“And just like that, he’s gone,” said Kevin Spacey, and like the devil in the superb Usual Suspects (1995), all the commotion we witnessed in the markets last week is no more. The S&P500 is close to an all-time high again, with investors piling back into the mega caps, and even small caps put up big numbers in a sign that risk is back on.
We are walking a tightrope between needing a cooling economy and hoping for a soft landing, which explains the frenzy in the bond markets. They are back to pricing in four rate cuts by the end of the year. However, that would seem highly unlikely to happen, unless things fall off a cliff, so why are equities up?
Base metals are always a good lead indicator because producers only buy when they see an uptick in order flow. That isn’t happening and despite the best efforts by speculators, metals are still pricing in a recession. Oil is waiting for more clues about World War Three, and Gold does whatever it wants, so I wouldn’t read too much into the all-time high it made last week.
This brings us to the US Dollar and after all the gyrations with the Japanese Yen, the Euro is now trading on the highs of the year. That’s great but seems strange given the respective performance of the economies. If that wasn’t weird enough, the US elections are now merely 77 days away. Seems best to buckle our seatbelts then, as it certainly doesn’t look like it will get boring out there any time soon.
Comments