Sunday, 24 February 2013

Weekend Chatter Vol. II

Fridays News AAA Downgrade, Plus Stock talk

As I look at the news from around the globe and try and translate this into sentiment with much speculation around the downgrade by Moody's being expected and even priced in to some degree (wow,I'm not sure about that) Its pretty obvious what effect this will have on key sectors.

With Gold pulling back and Platinum sinking to a real low point its worth remembering when the shit hit the fan where the money goes, Solid precious metals... Perhaps worth considering which companies layout looks safe to house your money.

Just as the stock markets start to rally (Beyond expectation) and it looks safe to get back in the water Moody's downgrade the AAA rating which may echo in Ozzy Osbourne's phrase '' We offer a safe haven '' As the axe swung across Europe prior to the UK joining the downgrade club.

Back to Global news:

Western Australia face cyclone threat
China to have government shake up
BHP say cost cutting demands needed
Pound drops to lowest point since 2010
Italian Notes weaken amid claims of government shake up (Hung)
Spending cuts to threaten state recovery
Pentagon slow contractor payments
Horse meat and Beef scandal

With all the positives we can only expect the markets to use this as its tool to play the FTSE amongst others into a bear trap! The real question is will we see a fake or a real decline and back into the dark trend of the bearish sub 5600pt lows.

Hardly you say? Well I agree if you do say that as it seems that Europe has moved on somewhat and although there are many highs and lows associated to the Euro it would appear that Germany's business is increasing and improving ahead of schedule. Is the UK downgrade simply falling in line with our invisible tether to Europe!!! The one we all want when trading with our buddies across the water or the route of all evil when there in the poop...
Funny old relationship we hold but one which  seemingly correlates regardless how visible it may or may not appear.

The game is on as the Monday open will be a serious tug of war as positions are closing/opening and the reality of the is it/isn't it or was it/wasn't it is played out.

The fact that the Aim and weaker markets have not really correlated with the highs in the FTSE or those of late 2010 and early 2011 I'd say that there maybe some concerns to have but nothing immediate. If your invested in companies with a decent cash position and revenue stream then I'd try and relax a little. If your invested in a company which relies on coming to market then you may find a bigger discount coming should the real trend reversal start to play out.

In truth there are worse things facing others around the world but to the greedy trader /investors i expect the opening bell on Monday will cause a flutter or two in anticipation.

As I cover Sareum Holdings Via late last week in comparator to JKX Oils. The safe option to the speculative one may be magnified in the coming months.

Initial thoughts are that indirect pain may be tolerable but how that develops over Summer (when it feels more direct) is another question.

My Attention Has Been Drawn To:

As Vince Cable tells Andrew Marr "In terms of the real economy, there is no reason why the downgrade should have any impact...

I now draw your attention to a more sordid,sinister and controversial piece form Money Week!

The End of Britain
WARNING: What you're about to see is controversial, and may be alarming to some audiences. Viewer discretion is advised.
This is a presentation that ties in with alot of thoughts I have shared on the stock market via twitter,FB and My Blog page.

£10 trillion in public funds - MoneyWeek calculations based on historical welfare spend
UK Total Debt as a percentage of GDP - Debt and deleveraging: Uneven progress on the path to growth, McKinsey Global Institute, 2 January 2012
500,000 pensioners in 1909 – BBC article: The state pension turns 100, 31 July 2008 Average life expectancy - World Bank data, 31 October 2012
An estimated £5 trillion government debt – IEA article: True level of UK government debt exceeds £5 trillion, 12 November 2012
£120 billion net borrowing – Office for National Statistics: Public Sector Finances August 2012, 21 September 2012
MP Douglas Carswell quote – The End of Politics and The Birth of iDemocracy
James Callaghan quote – British Political Speech, Blackpool 1976, 28 September 1976
America, Japanese and Weimar Republic total debt – Global Financial Data, Bridgewater's An In-Depth Look at Deleveragings report, February 2012
Salaries and pensions slashed up to 40% - The Guardian: Greece is ripe for radical change, 8 November 2012
Euro zone discussed capital controls – Reuters, 12 June 2012
For the calculations of UK debt, and more information about the charts, click here

(There is a clever request for subscription to Money Week which I'm not endorsing I'm simply suggesting you look and listen with a hope that we all learn, Open minds and the third eye)

Closing thoughts

All cannot be well as the cancer of national debt is escalating out of control!!! Now the increase over the next 5 yrs is set to exceed that of the last 100yrs. Its truly bonkers to think that this can go on forever.

Time to wake up to the markets and risk which is involved when you make the uneducated decision to enter the markets armed with simple logic and self confidence!!! (Its not enough)

I like to think I'm a realist and because of this I'm open enough to review all the thoughts,data and presented arguments and translate this to the layman.

If you hold a positive position or one which is likely to need funding soon, De-risk and hold cash or safer options. At least until we receive the vacuum that may or may not come over the coming weeks. Also remember the game play that comes via the markets! A unrealistic high before a huge implosion........ Are we at this point now? Is the fall about to commence? Are you clued up on this ruthless and dangerous arena?

All the best Doc

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