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The Weekly Track ends-versus-means

- The Weekly Track – Ends versus Means by Bob Savage
http://trackresearch.com/articles/the-weekly-track-ends-versus-means/

The long holiday weekend produced more excitement than the previous week did in total. When endings are more important than beginnings we doubt the process and how we got here as being as crucial as the results, but ends don’t justify the means particularly if they undermine the future next path. The moral quandary of markets reflects the ongoing uncertainty of policy clashing with politics. There are three key focal points that drive risk across all markets into next week: Italy, OPEC and North Korea. While many will note that geopolitical fears didn’t matter to markets last week, citing the US S&P500 gains and the USD stability, others will see the glass-half-full and see the rips in globalization tearing about confidence and growth for the rest of the world. The moves in TRY and in EUR reflect this point. Risk-on and -off thinking dominated the markets last week and may plague it further through out the summer making for more volatility with less notable returns.
The pain of market volatility and political uncertainty can destroy investor and consumer confidence. Expect that to be the focus in the month and weeks ahead. The end result for June and 3Q ahead may still lead to modest risk asset gains but via a tortured path. The key is the underlying global recovery strength with Italy counterbalanced by lower oil prices and North Korea peace hopes. Last week saw speculators lose money in the EUR, GBP, JPY, AUD and Oil while they made modestly in CAD and Gold. Market remains net long EUR despite the month-long decline – all of which suggests we have yet to see the capitulation trade.