Markets and Madness: Getting back onto the Saddle

Now, let me make one thing clear – I don’t hand out recommendations; I prefer to discuss what catches my eye and the positions I have on my own books.

After a brief sabbatical from the markets, I’m happy to report that my health is on the mend, and so I’m itching to discuss a few potential opportunities.

First up, let’s talk energy! Oil has already hit the $80 USD level, and from what I see on the chart, there might be at least another 6 or 7 bucks on the upside. The fundamentals of oil are still all over the place. Demand plummeted during Covid, and the West is still busy preaching about reducing fossil fuel usage. But hold your horses! Doesn’t the real driving force behind oil consumption lie with the likes of China, India, and other developing nations. I reckon that demand isn’t going anywhere soon, even with the doomsday predictions about the Chinese economy.

You can spin your stories either way and write a bullish or a bearish report on oil but mark my words – we’re going to need all sorts of energy to get back on the road to growth. Cutting down on oil consumption won’t cut it, not when the demand in developing countries is outpacing savings in the west.

Now, let’s move on to my little misadventure in the equity markets. Those high-tech giants on the SP500 and NASDAQ have pulled off some mighty gains, taking full advantage of developments in AI and other digital products. But alas, the rest of the equity market is hardly improving. The uncertainty about the economic outlook and dwindling disposable incomes have many worried. So, while I fancy raw materials, energy, and a bit of hi-tech, I’m not sure these rallies are harbingers of recovery. If you ask me, I’d rather sell rallies than buy dips for now.

Ah, cryptocurrencies – the wild west of the digital world! They’ve been holding their ground fairly well, but let’s not kid ourselves with wishful thinking. As much as I’d love to see BTC soar to new heights, the crypto industry is like a lost soul trying to find its place in this vast universe. The government’s hammering of cryptos has been a quite successful. Some celebrate minor victories as game-changers, but to me, it seems like too many in the industry are cosying up to the powers-that-be. That’s against the very essence of cryptocurrencies, isn’t it?

I’m all for owning more BTC, but I can’t help but worry about Altcoins and stable coins which, as a group, seem to be running around like headless chickens. Time will tell, but for now, I’m steering clear at the current levels. Perhaps a decent dip before year’s end will beckon me back, and I’ll snatch a bit of BTC at reasonable levels for good measure.

Last but not least, let’s talk FX and EURUSD. I know there’s a fair bit of chatter about the future of the dollar, but are Euros really the answer? Despite the USA’s massive expenditure on the Ukraine war, shouldn’t a war on the EU’s doorstep be more of a headache for Europe than the USA?

I’m decidedly negative about the EU and Europe as a whole. They’re like a bunch of squabbling kids, each tugging in a different direction. Northern Europe, Western Europe, Southern Europe, Eastern Europe – pick a direction, any direction, and you’ll find problems galore. Sure, the USA has its issues, but at least they can change course when a new administration takes the wheel. Not the EU, oh no. They’re the boss, and there’s no one to question them! Sure, they’ve dabbled with their fiscal policies and allowed their central bank to toy with interest rates, but every time they help one part of Europe (ahem, Germany), all they do is hurt another part. It’s just a circus of gains and losses that ultimately adds up to zero.

When major problems rear their ugly heads, the EU knows how to hush it all up. But you can’t keep sweeping trouble under the rug forever. At some point, when investors and speculators take a good, hard look at the EU’s financial situation, it might be far worse than the dollar sceptics believe. I, for one, won’t be caught long on dollars when that day comes.

Well, there you have it – my peculiar views for the week. Only time will reveal if I’m a genius or a madman. But hey, that’s the beauty of the markets, isn’t it?