Published January 13, 2023
Stocks have been moving higher. What began in Europe, spread to China, and is now beginning to show up elsewhere. Here are some charts displaying the shift in market tone in these areas. First up, a clear uptrend has formed over the past 3+ months in Europe. Fears of a natural gas shortage during the winter simply did not materialize. (more…)
Published December 2, 2022
Investors increasingly believe the Federal Reserve has seen peak inflation and, recession or no, will very soon pause their interest rate hikes. Stock markets are responding as if the market has bottomed; with the question now how slow 2023 global economies will be. While employment layoffs are regularly in the news, labor markets remain strong with metrics of consumer activity holding at high levels. At worst, the economic data has become mixed, compelling investors to shift away from the hand-wringing that characterized the late Summer/early Fall. China appears to have pulled back on the most restrictive Covid measures. Supply chain issues have all but disappeared. The FTX crypto implosion looks to be limited to the landscape of crypto companies and investors, not spreading outward to threaten any systemic trouble. Investors now seem to look forward to a 2023 without the storm clouds they once feared. (more…)
Published November 11, 2022
For the first time in awhile the usual market suspects of inflation and the Fed’s assault on the stock and bond markets took a backseat for a couple of days. When interest rates rise sharply as they have this year, investors find out who was overly leveraged and caught without a seat in the market’s cakewalk. This week, we found out that cryptocurrency exchange FTX was the latest one without a seat. (more…)
Published July 22, 2022
The only consistent winner during this bearish stock market period has been the U.S. dollar. Commodities had a brilliant run (blue line below) but have fallen off substantially in recent weeks. Bonds have followed stocks into the cellar in a rare case of very high correlation between the two major asset classes. Only the U.S. dollar (green line below) has held up. (more…)
Published June 29, 2018
International and emerging market stocks have displayed disturbing action recently, failing to hold support, giving up a two-year rally, and accelerating a notable downtrend. The chart below highlights the crossover of the 50 and 200-day moving averages. We see on the left side of the chart the circle and line highlighting the prior crossover for emerging markets back in mid-2015. (more…)
Published May 12, 2017
There is a natural tendency for investors to believe that the stock market will follow economic trends. What some people fail to realize, at least initially, is that investors are looking out into the future and the expected movement in the economy. Only when an economic datapoint shows up that is at odds with that expected outlook do stocks react. The Citigroup Economic Surprise Index (CESI) seeks to measure how those datapoints are matching up to what has been expected. (more…)