That Was The Week ending Jun22

A Pickup in Vol, Then the Crush

We saw the highly predictable OPEC talks raise oil prices  https://oilprice.com/Energy/Energy-General/OPECs-Agreement-Sends-Oil-Prices-Soaring.html

Not sure why the low volume BP and Shell share prices should move FTSE quite so dramatically, raising all boats. We did,however see volatility bump up at last. I note dividends are quite attractive currently even with BP’s share price again near a 7 yr historical high. Would you buy it with P/E of 29? I’m sure a lot of funds have to own it regardless. Personally I’ve always liked it when it is under a fiver.It’s £5.76. I like electric cars but not at double the price of the equivalent petrol driven model.

Trade,Trump and Tariffs

The spectre of trade wars raises its head again. Your view may differ but you have to know that not everyone in the White House is an idiot. China has long been abusing copyright-as have many other nations on the periphery of the developed world. Creators’ royalties must be paid fairly or there is no incentive for them to create. The music business is a prime example. Composers have been robbed blind and sites like Pirate Bay blatantly abused the internet. Prison may have sharpened their focus, and brought the issue under the legal spotlight. When people expect to get something for nothing, trade freezes up. It’s the velocity of money that makes the world go round. Money sat in a vault does nothing.

The Week Ahead

Globally we have some disconnects and this may start to impact more heavily on the non-US markets(like us!) The chart shows that while incredibly we have seen FTSE almost at 8000 despite the massive headwinds of Brexit, growth is sub par with the US. Despite the tail wind of a cheaperGBPUSD.

Our natural caution and lack of private investment may hamper FTSE’s growth. On a P/E of 13.48 FTSE is cheap, but with many shares at highs, banks looking awful, opinions are divided. Americans can buy stocks on margin too, doubling their purchasing power.

 

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About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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