We thought it prudent to put out a short note on what we’re seeing at the moment and whilst I’ll go on with a few lines on the USD & our refreshed look at Europe something hit me last night that took me back to my first day in broking so many years ago.
I was reading a piece in the FT on the flurry of dealmaking travelling around the market at the moment. “Merger Mania” saw USD $100m of announced deals in a 24 hour window early this week. This brings the total value of deals in 2018 up to $1.7tn. Read those letters there, people.
Any time I see big numbers like that I always look for the “this is the largest since…” comment in the article.
I’ll let the graphic do the talking for me…
Just when you get set to write a long boring piece filled with doom and gloom the US market goes and puts on its best day since August 2015. Just as well I held off:
a) writing that note (yet) and
b) panicking and taking emergency protective positions.
Regardless the markets have had a week best described as ‘odd’ with many fingers pointing in many directions on numerous reasons. Trade war commentary has been done to death and will be flogged for a while to come. I’ll do my best to add a few cents below too.
“James, come on. This all seems a little bit soft. You haven’t actually given a reason or time for another correction. All you’ve said is that there might be a bigger one at some point.”
The relatively young and still in fairly good shape for his age investment manager was ready for this thrust and, through the crackly line from Sydney to Hong Kong, immediately reverted to the Primary Directive of Investing as his parry.
A few weeks ago I put out a very simple note flagging the commodities space as our preferred area based on the following reasons:
1. USD weakness = commodity strength;
2. Copper strength = global bullishness = good for commodities;
3. Commodity Index is at a historic discount to the US index;
4. Commodity ownership = inflation hedge
When historians look back on what words to describe November 2017 with, “lithium” and “Bitcoin” would be sure to make the list.
Lithium, cobalt, graphite and the Pilbara gold explosion all made some spectacular gains.
We have our own problems. The property market is falling into chaos. Roads are littered with ‘For Sale’ signs and you can’t walk down the street without someone throwing the deeds to their house at you and begging for a two-week settlement.