We believe that the US$ impact is not at all factored in by sell side analysts, and will make for a nasty surprise in the coming quarters in 2015. The price of the long-term bond continues to bump against trend line resistance that has spanned the last 30-years. Should this trend line hold, the long-term treasury bond may succumb to selling pressures following the Fed announcement. International market ETFs including Emerging Markets and European equity market led world equity markets on the upside last week, and we are expecting for that trend to continue over the coming months.
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Category Archives: Gold & Precious Metals
Morning Market Commentary & Weekly Charts
North American equity markets entered into a short-term corrective phase on December 29th. The corrective phase is expected to continue until end of the fourth quarter earnings report period (i.e. late January/early February). Thereafter, North American equity markets are expected to resume an intermediate uptrend as they normally do during a US Presidential Pre-election
year. We are expecting for equity markets around the world to be exceptionally volatile this week due to a series of economic/political news events.
Morning Market Commentary & Weekly Charts
US Equities are extremely expensive compared to its global peers, and have been overweighed & overheld for a very long time by foreign investors. The fact that foreign ownership of US stocks is at an all-time high, totaling 16% in 2014, the highest in 69 years since such records have been kept, is of additional concern. For 2015, we are advising US investors to increase their foreign holdings, and reduce US equities exposure.
All that Glitters Is Not Gold: It’s Palladium
CGI 102814 Strategy Update- Palladium in focus
Global Strategist Steve Gluckstein outlines his positive outlook on Palladium over the next 12 months
062014 CGI Morning Market Commentary – Gold
Global Strategist Carlo Besenius reiterates his positive stance on gold, both the commodity and mining stocks. Since early June, Gold is up 6%, and Gold Mining Stocks are up 16%. Next resistance for Gold is at 1331.40. CGI’s outlook for potential policy actions in Abe’s 3rd arrow are also included.
Morning Market Commentary – Buy Chinese Equities $SSEC bottoming, Euro equity benchmarks continuing to gather momentum vs SPX
Global manufacturing data remains strong and it cannot be ruled out that the data out of China is distorted as a result of the upcoming Chinese New Year. Manufacturing activity in China typically declines into the Chinese holiday, which this year is on January 31. Despite the unexpected data point from China, manufacturing numbers continue to show signs of improvement, both in the US and Europe. Overshadowed by China’s disappointing manufacturing PMI report, January Flash Manufacturing PMI in the Euro-Zone was reported at the highest level since June 2011 at 53.9, firmly in expansion territory.
Although gold is not presently within its period of seasonal strength, which runs from July through to September, the metal typically does benefit from strength in metal prices at this time of year due to improving manufacturing demand.
Morning Market Commentary & Weekly Charts – EAFE cont. to outperform US equities, Oil, Commodities,
Short and intermediate technical indicators for most equity markets and sectors remain overbought. Look for a renewed seasonal buying opportunity in economic sensitive sectors on weakness in the month of January. We continue to recommend to add towards sectors which continue to show seasonal strength such as… Continue reading
Morning Market Commentary – Buy Intl. equities, Germany trade balance
Germany has a trade balance second to none on earth. Germany recorded a trade surplus of EUR 18.10 Bn in November of 2013. Germany is world leader in current account surplus in 2014.
We are expecting for the DAX 30 equities’ outperformance to extend through 2015. EPS expectations should stabilize alongside global GDP growth. We are forecasting DAX EPS FY 2014 to rise by 16% yoy to 760. (Vs. consensus 729) . Continue reading
Morning Market Commentary – European Stocks to continue to outperform
European stocks gained after global regulators eased the leverage-ratio rule for banks. The Basel Committee on Banking Supervision diluted a planned debt limit for banks following a meeting in Switzerland yesterday. The committee said the leverage ratio, which penalizes low-risk financial activities and curtails lending, was adjusted after thoroughly analyzing bank data. Banking stocks posted the second-biggest gain on the Stoxx 600 after the news. Deutsche Bank and Barclays were among the big risers. We like the EURO STOXX BANKS Index at current levels, and are advising our clients to add towards European Banking stocks. Continue reading
Morning Market Commentary – $hanghai Index ready for a major breakout, Metals, Silver, WTI, NatGas
China became the world’s biggest trader in goods for the first time last year, overtaking the US for all of 2013 and finishing the year with record trade figures in December. Trade with the rest of Asia and increasing flows with the Middle East represent a shift in power away from the US, still the world’s largest economy.
