Markets

Dr. Copper Is Down, Not Out May 19, 2015

Posted by Knowledge Leaders Team in Markets

While it is too early to really get our hopes up, it is worth noting that Dr. Copper has clawed its way back above the long-term support that it violated earlier this year: And though its efforts to overcome the downtrend seem to have faltered…

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Monetary Movements & Economic Mirage May 18, 2015

Posted by Knowledge Leaders Team in Markets

While we entered 2015 with the Federal Reserve talking confidently about lift-off and how many rate increases there would be by the end of the year, the markets didn’t seem to buy it.  As weak economic data began to surface, the Fed seemed to quietly…

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Does the Pause in USD Strength Imply Stronger Equities? May 18, 2015

Posted by Knowledge Leaders Team in Markets

As the U.S. Dollar takes a breather from its surge upward since the middle of last year… And our diffusion index of purchasing power parities versus 18 other currencies hovers in neutral territory… While individual PPP trends shift ever so slightly… Europe Asia North America…

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Stocks And Bonds Remain At A Historically High Correlation May 18, 2015

Posted by Knowledge Leaders Team in Markets

For most investors, a negative or low positive correlation between equity prices and long-term bond prices is a preferred and time-tested way of keeping one’s portfolio volatility low. However, this has been very difficult over the past two years as the four-year rolling correlation between…

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Is Equity Volatility Set to Rise? May 14, 2015

Posted by Knowledge Leaders Team in Markets

Even casual observers of the forex markets will have noticed that it has been a bit of a wild ride over the last several months.  And, while currency volatility has spiked, equities have remained relatively placid.  If this chart showing the historic relationship between the…

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Could the Bond-Bund Spread Widen Even Further? May 12, 2015

Posted by Knowledge Leaders Team in Markets

We first discussed the historic extreme in the spread between German Bunds and U.S. Treasuries last April (here).  And that relationship has continued since, propelling the difference (in red, below) to levels well above those reached over the last two decades:        …

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US Equity Leadership (Still) Hasn’t Changed May 12, 2015

Posted by Knowledge Leaders Team in Markets

We mentioned two weeks ago how equity performance has flip-flopped in the second quarter and how asset prices are most likely just in a counter-trend rally. Since then, others have picked up on this theme with a lot of folks calling for higher bond yields in particular (we…

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Amazon and Apple: Two Approaches To Capital Investment May 07, 2015

Posted by Knowledge Leaders Team in Markets

With Apple’s (ticker: AAPL) announcement that are selling more debt in order to buy back more shares and pay out dividends, a client posed an interesting question to us: Do you think Amazon (ticker: AMZN) will announce something similar soon? Our short answer is most likely no…

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Deja Vu All Over Again for the Long Bond? May 05, 2015

Posted by Knowledge Leaders Team in Markets

The 30-year treasury bond has experienced a rather large selloff by historical standards over the last three months. Yields have risen from roughly 2.2% to almost 2.9% in just over three months – a nearly 25% increase in yield – putting it on par with…

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The Smart Money Is Getting Long Treasury Bonds Again April 28, 2015

Posted by Knowledge Leaders Team in Markets

Long-dated US Treasury bonds have been treading water of late, leaving many rate watchers wondering in what direction the next big move is going to be. One variable in the next move is of course trader positioning. The two charts below show how the ”smart money” is betting.

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Last week we wrote that 2014 marked another year in which Chinese companies increased the leverage on their balance sheets. In fact 2014 marked the 10th consecutive annual increase in aggregate leverage as measured by total liabilities as a percent of equity. Meanwhile profit margins are down by more than half over the same period.

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