Guest post by Peter Tchir.
What Are Investors Thinking About Coming Into the Home Stretch?
Whether it is right or wrong, many still think of investing on a calendar year basis. So as we crawl through this period of incredibly low volatility and low volume it is time to start thinking about the home stretch. Coming into year end there are some striking numbers that investors and money managers must be thinking of and are likely to influence their decisions for here on out.
The S&P 500 is up 11.8% for the year. The Nasdaq is up 16.3%. Had you been lazy and just bought AAPL (which is allegedly the most owned stock by hedge funds), you would be up 55.8%. Had you “tried to lose client money” by buying banks, you would have failed there too. XLF is up 16.4% and even JPM, with the whale trade and LIBOR is still up 11.5% this year (remember how bearish everyone was on banks at the start of the year?).
Okay, what about Europe? Well an investment in the STOX 50 would be down 1% in USD, but still up 4.9% in Euro. The Nikkei is up 7.5% in Yen terms and 4% in dollars.
Guest post by Doug Short.
The past week was shaping up to be one of the strongest performances of the year for our eight featured world markets. But then Friday happened. Seven of the eight closed the week with a selloff following renewed anxiety over the eurozone debt crisis. Only the Hang Seng continued its rally, finishing the week as the top performer with a 2.87% gain. The DAXK came in a distant second, up 1.11%, but at Thursday’s close it was up 3.07%. The Shanghai Composite was the week’s worst performer. In fact, on Monday it hit a new interim low, 38.12% off its 2009 high.
The table inset in the chart below shows that four of the eight markets, the Asia-Pacific contingent, are in bear territory — the traditional designation for a 20% decline from an interim high, unchanged from last week. In our gang of eight, the S&P 500 remains the closest to an interim new high, down 3.97% from its April 2nd peak. At the other end, the Shanghai Composite is a stunning 37.53% off its interim high of August 2009.
Weekend market review, courtesy Doug Short.
Last week, the first week of the 3rd quarter, was a mixed bag for the eight world markets on my weekly watchlist. Half posted gains, half losses, with the average of the eight in the modest green at 0.32%. The fractional positive skew is attributable to the top performing Hang Seng and the close runner-up FTSE 100. Second thoughts in the aftermath of the previous week’s EU summit put the German index just below break-even and sent the French index to the bottom of the list. The S&P 500 finished next to last on ghostly post-holiday trading volume and disappointing employment data.
The table inset in the chart below shows that four of the eight markets are in bear territory — the traditional designation for a 20% decline from an interim high, unchanged from last week. However, the German index is only fractionally above the bear stigma. In our gang of eight, the S&P 500 remains the closest to an interim new high, down 4.54% from its April 2nd peak. At the other end, the Shanghai Composite is nearly 36% off its interim high of August 2009.
European leaders put off any decisions on shoring up the region’s banks at a late-night summit on Wednesday despite rising concerns that instability in Greece was undermining confidence in the eurozone’s financial sector. Instead, the heads of the EU’s main institutions were given the task of drawing up proposals for closer fiscal co-ordination in time for another summit next month, including plans that could include a path towards a Europe-wide deposit guarantee scheme and, in the longer term, commonly-backed eurozone bonds. http://www.ft.com/intl/cms/s/0/81d5eab0-a539-11e1-b421-00144feabdc0.html
Millions of Egyptians went to the polls to choose a president in a historic election intended to end army rule and usher in a new democratic era more than a year after the uprising which overthrew Hosni Mubarak. Lines formed in front of voting stations and a brisk flow of voters cast their ballots, though turnout in the first of two days of the election appeared lower than in the first post-Mubarak parliamentary poll held late last year. http://www.ft.com/intl/cms/s/0/7ed1b966-a43a-11e1-a701-00144feabdc0.html
The shale gas boom in the US has led to a big drop in its carbon emissions, as power generators switch from coal to cheap gas. According to the International Energy Agency, US energy-related emissions of carbon dioxide, the main greenhouse gas, fell by 450m tonnes over the past five years – the largest drop among all countries surveyed. http://www.ft.com/intl/cms/s/0/3aa19200-a4eb-11e1-b421-00144feabdc0.html
All news below.
Germany refused to share the debt burden of stressed eurozone peers on Tuesday, ignoring two of the most influential international economic bodies which offered support for proposals championed by Paris, Rome and Brussels ahead of a summit. Angela Merkel, Germany’s chancellor, has argued that any co-mingling of eurozone debt would remove incentives for southern economies to adopt structural reforms. The calls from the International Monetary Fund and the Organisation for Economic Co-operation and Development came on the eve of Wednesday’s EU summit.
Asian shares retreated as hopes of fresh measures to tackle Europe’s debt crisis faded ahead of a meeting of European leaders while weak trade figures weighed on Japanese exporters. The MSCI Asia Pacific index slid 1.2 per cent with Japan’s Nikkei 225 Stock Average 1.2 per cent lower, Australia’s S&P/ASX 200 index down 1 per cent and South Korea’s Kospi Composite index off 1.3 per cent. Hong Kong’s Hang Seng index fell 1.5 per cent while China’s Shanghai Composite index slipped 0.2 per cent. http://www.ft.com/intl/cms/s/0/b71e7fe0-a2ee-11e1-826a-00144feabdc0.html#axzz1vfG4GISL
Western powers are prepared to offer Iran an “oil carrot” that would allow it to continue supplying crude to Asian customers in exchange for guarantees it is not building an atomic bomb. As the five permanent member of the United Nations Security Council, Germany and the European Union prepare for talks with Iranian officials in Baghdad on Wednesday, diplomats and oil executives said Washington and Brussels were likely to hold out the prospect of a possible suspension of an EU insurance ban on ships carrying Iranian oil. They added that the US and EU are not prepared to lift other sanctions – including an EU import ban on Iranian oil – and also cautioned that a deal is unlikely to be agreed at the meeting. http://www.ft.com/intl/cms/s/0/149b7962-a433-11e1-84b1-00144feabdc0.html#axzz1vfG4GISL
Some of those are actually breaking big dynamic formations today.
Below is a quick chart recap of stuff that is at or breaking critical levels.
It feels the markets have been all over the place, but in fact, the “real” markets have traded in a range over the past weeks. The Eurozone momo countries have fallen aggressively over the past months. IBEX and the MIB have reached some short term support levels. If these levels break on us, it will be nasty. SPX and the DAX on the other hand, have been accumulating for a break out soon.
Essential charts below.