Interesting times and More interesting days
“There are decades where nothing happens; and there are weeks where decades happen.” - Vladimir Lenin
OPEC unity was dealt a blow after Ecuador announced to increase the production, stating it needs the money. This is adding woes to the compliance as more and more fissures appear among them. However, a larger problem seems to defeat the waning resolve to reduce production from an unlikely quarter i.e. the world’s largest energy guzzler, China, set to see lesser than assumed crude processing as it increases the alternate fuels in their mix. In the meanwhile, IEA (International Energy Agency) signaled that it’s less confident of the global commodity market to rebalance as anticipated. Some think that it could take until 2020 for the prices to recover from the lows of a generation.
The global stock indices seem to be on fire. The major US indices have had closings at an all-time high for the seventh time this year. What has transpired in these last few months that makes the markets to rise forever. Rate hikes, US Elections, Brexit, the markets had plenty of reasons to stop rising but it has behaved otherwise. So what’s that got into the market that we couldn’t fathom - liquidity. Nope, the US Fed Reserve has been tightening but other central banks like the European Central Bank, The Swiss National Bank and the Bank of Japan have continued their loose purse strings. As per a Forbes report, the Swiss Central bank has been on a rampage to scoop the US stocks and an estimate put it at $80bn through the 1st quarter. Meanwhile, the Bank of Japan is now among the five largest owners in 81 companies on the Nikkei 225 index and nearly the primary owner in 50 of them.
It didn’t stop there, as a recent Invesco poll of currency reserve managers at central banks revealed that 80% of the 18 central banks polled plan to increase their stock holdings.
Godspeed,
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