Elections season is upon us

Weekly Report - 29/04/2019

How Elections Impact Trading


In an unusual phenomenon, many important elections have been held recently or are underway around the globe. Israel, Finland, Indonesia, India, Egypt, North Macedonia, Ukraine, Spain, South Africa, Lithuania, Philippines, Australia, Ireland and Belgium are all nations of import. The trends these election results portray are an important piece of fundamental input into traders’ perceptions. It is like the sky color being a background for the feelings we experience about the weather. Traders follow these developments to gain understanding of the perceptions of market conditions generated by them into traders’ consciousness. Follow and understand the trends in this busy election cycle.

Earnings Report season chugs along

Corporate earnings have been as strong as Atlas. Like Atlas, they are bearing the load of financial performance worldwide on their shoulders. Many clients ask how long the path of continued all-time highs can persist. The short answer is, “as long as earnings support the rising share prices”. The more “nuanced” answer (as those who dislike the word “detailed” would say), is “not for too much longer”. Many of these terrific performances represent profits by corporations who enjoy true or near monopoly rents, meaning with virtually no competitors to their revenues. Think Facebook, Google, Amazon etc. We believe that the end of this period of permitted, indeed encouraged, industry consolidation and resulting monopoly profits is in sight. Facebook set aside $3b for what they believe will ultimately be a provision for a $5b fine for violating federal low on privacy and disclosure. Google continues to pay nearly yearly fines in excess of $1.5 to the EU for anti-competitive behavior. Maybe all of these fines and penalties are just a new way of taxing hugely successful corporations that are adept at dodging taxes. Maybe they are the opening salvos in an attempt to restrict the wholesale pandering of client personal data with no remuneration to the provider of the data. The end is in sight.


Oil: To Rise or Not To Rise. That Is The Question.

In two days on May 2, the ten exemptions to the US sanctions against Iran for selling its crude into the world market expire, not to be renewed. The question on the nervous minds of oil traders the world over is will these what become “new sanctions”, meaning additional crude disallowed from the markets raise prices or not? It is not an easy question to answer.

Saudi Arabia and the UAE, OPEC’s largest producers, have both stated that they don’t intend to rejig their output to make up for diminished supply from neither Iran nor Libya nor Venezuela. As well the US is setting up wells in the West Texas Permian Basin as fast as capital and equipment allow. On its face, the situation looks set for a spike up. Yet, oddly, prices are falling. Both the cash and future markets are not displaying panicked buying. Well and good for the time being. We are not in a position to speculate too far ahead of the charts. We see a fall in the near term. Not below 60 and not rising above 65. Should price penetrate support or resistance respectively for more than 72 hours the next level (75 or 65 respectively) they will likely stay in this new range. Stay tuned to the situation, keep your account sufficiently capitalized and be prepared for sudden and potentially lucrative volatility.


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