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Causal Capital ~ The Knowledge Capital Specialists

Oilmageddon ...

"Oilmageddon" seems to be the word on everyones mouth in the markets today, a wonderful term coined by Citigroup analyst Jonathan Stubbs. Between his analysis of where oil prices sit when viewed over a twelve month horizon and dark outlooks from the pages of George Soros in respects to China [LINK], it's hard to be bullish about too much in 2016.


"It appears that four inter-linked phenomena are driving a negative feedback loop in the global economy and across financial markets"


Jonathan Stubbs | Citigroup


[1] A US dollar that remains strong

[2] Lower commodities prices

[3] Weaker trade flows

[4] Declining growth in emerging markets


You can read more about it here on Bloomberg [LINK]


Historically speaking, Stubbs is on the mark. Oil has tumbled about 70% over the last year or so while the US dollar has strengthened a solid 18% to 22% across a basket of currencies.


For those curious about equity markets, Zero Hedge sees the cyclical bull market bell has just rang which is entirely feasible give current valuations after such a huge run up to the current position.


Zero Hedge Breaching a Key Technical Indicator | [LINK]

If all of this isn't enough, 2016 the year of the "Epocalypse" site [LINK] seems as cross-referentially factual as much as it is doom and gloom.


All the signs are there. Even if we look at potentially positive news in the markets such as some of the biggest mergers of all time from Dow and Dupont or Pfizer and Allergen; key reasons being sighted for these corporate actions appears to be cost cutting and tax efficiencies NOT companion revenue growth, market positioning or expansion.


What is going to save us? ... Banking is anaemic over regulatory burdens from its own past but recent transgressions and the property sector in much of the developed world is poissed across a 'bubble-like' dilemma and potentially illiquid. From Australia [LINK] to the UK [LINK], the news seems consistently concerning.


A couple of questions come to mind. Firstly, what is going to be the trigger for a market rout or has it already begun and secondly, where is the opportunity in all of this?


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