<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
SIMON BROWN: I\u2019m chatting with Jameel Ahmad, global chief analyst at GTCFX. Jameel, appreciate the time today. There are a couple of things I want to chat about, but I want to start off with perhaps a sort of big picture.<\/p>\n
In terms of market volatility, we\u2019re very much these days a market dominated by headlines and news. Scott Bessent last week [was] going to be buying the 10- and 30-year bonds \u2013 that moves the market. Does sort of economic data or even technical price action still play a role these days in this sort of market?<\/p>\n
JAMEEL AHMAD: In this current market environment it doesn\u2019t play any role at all. In this market this year \u2013 since the unfortunate geopolitical crisis that broke out at the end of February in the Middle East \u2013 this volatility which has been phenomenal across multiple asset classes is completely driven by headlines.<\/p>\n
And I think, as somebody who\u2019s been in this industry now for well over a decade, coming towards two decades since Covid, this is the first year I\u2019ve known where headlines have driven the market.<\/p>\n
We\u2019re not watching fundamental data. Of course, we\u2019re aware. But when you have so much volatility when it comes to geopolitics, any particular economic data release can vary month to month, and not really show a trend, because we don\u2019t know where the world is heading.<\/p>\n
Read:
Risk has not left the market
Five reasons global markets are holding up despite war in Iran
Beyond the war and oil shock<\/p>\n
And it\u2019s the same for technical price action. I\u2019m not going to say that we can completely discount these elements, because they\u2019re very important when it comes to investors watching financial markets.<\/p>\n
But essentially, yes, everything that\u2019s driving the market this year is actually headline \u2013 and it\u2019s one of those elements where sentiments or analysis has played out more than other traditional drivers of volatility and investor behaviour.<\/p>\n
Essentially, I don\u2019t see this trend concluding \u2013 or even coming towards an end \u2013 unless we have a real peace deal when it comes to geopolitics in the Middle East. And I mean a tangible peace deal, not a memorandum of understanding that then gets thrown out of the window and so forth.<\/p>\n
SIMON BROWN: I get your point around it, and I like your point there that a proper peace deal is what ends this. Until then there\u2019s so much weird stuff happening out there. Normally, in an inflationary environment with energy prices and US inflation, we\u2019d have a sense of what the Federal Reserve would do.<\/p>\n
Right now we sit here, and we have no idea what the Federal Reserve will do. We don\u2019t know. There are so many things that we would normally have thought, \u2018that\u2019s going to be the outcome\u2019 \u2013 and it\u2019s just no longer the case across so many different areas.<\/p>\n
JAMEEL AHMAD: It\u2019s not only that we don\u2019t know what they\u2019re going to do; even they themselves don\u2019t know what they\u2019re going to do!<\/p>\n
And if you look at the first opening narrative soundbites that we\u2019ve got from the new Fed chair, I think of the old adage we came to be familiar about with Jerome Powell, the former Fed chair, was that that Federal Reserve was data-dependent.<\/p>\n
And this current Fed chair \u2013 I would say the charge that he\u2019s leading with is that we\u2019re taking things meeting by meeting.<\/p>\n
Read:
Trump takes Iran hard line as Hormuz tensions set new normal
US-Iran peace prospects dim as Trump rejects truce extension
Market sentiment shaped by mixed signals
Warsh raises rethink on Fed\u2019s policy meeting frequency, timing<\/p>\n
That means that even as the world\u2019s leading institution, they\u2019re uncertain about where the world climate is heading, what it means for the economy, what it means for traditional financial markets, investors, and so forth.<\/p>\n
So, it\u2019s not only we who are none the wiser; it\u2019s the same when it comes to the central banks. But that means that uncertainty is continuing and we\u2019re going to continue to see volatility.<\/p>\n
And I really would highlight here the importance of investor education, because the volatility that we\u2019re seeing is phenomenal. Of course, volatility can come with opportunity \u2013 I didn\u2019t mean to rhyme there \u2013 but it also comes with risk.<\/p>\n
SIMON BROWN: It does come with risk, yes. and that then means at the heart of any sort of short-term trading in particular, but even in a long-term portfolio, it\u2019s around managing that risk. And in the investment world and in the trading world it\u2019s about position size, it\u2019s about knowing your leverage and your gearing.<\/p>\n
That is always important, but perhaps more important to your point in this type of volatile and unprecedented market. I hate the word \u2018unprecedented\u2019, but it\u2019s true.<\/p>\n
JAMEEL AHMAD: It is 100% true. It is unprecedented. These are very volatile market conditions.<\/p>\n
To give you an example, we\u2019ve seen swings in the price of gold \u2013 up and down 20% since the breakout of this crisis, the geopolitical crisis.<\/p>\n
And that\u2019s your traditional safe-haven asset. Look at what\u2019s happened with the Dollar Index and the greenback just over the past trading week. We\u2019re seeing volatility here across all asset classes: gold, commodities, oil, US dollar, foreign exchange.<\/p>\n
The only asset class where we\u2019re not seeing such tremendous bouts of volatility at the moment is in Wall Street, which is surprising to some because of the disconnect there from the real economy. But it\u2019s also because investors are completely all-in on AI, and Wall Street corporate earnings season continues to impress.<\/p>\n
I think once we see more blue-chip organisations and organisations overall put more investments into AI \u2013 I\u2019m still a bit sceptical about it, but nonetheless automation is seen as improving profitability \u2013 the shareholder value is there.<\/p>\n
Read:
Gold steadies after four-day gain as traders eye treasury moves
Gold, US politics and oil shocks: Decoding the gold market\u2019s next moves
In search of deep value on the JSE
AI can change the world and still be a bad investment
Meta\u2019s Zuckerberg defends AI bets to sceptical investors<\/p>\n
So I think that in some ways, this economic shift that we\u2019re undergoing now when it comes to evolution in tech is kind of playing out in a way that it\u2019s cushioned in a way from very uncertain geopolitics, and it might even put more investor attention into AI. That\u2019s not necessarily a good thing, but we are seeing uncertainty continuing nonetheless on a global level.<\/p>\n
SIMON BROWN: I take your point, and I take your point around the AI in particular. Again, great if you\u2019re the shareholder, but perhaps we\u2019re seeing some crazy stuff happening there. I\u2019m thinking particularly what we\u2019ve seen in memory chips in the South Korean market.<\/p>\n
But we\u2019ll leave it there. Jameel Ahmad, chief global analyst at GTCFX, I appreciate the time.<\/p>\n
#economic #data #matter #current #market<\/p>\n","protected":false},"excerpt":{"rendered":"
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