Tim Price, Director at PFP Wealth Management joined Tip TV to discuss his hot areas of interest today.
Fed to 180 and launch QE4?
He started by looking at how the phrase ‘black swan’ has become so overused as to loose its initial meaning, and presented a graph by SocGen as evidence. Price notes that political and financial risks now outnumber real economic risks. However, looking at the known knowns of potential risks and assumptions, he commented that the real black swan would be if the Federal Reserve were to step back from rate rises later this year and launch QE4.
The real message behind the buy back
Price continued to have a look at the number of share buy backs taking place more recently, and notices that the number is declining. He believes that the share buy back has become a bad indicator and can be seen as a sign of weakness.
Noting that some companies have official policy to buy back at specified price levels, he underlines that he is focusing more on the company executives who can’t think of more efficient ways of using capital. He feels that the buy back is now a sign of desperation by senior management to inflate stock prices.
Adam and Eve outlook worrying for commodities
The final area of focus for Price today is in the long term trend for commodities. Looking at the Bloomberg commodity index, Price notes that levels are now at long term lows dating back to 2003. Zak Mir, technical analyst at Share Prophet notes that an adam and eve formation is in place and it is a very negative outlook ahead. Price finishes by adding that especially in commodities, anything and everything can and will happen.