George Soros, billionaire and founder of Soros Fund Management LLC, looks on during an interview at the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 21, 2016. World leaders, influential executives, bankers and policy makers attend the 46th annual meeting of the World Economic Forum in Davos from Jan. 20 - 23.Bloomberg
A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Oil prices are jumping higher this morning and are set for their best week in three months. I don't trust it yet.
An intra-day chart of West Texas Intermediate crude futures shows the commodity price going straight vertical just before 11:00 am ET. This is usually a sign of short covering and short-covering rallies usually roll over. On the other hand, there are less frequent cases when short covering kicks off a sustained rally.
I wish I could provide a definitive answer on what's happening now, but I can't. Market timing is hard – if it weren't, we'd all be stinking rich by now. Personally, I'd rather be late than early on any rally in the sector but that's just me.
More optimistically, Citi research is expecting a sharp oil price recovery in the second half of the year, calling long oil 'the trade of the year'.
One thing that concerns me is the potential for an ocean of equity issuance from near-bankrupt and desperate-for-cash oil companies if the oil price stabilizes. I would urge investors to pay heed to the 'near-bankrupt' portion of the previous sentence and stay away.
"Oil heading for biggest weekly gain (yes, gain) in 3 months" – FastFT
"Oil Is `Trade of the Year' for Citigroup After Iran Export Surge" – Bloomberg
"Forget the glut, oil enters irrational territory" – Reuters
"Oil Must Go Past $34 to Show Rally Is No Fleeting Rebound: Chart" – Bloomberg
"@lizzie363 Oil holds 2 days of gains and we will get at least a billion dollar of [secondary offerrings] next week." – Twitter (yes, it was tongue-in-cheek)
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I remember a foreign exchange trader passing on a great piece of advice from his mentor, "anyone can be bearish, but a professional has to make money while being bearish." George Soros is, to say the least, a professional and likely the best speculative investor alive. He's really, really bearish,
"'A hard landing [for China] is practically unavoidable,' he said … from the World Economic Forum in Davos on Thursday. 'I'm not expecting it, I'm observing it' … The Fed made a mistake in lifting rates when it did, he said, because deflationary expectations had already set in and consumers were less likely to respond to lower borrowing costs with increased spending."
One of the few investors that can be mentioned with Mr. Soros in 'best alive' category is Ray Dalio, founder of Bridgewater Associates. He's also bearish,
"Hedge fund manager Ray Dalio said there are asymmetric risks to the downside for global markets as economies are nearing the end of a long-term debt cycle.
The next move for the Federal Reserve will be toward another quantitative easing, rather than monetary tightening, the founder of Bridgewater Associates said in an interview with CNBC from the World Economic Forum in Davos."
"Soros Says China Hard Landing Will Deepen the Rout in Stocks" – Bloomberg
"Bridgewater's Dalio Says Risks Are Asymmetric on the Downside" – Bloomberg
"The Markets Are Backing Central Bankers Into a Corner" – Bloomberg
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With all the negativity in the air at the self-congratulatory Davos conference, Motley Fool published an important reminder that the bearish case for markets always sounds smarter, but is usually wrong,
"In investing, a bull sounds like a reckless cheerleader, while a bear sounds like a sharp mind who has dug past the headlines – despite the record of the S&P 500 rising 18,000-fold over the last century... Alas, few care about past results when someone else is warning about The Next Great Depression… This goes beyond investing. Harvard professor Teresa Amabile shows that those publishing negative book reviews are seen as smarter and more competent than those giving positive reviews of the same book. 'Only pessimism sounds profound. Optimism sounds superficial,'"
"Why Does Pessimism Sound So Smart?" – Motley Fool
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Tweet of the Day: And then [Leonardo di Caprio] @pmarca And then gets back on his private jet to fly to his next $20 million acting gig. twitter.com/TIME/status/69… " – Twitter
Diversion: "When will self-driving cars be a real thing?" – Tyler Cowen, Marginal Revolution
Scott Barlow