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On the verge of some macro changes?


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I think some of the following snippets from a macro article released 14/2, may be of interest to you all? Due to copywrite, I could only relay the max. 10% from "The Daily Reckoning Australia."

Stocks might look fine — everything else does not

Large sections of China are closed. Ports are closed. Airports are closed. Trains are closed. Major manufacturing hubs are frozen. Large masses of people can’t leave the country. Schools are closed. Fast food joints and restaurants are shut.

The values of copper, iron ore, soybeans, wheat, and cotton are all down between 4.7–9.3% in the past four weeks, when official news said the virus was starting to spread…

Energy has taken a big hit. In the same time, Brent crude and natural gas have fallen 18% and 17% respectively.

Baltic Dry Index 2015–20

Dailyreckoning

Source: Trading Economics

[Click to open in a new window]

 

 

 
 
 
 
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Of course, these figures may just be a natural result of the closures due to the virus, along with the caution exhibited by businesses along with it. Nonetheless, I thought the article is worth bearing in mind.

I was also listening to what Jim Rickards (a well known financial market expert in the US) pointed out about this situation:

1. There is every reason to believe, due to China's habit of lying, that the Corona Virus figures are seriously understated, and

2. That we should not dismiss the fact that Wuhan Province is home to China's biological warfare laboratories.

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1 hour ago, SAMMYDAVID said:

Of course, these figures may just be a natural result of the closures due to the virus, along with the caution exhibited by businesses along with it. Nonetheless, I thought the article is worth bearing in mind.

I was also listening to what Jim Rickards (a well known financial market expert in the US) pointed out about this situation:

1. There is every reason to believe, due to China's habit of lying, that the Corona Virus figures are seriously understated, and

2. That we should not dismiss the fact that Wuhan Province is home to China's biological warfare laboratories.

yes this is all true though don't forget the market already knows each of those points and did make adjustments due to them at the time. Whether those adjustments were on the correct scale remains to be seen and so far the market has chosen to believe that the affects caused by the virus spread will be relatively short term. You can be sure that if new news undermines that forecast the market will be quick to respond though do you really want to front run that possibility, probably not though the need for caution is always present, especially for long hold positions.

The Baltic Dry Index (BDI) (an assessment of the average price to ship raw materials) has raised eyebrows for a few weeks now and is interesting and always worth keeping an eye on. See the longer term chart below which doesn't show the recent down turn which, as you say, is probably down to virus connected concerns.

image.png.ad371e084693f24bc39b42faccd32dfe.png

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On the matter of how one positions oneself financially, due to this info, is interesting. I have a few accounts with a few different reputable financial institutions - that's one strategy in itself. Don't rely on one financial institution to keep your money safe.

I have one CFD account with IG, and all positions have close stops. I have one account with Trade Station, where 50% is kept in cash and 50% devoted to Options. The last account... superannuation with ING - 50% gold stocks, 50% company stocks.
The ING account is the one that's got the most risk. The reason...they don't have a stop-loss facility! Still, I'd rather be in the market than out, and adjust my account as news comes in.

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