Equities upside down, hold no currency

So no rate rise this year. Where did I hear that before?

Oh yes, on this blog in January.

Global equities are soaring on the relief rally. But it is a relief? No. It has more to do with currencies across the globe weakening on zero growth.

It’s a strange dynamic of no global economic growth beating up the dollar, which sends Asian markets rising and carries through to Europe and the US futures pre-open.

You really can’t make it up.

Off of yesterday’s column on market strain and complexity the largest Asian ETF fund is not taking any new money over liquidity fears.

The leverage on the fund is 2 times the Nikkei, so as the index has fallen the fund manager Nomura has had to double down on lines of credit to pay off investors. Not a good scenario, but one very similar to the high-yield energy and corporate debt ETFs here in the US being pushed by BlackRock.

The search for yield in zero land could be the downfall of the markets this fall.

When selling comes to leveraged assets it like The Who concert in Cincinnati, small door and everyone trying to get through at the same time.

In a sign that the global economy is doing fine. Gold is up $110 an ounce since late July lows and is above its 200 day moving average. The 200-day mark is a strong technical buy signal for traders in most asset classes, but I look for gold to take a hit, since it is the benchmark for grading how central banks are performing. LOL. If it ends the week higher than $1,185 it could be a breakout moment.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.