Another busy week of analysis, trades, comment and images.An interesting week on various fronts. Here below some of the highlights of the last week from the forum pages.
Major themes this week were:
International equities making 5 year highs.
Euro strength vs her major developed world pairs. Inc GBP, USD, JPY.
Increased volatility in the commodities markets but no price breakouts in spite of the volatility and breakout of equities. Commodity cyclical bear market still in place, for the moment but traders picking up allocations and increasing volatility.
Considerable (and frankly personal surprise) GBP trade weighted weakness vs most majors but particularly Euro and Nok amongst others. Again a major question mark now hangs over the pound for as long as the cyclical bull vs the euro stands broken. Do you fully fund GBP equity longs with pounds or is the pound becoming the carry trade currency. We must all come to our own conclusions in the coming months on this issue.
Continuation of the secular JPY fx bear and secular japanese equity bull trade.
Overall its been a good week for trend traders with continuation of all themes. The commodity laggards once again failing to attract decisive capital though volatility increasing.The question traders should be asking themselves is a return to the age old question. When will the inverse long term relationship between commodities and equities reassert? Or rather when will inflation expectations jump up. Commodities have a positive beta to positive inflation expectations. Commodity bulls must continue be patient for now.
A couple of content updates i missed in the week.
Here the German team’s update on the bullion. Apologies for the lateness of the post. All i can say is that the intra-day correlations and price patterns on the shorter term must be your guide here. We are in a narrow range and close to a decisive move in the bullion. Direction will be derived from more short term trading techniques that Commerz don’t cover. (That’s my excuse for not posting in any case).
Here the report:
BullionWeeklyTechnicals29012013
Here as a new issue of the famous paper by Gary Gorton and K. Geert Rouwenhorst’s “Facts and Fantasies about Commodity Futures”.
The paper provides empirical evidence of the out and under performance of commodities during the various phases of business cycles. (Bonds and stock various correlations are also discussed).
The report was publicized, thanks in large part to Jim Rogers in 2004, who refers to its findings throughout his book “Hot Commodities”.
Have a great weekend all.
Rich
First up a short article on the correlation between the Fed and Inflation
http://www.youtube.com/watch?v=cikT5DdvGj4&feature=player_embedded#!
A nice report on the asian commercial property market: Asiapacific-commercialprop-dec2012
Care of Euro Pacific Capital a nice image that captures the evolutionary monetary cycle for us:
From the book “The Economics of Inflation – A study of Currency Depreciation In Post War Germany”
Russian Bank’s analysis of the ERP fund flow data as it refers to EM capital flows:
Latest US Mortgage Application to Purchase Index
Wells Bank’s view of the latest US durable goods nos:
Latest Spanish Mortgage application nos, approaching zero.
Copper and Silver futures re-based to the 9th of Dec 2012. Illustrating their relative performance:
And a chart of the mid stages of the Eurgbp rally which has now broken through the cyclical bear trend line vs the gbp catching many stops in the process. Have we seen the end of the cyclical bull for the gbp vs the euro is the question many asset allocators will be asking themselves this weekend. My view no. Or rather not yet but 2013 is likely to see the secular euro bull reassert herself but only after Spain is recapitalized and Greece leaves the euro. In my view.
50443369-Healthcare-REITS-110310-OIR
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