Bubble trouble: Is the Chinese commodity price spike about to be popped?


The appearance of irrational exuberance in China’s commodity markets is becoming more common and the impact on global commodity markets more profound. Speculative money in China (from investment funds and then subsequently followed by retail investors) flows from one asset class to the next just as air moves from one part of a balloon to another when you squeeze it.

I say asset class, but that has a very loose meaning in the sense of what Chinese speculators will pour their money into – one of the latest speculative crazes involves glass futures.

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Why the selloff in precious metals may be premature

Political uncertainty

The results of the EU referendum and the US Presidential Election may have passed but that doesnt mean the political uncertainty has evaporated. There are still many questions left unanswered about the UK’s relationship with the EU and Trump’s economic policies are likley to remain a source of guesswork for many months.

Even more concerning are series of elections coming up in Europe. From the Italian referendum on the country’s constitution in early December to the French Presidential elections in April next year to the Dutch general election a month before. As WSJ highlight the biggest risk could come from a little known referendum law in the Netherlands that requires the government to hold a referendum on any law if 300,000 citizens request it. Dutch Eurosceptic parties now believe they have the means to block any further integration. They have already taken advantage of this law to secure a vote that rejected the EU’s proposed trade and economic pact with Ukraine, which Brussels saw as a vital step in supporting a strategically important neighbour.

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OPEC and the price of oil: Who will hold all the cards in the final game of Top Trumps?

The battle for market share in today’s oil market and the internal battle within OPEC is much like the 1970’s card game Top Trumps in which the aim of the game was to compare the numerical values on your opponents cards and then to try and trump and win their cards. The winner eventually declared when he or she had taken all the other players cards (more on that later).

But first, perhaps it shouldn’t have been a surprise.

Just as the drop in oil prices completely wiped out all the gains since mid-August headlines reported that the cartel-like organisation was embarking on one final diplomatic push to secure a cut in oil production. Just two weeks before the group’s meeting in Vienna, Saudi Arabia, Iraq and Iran are still at odds over how to share production cuts.

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