It used to be that the Federal Reserve Chair can talk up the economy. Last night Fed Chair Yellen had “very little” say about the global financial market shakedown. She just acknowledged the slowdown and that rates which have inched up last December will be affected — ahhh – slowly. There was no market-supportive action at all. We’d have to watch report after report fishing for clues. This uncertainty is enough to weaken the dollar though, and we are seeing it dip below what they said was Nov 2015 levels. I think for all the problems that are persisting, (and they are very big ones!) Chinese slowdown and existing problems, oil oversupply and sluggish major economies, we’re going to have to face the reality that the dollar and stockmarkets could sag further.
Which is where we could be finding opportunities as US companies have been pointing out its strength is affecting their business. Pepsico, MSFT, some other multi-nationals. I think we would have to line up the “would-be winners” with the world facing slow growth everywhere. It was even reported Goldman Sachs abandoned 5 of 6 “top trades” for 2016 in the light of the wild markets and especially the dollar sagging.
(UPDATE 8:14 AM ET)
Global stocks fell again today — with — surprise! Oil (now below $27) and Hong Kong stocks diving 3.9% fresh from the lunar New Year holidays. You can guess what will happen with China mainland stockmarket opens next week. And more and more countries like Australia and India slipping into Bear market territory. Rio Tinto (one of the biggest miners in the world) have cut their dividend — and you would think this is just the start – with lesser mortals — miners, oil companies and even banks reporting dismal earnings (like 80% plunge dismal) . This bear market has a few ways to go. As I am all in cash position I view this market with detachment. I am just on the lookout for the next opportunity. Recession talk (in the US) is also on the rise but in that there are still opportunities for defensive stocks — as I tell my friends — we all still need things to use and live — water, electricity, communications, and not to forget the bath soap! So again, “Every opportunity has a difficulty, and every difficulty has an opportunity.”
“The yen climbed for a fourth day as a Bloomberg gauge of dollar strength traded near its lowest level since November. The Hang Seng Index headed for its worst start to a lunar new year since 1994, while Korean shares dropped the most in more than three years. Futures on U.S. equity indexes dropped. Gold rose beyond $1,200 an ounce. U.S. oil dipped below $27 a barrel.”
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