AGA Chart Book for 03.01.2013


AGA Weekly Chartbook

1.    Global Financial Conditions

  • The S&P 500 finished the week slightly higher after a sharp Monday selloff
  • U.S. Financial Conditions have pulled back from 12 month highs
  • European Financial Conditions continue to deteriorate
  • Emerging Markets have underperformed Developed Markets YTD
  •  European Markets are under pressure YTD: Italy (-3.67%), Spain (+0.24%), France (+1.62%), Germany (+1.26%)
  • Spanish and Italian 10yr Bond Yields, 5.08% and 4.77% respectively, have not confirmed the January rally in risk assets
  •  S&P 500 P/E multiple is forecasted to contract from 14.97 to 12.27 over the next 24 months
  • Consensus earnings growth for FY 2013 is a lofty 10.3%

2.    Interest Rates and Fixed Income

  • The US 10yr yields struggled to hold 2.00%, sliding 13bps lower on the week, currently @ 1.84%
  • Investment Grade and High Yield credit spreads have stopped narrowing
  • 5 Year Forward Inflation Expectations are at 2.76%, down from 2.90% in Mid February

3.    Major Currencies

  • The South Korea Won (+4.62%) is the strongest major currencies vs. USD over the last 6 months
  • The Japanese Yen (-16.24%) is the weakest major currencies vs. USD over the last 6 months
  • The Canadian Dollar is forecasted to be the strongest major currencies vs. USD (+3.72%) through Q2 2013
  • The Swedish Krona is forecasted to be the weakest major currencies vs. USD (-1.59%) through Q2 2013
  • The US Dollar has bounced nicely from support @ 79, currently @ 82.76 on the Dollar Index
  • EURO @ $1.3022, down from 1.33 two weeks ago
  • MXN/USD @ 12.76, weakening from 12.70 last week (12 month lows are@ 12.54)

4.    Global Equity Markets

  • The ACWI, MSCI EAFE, and MSCI EM are all consolidating near recent 12 month highs, but are at risk of losing upward momentum
  •  Over the last 12 months (in USD): Turkey (+31%), Thailand (+22%), and Australia (+22%) lead global markets
  • Healthcare (+11.71%) leads Global Sectors YTD, Basic Materials (+0.54%) lag Global Sectors YTD
  • Asia Pacific (+9.97%) leads global regions YTD
  • Small and Mid Cap Stocks have outperformed Large Caps YTD

5.    The Economy

  • Housing, Real Estate, and the Labor Market have been bright spots of the US Economy
  • Business Cycle Indicators are improving
  • The Industrial Sector Indicators have disappointed
  • Personal Income Growth missed expectations, coming in at -3.6%
  • ISM Manufacturing Index beat expectations, coming in at 54.2

6.    Commodities

  • Commodities (an equally weighted basket) remain in a medium-term downtrend and are at 8 month lows
  •  Gold @ $1576/oz., is down from $1610/oz. just two weeks ago, support at $1550/oz.
  • Oil @ $90.68/barrel, down from $95.86 two weeks ago
  • Platinum is up 2.19% YTD, currently trading @ $1573/oz.
  • Average Gas Prices continue to move higher, currently at $3.77

7.    Investor Sentiment

  • The VIX Index @ 15.36, up from 12.46 two weeks ago
  • Financial Stress remains low, but has been quietly increasing the last 4 weeks
  • Bullish Fund Flows deteriorated for the second week in a row
  • Bears now outnumber Bulls by 8.2%, backing off from 9.29% more Bulls than Bears last week
  • The Citi Macro Risk Index spiked this week, but remains moderate

 

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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