Times of market stress create inevitable client concerns. This is of course the nature of risk and equity investing but recent months have certainly been more turbulent than most.
As we have been alluding to in previous communications oil and China continue to be the main causes of market stress, we thought it might be worth highlighting some very recent events.
Firstly, there is a proposed meeting between the Saudis and other oil producers (including Russia) where there might be supply issues discussed. This is already sufficient to dramatically move the oil price upwards. It doesn’t really matter in the long term whether this meeting is successful or we have to wait for a future one, at some point supply will be reconciled with demand and it will be good news for markets.
Secondly the Chinese data on credit growth was stronger than expected but more importantly the leader of the PBOC popped up to come out with some calming platitudes as well. It’s not what he said that’s important, as much as he acknowledged China has issues, that’s all sometimes markets need, an acknowledgement of a problem, solving it can be done later.
All of a sudden the headlines are the opposite of a couple of weeks ago, sell gold from Goldman Sachs being a good example, last week it was all about the gold bear market being over.
Our point here is simple, the world communicates quickly and issues whatever they are will be resolved, taking less time than it used to. The doom mangers who have had such a joyous time so far this year always underestimate the capacity for people to come up with solutions, but come up with them they eventually will.
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