August 15, 2016, 4:00pm EST
Following a quiet week on the news and economic data front, this week will have plenty of events and catalysts for markets, as we sit at record highs in U.S. stocks.
We talked last week about the sharp bounce back in oil. That bounce continues today (+2.5%), and is being driven by comments from Saudi Arabia that an oil production freeze may finally come to put a floor under oil.
Why does it matter? OPEC, led by its biggest oil producer, Saudi Arabia, has rigged oil prices for the better part of two years in an attempt to ward off new shale industry competition. That brought the U.S. energy industry to its knees earlier this year, before central banks stepped in with “stimulus” measures that happened to bottom out oil and double the price in just weeks. Still, low prices are finally reaching the breaking point for all oil producers (including the Saudis and fellow OPEC countries).
So higher oil (above $40) takes shock risk off of the table for global markets. As such, global stocks continue to climb. It started in China this morning, with a 3% plus rise (as we said in early July, It May Be Time To Buy Chinese Stocks).
Among the events this week, the biggest investors in the world are filing required quarterly public portfolio disclosures with the SEC (13F filings). This is where we get a glimpse into their portfolios.
Of course, it’s a widely covered event these days by the media. And there’s interesting information to be gleaned. But of 400 or so top funds/investors, only 20-30 have the combination of size/influence and hold a concentrated portfolio of high conviction investments to make the prospect of following their lead, productive. Most of the lot allocate across so many stocks their portfolio performance mirrors the broader indices.
Of this small group of investors, what’s most valuable are the timely public disclosures (13D filings) they make when they’ve taken a controlling interest in a company with the intent to create change — their conviction level, and their clear and articulated game plan for unlocking value.
With filings continuing throughout the day today, we’ll talk more this week about the value of following the lead of some of the best investors in the world.
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