Monday, May 15, 2017

You go away from the weekend...and this happens!

So oil is back flirting with $50/bbl...again.  Apparently there was a deal done over the weekend to restrict supply...again, and so the market dutifully went up... again.  The stock market that had been a northingburger (yeah low vol but not much overall activity) is up nearly 1%, on a news lite day.

Straying a bit into politics, I note that Trump has been staying away from Twitter this weekend, I thing, but maybe he's been too busy remember all the names of the countries and people he will be meeting in his upcoming, golf free, foreign trip.  Historically, Canada has been the first port of call of any new president, this year, not so much, and Canadians (starting with the Trudeau) seem perfectly happy that Trump is going elsewhere -- reduce the police budget for 2017!  The absence of enthusiasm for Trump's possible visit to Canada, mirrors that UK's recent "rescheduling" of Trump's long announced visit to the UK, there too the government decided that his visit was not very popular, and moreover the British have an election to run.

Returning to the main topic, its easy to understand the frustration of institutional investors who also don't understand the market and its direction.  The market is happy to give Amazon a 180x valuation but has a hard time with GM at 5x -- Sure GM is going through a difficult period, but to think that one is worth nearly 30x as much is hard to understand.  The largely unprofitable techworld has nose bleed valuation; Snapchat is a perfect example, after the CEO and his friends took a massive bonus the company's reported US$ 2.2 billion in losses -- almost $2 billion of those losses were share allocation of Snapchat's management.    Despite this huge loss, the share price more or less shrugged off this massive 1,333% reduction in "profits", the share price went from $23 to $18 and is back around $21, and will prob ably be around $23 by the end of the week.

Another funny impact from the election of Trump, gun manufacturers are in trouble: the NRA should always support Democrats, because its when Democrats are in power that the gun manufacturers do the best.  Right now, its time to be short American Outdoors brand (owners of Smith and Wesson) and not long, gun sales are way off from the Obama years.

So its Monday and oil prices are up as are stock prices, the VIX is up, but really had only one possible direction, and overall the world is still unchanged, Macron picked a Prime Minister and will select his cabinet shortly, Merkel did well in the recent regional elections, and LePen is gone quiet fo the next four years -- it will be interesting to see if her party does well in the parliamentary election in June...


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