AGA Chart Book – April 26, 2013

AGA Weekly Chartbook

1.    Global Financial Conditions

  • The ACWI, EAFE, and S&P 500 (+1.76%) rallied this week, led by Europe/Developed International
  •  U.S. and European Financial Conditions have deteriorated, but remain near levels conducive to risk taking
  • S&P 500 P/E multiple is forecasted to contract from 15.5 to 12.9 over the next 20 months
  • Consensus earnings growth for the forward 12 months (FY) is forecasted at a lofty 11.2%, down from 12.2% last week

2.    Interest Rates and Fixed Income

  • The US 10yr yields have made a meaningful move lower over the last 6 weeks, currently @ 1.66%
  • Investment Grade Bonds broke out to new highs as spreads push towards 12 month lows
  • High Yield Bonds have made new highs, and spreads  appear ready to continue narrowing
  • 5 Year Forward Inflation Expectations increased to 2.77% after touching 2.64% earlier this week

3.    Major Currencies

  • The Mexican Peso (+7.0%) and Japanese Yen (-18.8%) 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 @ $1.30, down from $1.31 last week
  • MXN/USD @ 12.17, strengthening from 12.26 last week but showing early signs of a trend reversal

4.    Global Equity Markets

  • Global Equities, ex-EM, continue to rally despite worse than expected economic data
  • The S&P 500 Advance Decline Line, a measure of breadth, has broken out to new highs on week momentum
  • The MSCI Emerging Markets have significantly underperformed in 2013
  • Healthcare (+23.4%) leads Global Sectors YTD; Basic Materials lag all sectors (-3.0%) YTD
  • Asia Pacific (+21.5%) leads global regions YTD; Eastern Europe lags all regions (-0.6%)
  • AGA Top Ranked Countries – MTD: #1 Turkey: -0.35%, #2 Japan: +11.5%, #3 Germany: +1.77%, #4 Russia: -3.9%, #5 Switzerland: +2.3%

5.    The Economy

  • U.S. GDP growth for Q1 2013 came in at 2.5%, below expectations for 3.2%
  • Q1 2013 U.S. economic growth was led by consumers, while capital expenditures lagged
  • Personal Consumption Expenditures (PCE) rose 3.2% YoY, the fastest pace since Q4 2010
  • Housing, Real Estate, Labor, and the Personal Sector have been the bright spots of the US Economic Recovery
  • The Industrial Sector and Business Cycle Indicators have been disappointing
  • Economic Data has been worse than expected over the last 9 weeks

6.    Commodities

  • Commodities (an equally weighted basket) remain in a medium-term downtrend
  • Gold @ $1462/oz., up from $1403/oz. last week
  • Oil @ $93/barrel, rallying from $88.01/barrel last week

7.    Investor Sentiment

  • The VIX Index @ 13.61, down from 14.97 last week
  • Financial Stress decreased over the last 2 weeks, but remains in a modest uptrend
  • AAII % Bearish outnumber % Bullish by 10.5%, up from 21% last week
  • The Citi Macro Risk Index is trending higher

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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