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http://trackresearch.com/articles/the-morning-track-on-watch/
The patient is in the intensive care unit. That is the view about the present globally equity rally fizzling with Dr. Copper looking quite ill after yesterday’s 4% plus drop and global shares dropping sharply overnight. The problem of today's pain is that the diagnosis for why markets are swooning isn't so obvious. The cause for the pain is more than tax reform rotation, US Trump political battles or the UK Brexit breakthrough moment stall, rather it’s a mixture of position pains, rising economic uncertainty and a host of ongoing geopolitical worries – from the South Korean swarming drone force, to Trump moving his embassy to Jerusalem, to Italy’s left politics creating a new “free and equal†movement dashing Renzi coalition hopes next year, to a new UK cabinet revolt against UK May’s soft Brexit leanings, to the DUP saying no deal this weak on the Irish border to UK May, to MI5 in UK foiling a May assassination plot, to US banks talking down 4Q earnings –
all that put the December risk rally on watch again. The down draft in risk has been met by bond buying, but safe-havens like JPY and CHF or gold have all had less dramatic moves and interest than many would think if this was a full blown crisis of confidence in the rally ending. This makes today that much harder to play the odds as ranges have been tight and the breakouts need to be respected regardless of the lack of new economic news and the preponderance of political noise. The patient in the ICU is looking at the heart monitor to see whether there is stability and a chance for recovery – in the same way – today is about the US rate markets and its bond market stability since Octobers spike to 2.48% 10Y. The risk of 2.28% breaking is important today and it will pivot on the ADP and BOC news. From that maybe we see a chance of the usual reversal of the reversal in equities and more failure for the USD at the 55-day.
The Morning Track on-watch
- The Morning Track – On Watch by Bob Savagehttp://trackresearch.com/articles/the-morning-track-on-watch/
The patient is in the intensive care unit. That is the view about the present globally equity rally fizzling with Dr. Copper looking quite ill after yesterday’s 4% plus drop and global shares dropping sharply overnight. The problem of today's pain is that the diagnosis for why markets are swooning isn't so obvious. The cause for the pain is more than tax reform rotation, US Trump political battles or the UK Brexit breakthrough moment stall, rather it’s a mixture of position pains, rising economic uncertainty and a host of ongoing geopolitical worries – from the South Korean swarming drone force, to Trump moving his embassy to Jerusalem, to Italy’s left politics creating a new “free and equal†movement dashing Renzi coalition hopes next year, to a new UK cabinet revolt against UK May’s soft Brexit leanings, to the DUP saying no deal this weak on the Irish border to UK May, to MI5 in UK foiling a May assassination plot, to US banks talking down 4Q earnings –
all that put the December risk rally on watch again. The down draft in risk has been met by bond buying, but safe-havens like JPY and CHF or gold have all had less dramatic moves and interest than many would think if this was a full blown crisis of confidence in the rally ending. This makes today that much harder to play the odds as ranges have been tight and the breakouts need to be respected regardless of the lack of new economic news and the preponderance of political noise. The patient in the ICU is looking at the heart monitor to see whether there is stability and a chance for recovery – in the same way – today is about the US rate markets and its bond market stability since Octobers spike to 2.48% 10Y. The risk of 2.28% breaking is important today and it will pivot on the ADP and BOC news. From that maybe we see a chance of the usual reversal of the reversal in equities and more failure for the USD at the 55-day.
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Robert Savage
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