What a record 50-day rally tells us about what happens next….

Thursday, 11th June 2020

What a record 50-day rally tells us about what happens next….

It is always worth reminding yourself from time to time that markets are essentially forward-looking….

They tend toward pricing-in what investors expect to see next rather than what investors have already seen go through….

  • What’s gone through….

Right now, large parts of the First World are experiencing three crises simultaneously….

There’s the health crisis – with the COVID-19 virus at the root of it….

There’s an economic crisis – created by the combined efforts of the virus and global government….

And there’s a social crisis – driven by the Black Lives Matter protests (you know you’re deep in crisis when boneheads from football hooligan ‘firms’ are rebranded as ‘defenders’ of the nation’s heritage)….

But you don’t need to worry about any of this stuff. Relax yourself, as Roy Keane might say. It’s all going to turn out great….

That’s the message being relayed by the markets….

  • Markets weren’t always so relaxed….

Sure, markets weren’t very relaxed back in March when the COVID-19 virus descended on the world and its inhabitants like some alien invader with bad intentions….

Stock markets worldwide went into freefall….

Looking back through the notes I take daily on events in the world of money, it  really did feel like markets might not pull-out of the nosedive….… Click here to read more

They thought it was all over – but the worst was yet to come….

Thursday, 14th May 2020

They thought it was all over – but the worst was yet to come….

Thanks to the CBOE Volatility Index (VIX) we know exactly when investor fears about the global pandemic peaked ….

It was Monday 16th March. The VIX reading climbed to 82.69….

Some people call VIX the Fear Index. Others call it the Complacency Index. In truth, it’s both….

It measures how volatile investors expect the S&P 500 to be across 30-days….

A high measurement says investors are fearful. A low reading says tomorrow will be just like today….

‘Fear’ doesn’t quite capture a VIX reading of 82.69. Abject terror is more accurate….

The VIX reading had never been so high. Not once in 30-years….

  • A funny thing….

The funny thing is that on Friday 10th March, the US stock market enjoyed its best day since 2008….

The S&P 500 closed 9% up. The Dow Jones was up 9.36%. That represented a gain of 1,985 points – the biggest ever….

But, while champagne corks popped on Wall Street, European investors wept into their ale….

Earlier that day, European markets closed after their worst week since 2008….

The FTSE 100 had shed 17% of its value – £275 billion wiped from the boards….… Click here to read more

Where I am right now – and it isn’t in stocks….

Thursday, 2nd April 2020

Where I am right now – and it isn’t in stocks….

It’s carnage out there….

The FTSE 100 just posted its worst Q1 performance since 1987 – down 24.8%. It was down 14% in March alone….

The FTSE 250 fared even worse. The ‘domestic’ index – more UK focused than the FTSE 100 – lost 31%. That’s the worst quarter on record….

In the US, the Dow Jones Industrial – the 30 biggest blue-chip stocks – booked its worst quarter in 124-years. It was down 23.2%. The S&P 500 recorded its worst Q1 results in history – down 20%….

The Stoxx 600 includes the largest companies across Europe. That sank by just 23% January through March….

Asia-Pacific markets logged the worst Q1 results since the last financial crisis….

Did I say carnage? What I mean to say was bloodbath….

  • Unprecedented financial disaster….

Of course, the coronavirus has played a large part in all this evil….

But existing fragilities in global economic and market systems have played a part too….

The cracks were in place. Coronavirus is the black swan event that has exposed and widened them….

Now the world is on lockdown. Businesses aren’t doing business.… Click here to read more