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A time to reflect

Published Monday, September 1st, 2014

Americans are enjoying a long weekend knowing that Russia has invaded Ukraine for a second time, that the UN considers the Syrian crisis to be “the biggest humanitarian emergency of our era “and that ISIS is a bigger threat than al Qaeda. Over the weekend, President Putin upped the stakes further, calling for talks on statehood for southern and eastern Ukraine. The world is a less safe place than it was when they last celebrated Labour Day.

They also know that the eurozone is slipping back into recession, that Chinese growth is stumbling and Japan could crash land again at any time. The HSBC/Markit final Chinese PMI for August has come in at only 50.2 and the official PMI at 51.1, down from 51.7 in July. Brazil, despite the World Cup and the Olympics to come, has reported a second consecutive quarter of contraction and therefore slipped into recession as its Presidential election hots up.

Despite all of these headwinds the S&P broke through and closed above 2000 for the first time ever last week. US economic indicators are encouraging, company earnings are beating expectations and the Federal Reserve is committed to a benign interest rate environment. Against this background events elsewhere in the world, no matter the tail risks that they pose, are not yet of sufficient importance to persuade investors to cash in their stock market chips.

to read the rest of the report, please click here 

Posted by David Hufton