FX Futures: World Markets Are Bifurcated
Richard Rhodes | Jan 06, 2014 11:55PM ET
STOCKS: The world economy is has begun to heal if we look at the PMI figures across the world. However, there remain clear headwinds to the continuation of this healing, like speed-limiting higher interest rates. Quite clearly, we feel risk is being mispriced at current levels given the economic backdrop and developing pressure upon corporate revenues/margins/ earnings. But, the QE pillars and unlimited Fed communication regarding low interest rates continue to hold traders’ sway.
STRATEGY: The S&P 500 remains above the 160-wma long-term support level at 1431; and the standard 200-dma support level at 1682. But perhaps more importantly, the distance above the 160-wma has regained the+28% level that denotes a potential “bubble-like rally” threshold. If it expands above +30%, then an upside explosion is under way. For now, the +30% level has proved its merit. Occam’s Razor anyone?
WORLD MARKETS ARE BIFURCATED THIS MORNING as Asian bourses closed rather sharply lower, while European bourses have shrugged that off to a large degree and are modestly higher. Japan’s NIKKEI suffered the worst loss at -2.35%, which really isn’t surprising given the 2013 gains and those willing to take their profits here in January and look to pay their taxes in 2015. China also was lower by -1.80%, which is due to China’s services PMI dropping in December, but perhaps more attached to the fact that China’s cabinet published guidelines to strengthen regulation of risky off-ball sheet lending facilities in order to address growing financial risks from the recent revelation local debt soared by 70%. That said, European shares are modestly higher – led by the risk markets of Italy and Spain, both higher by +0.8%.
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