Weekly Market Outlook January 18, 2015
Weekly Market Outlook:
Pfäffikon SZ, Switzerland – Last week, the Swiss National Bank (SNB) drew all the attention by releasing the pegging of the Swiss franc to the euro, and reducing the negative interest rates – 0.75%. This resulted in a shock wave in the financial world and caused for some forex trading brokers acute solvency problems. The stock markets were highly volatile and the Swiss stock exchange in particular, declined heavily. Needless to say, we have responded directly to the changed situation which has generated a number of interesting investment opportunities, in our opinion. Last week, the S&P 500 lost 1.24% and has up to now the worst start of a year since 2009.
A cheaper currency is a blessing for Europe and will improve the competitiveness of the European industry. However, a continuing decline of the euro will cause increased political instability. In principle, low oil prices are positive, as these stimulate the purchasing power. In the U.S., they slowly feel the downside of the relatively strong dollar. Some companies have already published calculations about what the negative impact in 2015 will be by the ever-improving dollar. A strong currency reflects the health of an economy. Perhaps the U.S. economy is still not as strong as many investors now think, which is, therefore, a point of attention.
The SNB has given us the answer to the expected actions of the ECB next week. Mario Draghi — the president of the ECB — will probably announce a large-scale bond purchase program next Thursday. In our view, Draghi is determined to execute his plans. In addition, the earnings season is now well underway. Monday, the U.S. markets are closed for Martin Luther King day.
This material is communicated on January 18, 2015 by Thirteen Asset Management AG, Rietbrunnen 20, 8808 Pfäffikon SZ, Switzerland. This material is for information purposes only and is not intended to be a solicitation or invitation to invest. Any organizations or products described in this material are mentioned for reference purposes only. This material is intended only for investment professionals and professional clients and must not be relied upon by any other person. It is proprietary information of Thirteen Asset Management AG and may not be reproduced or otherwise disseminated in whole or in part without prior consent from Thirteen Asset Management AG. Alternative investments can involve significant risks and the value of an investment may go down as well as up. There is no guarantee of trading performance and past or projected performance is not a reliable indicator of future performance. We recommend to consult your bank, investment and/of tax adviser.
