19 Jan 2022

MarketWatch

Finally they couldn’t ramp it at the close, Nasdaq 100 lead it on the way down. I noted with interest the VIX got a bit a fright with an 18% spike.

Money Complex

We have arguably the most powerful man in the world on his knees begging for the western world not to increase rates. Why, 2 reasons come to mind. If you haven’t realised I am talking about Xi Jinping.

  1. His economy is under immense strain. That ego based call for zero Covid going into the winter Olympics is hurting.
  2. If interest rates are going up around the world and going down in China then you will see large capital outflows looking for yield. With all the property debt looming, China needs to hang onto all the capital it can get its hands on.

10yr US bond yields looking like 2%+ next. I think this will place a heavy brake on the economy.

The next chart is amazing for all the wrong reasons. It shows how Australian wealth has grown relative to disposable income. Essentially this means if you were lucky enough to have assets over the last 10yrs you have seen massive growth but not nearly as much growth in income. This does not bode well for socio economic stability. If I was Scott Morrison the Prime Minister I would be very worried with the upcoming elections. As the stimulus wears off and the majority of people come to realise the extent of their drop in standard of living they are likely to want blood.

If you are thinking of borrowing some money in the Ukraine you might want to think again. Sovereign spreads have shot up, without any Russian shots fired.

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