Monday, December 02, 2019
Please
find below our latest Weekly Trend Update Report covering major
asset classes and currencies.
Have
a nice week end.
Marc
Bentin
Trend
Status Update
The Eurostoxx50 gained 0,6% (26,3%), underperforming the S&P500
by-0,7%. Diversified EM equities (VWO) dropped -0,6% (10,4%), underperforming
the S&P500 by a larger -1,9%. CSI300 Chinese equity index (ASHR) dropped
-1,9% (25,8%) as investors fretted about the deteriorating health of smaller lenders,
their mounting (around 40%) bad debt and liquidity problems as more than 13% of
the 4379 small lenders are now considered “high risk” by the central bank.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7
currencies gained 0,3% (5,7%) while the MSCI EM currency index (measuring the
performance of EM currencies vs. the USD) dropped -0,1% (1,0%). EURUSD gained
0,1% (-3,9%). EURCHF gained 0,4% (-2,1%). EURJPY gained 0,6% (-4,1%). EURGBP
dropped -0,1% (-5,1%). JPY weakened last week as Japan’s industrial output dropped
-4.2% from the previous month in October and at the fasted pace in one year,
exposing the economy’s decline in domestic and foreign demand. Whilst Japan has
been the trend setter in slashing rates to historical lows coupling those with
QE and as Japan gears up to “reembrace the power of public spending” following
an increase in the sales tax (expectations for a politically motivated fiscal
stimulus in Japan rose from JPY5trn to JPY20trn,
double the largest stimulus enacted after the tsunami of 2011), the previous BoJ Governor Kuroda regretted not to have hiked rates to 1% and admitted
he hated QE. Japan’s economy is expected to shrink by 2.7%
this quarter. This could be a good enough set of reasons (next to the relentless
equity market rally) to question JPY current valuation before that of the USD
going into next year.
10Y US Treasuries dropped 1bps (-91bps) to 1,78%. 10Y Bunds were unchanged
(-60bps) at -0,36%. 10Y Italian BTPs climbed 5bps (-151bps) to 1,23%, matching
Bunds.
US High Yield (HY) Average Spread over Treasuries dropped -21bps
(-156bps) to 3,70%. US Investment Grade Average OAS dropped -3bps (-57bps) to
1,15%. In European credit markets, EUR 5Y Senior Financial Spread dropped -3bps
(-54bps) to 0,57%. EMLC (VANECK JPM EM LOCAL CCY BOND) dropped -0,8% (-0,2%).
Gold gained 0,1% (14,2%) while Silver closed unchanged on the week
(9,9%) after a strong and unexpected metals’ rally on Friday which coincided
with selling on the dollar index. Major Gold Mines (GDX) gained 1,0% on the
week (28,4%).
Goldman Sachs Commodity
Index sold off by -2,3% (7,9%, Z-score -2,6). WTI Crude sold off by -5,8%
(21,5%, Z-score -2,1) with Natgas also blasting off (below its 50d and
200d ma) to the bottom of its Bollinger band.
Over the week end
Asian
shares rose this morning supported by strong Chinese (and Taiwanese) manufacturing
data and Global Times reporting that China wants tariffs to be rolled back as
part of the phase I trade deal with the US. A gauge of China’s manufacturing
sector jumped unexpectedly in November back into expansion (to 50.2 from 49.3) after
a year of contraction and may help validating investor optimism that the global
economic slowdown has bottomed. The non-manufacturing PMI also rose strongly to
54.4 from 52.8 in October, beating the consensus forecast of 53.1. S&P500
+10 points
Sales
on the internet reportedly rose 18%. Today comes “ciber” Monday…in the steps of Black Friday.
US
ISM manufacturing and construction spending are due out today and the job
report on Friday (expected to show non-farm payrolls rose by 190’000 in
November).
D.
Trump will be landing in London today…and B. Johnson must be hoping that the
expected support he will get from the US President will not play in the hands
of J. Corbyn (a recent poll suggested Labour is slowly eating into the
Conservatives’ lead before for Dec. 12’s vote).
Trend Score Card
Click here for technical annotations.
US
& International Equities
Check out US and International Stocks’ Technical Trend
Status.
Sector
Trend & Momentum (revised)
Check out equity sectors’ trend and performance …and
when they break out!
Fixed
Income
Check out 10Y US Treasury and Bund yields, their trend,
expected Fed rate moves and speculative positioning in 10-year Treasury Futures.
US Recession
Risk Radar
A comprehensive list of economic
indicators to compare the current situation with previous recessions.
The
Dollar
Check out where the Dollar stands Trendwise and Breakoutwise vs. G7 and EM counterparts.
Precious Metals
Check out where precious metals
stand Trendwise and Breakoutwise. Get a sense of options
(cumulative open interests on calls and puts) and futures traders’ sentiment
(non-commercials open positions).
Why Trend Following Matters and How It Can Help
You?
The last months of 2018 illustrated
how fast and furious markets can fall. Trend following offers guidance as to
when to join and when to leave an asset class with changing trend
characteristics. A disciplined and rule-based trend following investment approach
can serve as an effective portfolio insurance technique. Our purpose, beyond
tracking economic, political and monetary developments is to assist readers
investing in global markets with a keen focus on trend formation covering all
important asset classes.
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