Chinese imports of crude oil grew by the least in almost a decade in 2013, new government data show, posing a challenge to exporters from the Middle East to Africa who are competing to sell more oil into the world’s second-largest economy.
We are advising clients to allocate new funds towards Chinese equities. As the chart shows, there has been a tug of war between the bulls & bears for over 6 months now, and we believe the $SSEC is ready for a major breakout to the upside in the short term. Our 2014 price target for the $SSEC is 3,000. Continue reading
Morning Market Commentary & Weekly Stocks – Global Stocks enter positive seasonal period, German Stocks to outperform
German Equities are at an all-time high. The DAX 30 Index is +20% ytd, after +29% in 2012. Our CGI Global 50 includes 12 German stocks, of which all are in positive territory for 2013.
We think so, particularly when looking at the anemic bond yields that European, US and Japanese government and corporate bonds are offering. We are seeing but one way for German investors, namely to increase equities investments, albeit late, however not too late to the plate, and invest now in their own equity market. Continue reading
Morning Market Commentary & Weekly Charts – Energy, Gold, Precious Metals to improve
Our recommended investment strategy is to maintain a healthy cash position for possible entry into the favorable seasonal trade in October. Seasonally, equity markets hold up rather well during the first half of September, posting gains of 1.3% on average over the last 20 years. The weakest three weeks of the year occurs during the last two weeks of September and the first week of October. Declines over this three-week period reach 2.5%, on average, based on the same 20-year time-span. Contradicting this calendar tendency is the “Sell Rosh Hashanah and Buy Yom Kippur” tendency, which runs through to this Friday. Loss for the S&P 500 between these key dates on the Jewish calendar averages 1.25%. Whichever scenario plays out, caution is warranted as seasonal volatility fuels erratic returns over the weeks ahead.
Morning Market Commentary – Currency & trade balance observations
As previously stated, we had expected the deficit to climb back to US$ 40 Bn after an unusually sharp decline in the prior month. The trade gap sank more than 20% in June to the lowest level since the fall of 2009. Although the increase in imports suggests strengthening demand in the US, a larger trade gap usually means slower economic growth at home since America is buying more goods and services from other countries. Continue reading
Morning Market Commentary & Weekly Charts
Looking forward to the next couple of months, equity markets are entering the weakest period of the year. Over the last 20 years, the S&P 500 index has averaged a loss of 0.20% for the month of September; positive results were realized in only 11 of the past 20 periods. The weak return in September ties it for the third weakest month of the year, behind February and August. The month that September ties with is June as investor reallocate portfolios at the end of the second quarter, just ahead of earnings season at the start of July. A similar reason is culprit for lackluster returns in September as the third quarter concludes. The weakest stretch of the entire year is a three week period that spans the last two weeks of September and the first week of October as investors buy and sell positions ahead of the volatile and uncertain third quarter reporting season. Continue reading
Morning Market Commentary & Weekly Charts – Summer breeze to continue for global equities?
Equity markets have just completed a traditional period of strength from the last week in June to the third week in July. Since the low on June 24th, gains have been extraordinary. The S&P 500 Index gained 8.44%, the Dow Jones Industrial Average improved 6.82% and the TSX Composite Index advanced 5.76%. It’s time to take trading profits in equity index based investments. Sectors with traditional positive seasonality are the exceptions. Gold, gold equities, biotech and utilities are bucking the trend by moving higher as well as outperforming equity indices.
Morning Market Commentary – Gold to move higher
We have been advising clients since June 2nd to sell equities globally prior to the peak period of seasonal weakness ahead in September and October, and continue to do so. Seasonal tendencies once again turn positive for broad market indices at the end of October.
Morning Market Commentary & Weekly Charts – “Tough labor” Day ahead for investors
US equity markets reached an intermediate peak on August 2nd. Short-term momentum indicators for equity markets may rebound early this week from deeply oversold levels, but seasonal trends are expected to re-assert themselves in September. We advise our clients to maintain high cash positions for possible entry into favorable seasonal trades into increasing downside volatility between now and October. We advise our clients to continue to hold/accumulate precious metal and precious metal equity ETFs. They continue to move contrary to equity market trends.
Morning Market Commentary & Weekly Charts – What’s next for the remainder of the Summer?
