Equity Bulls Should See More Gains

Equities are enjoying strength once again, recovering nearly all of the losses seen since selling off on November 29 when investors panicked that the global economy would not be able to cope with U.S tapering. Traders are seemingly convinced that there is enough sustenance in this recovery to maintain any progress made and not fall back into a recession. The fact that central banks have added more than $8 trillion to the value of global equities this year has gone a long way in shoring up the economy.

For bullish market participants who have managed to stay calm and ride out recent bumps, the likely hood of further gains now seems more realistic. We keep being reminded that traditionally, December is an exceptionally strong month for equities and many opportunistic investors will still be banking on a Santa rally.

Bank of England governor Mark Carney has given all Brits reason to cheer after declaring that the economic recovery is showing positive signs that it can reach self-sustaining momentum. Carney said that he was confident that monetary policy was gaining traction and that a 'liquidity trap' had been avoided, whilst maintaining the view that monetary policy will need to remain exceptionally loose for some time to come. The BoE, amongst other methods, has held interest rates at 0.5 percent since 2009 & bought 375 billion pounds' worth of government debt to get the recovery going.

– Max Cohen

A down morning for the UK markets today
A down morning for the UK markets today after the trade deficit came in wider than forecast.  Initially thought to be 9.3bn the announcement of a 9.7bn deficit seems to have spooked investors somewhat.  With all the recent bullish news about the UK’s recovery with George Osborne declaring the job was half done at his autumn statement, this could act as a stark reminder that we aren’t out of the woods just yet.  Prudential has attempted to drag the FTSE back into the black for the day, after setting new growth forecasts based on its increase in Asian business.

The major story in the US this afternoon will be the signing off of the Volcker rule; the regulators attempt to reign in the ever troublesome financial industry.  The rule is a way of discouraging proprietary trading amongst banks market makers desks meaning market makers will not be rewarded for taking undue risks, whilst protecting essential activity such as market making.  This rule has been contested for three years by the likes of JP Morgan, Goldman Sachs and others and it will be interesting to see if this will actually prove successful.

– Alex Conroy

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