Temperatures have hit 40 degrees in the last few days in the Balearic islands. The only place to be is on a boat which is exactly what i’m doing. Communications can be a little poor depending on my location so i’ll keep this short and sweet.
This bull market is still alive and well and although we continue to see some mixed signals near term (ie lacking momentum and breadth, etc) there is a strong possibility in my view that this market can simply drift up and onward here especially if policy makers jaw boning on higher rates and reduced balance sheet eases a little. Yellen i certainly already re setting expectations in terms of now simply a 25 basis point December hike.
Here the swiss team’s latest:
The commodity stocks have finally bounced. The entries good for now but the asset class is not out of the woods as yet. If the reflation trade is alive then this asset class crucial to confirm. The transports in breakout, soxx with very strong momentum signal for a rejoin of long term trend higher (no breakout as yet). Also finance, holding her strong recent trend higher (but no breakout) even with the dovish tone from Yellen very recently.
And here Fitzpatrick:
And here Louis cap:
And an Oppenhiemer chart on the transports:
Here a wf macro report on inflation in the US and its weakness:
My base case is for policy makers to allow this asset price bubble to continue and therefore not to reduce balance sheet and not to raise rates until inflation is firmly established. Its touch and go here whether we have “escape velocity’ here but i anticipate policy makers will tone down their rhetoric for as long as this data remains so mixed.
GBP remains in the cross hairs. There is some mkt optimism for a rate rise at the next boe meeting on 03rd of Aug. Technically, bounces aside any disappointment in the data or policy actions will force sterling through her supports vs the majors.
All the best for now guys.
Rich