The coming reduced accommodative monetary policy, along with rising geopolitical tensions, is likely to spur volatility in 2015.
The turmoil in high yield bond markets has left more than 18% of junk bond issuers at distressed levels. Investors should avoid the scary junk bond segment.
The fracking revolution and the plunge in prices have rendered the Oil Peak premise false. So alternative fuel companies are being hurt by cheaper oil.
According to estimates by Barclays, the industry could save up to the tune of $10 billion in fuel costs, making airlines lower oil price winners.
A rising dollar has and will continue to put downward pressure on oil prices, causing trouble for the energy sector (XLE).
The US shale boom, increased production elsewhere, as well as OPEC’s decision to maintain output are reasons for the current excess oil supply.
With China in a less oil-intensive stage of development, the demand for oil could stay low for a while.
The drop in oil prices is affecting the global equity markets (QWLD). The S&P 500 (SPY) also declined by 3.5%, the worst weekly decline in two years.
The immediate impact of Greece’s political crisis is evident in the capital markets, which have become jittery since Antonis Samaras called for snap presidential elections.
Greece is the Eurozone’s most indebted country, with a 175.1% debt-to-GDP ratio. In the world, it’s second only to Japan, with a 227.2% debt-to-GDP ratio.
The continuance of the New Democracy party’s ruling status is largely dependent on the snap election results, scheduled to be announced on December 29.
Although the GDP growth in the emerging markets is much more than the average GDP growth of the world (QWLD), emerging markets involve risks.
A rise in geopolitical tensions could cause higher market volatility. Today’s low volatility suggests that the market hasn’t factored in the possibility of geopolitical risks picking up.
The people of Taiwan fear that political unification with China could have grave consequences for their economy.
Taiwan is one of the world’s largest exporters of semiconductors and other high-tech electronic components, and China wants to use this to its advantage.
In the last two years, Chinese companies have raised $43 billion in IPOs in the Hong Kong market, versus just $25 billion on the Chinese stock exchanges.
Hong Kong still relies heavily on China for its income and growth.
The National People’s Congress said that Hong Kong would have the right to vote in 2017 elections only if a nominating committee pre-screens candidates.
So far in 2014, the capitalization of the Chinese stock market has already increased by 33% to $4.48 trillion.
The Shanghai-Hong Kong Stock Connect should benefit foreign investors, Chinese corporations, and the Chinese economy at large.