Features

The charts that matter: the war drums are beating – but how loudly?

The news has been dominated by wars and rumours of wars this week. John Stepek looks at the charts that matter to investors to see what effect that has had on the markets.

Welcome to your weekend edition, where we take a look through the charts that matter and catch up on anything else that we missed during the week.

If you missed any of this week's Money Mornings, here are the links you need.

Monday: The biggest threat to markets from a trade war

Tuesday: Why you need to act before markets agree on the inflation story

Wednesday: Platinum is cheap but will it ever get expensive again?

Thursday: How will the stand-off in the UK property market be resolved?

Friday: The UK's retail apocalypse is overhyped

Podcasts will return from our Easter break next week.

The news has been dominated by wars and rumours of wars this week. One minute Donald Trump is getting ready to bomb Syria imminently, and the next he's saying he might not do it at all. It's made for a volatile week in markets, with some big moves, although overall the S&P 500 and Dow Jones are in fact modestly higher.

Gold shot higher this week, and then gave back its gains as fears over war surged, then receded in line with Trump's Twitter activity. As my colleague Dominic noted a week or so ago, gold's "big problem" is this $1,360 an ounce level. It bounced above that level this week, but hasn't convincingly breached it as yet.

100812-MM-1

(Gold: three months)

The US dollar index a measure of the strength of the dollar against a basket of the currencies of its major trading partners was actually little changed this week, and has been trading in a pretty tight range for most of the last three months.

100812-MM-2

(DXY: three months)

The yield on the ten-year US Treasury bond bounced back somewhat as safe haven demand receded.

100812-MM-3

(Ten-year US Treasury: three months)

The yield on the ten-year German Bund the borrowing cost of Germany's government, which is Europe's "risk-free" rate also seems to have found its comfort zone for the time being. It's bouncing along the 0.5% mark.

100812-MM-4

(Ten-year bund yield: three months)

Copper has had a tougher week, again as the market worries whether or not global growth is really in good shape or not, and also amid concerns that the Federal Reserve may be quite serious about raising interest rates.

100812-MM-5

(Copper: three months)

Bitcoin was suffering this week, and then had a sudden surge on Thursday, making it all the way back up to above $8,000 a coin from near-enough $6,500. Some argue that selling pressure has eased off (because with the deadline for paying US tax returns looming, any selling to pay taxes has been done). Others argue that it's a side effect of capital flight from Russia amid sanctions. Who knows? Either way, it's interesting to watch.

100812-MM-6

(Bitcoin: ten days)

Turning to US employment, the four-week moving average of weekly US jobless claims remained low at 230,000 this week, while weekly claims came in at 223,000.

According to David Rosenberg of Gluskin Sheff, when US jobless claims hit a "cyclical trough" (as measured by the four-week moving average), a stockmarket peak is not far behind (on average 14 weeks), and a recession follows about a year later.

As you can see, we're only just above the most recent trough. If Rosenberg is right (and obviously, there are a limited number of instances to go by historically, so this is "finger in the air" stuff) and this run continues, then it looks as though we're likely to keep on pushing that recession out further and further.

100812-MM-7

(Four-week moving average of US jobless claims: since start of 2016)

The oil price (as measured by Brent crude, the international/European benchmark) has surged in the last week, primarily as a result of the banging of war drums.

100812-MM-8

(Brent crude oil: three months)

Internet giant Amazon had a better week as Trump's attention was occupied by Syria.

100812-MM-9

(Amazon: three months)

And incredibly, Tesla has put in another rally. That's partly down to Elon Musk (via Twitter) easing fears that the company would have to raise more funds imminently. It's hard to keep the Tesla true believers down. I'm still sceptical but it's not a stock I'd short.

100812-MM-10

(Tesla: three months)

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Aug 2020
The road to driverless cars
Sponsored

The road to driverless cars

The electrification of the automotive industry is gathering pace, but does the real future lie in driverless vehicles?
12 Aug 2020

Most Popular

No, the UK did not “plunge” into recession yesterday
UK Economy

No, the UK did not “plunge” into recession yesterday

That the economy took a massive hit due to Covid-19 should be news to no one, says John Stepek. The real question is what happens now.
13 Aug 2020
Inflation spiked in the US last month – is this the shape of things to come?
US Economy

Inflation spiked in the US last month – is this the shape of things to come?

Prices in the US rose much more dramatically than expected in July. Can we expect more of the same, and what does that mean for your money? John Stepe…
14 Aug 2020
The MoneyWeek Podcast: house prices, staycations, and the death of cash
House prices

The MoneyWeek Podcast: house prices, staycations, and the death of cash

John and Merryn talk about the rise in UK house prices and the fact that everybody is holidaying in the UK, plus gold's new highs, the death of cash, …
12 Aug 2020