Tuesday, 28 January 2014

Charts today - corrections, volatility, taxes and naval power

A few charts that struck me as interesting...

Futures have stabilised ahead of Tuesday's European and American sessions, but there is too much data out to call an end to the volatility of the last few business days. 
The above chart from The Daily Reckoning caught the debate nicely...is this (finally) the start of a 10% correction?  To me, if I had to make a call, it is the start of a period where there are plenty of 10%+ moves (up and down) in many more individual shares and asset classes.  Time for investors to get active.  I wrote about this much more at this link here

Yesterday I noted that the VIX at/above 20 has been a critical level for markets to bounce off over the last year.  We did not get there yesterday.  Keep watching volatility. 

Finally, a couple of 'alternative volatility inducing' charts beyond economic numbers and corporate disclosures.  I found this graphic on naval power in the East China Sea informative.  The US - clearly still holds the edge, but news in the last week that China has commissioned another aircraft carrier (their inaugural one was a Ukrainian refit) is a sign of generational intent.  China talks tough but still, at the moment, the US carries the big defence stick.  In economics though, it is much more balanced. 

Interesting that Italy, France, Spain and Belgium - all of which have struggled within the Eurozone in recent years - have the highest tax rates in the OECD.  This is not a flawless correlation - note Ireland - for example but thought-provoking.  My guess?  A continuation of the trend to lower corporate tax rates and higher indirect tax rates.  Better for an economy, not so good for consumers. 


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