US equities to continue to underperform, Asia, Emerging markets & European equity indices to outperform, Gold & Metals & mining to outperform, US$ to weaken & correct further.
Morning Market Commentary – Baltic Dry Index Observations
US equities to continue to correct downwards, MSCI World, Asian & European Equities to outperform, Gold & Precious Metals to continue to improve & outperform, Global Government Bond Yields to continue to rise.
Morning Market Commentary & Weekly Charts – Summer Doldrums for global equities
Emerging Equities & Europe to outperform US equities, Gold, Metals, and Commodities to outperform.
Morning Market Commentary – Equity Market Observations
N-225 poised for major breakout, Emerging market equities to come back, Gold & Silver, Platinum & related stocks to move higher.
Morning Market Commentary & Weekly Charts – Summer breeze to continue for global equities?
It’s time to take trading profits in equity index based investments. Sectors with traditional positive seasonality are the exceptions. Gold, gold equities, biotech and utilities are bucking the trend by moving higher as well as outperforming equity indices.
We continue recommending to “buy” EADS shares at the current price of EUR 44.34, and still continue to prefer EADS over Boeing, as we have for the past 6 years, since inclusion of EADS in the CGI Global 50. Our 12 months price target for EADS shares is EUR 54.
Morning Market Commentary – Mixed Signals for Global Equity Markets
We see three significant threats to impact equity market strength ahead, which we believe global investors have not taken adequately into account: Rising US$; Surging Interest Rates and Rising Crude Oil, prices.
Morning Market Commentary & Weekly Charts – Facts & Reality
Facts and Reality about currencies and trade deficits and current account deficits.
Morning Market Commentary & Weekly Charts
We are advising our clients to “sell/short” the US$ index against most major currencies at current levels of ($USD 82.59).
Morning Market Commentary & Weekly Charts – What’s about that US$?
Or research shows the following sectors being attractive for seasonal trades this summer and showing signs of outperformance relative to the S&P 500 Index and the TSX Composite Index: Fertilizers, Energy and Gold. Continue reading
Morning Market Commentary – All about the Nikkei
Fundamentally and long-term focused however, we continue to advise our clients to add towards Japanese equities. Investors should focus on both domestic asset reflation stock plays in Japan, and on Japanese companies with strong exporting profiles, as the Yen weakness will continue to improve their overall competitiveness and earnings capabilities in the coming years. Continue reading
Morning Market Commentary – Sell in May effect true
We continue to advise our clients to lighten up on equities, same in 2013 as in 2012, 2011 and 2010, and to wait for a better opportunity with lower global equity prices to materialize over the coming two to three summer months to re-allocate capital back into risk, as this market performance anomaly has proven to have been profitably over three decades, by choosing alpha generating investable strategies.
Morning Market Commentary Sell in May, AAPL reiterating sell/short; Gold & Silver to go higher
The period for seasonal strength in equity markets concludes on May 5th, after which a trendless market is the average. Economic events over the next few days, including central bank announcements and employment report releases, are likely to set the tone for the month ahead. The technical backdrop of equity markets has shown deterioration over recent months, particularly pertaining to momentum, and the likelihood is increasing that a market correction is near based on recent warning signals that have become prominent in April. Stocks have been up 6 months in a row. And April finished at a historic high of 1597.57.
Each May is different. And there have been some very profitable summers in years past. So it’s never wise to just take this saying at face value and truly walk away from the markets. The resilience of stocks to be pressing all-time highs after 3 straight weeks of soft economic reports (including a scary showing for Chicago PMI in contraction territory) is making it hard to say what exactly would make stocks go lower at this stage. Meaning that investors seem quite comfortable with the ebb and flow of muddle through economic growth. And as long as the Fed is on the side of investors, with all that QE, then there is no reason to walk away?
Morning Market Commentary & weekly charts SPX rolling over
Weekly Investment Conclusion: We are advising clients to use the temporary seasonal weakness to increase holdings towards select equity strategies, as equities are the better value asset class, versus cash, bonds, alternatives, combined with the lowest downside risk.
For our clients with a shorter term investment perspective, we recommend to take profits in equities sectors with seasonal weakness, as we see evidence of equity markets rolling over temporarily, and for bonds to enter their period of seasonal strength until mid summer.
