Scotland, Iraq, Venezuela, Brazil, Bosnia, Thailand, Ukraine, and just about all of the Middle East have something in common – they do not like the status quo in their country. In all of the above countries, save Scotland, violent protests or armed insurgencies are taking their toll on the citizenry. People are agitating because they want political change.
Interestingly so, Scotland, the one peaceful country desiring political change, could have the greatest impact on global markets. Coming this fall, the voters of Scotland will go to the polls to decide if they want to end their 307-year relationship with the United Kingdom.
The referendum is about secession, quitting the UK so the country can go on its own politically and, more importantly, economically. The economic ramifications of the this political sea change would be enormous for Scotland, as it would lose the largesse of Britain, as well as use of the pound, and it would prove economically and politically bad for Britain as well. No doubt, the world is transforming in many ways.
- About 74 percent of those that have posted results have beaten estimates for profit and 64 percent have exceeded sales projections, according to data compiled by Bloomberg. Companies in the gauge are exceeding analyst revenue forecasts by the most since 2012, a sign rising consumer demand is fueling economic expansion.
The market is behaving beautifully today. Another day of what I like to call sedate behavior. The emerging markets drama seems to have played out and now the market is dealing with the contrary emotions of middling economic data and yet another good round of earnings.
The economic data is off track because of inordinately bad, no, check that, horrifically bad weather in the upper mid-west and on the east coast of the US. This too is part of the transforming world as weather becomes more severe around the globe. This past year is the driest on record for us here in California and it is the third successive year we have seen drought conditions. I could go on about other parts of the world, but, suffice it to say, everyone is taking a hit from weather patterns that are changing.
The issue related to all of this weather change is, of course, climate change. To doubt that climate change is happening is to bury your head in the sand. It is reality, and the political world is slowly waking up to this fact – climate change will necessitate enormous transformation in the ways we have done business around the world for centuries. Change in the energy industry is coming fast and markets are opening up equally as fast.
- China drew $10.76 billion in foreign direct investment (FDI) in January, up 16.1 percent from a year earlier, the Commerce Ministry said on Tuesday, a sign that confidence in the world’s second-largest economy remains firm even as growth cools.
I guess investors are not that worried about China, now are they? Money is flowing there because investors understand China is in the midst of a transformation that is will bring a more stable economic power both politically and economically. A large percentage of the investment money above went into the services sector, while investment in manufacturing actually dropped almost 22%. Although this might seem counterintuitive, the fact is this is exactly what China needs and wants. It needs to bring down its overheated rate of growth and the politicians there have been engineering this for some years now.
The market too is changing. Many changes are obvious (algorithmic trading, for example), but those changes are elemental. The way folks respond to the changes is fundamental and this requires one to look at how one trades. Day trading, for example, has long held that one does not end the day holding a trade. Maybe, in today’s new market, one might want to rethink this notion. Maybe the market is more suited to another approach.
- It’s okay to hold a position overnight. Remember, the intraday moves are often exaggerated. As such, you may need to hold positions longer in order to stay in tune with a move. The ride may be bumpier, but the trend can indeed be your best friend at times.
The intraday moves are exaggerated and less predictable because of algorithmic trading (elemental). Perhaps swing trading is more suited to a market making larger peaks and troughs over longer periods of time. Swing trading requires more patience, but, in the market of today, it just might make payoffs easier to find.
- Ford increased European car sales by 9.2 percent in January, the eighth straight monthly gain, benefiting from strong demand in the region’s top markets Germany and the UK.
Europe is transforming in many ways as well, but the one way most important to global markets right now is that it is healing. Markets there are opening up again, which means companies such as Ford (and other automakers) are selling more product, which means better revenue and better bottom lines.
It is not just autos that will provide opportunity as Europe heals. Keep this in mind and keep your eyes open. Europe will provide market opportunity for years to come.
Trade in the day; Invest in your life …
