AGA Chart Book – June 28, 2013

AGA Weekly Chartbook

1.    Global Financial Conditions

  • Global Financial Conditions improved this week, but Macro Risk and Market Stress remain elevated
  • Bond Fund redemptions are spiking to levels last seen in October of 2008
  • 0% of MSCI Equity Markets are above their 50 day moving average
  • 84% of MSCI Equity Markets have upward sloping 200 day moving averages
  • After breaking its 50 day MA @ 1620, the S&P 500 found support @ 1570 and rallied to finish the week @1606
  • The S&P 500 and US Treasuries have become positively correlated over the last month
  • Evidence is mounting that China is entering a growth recession and a period of monetary tightening
  • SHIBOR (Shanghai) interbank overnight lending rate remains elevated, but has dropped to 5.6% from 8% last week
  • The VIX Index (implied S&P 500 volatility) decreased to 16.9 from 18.8 last week

2.    The Economy

  • Economic Data has been better than expected over the last 4 weeks
  • Improvement in the US Housing sector is beginning to benefit state and local tax revenues
  • Vehicle sales have mirrored the improvement in home prices and building permits
  • US Consumer Prices, Personal Consumption Expenditures, and Personal Income Growth are decelerating YoY
  • The M2 Velocity of Money and US Loans-to-Deposits ratio continue to slow
  • 30 year Mortgage Rates made new 18 month highs @ 4.57%, up from 4.29% last week
  • Industrial Production, ISM Manufacturing, and Leading Economic Indicators are weak

3.    Interest Rates and Fixed Income

  • 10 year US Treasury Yields dropped to 2.48% from 2.53% last week, and are up from 1.62% in early May
  • Investment Grade and High Yield Bonds bounced back this week, up 1.3% and 0.8%, respectively
  • Investment Grade and High Yield credit spreads widened slightly this week, currently at 1.83% and 4.27%, respectively

4.    Global Equity Markets

  • Global equities bounced off of their medium-term uptrend this week, and the long-term uptrend remains intact
  • After correcting 7.5% from all-time highs, the S&P 500 bounced off of initial support near 1570
  • After diverging for most of 2013, the S&P 500 has narrowed the gap between lofty equity prices and disappointing economic data
  • Year over Year estimates for Q2, Q3, and Q4 2013 earnings growth are 4%, 16%, and 27%, respectively

5.    Major Currencies

  • All major currencies are weaker relative to the USD over the last 6 months
  • The Global Carry Trade, driven by central bank liquidity, remains under pressure of increasing rates and volatility
  • MXN/USD @ 12.93, strengthening sharply from 13.33 last week
  • USD/EUR @ 1.30, weakening from 1.31 last week

6.    Commodities

  • Commodities (an equally weighted basket) remain in a cyclical downtrend
  • Gold @ $1234/oz., down from $1294/oz. last week

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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s