-Human nature does not change."
In light blue: S&P 500 buybacks
In purple: NYSE Margin debt
In green: inverse US labor participation rate.
Whereas oil demand in the US is independent from oil prices and completely inelastic, it is nevertheless a very important weight in GDP (imports) for many countries. Monetary inflows and outflows are highly dependent on oil prices. Oil producing countries can either end up a crisis or trigger one.
Overall the shipping industry continues to be plagued by overcapacity as the overbuilt legacy from the credit bing days continues to be dealt with - graph source Bloomberg:
When it comes to shipping and the conflicting message sent across, it might be just a case of a market of a market over extending its gains based on future expectations which have been distorted by ZIRP policies, hence the over optimistic reaction since August in that space. Last time the gap between the order book for bulk vessels and the US recession was one year. Once again, we are left wandering if the very large gap between the number of bulk vessels on order and the bulk vessel orderbook as a percentage of capacity is not a reflection of yet another "Cantillon effect" transmitted by ZIRP to the shipping industry - graph source Bloomberg:
So from a valuation point of view and looking at the recent evolution in shipping it appears to us very difficult to point to a strong rebound in the near terms for Emerging Markets equities, although valuations for some do appear clearly enticing.
"Shallow men believe in luck. Strong men believe in cause and effect." - Ralph Waldo Emerson, American poet.