2021 Investment outlook

Whilst 2020 was a tough year for many, that does not mean 2021 cannot be even more extreme. Monetary policy will continue to be extremely easy throughout 2021 unless the virus is beaten back and inflation shows up very quickly. Whilst the Dems took both Houses, they do not have a majority that would...

Continue reading

Bitcoin is going mainstream

Bitcoin rose above $28,000 today. It seems to be gaining wider acceptance in the traditional finance community. If it is to become an accepted asset class, it has only just started the journey and hence its price is likely to see continued gains. Unfortunately, Darwinex no longer supports cryptocurrency so I cannot add to...

Continue reading

The US gambles with the dollar

Jerome Powell's recent announcement of the change in Fed policy to target inflation at 2% on average was not a surprise. Powell has previously tried to communicate that the Fed is indifferent between missing on the upside as they are missing on the downside. This policy statement tries to build on those previous statements....

Continue reading

Hand in hand they blindly go

Forefront in my mind over the next month is central bank policy and the narrative from Powell and other FOMC members from now up to and including their next meeting in September. Yields rose last week in reaction to signs of rising inflation. That then pushed down on the price of gold. The risk...

Continue reading

Another gold liquidation

Yesterday saw a large sell off in gold and silver. Reasons for the fall were abound including rising inflation, increasing yields and the Russian vaccine approval. All of them valid reasons why gold and silver would fall after sitting in overbought territory for so long. But what has changed? The reason I hold gold...

Continue reading

Looking ahead

LWE and SKI have held very similar positioning over the last couple of weeks. That reflects my view that the short and medium term opportunities are aligned. However, I expect as the Summer moves on we will see increased volatility due to fiscal incentives being reduced and the momentum trade on gold getting more...

Continue reading

Correlations indicate a new phase

When equities sold off in March the risk-off mode also took down gold and strengthened the US dollar. It was clear that investors were not positioned for such a downturn as they were forced to liquidate positions. Most recently however this correlation between equities and assets has broken down. As equities fell toward the...

Continue reading

Euro nations coming together

Positive news for the Euro as after many days of negotiations EU leaders finally agree to 390 bn Euro of grants alongside loans of 360 bn Euro. Whilst EURUSD has gained to the high end of its recent range, the Euro has not outperformed other currencies than the dollar. I don’t think this level...

Continue reading

High stakes poker

Have you had your free money yet? As a resident of Jersey, I've just been told I will receive £100 by September to spend in Jersey. Of course, it's not only me, every man, woman and child will receive a £100 by voucher or pre-paid card with an expected time limit of November before...

Continue reading

Positive Euro positioning

Darwinex pivot First, a word on the Darwinex pivot changing their fee structure from commissions to performance and management fee. Overall I support the change since it allows Darwinex to focus on growing AUM and performance instead of encouraging trading turnover. What’s good for investors in all 3 Stokes Bay Darwins is that there...

Continue reading

Do budget deficits not matter?

You may have said to your kids, "no screens before midday". Then one busy day when you're too occupied to give it the necessary thought, your kids pick up a screen after breakfast and you say nothing. Then, over time as the event re-occurs, the rule without being spoken, gets re-written.  What we all...

Continue reading

Economics needs to save the day

  The narrative begins to switch from ‘return to work’ to trying to understand what the economy will look like in the weeks and months ahead. I think most people understand (and even the politicians admit) we are not returning to anything like normal in terms of economic activity. Even if we get a...

Continue reading

QE is fool’s gold

The debate continues amongst politicians and medics about how best to return the world to work. I don’t think we know enough about the virus to return in anything other than a slow and phased approach. What I do know is that wearing masks will become as accepted in the West as it is...

Continue reading

Markets are broken

*you know as I write this, Trump keeps mis-speaking, talking about ‘billions’ and needing to correct himself to ‘trillions’ and that is a great introduction to the below. This week was not about the markets. Prices are not relevant right now. I am not thinking here that markets are not important. We are traders...

Continue reading

Time for a reset

Every so often, we get an opportunity to reflect, rethink and perhaps reset. Covid-19 could be one great opportunity. Are we really happy with our lives and the way society conducts itself. If humans have one fault, it is that we share too much DNA with sheep. That is, we herd, we follow and...

Continue reading

Bernie stands a chance

Whilst the coronavirus will likely last at least a few more months and have a noticeable impact on global GDP, the economy will recover once the antidote is developed. Bernie Sanders on the other hand could be a long term problem for those wanting business as usual. A self-described 'democratic socialist', Bernie represents change...

Continue reading

Home run

The possible impeachment against President Trump was a remote chance but has ended sooner than the Democrats would have liked. It looks as if Trump is set to be acquitted in his impeachment trial after senators voted against calling witnesses or admitting new evidence. We can now expect him to focus on attacking Democrats...

Continue reading

Panic stations

The recent coronavirus outbreak and the negative market reaction is all part of the path to slower growth. Clearly, this outbreak could not be predicted but US 10 year yields have struggled to make any headway to reach 2%. The selling on Friday in equities and move into bonds was met with little resistance....

Continue reading

Target zero inflation

The majority of central banks focus on a 2% inflation target. In the developed world, we are experiencing inflation well below this level. I argue this is creating a debt spiral which is completely unnecessary if the true objective should be to increase GDP per capita and equality of income and wealth. Over the...

Continue reading

Good parenting

When a child misbehaves the best method is to correct their behaviour immediately, little and often. This keeps them 'honest'. Not doing so only enforces a message that misbehaviour is acceptable. Giving in to bad behaviour is even worse, it condones bad behaviour. As banks are required to hold reserves at the Fed under...

Continue reading