Here below the usual weekly round up from the team at WF.
Just quickly look through these charts. And recall what has happened to earnings this year and what is likely to be reported for q3 and q4!
The US picture is at best weak. The Euro loan growth to the private sector is a powerful chart. Place together with your price work on fx and commodities and consider the correlations.
Piece together these pieces of evidence with technical issues like the market breadth issue we looked at here a few days ago. Meanwhile the Vix has hit 5 year low!
My point – the bear case hasn’t looked this good for a long time.
Here the WF weekly from Friday.
And here a WF focus on Canada. (An overweight country allocation for my own book).
The devil is on the detail of the assumptions within the 2014 forecast. Given the technical issues of this 5 year bull run and the over extended levels we have reached a severe shock could emerge to the world economy soon. This would badly affect Canada given her dual exposure to household debt as well as her economic reliance to being a commodity supplier. (Also by the way an issue im having with entering the nok at this stage though every asset has a price at every part of the cycle. Ie even pricing in bad news the nok is look good quant value vs many pairs. IMO!)
Here Barcap’s global macro econ view with an emphasis on global rates. Good report, if you have time.
Here below the latest from BarCap’s econ team with a focus on Japan. The USDJPY trade is threatening the breakout once again and contrary to most I believe a breakout US$ has finally arrived. (I’m recently long from an average of 97.4 so a breakout would be good to see for obvious reasons).
All the best
Rich