Netflix just experienced its’ judder moment – and it is shaking markets. Overnight the streamer became a completely different investment proposition, even though we’ve been warning it was inevitable. There are lessons to be learnt across the equity market.
Yet another difficult week in prospect for markets as $130 oil threatens a global shock, geopolitics remains on the edge, and London tries to rid itself of an infestation of oligarchs without exposing the politicians who let them capture the state.
It’s going to be a testing week for markets as a whole slew of negatives, challenges and no-see-ums threaten to overturn everything. It couldn’t look worse… unless of course you remember my key market mantra (read on), and that the sun usually comes up tomorrow. Happy Valentines..
The Stock Market Rollercoaster will continue a while longer, but a decisive divergence point is coming! Corporate debt is likely to crack on rising rates, price distortion, forgotten risk metrics, and rising defaults. It will signal the perilous financial health of some sectors – bursting the current bubble violently. Anyone for the last few choc-ices?
After yesterday’s dramatic market roller-coaster, traders are wondering if it’s a buy-the-dip moment. They probably will. But the narrative has reversed. The improbable tech stocks into substantial correction territory have a considerable way still to fall if history is any guide.
“The future may dimly be perceived through the veil of the past”, sounds like bad poetry, but has a point. The confusions and conflabulations that characterised 2021 will likely set the tone for what’s coming – what were the key themes of 2021? Best to understand them before trying to fathom what comes next.
Markets are roiled by lockdowns and approaching holidays. Already the guessing season has begun – with predictions running all the way from Gloomy to Dire. Central Banks will be anxious to be seen to be doing the right thing – which probably means more of the same. And investors? Delusional or exploiting the delusion of others.
Markets are never as bad as you fear, but never as good as you hope. The Threat Board has seldom looked so complex: we can try to predict outcomes, but its notoriously difficult. The list of potential ignition points seems to be expanding exponentially: Energy Prices, Oil, Inflation, Stagflation, Supply Chains, Recession, China, Politics, Consumer Sentiment, Business Confidence, Property Markets, Liquidity, Bond Yields, Stock Prices.. you name it and someone is worrying about it.
Markets are fretting. Up one day and down the next? Do they believe in the dire fundamentals or inflation threat, or keep buying Central Banks juicing the markets? Never mind; hot disruptive tech stocks can only ever go up… But where do they eventually lead us? I suspect Tech will eventually kill us all…
What Inflation? “Oh, that’s nothing to worry about, the central banks have no choice but to keep juicing markets”… The market is so focused on the short-term and ignoring the consequences of the last 10 years of QE, monetary experimentation and easy rates, that its blundering into the next crisis. Inflation matters, and has jumped from financial assets into the real economy.