What you missed on the Markets in December

2016 was a tough year with some very interesting highlights and lowlights
for us all, but if nothing else it had some exciting surprises.
After taking some time off in the holidays the markets were still open
and so some events still made the news while we were dozing away
in afternoon naps and mentioning “well its 12 o clock somewhere in the world”
while drinking that first margarita…
I thought I’d round up some articles that you might’ve missed:

The banks in Italy are in a long decline this year with Italy’s 3rd largest bank
Monte dei Paschi (BMPS) requesting bailouts from the government.
The government stepped in late December authorizing $20 billion to help with a bail out,
however there is still concern as through some calculations it is not a sufficient amount.
BMPS used to trade around 600 – 800 euros per share, it is now suspended at 15 euros a share.
(click on the image to enlarge)

EZA the offshore ETF that represents South Africa in Dollar terms has gained ~15% for the year!
Which was great in comparison to other markets, except that for all the local SA investors
in ZAR terms the ALSI ended in 0% gains (the year started and ended at the same price)
as the ZAR strengthened.
(click on the image to enlarge)

Wall Street has come out with complete consensus the markets are bullish, despite weak fundamentals.
Every single wall street analyst reported seems to have come out with a bullish view
that 2017 will have gains, the gains range from single to double digits, however the consensus
is that it can only go up from here.
This includes Harry Dent, a US market analyst who has been bearish since 2009 has now
finally turned bullish.
(click on the image to enlarge)

Also interesting to note is that most analysts also have consensus that Financials and Health care
will be the top sectors.
This includes Steve Eisman in the US (better known as the character of Steve Carell from the movie “the Big Short”)
But Eisman, who works at money manager Neuberger Berman, says the era of Trump will be a “golden age” for the banking sector.
“I think over the next couple of years there will be more leverage, and this will be a golden age of investing in financial stocks,”
he told CNBC during an interview early Monday in New York.

A Danish couple is getting paid to buy a house…yes you read right.
With European reserve banks now putting negative interest rate policies to such a low that
it means banks now pay you to have a mortgage loan.
…They pay you to have the privilege of loaning money from them….?
Bet you that was something they never taught at Economics 110.

The best and worst performing stocks on the JSE in 2016

US has finally come out with penalties on the banks and their actions for their part in the 2008 financial crisis.
Credit Suisse and Deutsche Bank have been hit with a combined penalty of more than $12 billion over the sale of U.S. toxic debt

In local news inflation has a hit a high of 6.6% CPI in SA.
At the same time the US has decided to start with their interest rate hiking cycle.
Can anyone else see the tug of war that might take place here?
To keep inflation low and stay competitive with offerings in the US
it is very likely that SARB could hike interest rates further.
Most might disagree as “interest rates are too high” but I remind you the last time
rates were this low was in 1980, 37 years ago, with our average prime rates
staying more in the 15% region.
Historic Data: http://liberta.co.za/blog/prime-interest-rate-in-south-africa-current-and-historical/
(click on the image to enlarge)

Steinhoff and Shoprite are in talks to combine their operations, more details
about it can be read here:

Greece has been in and out of the news constantly regarding its bail out requirements.
In December however it seems that when Mr Tsipras said that he would spend €600m
on bonuses this month rather than fixing their debt crisis the EU took some offense
and suspended the debt relief plans to Greece.
Time will tell how they will pay their debts when payments come up again.
And finally
There seems to be some facts about the markets going round on news and on Twitter, these are
EURUSD will hit parity – ie  $1 = €1
Dow will hit 20,000
S&P will hit 2,300
Go with the crowd or time to be contrarian?
That’s the round up folks, hope you a restful holiday
and wishing you the best for the year ahead.

Blue Chip

Hi, This is BlueChip. Having studied the market for some time I can show how not to trade on the market...its at least one step closer to how to trade on the market

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