This is my first “The Good, the Bad, the Ugly” market report which kind of kicks off my blog.
This market report will be publish every week or two !
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Have a wounderful week-end,
Market report #1: The Good, the Bad, the Ugly
- Risky assets still fueled/drugged by central banks
- Oil export countries seems to be [finally] agreeing on production and price stability
- Market talk that ECB might step into buying European equities = tailwind for EU markets
- Even though it’s not very impressive, global economic expansion remains steady (…)
- A lot of cash is sitting on the sidelines = ready to be deployed in stocks?
- Great rotation from bonds to equities might start soon or might have already started
- US recession fears unclear following latest PMI/ISM [better] reports
- Eurozone : latest economic data was encouraging
- China : latest economic data suggests stabilization
- FED: every time the FED is close to hiking, markets drop postponing decision
- UK : stronger economic data fueled by weaker GBP
- EUR: the weakening currency is having positive effects on European exporters
- Corporate activity : good M&A activity + share buybacks
- Upside risk for [US] rates. Will the other central banks follow? Historically they did, this time (…)
- Asymmetric risk for US stocks (upside-potential limited, downside-potential important)
- US: S&P500 technical picture (rounding top) suggests caution. 2120 = strong support
- Rising USD could have negative effects on US corporates
- Uncertainties surrounding BREXIT impact on UK/EU
- Uncertainties surrounding Italian constitutional referendum
- Chinese desperate need to invest abroad (creating real estate bubbles) and weakening CNY
- Australian + Canadian housing bubble fueled by … the Chinese
- Central bankers incapacity to restore moderate growth in developed countries
- US elections pathetic drama
- Ongoing and rising tensions between Russia and western powers
- BoJ hazardous monetary policy trying to fight a complex problem >> aging of the population
- Central banks accommodative monetary policy’s exit strategy nightmare
- Rising income inequality leading to social unrests
- Tech bubble 2.0 lead by social media fantasy
- Global rising debts leading to concerns about the value of Fiat [not the car maker] money
- Fixed income bubble
- EU-US tax/economic war – tax my “Apple” and I will destroy your [German] banks
- Equities: favor European equities. Buy downside protection on S&P500 and/or Nasdaq (more vulnerable) to hedge against global risk.
- Fixed income: avoid sovereign bonds and buy dips on corporate investment grade and high yield
- Currencies: long USD, long CAD/AUD, short CHF
- Commodities: long oil, watching to go long agriculture
- Gold : great level to accumulate the only currency that central banks can’t PRINT
- Hedge funds: favor global macro and CTA’s and volatility stratégies
Today’s close (weekly close) will be very important. Market has to close > 2135 otherwise fasten you seat belt for more downside!