Some thoughts on this particularly dark Monday morning.....

Monday 16th November 2015

Some thoughts on this particularly dark Monday morning.....

 Ref :- General

Most attention this morning centred around the horrific events in Paris on Friday night, and quite right too. In light of the loss of life some might argue that even to contemplate what effects such barbarism might have on markets is inappropriate; but if it's true that the best way to fight terrorism is to continue to lead ones' lives as normally as possible (and we believe it is), then we hope that a quick look around is permissible.

In fact, it is reassuring to note that there is little or no panic. Unsurprisingly, European stocks were marked lower first thing , as was the Euro, but already these losses have been largely recovered and Paris' CAC40 is trading up on the day as we write. Sovereign bonds have benefitted marginally from their "safe-haven" status, as has gold ..... which will be of some comfort to gold longs but may have more to do with short-covering after a particularly dismal performance of late rather than any fundamental reassessment of whether the yellow metal's has regained any of its allure as a safe-haven.

On foreign exchanges, the principle beneficiaries have been the US Dollar, the Swiss Franc and the Japanese Yen. These currencies are traditional refuges in times of crisis but it's interesting that the Jap Yen managed to post gains after announcing a preliminary Q3 GDP number of -0.8% year-on-year. This was considerably lower than expectations and "theoretically" puts Japan into recession (official definition : two consecutive quarters of falling GDP). Inevitably, it increases the chances of further monetary easing and must raise further questions over the chances of success for "Abenomics" -- PM Abe's 3-pronged plan to put the economy back on track. One can only assume that the Yen's ability to shrug off such negative thoughts emanates from the view that this morning's data was skewed by a large draw-down in inventories, which presages a bounce in the next quarter's numbers. Let's hope so....

So all in all, the markets are taking Friday's events as calmly as could have been expected ..... and on all kinds of levels, that must be considered a good thing.

** NOTE :  With Inflation at the centre of everything , look out for US and UK data tomorrow :

 

US Oct Consumer Price Index (y-on-y) due 0.1%

US Oct Core Consumer Price Index, ex food and energy (y-on-y), due 1.9%

 UK Oct Consumer Price Index (y-on-y), due -0.1%

UK Oct Core consumer Price Index, ex food and energy (y-on-y) , due 1.0%