Oh what japes, and that was only the first week back at work this year. But did we learn anything useful from the first five days of trading? Possibly, but has anyone come out of week one with any credit or stood out as a visionary amid the chaos? Not that I can see, I’m afraid.
The chartists, of course, were having a field day, spouting a high degree of jibber jabber that as usual confirmed that we are almost certainly now doomed to a negative market performance in 2016. If I hear one more technical analyst telling me about the importance of the first week of trading for the full year’s move, I think I’m going to grab their candlestick and place it somewhere pretty uncomfortable. It just makes no sense to write off the rest of the year on such flimsy evidence.
That said, there’s going to be a few careers cut short in their prime if the rout of last week continues. After the pathetic performance of the hedge fund industry last year, where all indications are that the industry lost money again for investors, it’s going to be a tad tricky for most of them to justify charging anything, let alone the ludicrously high “two and twenty” average fee structure.
What about the analysts? How are they doing? Not so great, from what I’ve seen. In a week that saw one of the world’s most highly owned stocks, Apple, get a kicking, I revisited my Reuters system to see how the analysts stood on the stock. As usual, out of circa 50 analysts, there wasn’t one seller to be found. Most were Strong Buyers or Buyers, with one or two Neutrals thrown in for good measure. So not one piece of Wall Street research had called the stock lower. And people pay for this stuff.
It was also a bad week for regulators. What more can be said that hasn’t already been said about the shambolic Chinese authorities? Still, now they’ve sorted out the little hiccup with the circuit-breakers, maybe we can concentrate on the bonkers valuations on the Chinese markets. Who needs Macau when you’ve got the Shanghai Composite?
Perhaps the group who had the worst week were the oil longs. From Shell to the biggest Opec producers, it was a week to forget as the oil rout went on and on. I keep hearing that we are going to get a second half of 2016 bounceback to over $60 a barrel, and yet that now requires WTI and Brent to virtually double! That’s one hell of a call. In the week Saudi announced it was looking into a part privatisation of Aramco, I couldn’t help thinking that the Middle Eastern oil superpower doesn’t buy into the massive bounce story. You don’t talk about offloading part of your prize asset if you think prices are about to surge.
So that’s the technicians, the hedges, the analysts and the commodity players who had a bad week. Anyone else need a bit of a kicking? Oh yes, me.
I said on CNBC’s SquawkBox on Friday that I was sure the equity market would rally if we got a strong non-farm payroll figure. We got the good number but the Dow et al slumped by the close. Silly me. I got in a muddle thinking that good economic numbers would be soothing to a market fraught with uncertainty. I clearly forgot markets are more afraid of a rate hike Stateside than a slowing US.
When I was a trader, it was always good to reset the P&L to zero at the start of a new year. Shall we just pretend that this year hasn’t started yet and restart it this week?