The Market Buzz of FSA Espionage – March 25, 2022

It usually takes something personal for the macro to actually become micro. To spy was talking to a Munich-based fund salesman this week. He was shocked to learn that Nutella, the popular chocolate-hazelnut spread, increased its price by 7.5%. Forget the oil price hike, it’s getting serious now, he said To spy. The Federal Reserve seems to be waking up and rate hike predictions are now being traded as freely as Central’s expensive lattes. The Bloomberg Global Aggregate Bond Index is down nearly 11% from its all-time high and is now deep in correction territory for the first time since the GFC. The writing isn’t just on the wall, it’s also on your Nutella-laden toast.

just when To spy thought we had seen most varieties of ETFs in the market, covering most asset classes and most strategies, next comes JP Morgan Asset Management to surprise him. The global asset manager added Chinese bond ETFs to its growing range. Investors can choose between long and short duration varieties. They are active, not passive vehicles – which is a bit of a relief To spy because a passive approach from China would seem financially suicidal. ETFs are available in Hong Kong. The marketing blurb included this line: “Bond ETFs can act as a price discovery tool, helping investors see how the value of a basket of bond securities may change in response to market movements.” To spy has never seen “price discovery” itself used as a reason to support a strategy.

Larry Finck, by Blackrock CEO, made headlines this week as he speculated that the war in Ukraine marks the end of the current era of globalization. It is a thought-provoking position and certainly the winds of change seem to be blowing strong in Europe, the United States and Asia. To spy would humbly declare that Covid itself has done a lot to roll back globalization. People who were comfortable living anywhere in the world knowing you could get “home” in about 24 hours had a rude awakening, as countries locked down. The disruption of supply chains by war is deeply inconvenient, but markets tend to hatch a plan. However, the long-term psychological damage suffered by expatriate communities around the world may be more difficult for the market to correct.

The world is a very confusing place right now, and it’s so hard to have any real convictions about the direction of anything. To spy it was recalled by Abrdn who published an article this week on thought leadership in emerging markets. It’s titled: “Can Emerging Stocks Shine? To spy read it and wondered if it was written while the author was actually sitting on a physical fence. The summarizing paragraph reflects the current mindset: “Additionally, in the key market of China, we believe that the prospect of further policy stimulus, less regulatory intervention and a stabilizing real estate market, could drive a strong recovery in the coming quarters. Neverthelessin times of heightened volatility lately, we believe that a selective approach which is sensitive to changing risks, will remain of paramount importance. [emphasis by Spy] Could, however, selective, reactive. No wonder people feel nervous.

If you can’t get enough of Taiwan, Franklin Templeton added a single country ETF for this market this week. The company has listed the ETF in London, Frankfurt and Milan, allowing investors to target the FTSE Taiwan 30/18 Capped Index, which includes the large and mid-cap segments of the Taiwanese market. It won’t come as a shock to Asian investors that most of the exposure is in tech stocks and TSMC is the dominant security.

If you’re tired of WFH, maybe spare a thought for some workers in Shanghai who were told to do just the opposite and instead have to SAO, or Sleep At the Office. Caixin reports that “Some financial institutions in Shanghai are implementing special working arrangements for their staff to mitigate any risk to their businesses, as a major financial district enforces a sweeping lockdown and mass testing amid the latest Covid outbreak”. the Shanghai Stock Exchange itself is one such company.

Old certainties are swept away and new certainties emerge. Little North Macedonia beat Italy in football last night, ensuring the Italians won’t be able to participate in this year’s World Cup tournament. It will be the second World Cup, trotting, that will not feature former winners and current European champions. If football were a trend-following fund, one would assume Italy wouldn’t feature in the 2026 tournament either. The more likely outcome, of course, is that the Azzurri not only feature, but go on and win the thing instead.

To spy couldn’t help but wonder if Singapore was dragging Hong Kong, just a bit. This week, Lion City lifted travel restrictions, allowing Singaporeans and residents to get back on planes and travel without those pesky quarantine restrictions. Traditional destinations such as Bali, Thailand, Australia and Europe are back on the menu. Hong Kong’s recent liberalizations look totally soft by comparison.

Spy quote of the week comes from one of the american oil barons, John Paul Getty: “In times of rapid change, experience could be your worst enemy.” As counterintuitive as it may seem, To spy can’t help but feel like he nailed it.

Spy photographers spotted golden board push the gold straight to Singapore. No doubt there will be many people who will think that a little gold tucked away in the closet might just be the antidote to war and inflation that we need right now.

Until next week…

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