Here below please find the latest reports from the major institutions. As usual many more to come.
The rebound from the lows of the recent correction have produced some big bounce backs in many equity indexes.
The divergence in performance is worthy of comment. In the winner’s circle, China’s Shanghai index has risen nearly 15% from her lows to recent high, in volatile trade. The Nasdaq100 is close to breaking out of her prior all time highs (now broken out, see below). In the loser’s circle, interestingly, is the large cap Dow and the smaller cap Russell2000. The Russel2000 is struggling to recover her momentum, pegged around her end of Nov13 and End Jan14 price distribution areas and likewise the Dow. Both are relatively week and raise flags on this resumption of the bull market thesis that some price charts are suggesting. The commodities have bounced strongly possibly suggesting more than purely economic demand for the asset class.
The bullion has scored a price breakout but its low momentum, for now. Given the long duration cyclical bear market many are holding back doubting what price seems to be suggesting. It is unusual to see a ‘drift’ through a price resistance zone like this. When you do it usually indicates weakness not strength. The herd has not joined the move as yet but if a retest comes of resistance, now support and this test sees new buying the next wave higher should attract momentum (and therefore the herd). Given the price confirmation but not price technical indicator confirmation its right to remain a little skeptical of the move and keep allocation in line with a positive but skeptical development. We must watch for momentum in the asset class as this will provide a more reliable confirmation that the secular bull has returned.
Since I wrote this, at the start of today’s session, equity indexes have marched northward and the Russel has put in some ‘catch up’ but the Dow is still lagging. On a near term basis the moves are seeing declining momentum although the Nasdaq100 has scored a new breakout all time high. The commodities are outperforming and gold has sustained her breakout. She needs to hold the breakout level of 1280 and on any retest quickly reverse and see new inflows to add momentum to the move for confirmation.
From a fundamental perspective earnings season by the major international companies was weak. E.G.Ciscos,IBM, Intel, DowChemical, Yahoo, Apple, Cat,JNJ,AMD, P&C, Unilever,Etc, etc. The oil majors were also uniformly weak. There were bright spots of course and earnings beat prior estimates, as they always do. We must recall that estimates always set out very optimistic and are perpetually revised downward until they are overly pessimistic so earnings and revenue beats on estimates is not a good test of economic health.
Here Facset on earnings season again. Recall much of their data relates to EPS and to earnings and revenue in relation to expectations.
For my own broad book of assets its been the best start to the year for several years and a significant + beta to world equity indexes up around 8% in 6 trading weeks. When you consider savings rates from 1 year bank deposits are around 1.5% per annum is it any wonder speculation is popular again. The hedges paid for themselves and delivered some profit although I had hoped for more as the Nasdaq100 failed to deliver to her technical weakness. FX has once again been a wonderful asset class mainly via the long GBP cash vs $ and Euro. The technical chart for the GBP vs both provides for a high conviction trade. The increase in leverage on the bullion and her miners (via multiple instruments inc futures, options and carry trade cash equity longs) are running for now and we see. I increased allocation to some defensive Asian equities. So far so good but its just a paper number and can reverse very quickly as is always the case in these bubble and bust prone asset markets.
Back to the reports, as the commodities have life here and are the strongest relative asset class year to date, here BarCap on the subject
And here JP on the revival of the gold miners
And here CS with their FX technical report:
And here the barcap team on the major FX pairs
And here JP with a trio of recent reports on the FX pairs
Here JP with a technical analysis of the fixed income markets:
And here Commerz with a technical analysis of the commodity fx pairs
and here, as the Asian markets bounce, the JP team with a trio of fundamental and technical analysis including equity recommendations:
I’m behind the curve on releasing these reports. Apologies for that. I mean to catch up in the next 48hrs.
All the best
Rich