Since everything is looking so good, is there any point in worrying about anything? Perhaps not, but there is always something out there which lurks that we need to be aware of. It can never hurt to prepare for adversities when things are going well.
VGA has not made a new high yet. The print high of 2898 of 9th Nov still stands. Admittedly, now less than 100 points away, nonetheless one observation that is still keeping the bear on his artificial respirator. Do bear this in mind as if for whatever reason, the US markets reverse from here (we are NOT saying they will), this would stick out as a non-confirmation between Europe and the US.
In this context, it is also worth mentioning that the US ETF of Emerging markets (EEM US) is also still beneath its 9th Nov high.
Finally, we have the US Dollar, which despite Bernanke running the printing press, is holding steady. DXY is finding it hard to make new lows and somewhat worryingly has held the higher low of 22nd Nov. The last thing we want for asset markets is a rising Dollar. To our mind, it remains the only remaining friend of the fast dwindling army of Deflationists, who have recently also been deserted by the bond markets.
The bulls are holding a great hand but they don't (yet) have the nuts ('nuts' in poker is an unbeatable hand). Don't be ALL-IN. Europe, EEM and the Dollar are three river cards that can still fall and upset the party that risk assets are having. Let's be aware of that whilst the going is good.
VGA has not made a new high yet. The print high of 2898 of 9th Nov still stands. Admittedly, now less than 100 points away, nonetheless one observation that is still keeping the bear on his artificial respirator. Do bear this in mind as if for whatever reason, the US markets reverse from here (we are NOT saying they will), this would stick out as a non-confirmation between Europe and the US.
In this context, it is also worth mentioning that the US ETF of Emerging markets (EEM US) is also still beneath its 9th Nov high.
Finally, we have the US Dollar, which despite Bernanke running the printing press, is holding steady. DXY is finding it hard to make new lows and somewhat worryingly has held the higher low of 22nd Nov. The last thing we want for asset markets is a rising Dollar. To our mind, it remains the only remaining friend of the fast dwindling army of Deflationists, who have recently also been deserted by the bond markets.
The bulls are holding a great hand but they don't (yet) have the nuts ('nuts' in poker is an unbeatable hand). Don't be ALL-IN. Europe, EEM and the Dollar are three river cards that can still fall and upset the party that risk assets are having. Let's be aware of that whilst the going is good.
The festive spirit has been given a huge boost by the recent rip in the S&P that's carried every other boat higher with it. Commodity stocks have picked up momentum with the CRY Index recovering the entire decline of mid Nov. Industrials and Chemicals have almost started to verge on the boring because there has been nothing other than 'more of the same' to say about them. Autos (led by a mind boggling rally to new highs by BMW and a rare super trend by Porsche) have been going gangbusters. Even the Oils have caught a bid over the last few days, dare we say, in line with a well timed call we made last week. Meanwhile, the Financials, Insurers, Utilities, Telcos and Pharma have brought up the rear – making it an equally boring 'more of the same' market.
Meanwhile, the 10 year US Treasury sits at 3.2%, arguably the stand out move amongst asset markets from its low print of 2.33% as recently as the 8th of Oct. A while back we wrote about the "normalized" state that the markets were approaching – where rising bond yields and rising stock prices begin to go hand in hand. Some of you may recall the multi-month chart we showed where the long standing inverse relationship between these two asset classes had so neatly stood the test of time. That was a long duration chart that cut through the daily noise. That relationship is working again and has gathered momentum recently as both the SPX and the 10 year yield sit above their 200 Day Moving Averages.
So we have the obvious sectors going up and down in relative and absolute terms and we have the long standing bond/equity relationship kicking in. Can things get any better for the bull market? .
-- Meanwhile, the 10 year US Treasury sits at 3.2%, arguably the stand out move amongst asset markets from its low print of 2.33% as recently as the 8th of Oct. A while back we wrote about the "normalized" state that the markets were approaching – where rising bond yields and rising stock prices begin to go hand in hand. Some of you may recall the multi-month chart we showed where the long standing inverse relationship between these two asset classes had so neatly stood the test of time. That was a long duration chart that cut through the daily noise. That relationship is working again and has gathered momentum recently as both the SPX and the 10 year yield sit above their 200 Day Moving Averages.
So we have the obvious sectors going up and down in relative and absolute terms and we have the long standing bond/equity relationship kicking in. Can things get any better for the bull market? .
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