Stock market 2015: judgment year!

Posted: November 28, 2014 in Uncategorized

Soon it will be 2015. It will be  a very different year.

In 2014 every attempt to a serious correction became a buy opportunity. Not so in 2015.

1. For the first time since 2009 the Anglo Saxon reserve banks (US, Canada, Australia) are in tightening mode, while Europe and Japan are still in loosening mode. The first immediate consequences have been currencies. But as earnings follow currencies the US companies will have pretty hard pressed to keep the margin and sales. Usually after the spike in volatility in currencies there is a spike in volatility in the stock market.

2. The Saudis crashed the oil price. Initially with the help of the US as anti Russia move (as the main income generator for Russia is oil), but now they are turning against their master (or puppet) as the low price (target is USD50, for now) would crash the shale oil companies (30% of the SP500 are oil companies. And they issued also a lot of junk bond which could have ripple effect

3 The US Federal Reserve has projected an increase of interest rate. The repercussions are so enormous that go beyond the scope of this blog. It is a very delicate balance that, if mishandled, could even plunge the world in a new recession.

4 Russian President Putin (also with the help of China) is pushing to de-dollarize the world commerce. Again a change of world reserve currency is an event of historical proportion. I do not think it will be achieved in 2015. Anyway the New Cold War it is just at the start and now the Russians know what the US did to cripple the USSR.

5 Geopolitical tensions are every where from Ukraine to the Middle East to the South East China sea and the great forgotten Pakistan-India situation (both nuclear powers)

6 The only time when we had a high dollar/low oil price was 1986, and the Dow Jones ended down -7%

7 The Republican US Congress will have more say in the Federal Reserve actions that saved the market so many times, in 2014.

8 China will keep on trying to stimulate the economy – but each successive stimulus is less efficient than the one before.

All is all it is very possible that 2015 will be the first negative return equity market in quite a few years.

Definitely it will be a year not buy and hold, but trading for your life.

Iron Ore: the Chinese supply indicate a floor of USD65 and not much movement from there.

Oil: the Saudis definitely want to flush out the competition and are aiming at least at USD50 for at least one year (and then rise the price afterwards)

Gold: still persistently weak and manipulated, but a great diversifier in this  complex world (plus the various reserve banks are buying gold like there is no tomorrow – and usually they know more than you).

 

 

 

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