hello and welcome back to the notes back
in New York today where it's been
day now perhaps the biggest headlines
surrounded the US stock market and oil
we saw another day of sharp gyrations in
the oil price that spooked the stock
market the S&P 500 is now down for the
year now it's popular to blame almost
all of what's happened to the stock
market on the energy sector and there is
some reason for that but as this chart
shows that can be very much overdone the
green line there is the sp500 energy
sector obviously had a horrible time of
it this year investors really hadn't
expected oil to oil the oil price to say
where it is but if you then look at that
red line there which is the S&P 500
excluding the energy companies you can
see that yes it is just about positive
for the year but it's very much a
thoroughly unexcited year that's been
had by the rest of the US stock market
many of which many of the stocks in that
index excluding energy would of course
benefit significantly from cheaper oil
so you still plainly have to contend
that the fact that the US stock market
is not in the greatest of health even if
you discount the effect of oil now
elsewhere we saw the dollar weakened
quite considerably against the euro that
was without any big move in the bond
markets there without any shift in
expectations for the Fed for next week
still seen as a racing certainty that
the Fed will be raising rates meanwhile
you also saw the dollar strengthened
against emerging market currencies
spectacularly so in the case of the
south african rand emerging market
currencies in general are now beginning
to fall quite close to the levels they
had in September which prompted the feds
to decide not to go through with a rate
rise then perhaps most importantly for
the long term however I'd like to show
you this chart coming up which is of the
Chinese currency obviously the single
scariest moment as far as many in world
markets with concerns of 2015 was when
the Chinese allowed their currency to
devalue
very sharply by its own standards in the
middle of August the currency was
steadily managed stronger for a couple
of months after that you can see that in
the last few days it has been allowed to
fall once more it is now significantly
weaker than it was on the day of all
that excitement back in August it makes
eminent sense for the Chinese to allow
their currency to devalue if they want
to become more of a market led currency
become an active part of the STRs run by
the IMF plane it makes more sense for
them to follow the market which would
imply a weaker Chinese currency
obviously a weaker Chinese currency
would have very intriguing effects for
the rest of the world I suspect this is
one to watch