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http://trackresearch.com/articles/the-morning-track-wheres-the-party/
The rush to new highs Monday in the US for equities didn’t translate across the globe last night. The key question is what really drives the markets today. If you want the quick explanation – stick to US tax reform, buy equities and go home, but risk the sell-on-the-fact trade tomorrow. If you want the longer explanation watch the yield curves abroad and at home, study the growth forecasts for each country and go back to the old-fashioned profit-margin analysis to buy risky assets. Overnight, the news was mixed on growth with New Zealand business still stung by its new government, with the RBA sounding more hawkish, with the Chinese sounding more strident with the US, with the forecasts from the World Bank, Swiss SECO and Japan Cabinet office all upbeat but the German IFO missing out as the expectations for the future are lower there even as everyone else wants to party. In Germany, Merkel wants to party with the SPD, she made that clear even as they seem to have othe
r ideas. In South Africa, the ANC picked the reformer Ramaphosa over Zuma – as most expected but many other key positions remain in hands of traditionalist. The party in stocks faltered a bit in Europe and its going to hang on the news flows in the US with the liquidity thin and interest in doing anything going down. Witness the shift lower in Bitcoin – the most speculative of futures is reversing from its $20,000 test and down 4% today. The press against the crypto currency is getting some momentum. Witness also the collapse of FX volatility in EUR and JPY back to near historic lows – and out of sorts for the holiday season which usually has bouts of significant movement if only because of illiquidity. The Thursday news flows maybe worth considering in that regard, but its only Tuesday and the wise seem to be looking for a party – the breakout currency overnight isn’t the EUR or GBP but AUD where the 200-day looks ready to roll even if the RBA isn’t or maybe
it’s still all about eAUD and the new G10 crypto-club.
The Morning Track wheres-the-party
- The Morning Track – Where’s the Party? by Bob Savagehttp://trackresearch.com/articles/the-morning-track-wheres-the-party/
The rush to new highs Monday in the US for equities didn’t translate across the globe last night. The key question is what really drives the markets today. If you want the quick explanation – stick to US tax reform, buy equities and go home, but risk the sell-on-the-fact trade tomorrow. If you want the longer explanation watch the yield curves abroad and at home, study the growth forecasts for each country and go back to the old-fashioned profit-margin analysis to buy risky assets. Overnight, the news was mixed on growth with New Zealand business still stung by its new government, with the RBA sounding more hawkish, with the Chinese sounding more strident with the US, with the forecasts from the World Bank, Swiss SECO and Japan Cabinet office all upbeat but the German IFO missing out as the expectations for the future are lower there even as everyone else wants to party. In Germany, Merkel wants to party with the SPD, she made that clear even as they seem to have othe
r ideas. In South Africa, the ANC picked the reformer Ramaphosa over Zuma – as most expected but many other key positions remain in hands of traditionalist. The party in stocks faltered a bit in Europe and its going to hang on the news flows in the US with the liquidity thin and interest in doing anything going down. Witness the shift lower in Bitcoin – the most speculative of futures is reversing from its $20,000 test and down 4% today. The press against the crypto currency is getting some momentum. Witness also the collapse of FX volatility in EUR and JPY back to near historic lows – and out of sorts for the holiday season which usually has bouts of significant movement if only because of illiquidity. The Thursday news flows maybe worth considering in that regard, but its only Tuesday and the wise seem to be looking for a party – the breakout currency overnight isn’t the EUR or GBP but AUD where the 200-day looks ready to roll even if the RBA isn’t or maybe
it’s still all about eAUD and the new G10 crypto-club.
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Robert Savage
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