The "What Ian Can See" WICS trading information newsletter - previous edition.
Ian's weekly look at the world economic situation. Members get access to the current edition, searchable archives, chart analysis and one-to-one mentoring on your trading.
Well, that was a bit of a hectic week! I daresay the poor folks in the Caribbean and around Florida will be saying the same thing, albeit for far more significant reasons than why I'm saying it. In fact I'm a bit taken aback by all the dosh that will be thrown at these places in order to "rebuild" them. There's little doubt that they will be rebuilt of course, but my point is that almost certainly they'll be rebuilt as they were before they were flattened.......only to be flattened yet again when the next lot of hurricanes arrive. It's all just another example of people never learning from history, is it not? (And of course, the usual politico/big biz con job). And as I have frequently banged on about, mankind is far, far too puny to reverse this current bout of global warming. Zillions of wind turbines polluting the landscape, all-electric vehicles, whatever - they will make not a jot of difference to global temperatures, and storms will inevitably get ever stormier. For goodness' sake! Spend all the dosh and use all of Man's ingenuity to alter what CAN be altered - the where, the how, the why of where people live, if they are meantime located in the known path of hurricanes, or by the sea, or on a floodplain somewhere, or all three of these. There again, the process might well take rather more ingenuity than people are capable of, when you read that the American Society of Civil Engineers admits that only 25% of Florida's storm water drains are fit for purpose! There's also the fact to consider, that since the last massive hurricane that hit Florida (Andrew, back in 1992) the population there has increased by some 35%. Where are they all living? Oh, I suspect you can work that one out!
Speaking of my beloved wind turbines, this last week was a hectic one on behalf of daughter's rapidly expanding business, and I had the joy of seeing so many of these abominations in Scotland's Central Belt, so it's not just the north that is suffering. I also had the dubious pleasure of driving around bits of Scotland's motorway system - specifically the M8, M9 and M80, not to mention Dundee's Kingsway (allegedly a ring road). I have to say that the litter problem gets worse every year, and this time it's simply appalling. Incidentally - anent wind turbines - why are they painted glossy white? Surely their shape could be broken up a bit with the use of camouflage paint? Wouldn't that make them a wee bit less in yer face? There again, Nicola Krankie wants people to see them so that the public can appreciate just what a great job she's doing for the planet..... And when I contemplate the term "broken up", I can think of another method that would work far better altogether. It involves the application of a wrecking ball.....
Pride in one's country and one's heritage? Pah! And as for the 72% of Blighty's tap water that's polluted with bits of plastic, well, what can you say? Here's a piece about it from the Grauniad.
Between that and chlorine, is it any real wonder that IW and family don't drink tap water?
No, I'm afraid that due to politicians and big business being joined at the hip for mutual advantage, all the money and effort that could be directed towards doing effective stuff to help Mother Earth, are being directed towards lining the pockets of the few.
Speaking of big biz, here's a Bloomberg piece to contemplate.
Onward then, and back to Blighty for a moment, where the BBC tells us that there were about 450000 oil and gas-related jobs in 2014, whereas there are 300000 today. That's quite a reduction, and it's reflected in an ongoing property value collapse throughout the north-east of Scotland. One house I know of (no, not one that I would be buying, nice though it is) was for sale 2 years ago for offers over £499000. Then it was reduced to £475000, £450000, £425000, and today it stands at £350000, still unsold. I daresay there are many more in a similar situation.
Meanwhile, BA is closing its main pension scheme because it's unaffordable, and that's only the tip of a very large iceberg affecting a great many of Britain's Plcs.
On the other hand however, not everyone thinks Brexit will be an utter disaster - it seems Norway is happy to increase its investments in the UK - thanks to "Steve" for this message:
The world's biggest sovereign wealth fund has issued a resounding vote of confidence in the UK economy and the long-term prospects for the pound, raising its target for sterling bonds to 8pc of its global benchmark fund.
Norway's $1 trillion oil fund has advised its government to concentrate core holdings of debt into dollars, euros, and sterling, dropping Japanese and emerging market bonds altogether.
"This is a very significant move. It is extraordinary that they have opted for the UK as world number three for investment ahead of China and Japan," said Stephen Jen, a currency expert at EurizonSLJ Capital and an advisor to Asian sovereign wealth funds.
The shift in strategy came as the vast Norwegian fund – now known as the Government Pension Fund – said it is stepping up its expansion into London commercial property, buying a £112m stake in 20 Air Street in Soho from Crown Estate.
It purchased stakes on Oxford Street and Princes Street in May, and bought London developments from Great Portland Estates and Aberdeen Asset Management last year after the Brexit vote. "They are thinking long-term and buying prime assets at a 20pc currency discount. We foreigners are not as bearish about the UK as a lot of British analysts seem to be," said Mr Jen.
The Norwegian fund was one of the first of global pension giants to embrace emerging markets in the early boom years so it is remarkable that reducing its bond benchmark from 23 different currencies to a residual core of just three western reserve currencies.
