November 29, 2015
Weekly Market Outlook
By Keith Schneider
After a wobbly start to what is generally a light trading week, US equities markets shrugged off the news of a Russian fighter getting shot down by NATO ally Turkey. US Markets closed the week flat to up with the Russell (IWM) closing up over 2% and making up for some lost ground with its relative underperformance this year.
The volatile situation in Syria also seems to have also shot down hopes of an alliance between Russia and the West in fighting ISIS. It was already looking like any alliance between Russia and the US and working together in Syria was on shaky ground as Putin dug in his heels last week ( before this week’s incident) in supporting his ruthless pawn, Syrian President Assad. Obama is clearly against this.
The proxy wars continue as Putin presses his new found gains on the geo-political chessboard but the fallout longer term is the Russian economy. As I write this, Russia announced economic sanctions on trade with Turkey. How long this will impact trade between the two countries is unclear but Turkey depends on Russian natural gas for it energy and Russia needs the cash.
News coming out of China is that the CEO of the biggest Chinese brokerage company has gone missing and it stock has plunged. Since the Chinese stock market bubble burst this summer, hundreds of traders, hedge fund managers and bankers have gone missing and presumed under arrest.
The CEO has gone missing story is not isolated in China and begs the question of how to invest in a region where government intervention takes on a completely new twist and where hedging your portfolio could become a health issue.
The confusing backdrop of a volatile Geo- political situation that has resulted in lower gold and oil prices has Global Macro players confused at best. The renewed plunge in the Chinese market seems to be taking center stage in the financial markets and overshadowing the fallout from worldwide terrorism.
With the strong end of year seasonal coming into play (80% of the time US equities rallies about 2%), it likely that the narrow advance of leading Nasdaq 100 will persist as many hedge funds are lagging their benchmarks and are looking to spruce up their portfolios.
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