Last week the Swiss team took a well deserved holiday. Many market report teams are holiday so please keep this in mind.
First up here the latest from the guys.
The level of bearishness in the market is at such an elevated level its hard to go short using technical history as a guide, even though we are so close to record price highs.
Here Fitzpatrick making his macro case for rate rises.
This is an extremely US centric view here of economic micro data. The data is taken at face value, imo. Nonetheless should the Fed raise rates? Yes I absolutely agree with that call but the consequences on asset markets and therefore the consumption economy might be dramatic. Recall in 1977 when rates started rising GDP growth was also non existent. We live in extraordinary times.
And here GS, maintaining two equity short calls conviction 3.
And here an RBC seasonal chart pack. A timely reminder for us.
Lest we forget here a bullion tech update from Commerz, wiith some longer term charts also. 50% retracement of the bull trend taking her inline with the 1970s sell off in terms of retracement of that secular bull.
& here scotia with some levels and comment:
Watching this very closely here. Lets see how this last wave up fades. So many cheer leading stocks are falling through supports, eg Apple amongst others. For stock pickers its truly been a battering market over the last year. Index players have scored much better. Its also worth noting the churn inside the indexes has been dramatic. It just doesn’t pay to be a stock picker in this environment. Earnings have recently been not far short of disastrous. Even the success story of the German Autos has lost their shine with BMW sales and net down due to Asia consumer demand rolling over. China with a pmi at 50 now. A whisker from contraction (officially). The reality doubtless much worse.
We are close guys to a deep correction in US markets. Many world indexes started their correction a while ago.
Some useful correlation charts here care of Yardeni. Seeing the wood for the trees.
The question will soon become what do you buy? Cyclicals or defensives. Income, assuming interest rates stay lower for longer or growth? The new normal or the great reflation theme? This will soon be the next consideration once this bear commences.
All the best
Rich
p.s. as an allocator to the sreits im watching the sector carefully here as the 10yr sgs yield rises.
I like c61u or cct at around these levels.