We foreigners are not as bearish about the UK as a lot of British analysts seem to beStephen Jen
It recommends that the Mexican peso, the Polish zloty, the Korean won, and the South African rand all be dropped, along with the Australian and Canadian dollars and the Swedish krona – even though the last three are AAA-rated paragons.
While the fund will continue to hold some of these investments – and may keep 'country risk' such as Brazilian bonds denominated in dollars – the move implies a sale of these non-core bonds. "It will happen very gradually. You can deviate from your benchmark but if you do that you face career risk," said Martin Enlund from Nordea Bank.
The fund currently owns £6.2bn of UK bonds, less than its holding of Mexican debt. It would have to increase purchases of Gilts and other sterling bonds dramatically to reach an 8pc target. This alone would lead to a steady flow of investment into the pound, helping to put a floor under the exchange rate over time.
The fund is coy about its exact purposes, stressing that it wants assets that are "liquid and investable". It is opting for 54pc in dollars, 38pc in euros, and the rest in pounds. It wants to shorten maturities to a maximum of ten years, and axe both corporate debt and inflation-linked bonds. It said emerging market currencies are too volatile and plagued with short-term correlations across countries.
Analysts note that these moves are what you might do if you were worried about the damage that inflicted by future inflation on bond values.
What is striking is that Japanese bonds are to be eliminated. This is consistent with growing fears among investors that 'Abenomics' may succeed all too well in reflating the Japanese economy, leading ineluctably to a crisis in the government bond market. "Be careful what you wish for. If Japan is successful in creating in inflation, their bonds are toast," said Mr Jen.
Japan's Abe Urges Voters to Stick With Abenomics 01:25
The moves are also what you would do if worried about the rapid build-up of corporate debt in Asia and Latin America, although the fund is sticking to its 70pc weighting in equities.
The Bank for International Settlements has warned that the epicentre of global banking risk has rotated from the developed countries to such places as China, Hong Kong, Singapore, Thailand, Indonesia, Saudi Arabia, and Chile.
Mr Enlund said the fund may be taking tentative steps to prepare for a turn in the aging economic cycle. "The end is not near but the risks are increasing. Emerging markets have been releveraging while at at least some in the West have been deleveraging," he said.
Singapore's $100bn (£77bn) GIC fund warned in July that it was switching to defensive positions, expecting a "period of protracted uncertainty and low returns". A report by Barclays said global funds have begun to batten down the hatches, shifting to an overweight position in defensive stocks for the first time since 2009.
Coming back to "the environment" for a moment, here's a link to take a look at in regard to the current wave of car scrappage schemes being touted.
Running an older car and keeping it in good nick, is surely less damaging to the planet that constantly making new stuff? Or am I just being a wee bit oldfashioned?
Anyway, it's not just Blighty and Yankland where "trouble" is bubbling away nicely and about to erupt at some (admittedly as yet uncertain) point. Take a look at the Oz property market, for example.
That is most certainly a Ponzi scheme!
And Canada's real estate market ain't that much healthier either.
Fools and their money eh? Actually, that should read "fools and other people's money".....
Moving on to some even sillier stuff, I was greatly amused to read that Faceplant tells porkies - as if that's a surprise!
One day (and I can hardly wait!) Faceplant, Twitter, Instagram et al will disappear from the planet.
Meanwhile, over in the French Alps, some British second home owners have decided that they can't stand the noise of cow bells and they have organised a petition to have such things banned from around their houses. How to win over the locals, eh? What utter morons.
And finally before looking at a few charts as usual, what about that Yankland Equifax hack attack eh? 143 million people have had all their personal data nicked. I simply can't get my head around the fact that such stuff is stored online in the first place. The internet is a marvellous thing - of course it is - but sensitive personal information shouldn't be available on it, at any level. There you go then - even more evidence that IW is a very long way past his sell-by date! But one day, I'll be the one who can say "I told you so......."
That's that for today then - a bit of an IW rant, but only one sentence about Fishy Nicola. I must be getting kindhearted and tolerant as I mature......
Onward to a chart or two, and first there's a look at BAE, where the short term countertrend channel looks potentially tasty. Next, there's a major downwards break to be seen on the Go-Ahead Group's chart, after a fairly long lasting sideways channel. The Going-Down Group perhaps? Then the AA has some nice horizontal resistance along 160p..... Which implies what? Meanwhile, some horizontal resistance on the Cairn Homes picture, suggests further price rises lie ahead.
And finally, another look at the triangle that's still forming on the chart of the DJIA. I have (very slightly) redrawn the lower line from last weekend to reflect the clear support it's now providing. A break upwards is still expected here, in a final thrust to new all time highs - but make no mistake - in due course, "final" will prove to have been the correct term!
That's all for today folks - I'm hoping to demolish a dead tree in daughter's garden this pm, but the way the wind is blowing, that might be a bad idea..... We'll see!
Anyway, all the best till next weekend.
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