Misery of Joy?

First things first. Out on the ADVFN bookstore is my new book taking an inside look at investments with my former Bloomberg TV insider hat on. What works and what doesn't and what you need to know which the investment media never tell you. The book is called, 'Investing Unplugged: Secrets from the Inside' and this is what the founder of $2billion hedge fund, Centaurus Capital said: 'As a trader and financial journalist, Alpesh Patel is uniquely qualified to give a behind-the-scene view of financial markets, and their interaction with the media. This book gives a very intelligent view of the art of investing, and debunks a lot of myths. I recommend it to anyone who is serious about investing'.

Now, back at the ranch. So we return to that same question we asked earlier this year. Is it misery or is it joy for the markets? The downside is on the market's mind.

A caricature could be that oil prices will fuel inflation, slow down growth, hit corporate earnings, the Chinese will mean we can't afford to live (they drive up oil on which we rely and push down the price at which we can sell things).

Earnings growth is only fuelled by borrowing to consume, so debt hits levels it can't be repaid. Or earnings come from productivity growth as we work harder in less time and that will hit a barrier. The fed will raise interest rates to hit inflation, but rising rates fuels inflation as prices are raised to meet expenses and more money is borrowed to pay.

All this points to a slow-down in consumption, business investment. What about government spending. Huge US debt means they keep borrowing more money until they have to devalue the dollar or just keep printing notes. Either way: inflation, slower growth and rising rates.

Okay, that is the miserable version. So what is the good one? Earnings keep beating estimates, valuations are sound. Rates are not rising that quickly because the monetary authorities realize growth prospects are in danger. Oil prices have just calibrated to greater demand and we readjust, rather than have a price shock. Even a shock, the system absorbs through lower consumption.

My view? Oil off the scale and the dollar as weak as I ever remember it. We are in one of those rare moments, a bit like the dot-com boom, where trends look to be continuing in unchartered territory for longer. I've been wrong-footed on oil, despite being willing to wait and wait. That's a sign.

So, what would the world look like if things continue like this. More importantly, what would the stock market look like. The market will rise on interest rates being held and on oil dipping. Earnings are not on its mind yet. It will fall if earnings take a hit. Ie the more things impacting each other, the more the market will get scared.

What's interesting is in this environment, money is chasing prices up in the following leading sectors: food producers, personal care and household products, aerospace and defence, beverages, food and beverages.

Also, if you would like a free multi-media CDROM on 'Investing Better', which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh@tradermind.com.

Spreadbetters

Spreadbetters and futures traders often look at hard and soft commodities. Here's my quick take on the action for the week ahead:

• Oil: I'm not calling it!
• Copper: Mixed to higher
• Gold: Mixed to lower
• $/£: Mixed to lower
• Dow: Mixed to lower
• FTSE 100: mixed to lower
• Soyabean Oil: lower