In a recent note, ConvergEx’s chief market strategist Nick Colas decided to play a fund game; a sort of word association inspired by a BBC radio program on the 100 most significant pieces in the British Museum.
Colas came up with several random objects that together paint a picture of our current economic and market situation. He stopped by Yahoo Finance to play a sort of word association version of his “game.”
A barrel of oil
“A barrel of oil is basically a 42 gallon container of oil. What it tells us about the capital markets is really important. A simple barrel shows us how strong the global economy is. We have seen oil prices really collapse over the past couple of months and that has led to worries, not only about slower growth, but deflation in the system. So from a humble barrel we get a whole economic story.”
An Apple
This is “one the most powerful symbols of unemployment in the U.S. Think back to the depression. Right here in Times Square in midtown Manhattan we had people selling Apples to make ends meet because they were unemployed. An Apple is a very powerful signal about how much unemployment shapes our monetary policy.”
A Berlin radiator
This “is probably the most important symbol for the next couple of months because Russia provides most of Germany’s energy: gas, coal, [and] oil. If Russia chooses, they can cut off a lot of those supplies to Germany. It will be very interesting to see how Germany plays out their role in the Ukraine crisis negotiating with Russia when that energy overhang exists.”
A German bank note from the 1920’s
"If you go back to the 1920s German hyperinflation was one of the most important historical artifacts of the post WWI era and it shaped a lot of consciousness in Germany about inflation and the importance of keeping inflation under control. That's why you see Germany still to this day, 100 years later, so reluctant to engage in QE cause they remember hyperinflation in the 20s.”
A Rolex
“Very simple income inequality a $4K Rolex tells the same time s a $40 Timex why do you buy it? Because you can…”
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