Global Macro Perspectives
One of the most important piece of data being reported this week is Chinese money supply. When giving a little thought to the meter, it gives a negative impulse to the markets turned both ways. If the growth continues we have asset bubbles forming and inflation threat; If growth slows down we have a threat […]
Equities Equity performance was impressive in recent month, down to the last trading day of the year. Thursday trading showed that the investors are not so confident that the upside will continue, revealing, maybe a moment of truth. Everybody is long because of fear not to miss further gains, but scared of a potential slip. […]
Well I must admit that I don’t have a clue what’s happening in the markets now. The markets opened positive on large positive surprise in non-farm payrolls and in mid of trading everything reversed. Three reasons come to my mind: first is a deeper look in unemployment numbers; the second one would be the new […]
Nonfarm Payrolls for November came out at -11.000 vs. -100.000 consensus and – 190.000 in September. A clear improvement and a positive surprise for the markets. Chart 1. Non-farm Payrolls Monthly and Yearly Change The unemployment edged lower to 10.0% from 10.2% in December. Consensus was at 10.2%. Chart 2. Civilian Unemployment Rate The equity […]
ADP unemployment for November just came out at -169.000 vs. -209.000 last month. Similar as with jobless claims, the job loses are coming down, but U.S. economy is still losing jobs. The story of the day in the U.S. yesterdays was GM CEO Fritz Henderson resignation. The resignation followed the Motor Vehicle Sales but apparently […]
I am starting a monthly strategy overview to have my strategy in one place and a to test accuracy of my views. Written revisions and accommodations would also contribute to my investment discipline. Equities I have been surprised by the market strength as the market rejected the Dubai turmoil as a correction catalyst. This has […]
…at least for one trading session. Belisarius was occupied with his new firm in last few days so his blog suffered a little; now he’s back fully operational. Back to the theme; yesterday someone took a large position in gold and surprisingly moved the precious metal up on a positive dollar day. Media and blogosphere are full of various theories and reasons for the action. From India’s central bank buying MMF gold (Bloomberg story: IMF Sells Gold to India, First Sale in Nine Years) to “informed” buyer taking the position ahead of today FED interest rate decision/statement and rumors of big financial institution in trouble.
Interesting action with the VIX yesterday, break out to the 52 weeks low and then rebound to the upside. Looks someone was buying insurance after the run yesterday.
Markets are feeling nervous, I’m feeling nervous. VIX is at the lower bottom of the short term range, it looks it could stay in the range. Gold is hitting new highs today, it’s overbought a little, maybe some consolidation there needed if it is bound to stay at today’s levels.
Looks like market optimism is not jet ready to vane. On the back of falling dollar the gold reached new highs, and equity followed. It looks that the speculation on extension of some stimulus measures played most important part in this mini rally. Looks like dollar, gold, crude oil and equity correlation have become a part of computer algorithms and almost perfect inverse relationship will continue. Not indefinitely, I’m sure. It looks artificial.
The market just keeps on going on, you could think that it could go on even further. I would not be particularity surprised to see S&P 500 at 1200. We have equities rallying and at the same time declining US dollar and gold hitting nominally highest level ever.
The S&P 500 hit the new high for the year yesterday, but it didn’t sparked interest from the mainstream media. The market looks as it is looking for clues in which direction to move. Its similar like in June/July, everything was pointing to move lower but all went in the other direction on “better than expected” earnings. Earnings season is months away and I’m feeling tempted to start a short position.
All chips in for the Barrick Gold. The largest gold producer in the world plans to issue new equity to terminate hedging contracts. Brave. We will see if it pays off. Reuters story: Barrick to sell $3 billion in stock to buy back hedges
Major news yesterday was consumer credit decline. Reuters story: July consumer credit falls a record $21.6 billion It’s obvious that consumer credit/spending fueled recovery is not at the moment on the table.
Optimism is a flavor of the day. Nice article by Bloomberg showing disparity between analysts and economists. Bloomberg link: Stocks Show Why Analysts Dismiss Economists on Growth. Not that I think that either of them will be right at the end of the day, but it’s interesting to look at the dilemmas the market is in. Its pretty obvious, given the run we had, no analyst wants to look like an idiot having bearish reports so they are chasing the market. On the other side you have economists who are analytical guys; who don’t want to believe that anything beside predicted by their models will happen and those prospects don’t look good. And we have also corporate insiders who are selling and companies that are issuing shares. Bloomberg link: Mobius Spurns Brazil Share Offers as Gol Seeks Sale. (disregard Mr. Mobius statements as he probably trades opposite his statements). Being skeptical and contrarian by nature the market looks overly optimistic to me, but given the sentiment it could go further higher.
We have had some spectacular runs from the recent lows both in the equity arena and among commodities. As I am writing this introductory post markets are hitting new highs for the year. Common to these diverse markets is that we have seen little or no material improvement in underlying fundamentals only consolidation at initially depressed levels.