Hey it’s Kieran! I hope that you had a great weekend and are looking forward to getting back into the markets this week. I’ll hopefully speak to you in the Traderseed programs, and as ever, if you have any questions, just contact me let me know. With that said, let’s get started!
Weekly Watchlist
This week key event to look out for will be the Fed’s interest rate decision on Wednesday. It is believed that the central bank will keep rates at their current level. Any surprises will cause chaos in the markets.
We’ll also get an update on US inflation when the Consumer Price Index (CPI) is released on Tuesday and the Producer Price Index (PPI) on Wednesday. Jobs numbers and US retail sales on Thursday will round off a busy week of data releases.
The Macro View
S&P 500 Positioning remains ‘Stretched’. Despite a lot of big moves in other asset classes last week (Gold, Crypto, Oil) equities held firm as traders held onto their equity positions.
The contrarian buy is long gone. BofA’s slow moving contrarian indicator nailed the lows. Biggest weekly jump since the Euro debt crisis in Feb 2012.
European Equities are exploding higher. The big story of these past few weeks has been the outperformance of European equities compared to US Equities. DAX and STOXX 50 posting all time highs last week.
European Equities still undervalued. Despite their relative outperformance, European equites remain undervalued compared to their historical average.
The China problem. One region where equities have very much not performed is China. China A50 is currently trading 45% off the 2021 highs. Curiously dip buyers arrived on mass last week with huge inflows.
The Biggest Asset Class in the World. The Chinese property market is the biggest asset class in the word and continues to implode. This needs to be watched closely.
US Economy. With that said, all is not rosy in the US. Despite economic figures holding up very well this past year, under the hood, Bankruptcy Filings are at decade highs. “Slowly at first and then all at once”.
I hope you found this interesting and useful. As ever, keep your risk management top of mind, trade safe, and stay nimble out there.
Have a good week!
Kieran
www.traderseed.io
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