Morning Market Commentary & Weekly Charts – Global Equities running out of steam
This past weekend’s meeting of the G-20 has been described by some as highlighting that there is only minimal coordination between the main economic powers. Japan was not singled out for reprobation. The G-20 and the BoJ have made it very clear to the financial community that Japan has the green light regarding continued quantitative easing and resulting in continued Yen weakness. We expect the US$/Yen 100 level will fall soon, and moving towards our 2013 price target in coming months. Short term, we expect the US$ to run into resistance at the psychologically important US$/Yen 100 level, which it hasn’t crossed since April 2009.
Morning Market Commentary – AAPL “Sell/Short” reiteration, SPX Sell signals clear
Apple stock traded below US$ 400 for the first time since 2011, just prior to the exuberant and parabolic rise to US$ 705 in 1H 2012. Yesterday APPL fell 5.50% following a weak sales outlook from key chip supplier to Apple, Cirrus Logic. Shares of AAPL are down around 42% since the stock peaked in September of last year, when we put a “Sell/short” recommendation on AAPL at US$ 685, this amidst concerns that Apple is losing its market dominance.
Morning Market Commentary – US$ impact on US equities, SPX, Nasdaq, RUT continuing to weaken;
The fact is, the US$ index is down over 33% in the past 35 years. Below we have added a few charts elaborating on a major subject which we clearly part with the “so called experts” on economics, and stock markets, who are now predicting a period of US$ strength, paired with simultaneous strength and outperformance of US equities:
Well, for those “experts” and their opinions, let’s see if they have a point, as we believe a few pictures are worth a few million (wasted) words. Let’s look at the chart of the US$ versus the S&P 500 going back to 1980.
Morning Market Commentary-Major breakdowns for US stocks, sectors, Oil, Gold, Silver, WTI, another -15% downside risk
Equity markets around the world recorded significant technical weakness yesterday. Much of the weakness was recorded prior to the Boston explosions. The explosions accelerated weakness near the close. The 9.1% one-day slump for the price of gold was the steepest fall in 30 years. Gold prices had recovered by as much as 2.0% this morning. The CME Group Inc. said yesterday it was the minimum collateral requirements for trading in benchmark gold, silver and other precious-metals futures contracts. The CME also raised the margin to trade palladium by 14%, and for platinum by 19%.
Morning Market Commentary & Weekly Charts – PROFIT TAKING in global equities; Commodities
Well, the profit taking has started. Despite continued resilience in the US equity markets, benchmarks around the globe have begun to trend lower, showing a series of lower-lows and lower-highs, a characteristic of a negative trend.
“Sell in May” has come early for equity markets in Canada, Germany, France, United Kingdom, and China. Negative pressures in equity benchmarks around the globe combined with significant declines in commodity markets is resulting in an increased probability that a top in United States equity markets is near, if not already realized. Trend line support for the S&P 500 is presently just above 1550, making this a logical point to trigger the conclusion to the seasonally favourable period for the market, which ends on May 5th, on average.
Morning Market Commentary & Weekly charts
“Sell in May & Go Away” or is it “Sell in April”, like it was in 2012?
Japanese companies see the continued weakening of the Yen as an opportunity to increase investments abroad, and are buying foreign assets. European companies are generating more than 50% of their earnings from outside of the Eurozone, and for the Eurostoxx 600, about 30% of earnings are coming from emerging markets. Hence why we see better buying opportunities in Japanese and European stocks.
Morning Market Commentary – US Markets Technical Deterioration
Japan’s economy has been hurt by a variety of factors, not least decades of deflation or falling prices. Falling prices discourage people from spending and companies from investing, and that has trapped Japan in a cycle of sluggish growth and recession. Given the slowdown in Japan’s export sector in recent years, reviving domestic demand has become ever more crucial to spurring a fresh wave of economic growth in the country. Prime Minister Shinzo Abe has also said that stoking inflation is key to boosting domestic consumption. Under pressure from the government, the central bank had doubled its inflation target to 2%, earlier this year.
The YEN fell against the US$, and Tokyo’s Nikkei 225 index rose 2.2% on the central bank’s decision, indicating markets were reacting positively to the extent of the stimulus measures.
US equity markets are slowly rolling over, yesterday some significant technical damage was done. US equity markets started to roll over. Yesterday’s technical negative action increased significantly.
