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Trading results make me nervous

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Market Rider

Trading results make me nervous

/ 05:27 AM October 24, 2017

Equity markets within the region and across the globe had a good trading run last week. Most of them even put in their finest performances.

The Nikkei or Japan’s benchmark index, for instance, was reported to have risen “for the 14th straight session on Friday to post its longest winning streak in over 50 years.”

Wall Street also capped the week with strong performances as both its S&P 500 and Dow Jones Industrial Average (DJIA) indexes were on a “six-week winning streak.”

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Last Tuesday, the DJIA breached the all-time high 23,000 psychological mark. The momentum was maintained up to the end of the week.

On Friday, however, trading was already mixed. In Europe, “Germany’s DAX and the FTSE 100 of British shares finished flat, while the CAC 40 in France added 0.1 percent.”

“In Asia, Japan’s benchmark Nikkei 225 finished less than 0.1 percent higher; South Korea added 0.7 percent, while Hong Kong’s HangSeng index rebounded 1.2 percent after a big sell-off the day before,” a report added.

Here at home, the Philippine Stock Exchange index (PSEi) also did well. Like the DJIA on Tuesday, the PSEi was able to hit an all-time record session high of 8,586.73.

Like the other major markets, the local bourse did not also escape serious sell-offs. The rebounds that followed were also similarly weak. If they were ever positive, they were barely enough to put share prices back on positive territory.

By Friday, the obvious was already happening: Many of the markets were either about to or were already losing steam. In our case, by the time it closed at 8,420.95, the market has already suffered a weekly loss of 26.99 points or 0.32 percent.

Doomsday Clock

Trying to look for sensible explanations, the Doomsday Clock is one indicator that could possibly provide some plausible answers as to why the market was behaving that way.

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I have mentioned this Doomsday Clock before. Understanding what it is doing now should be interesting especially with the barbs traded between North Korean leader Kim Jong-un and US President Donald Trump. The threats they are throwing at each other are unsettling, especially for the market.

The Doomsday Clock is a representation on the likelihood of a global nuclear war. It was conceived and maintained since 1947.

The members of the Science and Security Board (SASB), comprised of a select group of globally recognized leaders, are tasked “to set the hands of the Doomsday Clock.” They specifically “focus on nuclear risk, climate change and emerging technologies.”

The closer the minute hand is to 12:00, the closer the world is to a catastrophe.

Bottom line spin

In 1991, the United States and Russia made “deep cuts” in the number of strategic nuclear weapons they have deployed. It was the end of the Cold War. Thus, the Doomsday Clock was set back to 17 minutes to midnight.

Nineteen years later, or in 2010, the clock was adjusted to six minutes to midnight. This was because of the dangers posed by climate change and concern that little or only pockets of progress are felt in the field to combat the problem. Thereafter, “developing and industrialized countries agreed to take responsibility for carbon emissions and to limit global temperature rise to 2 degrees Celsius.”

Five years later, the hand of the clock was drastically moved to an alarming three minutes to midnight. SASB’s bulletin took issue on the “extraordinary and undeniable threats made to the continued existence of humanity” because of “unchecked climate change, the global program on nuclear weapons modernizations and the outsized collection of nuclear weapons arsenals.”

This year, the hand of the clock was moved to 2.5 minutes to midnight, unless “actions must be taken very soon,” the SASB warned. The geopolitical flashpoints unfolding around the globe today have apparently heightened the risk of a nuclear war.

When an Armageddon expert was asked if this could be because of the Kim Jong-un-Donald Trump dare, he said: “I’m not concerned. President Trump is unpredictable, unexpected, but I don’t think he’s insane.”

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