Global markets seem to be shrugging off the risks of a FULL BLOWN Trade War.
Global markets rallied off the back of the NFP data last Friday but are showing more signs of weakness today.
We are currently, and have been for quite some time now, bearish on the global markets indices. Mainly due to fundamental analysis and news feed. Of course the possibility of further trade war escalations and BREXIT are weighing heavily on stock markets in Europe. So we have been especially shorting DAX . We have also been short on the NASDAQ, and the NASDAQ has increased from the start of the year. Whilst the DAX has decreased since year star. This has a lot to do with the stronger dollar firstly, and also the ECB and the FED’s divergence in monetary policy regarding raising interest rates.
So we have the two major central banks doing different things. Which should cause some doubt and confusion for investors as to how the rising dollar and rising interest rates will affect the rest of the global markets. One could make a very well educated and informed bet that European equities will wind down either from now or from December when the ECB’s bond buying program comes to an end.
Emerging markets are getting hit first by the stronger USD. We do expect buying on the dips across all equity markets for the time being. As we believe there is still enough cheap money sloshing around that enable the biggest corporations to still just do share buy backs.
Take Glencore for instance!
Click on Glencore to read the FT’s latest article about Glencore and their CEO. Ivan Glasberg’s activities and way of doing business. I thought there would be a massive crash in their stock price and there was, for a while, until they bought a huge chunk of their own stock! Corporations like them are just too big to fail.