AGA Chart Book for 1.25.2013


AGA Weekly Chartbook

The Accuvest Weekly Chart Book provides an update on the following:

1.   Global Financial Conditions

  • Financial Conditions continue to be bullish and remain at 5 year week highs
  • Global equity markets are off to a strong start in 2013 (ACWI +4.0% YTD)
  • Emerging Markets (+1.6%) have underperformed Developed Markets (+2.8%) YTD
  • Notable MTD Country Performance: Switzerland +9.3%, Italy +8.9%, Turkey +8.4%
  • The VIX was up slightly to 12.89 on the week, but remains near 5 year lows
  • Spanish and Italian 10yr Bond Yields moved higher for the 2nd week, currently at 5.15% (-12bps MTD) and 4.12% (-34bps MTD) respectively
  • S&P 500 P/E multiples are currently at 14.92 and are forecasted to contract to 12.24

2.    Interest Rates and Fixed Income

  • The US yield curve is largely unchanged over the last 12 months
  • Spanish and Italian sovereign yield curves have shifted nicely lower over the last 12 months
  • The US 10yr yield moved 11bps higher on the week, currently at 1.95% (7 month highs) and above resistance @ 1.93%
  • Investment Grade Credit Spreads are trending sideways, currently @ 179bps (-1bps this week)
  • Investment Grade Bond Prices are testing 3 month lows and now exhibit negative momentum
  • High Yield Bond Prices continue to make new highs
  • 5 Year Forward Inflation Expectations are at 2.81%, suggesting a low deflationary risk

3.    Major Currencies

  • The Japanese Yen (-14.02%) and South African Rand (-6.13%) are the weakest major currencies vs. USD over the last 6 months
  • The Danish Krone (+10.38%) and Euro (+10.74) are the strongest major currencies vs. USD over the last 6 months
  • The Japanese Yen and South African Rand are forecasted to be the strongest major currencies vs. USD through Q2 2013
  • The Euro and Danish Krone are forecasted to be the weakest major currencies vs. USD through Q2 2013
  • The USD Index has trended sideways over the last 4 months, currently at 79.74 and above 79.00 support
  • There is divergence between Euro Analyst Forecasts and Euro Forward Rates, currently at 1.28 and 1.35 respectively
  • EURO @ $1.346, up nicely on the week and testing 12 month highs
  • MXN/USD @ 12.71, weakening from 12.66 last week but near 12 month lows @ 12.54

4.    Global Equity Markets

  • In US Dollar terms, Italy (+11.16%), Spain (+9.01%), and Switzerland (+8.03%) lead Major Equity Markets YTD
  • The ACWI,  S&P500,and  MSCI EAFE are all making new 12 month highs
  • The MSCI EM is struggling to break above 12 month highs @ 1070
  • Healthcare (+7.42%) leads Global Sectors YTD, followed by Financials (+6.22%)
  • Western Europe (+5.74%) leads Global Regions YTD, followed by North America (+5.61%)
  • Companies with Market Caps below $100M (+6.17%) are leading all Global Market Caps
  • Out of the G8 countries, Germany (13.2%) and Japan (12.4%) have the highest Equity Risk Premium

5.    The Economy

  • Housing, Real Estate, and the Labor Market have been bright spots of the US Economy
  • Industrial Sector and Business Cycle Indicators continue to disappoint
  • Manufacturing and Housing Data missed expectations this week
  • The Economic Surprise Index has now broken below its sideways trending 4 week moving average
  • Initial Jobless Claims broke to 5 year lows this week, currently @ 330K/week

6.    Commodities

  • Commodities remain below November and September resistance
  • Gold @ $1658/oz., down $26 on the week
  • Oil moved up to $95.88/barrel, moving nicely higher from $85 in early December 2012
  • Average Gas Prices appear to have bottomed

7.    Investor Sentiment

  • The VIX Index is at 12.89 (near 5 year lows) after making 6 month highs @ 22.68 at the end of December
  • Financial Stress remains low, but did increase this week
  • Fund Flows have improved nicely over the last 3 months
  • Bulls outnumber Bears by a gaudy 28.1%
  • State Street Investor Confidence (a measure of portfolio exposure) remains near 5 year lows
  • The Citi Macro Risk Index remains low

Please feel free to forward any questions or suggestions.

Thanks,

James

disclosure: The opinions expressed in this Weekly Chart Book report are those of the author. The materials and commentary are strictly informational and should be used for research use only. This bulletin is not intended to provide investing or other advice or guidance with respect to the matters addressed in the bulletin. All relevant facts, including individual circumstances, need to be considered by the reader to arrive at investment conclusions that comply with matters addressed in this bulletin. Charts and information used in this report are sourced from Bloomberg.

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