Tuesday, 17 March 2015

Charts and macro thoughts today

So many interesting financial and related stories at the moment.  First whilst Mr Putin has re-emerged tensions in that broader part of the world continues.  I note that conscription is coming back for  Lithuania as “no other way to strengthen its army” as fear over a potential Russian invasion heightens.  

Meanwhile re Ukraine there is a growing divisions in the press between countries (UK, Nordic, Baltic) who want a six month extension to Russian sanctions and others who don’t...



Meanwhile in European markets the "core" Dax index (non reinvested dividends) has finally surpassed its 2000 high of 6,266.15 level touched on March 7, 2000.  It closed at 6,240.4 after giving up some of its gains in the last trading hour of the day.  Reflecting this optimism in European bonds peripheral high yield issuance is very high (all this despite Ukrainian bond haircut fears...) 


But, but...if you exchange rate adjust some of the recent romp in European equities it does not look so good...

(h/t @MktOutperform) 

And then we turn to Japan and specifically the Bank of Japan who keep their loose policy as "The year-on-year rate of increase in the CPI is likely to be about 0 per cent for the time being”.  This helped the Nikkei to push to a new 15 year high as the BoJ said Japan's economy is in a "moderate recovery trend" and that is set to continue particularly as "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective".  

So a new 15 year high...but again (h/t @MktOutperform) you currency adjust it and everything looks a little different...




Also on Japan whilst there is chat about Toyota raising wages most since 2002 but I note in a Reuters poll ‘75% Believe Of Japanese Firms That The Last 2 Wage Rises Will Not Offset Sales Tax Hike’ = not good.

I still anticipate the yen falling to c. 140 against the US dollar...

Sticking with exchange rate and Asia, in Australia the RBA minutes are out...with a usual refrain to them: Although the Australian dollar had depreciated, particularly against the US dollar, it remained above most estimates of its fundamental value, particularly given the significant declines in key commodity prices.

Currency wars...

Finally - and despite Chinese markets are being strong due to stimulus hopes - this Hong Kong property chart is pretty ugly unless you are looking to buy: 


As I said, some interesting compare/contrast realities in global markets currently.  I am continuing to build up my long volatility position...

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