Investors’ focus is swinging from one area of the market to another and there’s a sudden expectation to become an expert on one very niche macro factor or statistic.
US non-farm payrolls are back in focus, as everyone tries to get a steer on whether the US economy is flat lining or growing strongly. This, of course, is key to Federal Reserve chair Janet Yellen’s next utterance. No-one seems to care that these figures are often significantly revised later.
The excitement around these numbers can often reach fever pitch, especially on our desk where we have a monthly sweepstake. Yes, I have never guessed correctly, so there is some bitterness here as well.
The China Services PMI came in at 51.2, falling sharply when the wonks had expected it to rise. However, this appears to have been largely ignored by investors. Over the past couple of years any evidence of a potential ‘soft landing’ would have caused a furore in global markets. But now it’s out of fashion.
Remember Greece? We only focus on the embattled Mediterranean nation about once every two years. And when we do, its importance drives movement in asset prices that dwarf its miniscule GDP and trade clout. The oil price was massively important a few weeks ago and everyone’s view was being canvassed. A colleague was looking at the Baltic Dry Index last week. Eight years ago, everyone was watching this red-hot metric, as it was seen as a key leading indicator. I haven’t heard it being mentioned for years, after it fell from favour.
Information is pivotal to what we do, and these measures, along with all the others, are crucial to determine the state of the world and potential investments. However, I think investors are increasingly being railroaded into looking at the same things with the same fears and the same eyes.
More than ever, a contrarian standpoint is needed. Not just for the sake of being different, but to make sure clients aren’t caught in the investment equivalent of a traffic jam near Blackpool.
