It’s very important we balance the near-term ‘optimism’ in equities with what we see with leading macro indicators such as gold, the US dollar index, treasury bonds and credit default swap spreads.
For example, whilst bond investors are typically early, over the long-run they are generally right.
Wall Street’s (growing) bullish sentiment is priced for a swift recovery.
I remain skeptical. Prices continue to rally at breakneck speed on the back of: (a) Trump indicating he’s keen to re-open the US economy soon; and more importantly (b) positive health developments from Gilead…
Today the market’s direction is determined by what we see with the COVID headlines. And whilst we ‘see’ the dire health impact – we don’t have clear visibility on the financial impact
Not since 2008 has the market been gripped with so much fear. COVID-19 (or Coronavirus) continues to spread at pace – with the number infected now exceeding 109,000 (a jump of ~3% in one day)
Stocks are correcting. The 10%-type correction we penciled in at the beginning of the year is now taking shape. Now for most readers, the move lower will bring a wry smile….
Central banks are flooding markets with liquidity. The Fed, PBoC, BoE, BoJ and ECB have added ~$15T to their balance sheets over the past 10 years… helping to turbo-charge stocks.
A review of 4 key indicators which help us make an informed decision on economic (and market) risks.
Renowned billionarie hedge-fund titan – David Tepper – told CNBC this week he remains bullish on the market.
Mainstream have been touting the possibility of a near-term recession all year. Unfortunately they are wrong.
Most economic growth indicators are positive and suggest the expansion is likely to continue.
For example, consider Truck Tonnage – which measure the amount of product being transported across the US.
Retail sales rose 0.4% compared to May, above the 0.1% gain expected by economists polled by MarketWatch.
This is solid consumer signal.
On the other hand, a contraction in spending would indicate a less confident consumer.
Now in terms of banks – they will often set the tone for the market going forward. In short, if they are positive about the outlook… and why not!
