Welcome to the jam-packed February 2019 edition of the Ghost in the Machine! This edition looks at a number of overarching themes: including the Q4 debacle and subsequent January rebound in many asset classes, Brexit, the 2019 outlook for the US and China and the sugar markets, and revisits IMO 2020 from the aspect of whether ‘scrubbers’ really are compliant.
The ostensible brutality of the sell-off in most ‘risk’ asset classes during Q4 2018 caught many by surprise, even if the subsequent recovery in January begged the question: ‘what was all the fuss about?’ For all that the narrative blamed an overly zealous Fed above all given rising concerns about the global economic outlook, outright positioning imbalances also played their part. The question then is whether the January rally is prescient in economic and policy terms, or rather too exuberant. Much may depend on the performance of the US and Chinese economies, with the outlook for both compared and contrasted. The US government shutdown leaves policy makers and markets scrabbling for clues, amid the data drought, perhaps most acutely evident in subdued volumes in grains futures.
Hindsight suggests that a tough 2018 for Sugar markets was in many respects predictable, but has the sell-off left the market more balanced? What lessons are there for physical agricultural and energy markets from physical trade in industrial metals?
Despite the almost immediate proximity of the Article 50 closing date for Brexit, it remains unclear whether a withdrawal deal will be ratified. We look at what trade under WTO rules implies, and take a closer look at the very substantial UK agri-food sector. Last but certainly not least, Eddie Tofpik recounts his experiences as a leading technical analyst, and one seasoned trader asks some searching questions about the ‘fat finger’ syndrome in FX.