In spite of world growth slowing dramatically and US Corporates struggling with the resurgent US$ her equity markets appear to have sufficient strength to avoid a correction. Sectors wise US housing is leading the charge making consistent higher highs. Technology and Biotech within this are also in breakout and strongly. The market breadth of the technology breakout is a little weak but Apple is so large her new breakout appears enough in herself to lead this higher still. Sectors like Dow transports, Finance and semi conductors, usually leads, have been less convincing of late but there appears enough strength for this tired US equity bull to persist a while longer yet. (Even if this proves a narrow range consolidation period).
A few charts:
As we know exports are not what the US economy is typically reliant on and hedges sustain making for a lag of some time before the US$ really hits earnings and economic performance. US consumer credit continues to rise and large family house prices and new builds are buoyant in the US again. In contrast to single and smaller family unit sale prices and new build.
Much of technology and biotech related sectors are not bought for their earnings so again earning related issues stemming from the weak global macro date and strong US$ are not negatively impacting, as yet, these US sectors.
If the US looks tired Europe’s blue chips looks perfect for a sustained price recovery. Banking is finally in breakout of her sustained bear market. Many euro property reits have risen 20% since the start of 2015 as just one example.
Our Swiss friends are traveling as am I but without delay here some of the latest tech and macro reports:
Firstly GS
Aud is very vulnerable to another leg lower.
Here ICAP with a tech view
And here JP
and here JP again on the macro
And here a couple of JP fx reports:
And here CS
And here CS with an interesting report if you have time looking at shifting patterns of global wealth. Running negative nominal interest rates is certainly increasing asset price paper wealth here rapidly.
And here ML with a good report touching on the related theme of the hunt for yield.
And here ML with their usual FX tech update:
And here DB with their fx perspective
And here WF on US credit:
And here a great report from MK, again if you have time, on the re-leveraging global trend:
And finally Yardeni with his technical indicator run through:
In summary, horrible global trends in risk and leverage but enough technically to suggest it can sustain for a few more months, most likely but stronger in Europe than the US. Seasonally a continuation of the bull also appears likely now. Good bye for now from communist Vietnam.
Happy new lunar year of the goat (goat in Vietnam) to you. Today also marks the 47th Anniversary to this day of the Tet offensive which many Vietnamese sight as the start of the end of the Vietnam war and victory vs the USA. Its worth noting that Vietnam is still living with the aftermath of their civil war inc America.
http://www.huffingtonpost.com/2013/08/14/vietnam-war-bombs_n_3755066.html
It makes you wonder how many mines and bombs are unexploded across the middle east. And how many children and civilians will die in the coming decades due to Western efforts to liberate them? I don’t mention the chemical weapons the US used in Vietnam which is another great tragedy.
Slightly depressingly, it seems to be, whether economic or political history, we seem trapped in an endless cycle of repetition.
All the best
Richard
p.s. with the latest GS report hot off the wires, here: