AGA Chart Book – April 19, 2013

AGA Weekly Chartbook

1.    Global Financial Conditions

  • After making new 12 month highs last week, the ACWI, EAFE, and S&P 500 (-2.1%) turned in their worst week of 2013
  • U.S. and European Financial Conditions have retreated from levels conducive to risk taking
  • S&P 500 P/E multiple is forecasted to contract from 15.3 to 12.6 over the next 20 months
  • Consensus earnings growth for the forward 12 months (FY) is forecasted at a lofty 12.2%

2.    Interest Rates and Fixed Income

  • The US 10yr yields have made a meaningful move lower over the last 5 weeks, currently @ 1.71%
  • Investment Grade Bonds broke out to new highs as spreads rest on 12 month lows
  • High Yield Bonds are near new highs, but appear to be losing momentum
  • 5 Year Forward Inflation Expectations are subdued at 2.72%

3.    Major Currencies

  • The Mexican Peso (+5.1%) and Japanese Yen (-20.3%) are the strongest and weakest major currencies vs. USD over the last 6 months
  • The US Dollar has rallied nicely from support @ 79, DXY is attempting to make new 12 month highs and break a 3 year down trend
  • EURO @ $1.31, flat this week
  • MXN/USD @ 12.26, weakening from 12.08 last week and retreating from fresh 12 month lows

4.    Global Equity Markets

  • The ACWI, EAFE, and S&P 500 are near 12 month highs but have begun to re-exhibit signs of exhaustion
  • The Advance Decline Line, a measure of breadth, for the S&P 500 is losing momentum
  • The MSCI Emerging Markets have significantly underperformed in 2013
  • Healthcare (+19.9%) leads Global Sectors YTD; Basic Materials lag all sectors (-6.8%) YTD
  •  Asia Pacific (+17.1%) leads global regions YTD; Eastern Europe lags all regions (-2.2%)
  • AGA Top Ranked Countries – MTD: #1 Turkey: -0.7%, #2 Japan: +8.0%, #3 Germany: -2.3%, #4 Russia: -7.3%, #5 Switzerland: -0.4%

5.    The Economy

  • Leading Economic Indicators slipped -0.1% in March, its first decline in 7 months, and contrary to expectations of +0.2%
  •  The LEI Conference Board noted, “The pace of growth is not likely to accelerate in the 2nd half of the year.”
  • Housing, Real Estate, Labor, and the Personal Sector have been the bright spots of the US Economic Recovery
  •  Business Cycle Indicators have been disappointing
  • Economic Data has been worse than expected over the last 8 weeks

6.    Commodities

  • Commodities (an equally weighted basket) remain in a medium-term downtrend
  • Gold @ $1403/oz., down almost $200 in two weeks
  • Gold to Gold Miners Ratio has pushed to new highs @ 13.6
  • Oil @ $88.01/barrel, has broken its 10 month uptrend

7.    Investor Sentiment

  • The VIX Index @ 14.97, up from 12.06 last week and picking up momentum
  • Financial Stress increased over the last 2 weeks, and remains in a modest uptrend
  •  AAII % Bearish outnumber % Bullish by 21.4%, down from 35% last week
  • The Citi Macro Risk Index is currently at the high end of end ascending channel

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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