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China – The domestic credit dragon.
Hang Seng (17.979)  Shanghai B (199,00)  USD/CNY (6,8315)

I have spend some time researching the rising Chinese commodity import as it has been discussed during the last 2 months. Naturally very interesting in respect of the commodity prices, but the conclusions affect all asset classes in China, including equities.
Many have heard that imports of physical commodities are so huge that they can’t be transported away from the ports. Some of the stories are true, but as always regarding China, we will never find the final answer. Based on different information sources, then around 1/3 of all commodities imported to China are bought and kept for speculative reasons.
The speculative commodity buying continues.

The higher…

EUR/USD (1,4000): Last I argued for a move to 1,4500 followed by a retreat towards 1,4000. The high was around 1,4325 and not 1,4500 but afterwards sold off to reach 1,4000. The trading pattern suggests that the air above 1,4250 is thin, but I feel, and will still argue, that the momentum points towards 1,4500.

EUR/USD still very much tracks the equity market but equities have lost upside momentum and EUR/USD hasn’t. It points towards less correlation between equities and EUR/USD for the coming period.

The growing risk appetite in Far East creates EUR inflow and should be observed, so keep a close eye on EUR/JPY and investor news from Japan.

I expect fundamentals to gain importance in the currency market,…

Nikkei 225 (9.290) Topix (880) Dax (4.957) FTSE 100 (4.483) Dow Jones (8.504) S&P 500 (910) Nasdaq Comp (1.733)

No doubt that I am very sceptical about the current rebound in the global equity market, or at least the speed of it, but right now we play the “all happy” game. I continue to believe in the W shape recovery, where the global markets currently are in the first V. I acknowledge that the low of the second V won’t reach the lows we had in the markets earlier this year (or last autumn in the BRIC countries).

I also agree that the world didn’t end in a black hole. We might have seen the worst in Far East, seeing some…

EUR/USD (1,4105): Yes, with capital flows into Europe combined with some concern about the US debt.

Let’s take the last one first. We are many who have raised the US debt concern several times and it will be a long term burden for the greenback. Though the latest USD sell offs on that account seems more speculative than fundamental. On the other side of the Atlantic, in Europe, are we trying to save everything with state debt (lending plus serious large off balance sheet positions) so the debt concern will mid term swing back hitting the Euro.

The capital flows are more fundamental, as what I have seen origin from Japanese investors to a large extend. We don’t like to hear…

Below you will find my weekly view on the very challenging financial markets.

Read more about all the interesting happenings in the financial markets in the 4 entries here below. I hope you find it interesting to read my private view about the consequences for the stock markets, currencies, China and what to expect from the central banks.

I apologise for not having updated with comments the last 3 weeks but I had 1½ weeks holiday on 2 very nice hotel. Very unfortunate did the wifi not work. Then Easter arrivved……

The 4 entries from today are:

Currency markets – Back in the risk aversion / appetite game again

Equities – A new recovery shape has been invented – the W shape recovery.

China…

Currency markets – Back in the risk aversion / appetite game again.

EUR/USD (1,3180): This time the FX comments are a bit shorter as it is mainly a correlation play with risk aversion / equities right now.

During my holiday the long entry idea at 1,3300 was reached and is still alive as the stop loss is at 1,3000. The range after was 1,3100 to 1,3600. I had expected EUR/USD to trade much closer to 1,4000 after Easter based on the buoyant stock market. Clearly didn’t materialise so far and EUR/USD looks toppish below 1,3600 right now. I keep the idea, but I still believe in renewed focus on problems in some CCE countries.

One interesting figure I noticed during my holiday…

Equities – A new recovery shape has been invented – the W shape recovery.

Nikkei 225 (8.743)  Topix (835)  Dax (4.542)  FTSE 100 (3.989) Dow Jones (7.920)  S&P 500 (835) Nasdaq Comp (1.626)  

The current uptrend in global equity markets is so persistent that I am very close to revise my view on this asset class. So far, I have for a very long time (since early 2007 or longer) argued to stay away from stocks. If the current upside momentum continues for just another week or two I will adjust my view to be 25% long of the total expected allocation to equities.

The downturn will reassume, the question is just when. With all the stimulus packages a…

China – The Ox is strong

Hang Seng (15.670)  Shanghai B (168,00)  USD/CNY (6,8320)

For the next 12 months we won’t see the lows from last autumn and I need to revise my thinking about Chinese stocks.

I have always argued that the turnaround should come in China and other countries in that area. But I admit that I didn’t expect the turnaround to happen so fast and I will claim that it is not sustainable. The counter reaction might come next year.

No doubt that domestic China has seen some improvement. The number of passengers on domestic Chinese flights lately have shown y/y growth rates of more than 10%. Different consumer segments also have shown good signs. But in reality are we…

Below you will find my weekly view on the very challenging financial markets.

Read more about all the interesting happenings in the financial markets in the 5 entries here below. I hope you find it interesting to read my private view about the consequences for the stock markets, currencies, China and what to expect from the central banks.

The 5 entries from today are:

Currency markets – Finally reacting on different factors

Equities – Another bull go, backed by the US tax payer – PPIP it’s called this time….

China – Reorganizing the car industry

Hot Topic – EUR/USD – Did Fed start a new EUR/USD trend ?

Central bank rates – They did, quantitative easing from Fed…….

Currency markets – Finally reacting on different factors

EUR/USD (1,3550): This weeks “Hot Topic” is EUR/USD but the conclusion is here.

Short term the US housing data Monday to Wednesday might help the greenback and even the personal income (exp. -0,1%) and personal spending (exp. +0,2) could support. Funny enough, I have the feeling that if the PPIP news are well received it’s also dollar supportive. It explains the entry level at 1,3300 if I should take a position. As it is too early with the big investor depression about the huge US debt, the position will not be the fundamental one. Therefore I would choose a stop loss at 1,3000 and very likely an exit at 1,4000, maybe even a turnaround…