2014……. A Reflection

 

As 2014 draws to a close it’s customary to look back at our “musings” to assess whether any were of use, so without further ado, here we go:-

Oil & Gold: January’s “Crude Confusion” gave the first hint of a fall for the price of Oil, highlighting the moving-average cross and the $79 support line, with the 14th March “Investment markets Overview” warning of a crash for both Oil and for Russian stocks, whereas our, “Gold Watch” missive of mid-November, observed the bearish sentiment extreme, together with the completion, or near completion, of 5-waves down, which in Elliott Wave parlance suggested an expectation of a reasonable ABC bounce. The latter remains a possible work in progress.

Emerging markets/BRICS: Late January’s “BRICwall Cracking” and February’s “Sub-Merging Markets,” reminded that both sectors had been heading lower since their 2011 highs and of their close correlation to the fortunes of commodity prices, going on to provide support levels, which if breeched, would open the way to far lower levels.

US Treasuries: “On the Move Revisited,” from May compared the ML Move Index, a measure of one-month treasury volatility, against the 30-year Treasury price, warning that volatility was about to surge, followed by higher yields. The Move Index subsequently doubled between May and October, but the 30-year yield actually fell.

UK House Prices: July’s “Spot the Difference” observed the yawning gap between the Rightmove asking price and the average UK actual house price, describing the gap as Hope versus Reality, also showing another divergence between price and mortgage lending. The bottom-line suggested that either lending was about to soar or prices were about to collapse. Thus far, lending has remained muted, whilst asking prices are falling with actual prices stalling.

Japan: “Ailing-Nomics,” from September, noted the correlation between the Nikkei and the weakening Yen and between Japan’s GDP and Money-supply, whilst November’s “Japanese Jolt” observed the slowing economy and retail sales, introducing our own proprietary indicator as guidance towards the likely direction for stocks.

 Stocks: “Sale, Sale, Sell?” in May, subsequently revisited in November, commented on UK retail sales against the Nation’s main stock-index, predicting the move lower as per one of our preferred indicators, Buy, Sell or Neutral, whereas October’s “Buyback Bubble” and “Red Margin,” warned on the distorting effect of US share buy-backs and on margin debt, both of which had reached record highs. The targeted levels have yet to play-out, but the increased volatility and stalling momentum is a start.

 Central Banks: There were no less than four commentaries on these, frustrating that the subject matter is, due to the opaque, secretive manner in how they operate, but as they have become so dominant in respect of investors’ expectations and guidance, they do need to be analysed. One of the four was, “China Connection,” an early warning in respect of “officially fudged economic data,” whereas “An Honest Central Banker?” and “Central Bank Crook-ery?” alluded to the increasingly interventionist policies by The Federal Reserve Bank in their efforts to manipulate asset prices and financial markets in general. This line, emphasised in red, are not our words, but those of Philly Federal Reserve Bank President, Charles Plosser. Furthermore, Distortion appears to have turned into Deception, in respect of alleged money-laundering and the “rigging” of markets, which are crimes for lesser mortals of course and make an absolute joke that markets are free, transparent and fair. “Carney Confusion,” along with sections within the aforementioned commentaries, exposed the “myth”   that Central Banks are in control of anything, least of all interest rates, other than the base rate at which only the banks can borrow at, subject to certain terms.

2014 has been a challenging year for investors’, which is not surprising given the manipulation seen by the CBs, but hopefully we have provided some useful observations to assist in your decision-making.We look forward to assisting in 2015.

 

Seasons Greetings

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