/ 11 August 2010

The problem with public holidays

The problem with public holidays is that when you have open positions, you miss the whole move.

Take our holiday on Monday, when the European markets all hit 18-month highs and then you walk in on Tuesday and all the markets are down, so we open flat. All very frustrating.

We could’ve shorted at some nice levels. Anyway, the existing shorts that we have been building at the start of last week are beginning to pay off as the realities of the slowing economy start to hit home.

I certainly don’t feel that we are going to have the infamous “double dip”, but there is no doubt the world is starting to slow.

Everywhere from China to America, the economic data is starting to come in softer. On Tuesday morning, China’s trade surplus reached an 18-month high, as exports rose to a record and import gains slowed, adding further pressure on officials to allow faster appreciation of the Yuan and signalling a diminished contribution to global growth.

Then in the United Kingdom, the housing-market gauge showed the first decline in prices for a year in July as demand for homes fell.

At home, we aren’t doing ourselves any favours either by having nationwide strikes, and the pay demands, if they go through, will place pressure on inflation which will throw the case for lower local interest rates out the window.

That will keep the rand stronger as the carry trade continues to play out and foreign inflows continue. It looks like a good chance to continue to add to some short as the market begins to look tired.

How many times has the All Share failed to hold that 28500 level? I’m losing count.

All in all, expect a quiet August as European hedge fund managers head of to the Mediterranean and New Yorkers head off to the Hamptons and the market grinds lower. I don’t see any reason to expect that to change, all though the markets still tend to surprise …

  • Nick Kunze is head of dealing at BJM Private Client Services
  • Traders’ jargon:
    “Long” is when you have bought a share with the expectation of the share price going up.

    “Short” is when you have sold a share you have borrowed with the expectation that the share price will fall and you will buy it at a cheaper price to settle the deal.

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