Morning Market Commentary & Weekly Charts
Cyprus deal done. Stocks advanced strongly on Monday morning after 11th-hour talks to save Cyprus from default resulted in a last-minute bailout deal with the Troika. Following a meeting of Eurozone finance ministers that lasted almost 12 hours, Cyprus agreed to a EUR 10 bn aid package that doesn’t include a controversial across-the-board bank-account tax but involves forcing big losses on uninsured depositors.
Cyprus is about as economically significant as the German city-state of Bremen, and yet the attention of citizens and politicians alike was focused on the debt-ridden country on the continent’s periphery last week and through the weekend. Since Cypriot parliament rejected the initial bailout plan, one crisis meeting followed the next in Berlin, Frankfurt and Brussels as concepts were presented, revised, rejected and resubmitted. In the end, the European Central Bank (ECB) imposed an ultimatum on the country. The message from ECB President Mario Draghi was that either Cyprus agrees to the bailout conditions or it could be the first member of the Eurozone to declare a national bankruptcy.
Morning Market Commentary
Global equity markets have had a very mixed performance so far, the question begs, is it time for the inevitable correction?
Or is there a bit more room on the upside?
If all the BRIC countries are struggling, that is a big concern. Maybe the SENSEX rallies from here. The chart above shows a very important pattern that usually identifies major tops. Taiwan and Singapore are starting to soften on the ETF’s. Most of the commodities looked like they were at a pivotal point too, be it related to the US$’s recent temporary strength. The Rest of the World dragged down the US market in 2011. If commodities, and emerging markets are not rallying from here onwards, then we see cause for a softening of US equities in a rather large move down through the summer. $COPPER would suggest the move is to the downside. US housing starts and Transports would suggest the move is to the upside.
We do not say that the trend for global equity markets has reversed, but surely a correction of 5% – 8% is not far ahead, and we are advising our clients to add towards strategic equity positions when it will occur. When looking at aggregate performance since January 1st 2012, the Nikkei 225 is up 48%. In the last three weeks alone, the Nikkei has risen 8%. Frankfurt’s Xetra Dax is second best, with a gain of 36%. The Nasdaq is next, followed by the S&P 500. Continue reading
Morning Market Commentary – Natural Gas Breakout
The energy sector was buoyed by a breakout in natural gas prices. Natural gas prices surged by 3.59% to US$ 3.812 mBTU’s after the Energy Information Administration reported that inventories fell by 145bn cubic feet last week, 18.5% below the same level last year. The consensus estimate was for a 137bn cubic-feet fall. Nat Gas prices have risen by over 9% month to date, with the market betting on a tighter supply and demand situation following a cold winter season, signs of a recovery in the US economy, a drop in drilling rigs, growing uses for the fuel, and a shift away from coal-fired plants.
Morning Market Commentary & Weekly Charts – Global Equity Markets
Weekly Investment Conclusion:
Strength in US equity markets last week triggered by surprising strength in economic indicators was unexpected. US equity markets quickly regained short term momentum. Positive psychology related to the Dow Industrials reaching all-time highs also helped. This week, economic data is expected to be positive again and the S&P 500 Index (a more significant US equity index) will have a chance of reaching its all-time high at 1,576.09, despite short and intermediate technical indicators once again have returned to overbought levels.
Selected sectors with favorable seasonality at this time of year remain attractive purchases candidates on weakness. The trigger could be a rollover of the US$ from a highly overbought level. When it happens, and we do think this will happen within days, commodity stocks including metals & mining, energy, coal and steel stocks will come alive. All recorded exceptional gains on Thursday and Friday.
Morning Market Commentary – GDP improvements, US$ Weakening
More support for global equities due to slowly but gradually improving global economic expectations and economic outlook.
GDP in the Euro area as a whole, we think might surprise on the upside and are expecting a +0.2% GDP number for 2013, and +1.0% GDP for 2014, as we are seeing more evidence of government policies in Europe, but also around the world starting to make progress, and hence why we are expecting for global GDP growth to accelerate in 2014, albeit slowly for Europe, the UK, the US, but more rapidly in Japan, China, India, Africa, Brazil, Russia and emerging economies like the Philippines, Thailand, Turkey, Poland. Continue reading
Morning Market Commentary – Venezuela, Europe Top 100, Palladium, Nat Gas
So, whilst we are expecting for volatility in Latin American markets to increase, our favorite markets for investors to increase weightings in equities are: …… Continue reading
Morning Market Commentary & Weekly Charts – Currency Wars Musings
We still see the current US$ temporary strength as a good opportunity for investors to increase equity holding in international companies. The current temporary strength of the US$ and its inverse impact on global commodities prices as a good opportunity for US institutional investors to increase their weightings in foreign equities and commodities, and particularly to those benefiting from a seasonality point of strength, we advise investors to add towards the following equity markets and sectors: …..
