16 Jan I Can’t Give Everything Away
I Can’t Give Everything Away
As you all know by now David Bowie one of the 20th Century’s Popular Music Icons passed away last week.
One of my earliest memories of Bowie was one of my first “investments” in music where at a school fete I paid someone 5 cents to play the 45 of Jean Genie for me.
Like investment markets Bowie’s musical fortunes waxed and waned with his commercial peak coming back in 1983 with the Lets Dance. Since his passing his latest LP “Blackstar” is No 1 worldwide & 17 of his LP’s have entered the Australian charts.
Since the beginning of 2016 markets have been heading downwards which is based on a change in sentiment (fear) without any real corresponding change in the economic environment.
The price of oil has dropped below $30 a barrel with the OPEC countries continuing to pump out oil at record rates and you can now add Iran to the mix with sanctions being lifted. On top of this we have continuing terrorist fears, Middle East tension & the equivalent of a tantrum from North Korea – with them testing a supposed H Bomb (Me thinks that they either need some more aid – food, oil or $$$) and this is the way that they get the Americans attention.
China’s economy is in the midst of transitioning away from investment & manufacturing to consumer services & products. Like our experience in Australia moving away from the mining boom to services also, this doesn’t happen in a linear fashion. Rest assured Chins is not going into a recession but it’s level of growth (GDP) has moderated – whilst still being far higher than Western World countries. China is also moving from being a centrally controlled to more deregulated & their authorities are on a reasonable learning curve.
What we know is the China has the financial ability to support its economy through further monetary easing (reduction in interest rates & banks reserve requirements). China also continues to hold the worlds largest financial reserves & recent reduction in the Yuan has allowed the Chinese to bring some of these $$$ home.Evidence of increasing consumer activity is that Chinese retail sales are up 10% year on year over 2015 – that is not a sign of an economy tanking.
The rest of the world continues on its slow economic growth path. Australian & US growth is expected to remain steady. What I can tell you from the other side of the world is that we have seen no signs of slowing activity in either New York, London or Paris. Europe & Japan continue to stimulate their economies through QE & sharemarkets remain cheap compared to bonds & bank deposits. You can however expect volatility to continue in the short term and whilst no genius can predict the bottom (generally it is characterised by the “capitulation” trade where everyone throws their hands in the air and say No Mas) markets do not go down forever.
No doubt you will wake up some mornings with a feeling of dismay in respect of investment markets as I did on 11th January to hear of David Bowie’s passing. What I do know is that economics wins out in the end and when more rational behaviours recommence markets will go up again.
I had only downloaded Bowie’s latest LP On Sunday 10th January and had listened to it twice that day before learning of the fateful news on the Monday. Bowie left a message on the last song that he will ever release on that LP. In a similar vein to Warren Buffet who says that the impatient investor hands their monies over to the patient investor – Bowie left us with his parting song “I Cant Give Everything Away”
Seeing more & feeling less. Saying No but meaning Yes. That’s All I ever Meant. That’s the message that I sent.
Merci Au Revoir