Ghost In The Machine
The Ghost in the Machine Q1 2024
March 19, 2024
Welcome to the April 2019 edition of the Ghost In The Machine, which unsurprisingly has a strong focus on the remarkable Q1 performance of financial markets.
It also looks across a broad spectrum of issues in commodity and energy markets, with a focus on the grains markets in Russia and Ukraine, and It would be easy to ascribe the Q1 rally in bonds and equities to the ostensible Fed and ECB u-turns, but a much closer look at some underlying themes is needed. Thus we consider how stock indices have largely ignored a weak quarter for quarterly earnings and a stream of weak economic news around the globe; consider how QE has moved from being termed unconventional in monetary policy to ostensibly being a key instrument now, and for the foreseeable future. Q1 also and increasing level of G3 central bank debate and dissent about the efficacy and longer term impact of QE, ZIRP and NIRP on asset prices.
We also consider how core market liquidity continues to deteriorate, as well as what impact the run of holidays in the middle of Q2 may have on markets.
Russian Wheat output and supply has been a key element in how wheat prices have performed over the past few years, and will likely be critical in the coming year. Agriculture is the mainstay of the Ukrainian economy, but only latterly are hedging strategies deployed elsewhere getting traction, and offering business opportunities. In broader terms options strategies which are frequently used in metals and energy trading may have applications in the agricultural sector. We also look at the impact of US resuming energy exports on the world’s oil markets, consider how the US/China tussle over Huawei impacts commodity markets, and ponder why some fund managers remain rather too sceptical about technical analysis as a trading tool.
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