What a wild ride we've had since my last update a mere six weeks ago. My last note commented on the seemingly large disconnect between the rampant geopolitical chaos and the shockingly low volatility in asset markets. Well, things changed in October. The yield on the US 10-year plunged to under 2% and then rebounded. The S&P 500 saw multiple days of 2%+ drops, and volatility spiked (the VIX skyrocketed into the 20s). But by month end, things had rebounded and since then markets have raced onward to new highs.
I recently had a chance to speak with Jeremy Grantham about his presidential cycle hypothesis. He firmly believes that markets will race to even higher highs between now and early Spring. For sure the oil price plunge is an effective tax cut and should support discretionary consumer spending this holiday season. While I hope he's right, I fear deflationary pressures are building rapidly in Europe and China's slowdown can't be helping.
This mid-quarter update contains links to several comments I've made over the past six weeks. Of particular note is a piece I wrote about Ghana (below) in which I explore a potential solution to the current crisis of confidence.
Best wishes for the remainder of 2014!
Watches, Flags, & Confidence...
My latest comment was about art markets and how the $2 billion of sales during the last two weeks have telegraphed a rapidly rising confidence. I suggest we connect the dots between art markets, M&A activity, and global confidence. Read more HERE.
Japan's Latest Export: Deflation
Japan's unprecedented economic stimulus has one very obvious impact for the rest of the world: it pushes deflation from Japan towards the rest of us. Read my comment HERE.
Saudi Sows Budget Busts
Why the heck is Saudi Arabia, the traditional arbiter of world oil production, pumping more oil in the face of an oversupplied world? Read my thoughts HERE.
One Child Ripples...
What are the global implications of China's one child policy? In this brief comment, I consider some ramifications--including the ongoing economic slowdown in China. My comment is available HERE.
The true beneficiary of the ongoing and structural boom in animal protein consumption may be Morocco, a desert nation in Northwest Africa. Read my comment HERE to understand my thesis.
Hong Kong Gong
The unrest in Hong Kong may be pointing at a larger problem: a world with Chinese characteristics. Read my comment HERE
My thoughts on a country that went from the world's fastest growing economy to one fighting a crisis of confidence. Read my comment HERE