Macroview reading between the lines
This presentation is the property of its rightful owner.
Sponsored Links
1 / 8

MacroView : Reading Between the Lines PowerPoint PPT Presentation


  • 70 Views
  • Uploaded on
  • Presentation posted in: General

MacroView : Reading Between the Lines. US 10 Yr US Dollar Index Nikkei US Financials v. Far East Financials US Financials v. US REITs SP 500 v. Brazil SP 500 v. Emerging Markets Brent Crude Gold and Gold Miners.

Download Presentation

MacroView : Reading Between the Lines

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Macroview reading between the lines

MacroView:

Reading Between the Lines

  • US 10 Yr

  • US Dollar Index

  • Nikkei

  • US Financials v. Far East Financials

  • US Financials v. US REITs

  • SP 500 v. Brazil

  • SP 500 v. Emerging Markets

  • Brent Crude

  • Gold and Gold Miners

Our mission is to produce original, unbiased, thought-provoking observations that will unlock the message of the markets. Our view is neither bullish nor bearish, our goal is to uncover potential ideas and opportunities for our clients.

SP 5001,630.74

10 Yr2.164%

Gold1,392.6

DXY83.375


Macroview reading between the lines

Summary

Recent movements in the markets have been swift, leaving many investors ill-prepared for higher volatility. Global interest rates are rising, foreign currencies are declining against the USD, and global equity markets are dropping. While the S&P is performing well on the surface, the internals of the market are showing erratic movements across sectors.

Will this current volatility usher in a new wave of increasingly turbulent markets?

In terms of the US market, there have been warning signs over the past several weeks indicating current trends will not hold. We are now starting to see the correction on an absolute level.

With the underperformance of the global markets relative to the S&P widening to 2009 extremes, we are now at a crossroads. If the rest of the world does not begin to stabilize, there is a heightened risk of weakening in the S&P.

During a rising market, relative performance is what matters most to portfolio managers. If the market rises by 10%, a fund manager ultimately strives to beat their respective benchmark. During bear markets, the focus shifts toward ABSOLUTE performance. Different strategies become necessary for different markets.

Our goal is to provide an outline that helps

guide you through these shifting markets.


Macroview reading between the lines

US 10Yr YLD and US Dollar Index (July 2008 – Present)

  • US 10YR

  • Recent back-up in 10yr yields, either due to economic or confidence issues, is having a dramatic impact on the Financial markets

  • US 10YR currently testing secondary resistance at the 2.20%-2.40% range

  • US Dollar Index

  • USD Index challenging CRITICAL RESISTANCE LEVELS

  • Possible USD Index Head and Shoulders bottoming pattern targets 92 zone

  • Higher Yields + Higher

  • USD = historically has

  • led to a liquidity event

  • for global markets

RIGHT

LEFT

HEAD


Macroview reading between the lines

Every Action Causes a Reaction:

Nikkei Correction and the Relative Outperformance of US Financials

  • Nikkei 225

  • 13% correction caused tremors across many intermarket spreads

  • US Financials vs MSCI Far East Financials Index

  • Lack of confidence in Bank of Japan and its Asian neighbors’ monetary policies could be a watershed event

  • US Financials vs

  • US REITs

  • Lumber, down nearly 30% from its March peak, has been a headwind toward REIT outperformance

Nikkei Absolute Performance

Nikkei has risen over 75% since November of 2012. While the correction was overdue, it might be the start of something more meaningful.

US Financials Relative to Far East Financials Index

US Financials have outperformed Asian financials by 20% since the Nikkei peak

US Financials Relative to US REITs

  • Recent back up in Global Bond YLDs has caused a rotation within the interest rate sensitive groups to the detriment of REITS and related to the RELATIVE benefit of banks


Macroview reading between the lines

SP 500: 8 Month Performance

  • SP 500

  • Support 1 1625

  • Support 2 1600

  • Resistance 1 1650

  • Resistance 2 1675

  • Sector Performance MTD

  • SPX +3.26%

  • Materials +3.73%

  • Energy +4.48%

  • Financials +7.30%

  • Industrials +6.40%

  • Technology +3.70%

  • Staples -2.08%

  • Utilities -8.14%

  • Healthcare +2.73%

  • Cons Discretionary +3.31%

  • REITs -5.85

  • Transports + 4.55%

  • Gold Miners -.51%

  • In the month of May, it didn’t matter IF you were long or short, but, WHAT you were long or short

Since the recent lows in November 2012, the SP500 has had 3 corrections of nearly 3% that brought the index to within 6% of its 200dma. The current correction of about 3% still leaves the index almost 9% from its 200dma.


Macroview reading between the lines

Bouncing Ball or a Safe?:

SP 500 Relative to Brazil (EWZ)

  • SP500/Brazil

  • Testing upper end of channel resistance after rallying over 100% from July 2010 lows

  • Recent internal rotations have sent a clear warning of pause and possible peak in absolute price performance

  • While the SP500 is making 10YR highs, the Brazilian market is currently testing 3YR lows

  • The SP500 has outperformed the Brazilian Market by over 65% since the US Dollar Bottomed in April of 2010 (Vertical Blue Line)

  • Should Brazil break support, the SP500 will have a harder time generating ABSOLUTE gains

SP 500 Absolute Performance

SP 500 currently 8.5% above 200dma

USD bottomed April 2011

Brazil (EWZ) Absolute Performance

Brazil (EWZ) Relative to SP 500

Brazil down over 65% RELATIVE to SP 500 since Oct 2010

Trend remains down yet looks to be entering exhaustion zone. Capitulation may be ahead.


Macroview reading between the lines

Emerging Markets (EEM) Abolute and Relative to SP500 - Brent Crude

  • EMERGING MARKETS (EEM)

  • Consolidation continues with directional resolution coming soon

  • Support 1 40

  • Support 2 37

  • Resistance 44

  • Resistance 46

  • EEM vs SP500

  • Emerging Markets have underperformed the SP500 and are currently testing 2009 relative spread levels

  • Overall spreads seem to lean towards a washout and upcoming reversal

  • BRENT

  • Crude testing support at 100

  • Break of support will most likely coincide with a break in overall equity markets

EEM Absolute Performance

EEM Relative to SP500

Brent Crude Performance


Macroview reading between the lines

GOLD (USD) and the GOLD MINERS (GDX)

  • GOLD

  • KEY SUPPORT remains 1325-1350 zone

  • Close ABOVE 1425 would be a ST bullish reversal targeting 1450-1475

  • Many outside asset classes are impacting the daily action in the GOLD space

  • Discipline over conviction

  • GOLD MINERS (GDX)

  • Massive underperformance YTD

  • Relative and absolute levels holding firm the past several weeks

  • Close ABOVE 31 would be a bullish development


  • Login