Morning Market Commentary – Time to go long on the EURO again
The Euro is in oversold territory. We expect the Euro to reverse it’s latest weakness, as the “Italian Job” damage is done, and investors will focus on the macro aspects which matter most at this stage.
The current temporary Euro-weakness has enabled European governments and corporates to initiate hedging positions for the next 18 months, which will ensure their global competitiveness, and so we are advising investors to buy the Euro at the current levels of 1.30. We maintain our 3 – 6 months price target for the Euro at EUR/US$ 1.38. The Euro typically enters a period of strength form April – July.
Morning Market Commentary & Weekly Charts Bullish on Oil, Gold,
Weekly Investment Conclusion: The current, and shallow correction between now and the end of March will provide investors with an opportunity to accumulate sectors on weakness that have a history of seasonal outperformance until the traditional “Sell in May & Go Away” period, which may start this year, again like in 2012, ahead of its usual acclaimed season. Last year, we did forecast the “Sell in May & Go Away” equities peak correctly as of April 2nd.
Morning Market Commentary EUR/USE;US$/YESN;SSEC;AAPL
Apple stock continues to look for a lower price. The gap down from January is a major sign of more selling volume to possibly join the carnage in the once biggest stock in the world. Shares of Apple have not moved above its 50-day moving average since September of last year, precisely when the new iPhone and iPad were launched.
We maintain our “Sell/Short” recommendation on AAPL, with our 3 – 6 months price target of US$ 320.
Morning Market Commentary – No sell signals yet NDX;AAPL;Currency Musings;Global Automakers
We continue to see one good investment solution to the problem of global currency wars: Investors should continue to buy Gold.
We have been recommending for 3 years to “sell/short” the French OEM’s and also Fiat, in Italy, which in retrospect clearly was an alpha generating call for investors over the entire time period.
Given recent macro-dynamic changes, in monetary policies, impacting currency markets around the world, namely the Yen weakening substantially versus most currencies, particularly the US$, the EURO, but also mostly against the Korean Won, we have become bullish in September 2012 on Japanese stocks, calling for a major rise in the Nikkei, and implicitly seeing a bullish case in favor of Japanese car companies.
Morning Market Commentary & Weekly Charts-Currency Manipulation vs Gold
As we have written in the past years, most countries are artificially pushing down their exchange rates in an attempt to obtaining competitive advantages at the expense of others. And if they all manipulate their own currencies, all sides will end up losing out. At the EURO summit, as well at other Central Banker policy meetings as of late, we have heard over and over that currency wars are impacting policies and inherent competitiveness issues.
Global Markets Strategy & Equities Outlook – Bullish on Japan & China
As you know we turned very bullish on Japan and China in September 2012, and have been advising to overweight allocations towards the Nikkei and the Shanghai Indices, as we recognized major turning points in those markets due to changes in government leadership and implicitly new and improved stimulus policies going into effect as of Q4 2012.
Morning Market Commentary & Weekly Charts
History shows that US equity markets in the year after a Presidential election move higher into the first week in February in conjunction with fourth quarter reports, weaken thereafter until the end of March and moves higher thereafter. Given political events scheduled in the US during the next two months, history is repeating. Continue reading
Morning Market Commentary & Weekly Charts
Global Equity Markets, what next? Overheated? Or much more to go? While funds continue to flow into stocks, as we were forecasting since mid-December, money continues to move away from the bond market; particularly treasuries that have seen yields spike almost 400 basis points since the start of December.
Treasury yields have broken firmly above a long-term declining trend line that had remained intact for almost two years, diverging from the positive trend of equity markets over the same period.
Market Commentary LTRO, EUR, GOLD & SILVER
We see the LTRO repayments likely to boost money-market rates, leading to more EUR/US$ strength in the near term. The EURO extended a gain versus the US$ to trade as high as EUR/US$1.3464, extending an 11-month high set earlier in the session. We maintain our Q1 price target of EUR/US$ 1.3850. Continue reading
Morning Market Commentary & Weekly Charts
End of Q3
Now will there be a final spurt in Q4 2012?
