Alastair Hunter – Lead Analyst, Investment Manager | Franklin Local Asset Management
The US Election and Global Political Landscape | Franklin Templeton
Niall Ferguson: The “age of debt” has come to an end
Apologies for the sub-titles but this Hard Talk interview has an important message.
Australia: ASX 200 weak but support for banks
The ASX 200 penetrated its lower trend channel, indicating that the up-trend is slowing. This week’s long tail indicates short-term buying pressure but not necessarily a reversal. Breach of primary support at 5100 would warn of another decline (4700). Bearish divergence on Twiggs Money Flow indicates long-term selling pressure.
The ASX 300 Banks Index is consolidating between 7200 and 8000. Declining Twiggs Money Flow peaks warn of long-term selling pressure but this week’s blue candle suggests short-term support. A test of primary support at 7200 remains more likely but a failed swing that recovers to 8000 would be a bullish sign. Breakout above 8000 (still unlikely) would signal a primary up-trend.
India: SENSEX trend channel
India’s Sensex respected support at the lower channel of a linear regression channel from March 2016. Short candlesticks for the last two weeks indicate some hesitancy, but breakout above 29000 is likely and would indicate a test of long-term resistance at 30000. Rising Twiggs Money Flow, with troughs above zero, indicates long-term buying pressure.
China: Hang Seng retreats
Hong Kong’s Hang Seng Index (monthly) broke resistance at 24000 after a strong up-trend, but this week retreated below the new support level. Expect a test of the rising trendline around 22000. A Twiggs Money Flow trough above zero would confirm long-term buying pressure.
The Shanghai Composite Index (monthly chart) continues to range below resistance at 3100.
UK: Footsie buying pressure
Footsie retracement continues to look promising. Twiggs Money Flow high above zero suggests long-term buying pressure. Respect of support at 6400/6500 would establish a solid base for another attempt at 7000/7100*.
* Target calculation: 6500 + ( 6500 – 5900 ) = 7100
S&P500 consolidation suggests another downward leg
The S&P 500 is consolidating between 2120 and 2150 after a rounding top. Short-term consolidation (I would hesitate to call this a pennant) suggests another downward leg is likely, with a target of 2080. Respect of primary support at 2000 remains likely. Recovery above 2200 would complete a bullish rounded top (an inverted “U”) or a stronger inverted scallop pattern (resembling an inverted fishing hook) depending on the length of the right-hand leg. Twiggs Money Flow high above zero continues to indicate long-term buying pressure. Breach of primary support at 2000 is unlikely but would warn of another test of 1800.
* Target calculation: 2200 + ( 2200 – 2000 ) = 2400
Conversation with Hillary Rodham Clinton (2013) | Chatham House
This is not an endorsement. I don’t agree with a lot of her policies. But Hillary Clinton is likely to be the next president of the United States and this 2013 conversation gives an insight into what makes her tick.
Niall Ferguson: The West and the Rest – The Changing Global Balance of Power
Niall Ferguson is the Laurence A. Tisch Professor of History at Harvard University.
I would love to see Ferguson re-visit this 2011 talk every five years. One certainty about the future: it isn’t what we think it’s going to be. China’s economic rise seems to be slowing far more rapidly than was expected. Foreign reserves have declined by $800 billion in the last two years (from a peak of $4 trillion) through PBOC efforts to prevent the collapse of the Yuan in the face of rising interest rates from the Fed. China’s growth-through-infrastructure-investment model seems to have run its course and is now facing diminishing returns. Transition to a consumer society is not going to be easy. And China’s property bubble has created an extremely fragile banking system with massive bad debts.
On the plus side, Ferguson seems to have been right about rising Chinese nationalism — to deflect the population’s attention from enormous inequality in the distribution of wealth — and the CCP’s ability to maintain tight political control. Let’s hope that he is also right about China’s inability to suppress personal and political freedom in the long-term if it wants to maintain stable growth.