Markets are moving quickly here so a few technical comments.
The bounce has not sustained. US sector wise the prior alphas of tech and bio tech are the unsurprisingly the alphas now to the down side. Bio tech particularly has made new lows again and is now down 40% from her high point. Europe has showed particular weakness and high breadth to the recent lows. As a quick mention euro stoxx autos has made new lows, also euro stoxx banks. Indeed cyclical sectors from across the world are bearish and the bearish beta. The positive betas are defensive in nature including property reits, health care dividend payers (not the bio techs), and utilities (that the Swiss team cover below).
For all their monetary magic the Euro Zone and Japan have nothing to show for their efforts as yet. Doubtless they will conclude that this was simply as they didn’t do enough and shortly they will redouble their monetary efforts. Its worth noting that most of the developed world US aside is now in negative interest rate territory on over night central bank deposits.
Technically the weakness of the price bounce was a bear flag that all was not well and tactical trading a signal to get out. The take home is that price moment wise we need to find a price where buyers are tempted to enter in force and as yet we have not found that level and this is clear.
The Swiss team cover the scenario of a possible retest of the recent lows, at least on negative beta sectors. I would second that but add a slightly more bearish note that I now expect a retest of the recent lows plus a little before a significant bounce emerges. Of course policy makers are adept at interrupting the nature rhythm of the market so policy changes aside the natural course of price here to find buyers and this needs to occur at a lower level.
On the macro data side, having said the above consumption continues in the US and UK and some signs of a consumer pick up in the data for the euro area. Policy makers have room to maneuver so long as inflation remains benign and their current account allows for the move. Remain those prerequisites as they wont always hold for all the g10 all the time!
Without more delay here the Swiss team’s invaluable report:
And here GS:
Little change as of Sunday evening but i wonder if the recent price action would change their conviction levels. I suspect so.
Here Fitzpatrick with a pretty bullish risk on technical view of asset markets.
Ie a bottom in oil and related currencies and a weekly bull pattern on the sp500 at a fairly key price area. I agree Sp500 wise there is better price evidence of a support for higher prices but sector wise there is not and breadth there is not.
I realize subscribers are waiting for this report and markets are moving quickly here and now. Please watch out for a V2 of this update later today.
All the best
Rich