We had the privilege to visit with some of Germany’s top corporate managements last week in Munich, plus get a glimpse at the Oktoberfest, where we were on a fact-finding mission with clients to assess the state of mind of the German corporate executives and that of the overall German consumer.
Morning Market Commentary & Weekly Charts – No Inflation?
Inflation adjusted gasoline prices in the US have soared in the past four months. The inflation-adjusted price for a gallon of unleaded is up over $0.50 since the end of June and has rarely been higher than current levels.
- Middle East crises are often associated with major swings in the price of gasoline.
- Gasoline price spikes also have often occurred prior to an economic downturn.
Middle East instability (e.g. Arab spring) and Middle East tensions (e.g. Iran) are ongoing. Continue reading
Morning Market Commentary – European Mega Banks “Big Split”
Discussions have been going on for some time, in Berlin and, most of all, Brussels, to proceed to split up “Mega-Banks”. The European Commissioner for Internal Market and Services, Michel Barnier, a former French cabinet minister with snow-white hair, is the most feared of the Brussels commissioners in European financial centers. He is already responsible for more than 30 EU regulations decreeing how banks and other financial market players are to do business in the future.
Morning Market Commentary & Weekly Charts
The Federal Reserve’s decision on Thursday to proceed with QE3 + was not a surprise to us, albeit for most of the market participants, and equity markets responded accordingly. Volume gains on Thursday and Friday were impressive. Additional follow through early this week is likely. However, news from the Fed came at a time when equity markets already were significantly overbought based on short and intermediate technical indicators. Technical action on Friday was an interesting “tell”. Equity markets moved higher at the open, dropped close to break-even just before the close and closed strong on end-of-day buy orders. Not an impressive follow through!
The weakest three week period of the year starts this week. The period is related to pre-third quarter earnings report news. The next three-week period historically is when negative guidance is most frequently released by corporations and when analysts reduce estimates and recommendations. The frequency of negative guidance since release of second quarter results has been unusually high this year. We see evidence of history to repeat during the next three weeks.
Morning Market Commentary – Temporary Euro Relief
“Saved by the bell” “Temporary Euro Relief”
The Federal Constitutional Court has rejected a petition to stop the ratification of the permanent euro rescue fund, the European Stability Mechanism. The decision clears the way for the ESM to go into effect. In a historically significant signal for the Euro rescue, the German Federal Constitutional Court on Wednesday ruled there are no grounds to stop the country from ratifying the European Stability Mechanism, the permanent euro bailout fund. However, the justices expressed some reservations.
Morning Market Commentary & Weekly Charts – Russia’s “Nukes of Hazard”
Weekly Investment Conclusion:
Downside risk exceeds upside potential in equity markets during the next six weeks.The breakout by the S&P 500 Index last week implies that depth of the downside risk is less than previous. Selected seasonal trades continue on the upside (gold, energy, software) and downside (transportation). However, many of these seasonal trades reach the end of their period of seasonal strength this month. September is a month of transition.
Morning Market Commentary & Weekly Charts
So Mr. Bernanke, Ready for a run down Corbett’s Couloir?
Following on from last week’s peak of the Federal Reserve Chairman Ben Bernanke’s closely watched speech at the Jackson Hole symposium, markets widely believe that further quantitative easing (QE) is now on the cards for the central bank’s next meeting on September 13th and 14th.
Global Markets Technical Outlook
We see the current EURO weakness, and implicit US$ strength as a tremendous opportunity to add towards EU quality assets, and inversely, to reducing US assets, as we expect the US$ weakness to resume later in 2010. Please read our in-depth report on the US Economy , Chinese Economy, Japan’s Economy, European Economies, Emerging Economies, Currencies, Global Equity Markets and Commodities.
Greek Myth(s)ology?
Mr. Trichet has an opportunity to help Greece to join the Modern Era. As we have been warning investors since November 2009 about the “Sovereign Risks” that would impact currencies, bonds and equities in 2010, we believe that now the risks seem to be fully taken into valuation accounts for the three asset classes.
CGI 2010 Global Markets Strategy & Equities Outlook and 50 Recommended Portfolio
The Year of Capital Preservation?