Month: April 2020

dead cat bounce

……markets are likely to remain rocky, argues Ms Hooper. “We’re certainly getting closer to the bottom, but I don’t think we’re at it yet,” she said. “This is probably a dead cat bounce.”

Financial Times March 13 2020

Let’s face it, this expression does nothing to help convince you that traders are charming people you’d like to introduce to your parents! Be that as it may, the expression has come up a fair amount recently so needs some elucidating (=explaining).

Basically, a dead cat bounce is a small, short-lived recovery or rebound in a downward trend of a market, otherwise known as a bear market.

Simple as that. At least, simple to say, but not simple to spot, because in the heat of the moment, how do you know whether it’s a temporary rebound or that the market has bottomed out?

That’s the million dollar question and obviously if they could be clearly identified at the time, then I would be a multi-millionaire by now. They are in fact identified with hindsight, that is looking backwards.

greenwashing

This word is what is known as a portemanteau – which means that the word was created by joining two words and combining their meanings. Think of what maybe you eat late on a Sunday morning – brunch. This is a combination of breakfast and lunch. Or how about smog , which resulted from smoke and fog?

So, greenwashing clearly comes from green and washing doesn’t it? Well, not quite, as it actually is a combination of green relating to environmental issues and whitewashing.

Whitewashing initially refers to the fact of painting a wall in white so it hides any imperfections or blemishes and looks cleaner. Metaphorically, it can be used to refer to a situation in which there is not total transparency in order to hide failings or to avoid blame.

 We must maintain the integrity of the White House, and that integrity must be real, not transparent. There can be no whitewash at the White House.

Richard Nixon April 30 1973

Richardson quits Myanmar’s ‘whitewash’ Rohingya crisis panel

Reuters January 24 2018

So by combining these two concepts we arrive at the buzzword greenwashing . This is related to the concept of putting a “spin” on things, presenting them in a biased, i.e. not objective, manner, so they appear more positive.

It’s greenwashing when a company or organisation spends more time and money claiming to be “green” through advertising and marketing than actually implementing business practices that minimise environmental impact. So let’s take the example of McDonald’s swapping from single use plastic straws to paper ones and drawing attention to the fact in the media. This is used to refer to a company’s practice of making misleading claims about its products, politics or strategies to make them appear more “environmentally friendly” rather than less environmentally damaging.

bears

First of all, let’s get the pronunciation out of the way; bear is pronounced /beə/, rhyming with “hair”. Don’t make the terrible mistake of saying “beer” /bɪə/ (which rhymes with “here”), nobody will be impressed.

So, what is this animal doing in financial markets? Well, A bear is an investor who’s downbeat about the economic situation, pessimistic about the market and so thinks that the value of an asset, or of the market as a whole, is going to decline.

Consequently, a bear market is a pessimistic market in which asset prices fall for a prolonged period of time – more technically, it’s when prices have fallen 20% or more after a recent peak.

“World markets are bearish due to the impact of the coronavirus and fell across the board in yesterday’s trading”.

bear market

“bear markets are usually characterised by investors arguing themselves out of buying. That’s why we always miss the bottom.”

Merryn Somerset Webb Financial Times March 13 2020

A popular saying is

“the best thing you can do in a bear market is play dead”

i.e. sit tight and wait for things to pass or maybe invest in liquid, short term instruments.

The adjective relating to bear is bearish

Japanese stocks are well placed to confound the sceptics. From coronavirus to corporate governance changes, foreign investors are too bearish

Financial Times February 11 2020

while the opposites to bears and bearish are bulls and bullish.

deficit

Generally speaking, there is a deficit when an amount falls short, or doesn’t attain or reach, a required level.

Those with a moral deficit put on a good show, and sleep like a baby.

Paul Newman

the Philippines looks to geothermal energy to reduce its energy deficit on the island of Mindoro

Financially and economically speaking, there is a deficit when more money is spent than received i.e. outflows of money exceed inflows of money.

Many governments have run deficits since the financial crisis, that is they have spent more money than they raised through taxation. However, this can be controversial as some politicians view running a fiscal deficit as “living above your means“.

Armed with a $6.4 billion arsenal to fight the coronavirus and its fallout on the economy, this year’s expansionary Budget could run a historic deficit of $10.9 billion – the highest in recent times.

Straitstimes.com February 19 2020

A trade deficit refers to an imbalance between the amount spent on imports and the amount earned on exports.

Trump has pledged to narrow the trade deficit and bring manufacturing back to the United States

CNN February 5 2020

Related words are the adjective “deficient” and the noun “deficiency“

Although he boasts about his negotiating skills, they appear somewhat deficient.

Health care systems around the world denounce deficiencies in medical supplies.

What is the opposite of a deficit? If you are a Spanish speaker then maybe you fall into the common mistake of saying “a superavit” which, while it may bring smiles to many faces, won’t forward your career. It’s not a superrabbit,

it’s actually a surplus.

And I leave you with something to ponder, or think long and carefully about, is it possible to have a moral surplus?