We see higher highs. And we see polarizing conditions in the currency, commodity and bond markets. More on global markets from Ziad Jasani of the Independent Investor Institute, writing on Tuesday.
View this week’s video commentary here:
It is hard to imagine the equity markets’ future being brighter than it is now, unless central banks temper their plans to “normalize” policy in the face of rising inflation.
For now, higher-highs are where we are but under-the-hood we see polarizing conditions in the currency, commodity and bond markets.
We start this week’s trading with six key “under-the-hood” market conditions:
- Bond yields near 52-week highs on signs of inflation (US CPI)
- Euro break-out/USD (EUR/USD) break-down
- Gold/silver/miners break-out on the USD break-down
- Oil break-out nearing $65
- S&P 500 Futures bettering 2,800
- Q4 2017 earnings delighting.
The underlying themes this week:
- Equities stretched to highs (most overbought in history)
- Is tax-reform priced in?
- Is global growth priced in?
- Will inflationary surprises force more than market-expected hawkishness from central bankers?
- Q4 2017 earnings stoking the retail-bull fire. Are we embarking into a blow-off-top-phase, where institutions transfer risk over to retail and leave them holding-the-proverbial-bag?
- Cost of living and cost of credit rising (US CPI printed hotter)
- USD break-down over-done, driven by deficit fears (tax plan), and euro gains on Merkel coalition.
- Commodities breaking-out (but now stretched to extremes)
Video recorded 8:55am EST Tuesday, January 16, 2018
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