Week In Review – August 8

Global Stock Indices

Emerging markets once again led the charge in the global equity markets this past week.  Russia continues it momentum, which we thought would begin to bounce after being down almost 15 percent in the first half.

Japanese equities hurting on strong yen

Weekly_Stocks

Global 10-year Bond Yields

The chase for yield continues.  The Brazil local currency sovereign 10-year closed for the second week in a row for the first time in a long time.  The U.S. 10-year closing in on 2 percent, which should offer some support for yields.   A new narrative developing that the U.S. economy is weak and getting weaker.  Not buying it quite yet.

The Brazil local currency sovereign 10-year closed for the second week in a row for the first time in a long time.

The U.S. 10-year closing in on 2 percent, which should offer some support for yields.   A new narrative developing that the U.S. economy is weak and getting weaker.  No doubt the dual hurricanes are going to gum up the economic data for a few quarters.  Not buying a cyclical slowdown quite yet.

Another problem is the strong euro, which is handcuffing Draghi’s exit from QE.

A little spread widening in high-yield bonds this week.

Weekly_Bonds

Global Currencies

The dollar index, which is effectively a euro/$ index, is sitting right below medium-term key support (see chart).  A little surprised it hasn’t broken more decisively, but everyone is short.  Dollar could be in trouble.

Cable, yen, and Swissie up big this week.

 

Weekly_Currency

Selected Commodities

The industrial metals took some profits this week, a few days of risk off and fitting the new economic slowdown narrative.

Gold continues to rock with weak dollar

Weekly_Commodities

Other Risk Indicators

The VIX starting to creep higher.  ‘Nuff said.

 

Weekly_Other

 

What Is On Our Radar

Watching global equities.  Most DM stock charts look like topping formations.

Still looking for the big October correction.  May see a blow-off buying panic if the S&P500 can get above 2490.

Also, wouldn’t be surprised if the bubblious markets exercise some cognitive dissonance here, where bond yields price in the short-term contractionary effects of the hurricanes and move lower and stocks price the long-term stimulative impact and move higher.

Goldilocks, right?   Go figure.  Get your frigging algos straight!

Sell that shit!

So far, setting up nicely for Mr. October to have a whack at the risk markets.  After all, it will be 40 years next month when Mr. October became Mr. October.   Hmmm… 40 years, the biblical number representing testing;  and it will be the 30-year anniversary of the 1987 stock market crash.

Also, we will keeping an eye on Apple and its rollout of the new iPhones.

Key Charts

Weekly_Chart1

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