Month: December 2016
With Christmas looming rapidly next Sunday it’s no surprise that we have a fewer questions than usual this week, although it would nice to think this was because our subscribers fully understand our thoughts for the weeks / months ahead and hence are on the same page! We had a number of questions around the Fed’s fully flagged decision to raise interest rates last week so addressing them today seems a bit retrospective however the view remains relevant we think.
“Oh, what a difference a day makes” is a phrase so often quoted, it’s certainly applicable to Sydney’s weather today – cold and very wet after a few days earlier in the week in the high 30’s. The expression also feels very suitable to our Energy Sector after Santos (STO) initiated a $1.5bn capital raising, sucking plenty of buying from the sector, just as it was regaining its “mojo”. It’s a strange decision to raise capital the night the US Fed intends to raise interest rates and after a strategy day last week that paid no reference to a potential raising.
This morning the US Fed raised interest rates as expected, but where they caught the market napping, was in their forecast for 2017 – an additional 3 hikes, not the 2 most markets players were anticipating. However before we get too carried away, we should remember that at this time last year, the Fed were projecting four increases for 2016, but we’ve only witnessed the one today, hence illustrating they are far from infallible.
My Bloomberg this morning is telling me that the local ASX200 may have got it wrong yesterday when it fell 0.3%, following Asian indices lower after lunch – typically they all turned around and rallied to close up after we had closed and gone home. This morning The Dow is again up well over 100-points as the tech stocks regain their “mojo” with the NASDAQ rallying 1.2% to make fresh highs for 2016.
Really bullish, there's more to go in the reflation rally
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