With a week to go in January, global stock markets\u00a0are up 3.8 percent \u2013 gently nudging higher after the new year burst and with a continued evaporation of volatility gauges toward new 5-year lows. That\u2019s all\u00a0warranted by a reappraisal of the global economy as well as murmurs about longer-term strategic shifts back to under-owned and cheaper equities. But, as ever, you can never draw a straight line. If we were to get this sort of move every month this year, then total returns for the year on\u00a0the MCSI global index\u00a0would\u00a0be\u00a050 percent\u00a0\u2013 not impossible I guess, but highly unlikely. So, at some stage the market\u00a0will pause, hestitate or even\u00a0take a step back. Is now the time just three weeks into the year?<\/p>\n
Well lots of the much-feared\u00a0headwinds\u00a0have\u00a0not materialized. The looming US budget ceiling showdown <\/a>keeps getting put back \u2013 it\u2019s now May by the way, even if another mini-cliff of sorts is due in March — but you get can-kicking picture here already. The US earnings season looks fairly benign so far, even given the outsize reaction to Apple<\/a> after hours on Wednesday. European sovereign funding worries have proven wide of the mark to date too as money floods to Spain and even Portugal again. And Chinese data <\/a>confirms a decent cyclical rebound there at least from Q3′s trough.\u00a0All seems like pretty smooth sailing \u2013 aside perhaps from the UK\u2019s slightly perplexing decision to add rather than ease uncertainty about its economic future. So what can go wrong? Well there\u2019s still an event calendar to keep an eye on \u2013 next month\u2019s Italian elections for example. But even that\u2019s stretching it as a major bogeyman the likely outcome.<\/p>\n In truth, the biggest hurdle is most likely to be the hoary old problem of over-inflated expectations. Just look at the US economic surprise index \u2013 it\u2019s tipped into negative territory for the first time since late last summer.\u00a0Yet incoming US data has not been that bad this year.\u00a0What the index tells you more about has been the rising expectations. (The converse, incidentally, is true of the euro zone<\/a> where you could say the gloom\u2019s been overdone.) Yet without the fuel of positive \u201csurprises\u201d we\u2019re depending more on a structural story <\/a>to buoy equity and that is a multi-year, glacial shift rather than necessarily a 2013 yarn. The start of the earnings season too is also interesting with regard to expectations. With little over 10 percent of the S&P500 reported by last Friday, the numbers showed 58% had beaten the street. That\u2019s not bad at first glance but a good bit lower than the 65% average of the past four quarters. On the other hand, it\u2019s been top-line corporate revenues that have supposedly been terrifying everyone and it\u2019s a different picture there. Of the 10% of firms out to date, 65 percent have reported Q4 revenues ahead of forecasts \u2013 far ahead of the 50% average of the past four quarters. Early days, but that\u2019s relatively positive on the underlying economy at least.<\/p>\n And\u00a0the Apple story is yet another case in point. Even though its shares fell about 10% in after-hours trade on anything from a slight revenue miss, future guidance and market-share concerns — it says more about the\u00a0scale of expectations built into this one, if\u00a0spectacular, corporate story. Look at the actual numbers\u00a0\u00a0and you see in absolute terms,\u00a0its\u00a0supposedly worrying iPhone shipments were still up 29% over the year to a new record and iPhone sales in greater China more than doubled.\u00a0A tough crowd to please now, clearly, but again telling us more about expectations that underlying activity.\u00a0For what it’s worth, Apple’s\u00a0bottom-line earnings beat the street.\u00a0<\/p>\n And finally, the other big \u2013 structural rather than cyclical \u2013 story in play over the past 10 days has been the unwind of the euro safe-haven plays \u2013 hardly surprising given that now two of the three bailout countries (Ireland and Portugal) are back in the private markets again default-free and the one-time big worry (Spain) is drowning in foreign creditors all of a sudden. Bund, Treasury and Gilt yields of course have all been pushing higher, even though QE limits that move. But perhaps the biggest manifestation of the safe-haven exit has been the 3% Swiss franc retreat \u2013 who said the SNB couldn\u2019t hold the line? Sterling\u2019s slide too is as much to do with this as it is related to Cameron\u2019s EU sideswipe. Watch out for others too \u2013\u00a0Nordic markets perhaps? London property? Gold is still higher on the year, but that just underlines the fact it was always\u00a0more an inflation-hedge rather than haven from systemic shocks. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n Next week turns macro again\u00a0in\u00a0west of the Atlantic again\u00a0\u2013 with the FOMC, US December payrolls and US Q4 GDP easily the dominant releases for world markets.\u00a0European earnings season will keep people on their toes too as the likes of Deutsche Bank reporting amid some renewed jitters about European and German bank restructuring and regulatory pressures.<\/p>\n GLOBAL<\/span><\/strong>\u00a0DATA\/EVENTS TO WATCH<\/strong><\/span> <\/strong><\/strong><\/p>\n Europe Q4 earnings Mon: Ryanair<\/strong><\/p>\n EZ Dec M3 money\/credit Mon<\/strong><\/p>\n Italy Jan consumer confidence Mon<\/strong><\/p>\n US Q4 earnings Mon: Caterpillar, BioGen, Yahoo<\/strong><\/p>\n US Dec durable goods orders Mon<\/strong><\/p>\n US 2-yr note auction Mon<\/strong><\/p>\n India rate decision Tues<\/strong><\/p>\n Europe Q4 earnings Tues: AMS, Sandvik<\/strong><\/p>\n France Jan consumer confidence Tues<\/strong><\/p>\n US Q4 earnings Tues: Ford, Pfizer, Amazon, Corning \u00a0<\/strong><\/p>\n US Jan consumer confidence Tues<\/strong><\/p>\n US 5-yr note auction Tues<\/strong><\/p>\n Europe Q4 earnings Weds: Nordea, Roche, Swedbank<\/strong><\/p>\n EZ Jan consumer\/biz confidence Weds<\/strong><\/p>\n Italy govt bond auction Weds<\/strong><\/p>\n German 30-yr bund auction Weds<\/strong><\/p>\n US Q4 earnings Weds: Boeing, ConocoPhillips, Marathon<\/strong><\/p>\n US ADP Jan private sector jobs data Weds<\/strong><\/p>\n US Q4 GDP Weds<\/strong><\/p>\n FOMC rate decision Weds<\/strong><\/p>\n US 7-yr note auction Weds<\/strong><\/p>\n Japan Dec industrial production Thurs<\/strong><\/p>\n RBNZ rate decision Thurs<\/strong><\/p>\n Europe Q4 earnings Thurs: Deutsche Bank, Astrazeneca, Shell, BSkyB, Diageo, Ericsson, Infineon, LVMH, Novo Nordisk <\/strong><\/p>\n German Jan CPI\/jobless Thurs<\/strong><\/p>\n UK Dec mortgage\/credit data Thurs<\/strong><\/p>\n Egypt central bank meeting Thurs<\/strong><\/p>\n US Q4 earnings Thurs: Dow Chemical, Viacom, UPS, Colgate-Palmolive<\/strong><\/p>\n US Jan Chicago PMI Thurs<\/strong><\/p>\n Japan Dec jobless\/spending Fri<\/strong><\/p>\n Europe Q4 earnings Fri: BBVA, BT, Electrolux<\/strong><\/p>\n Global Jan manufacturing PMIs Fri<\/strong><\/p>\n EZ Dec jobless, flash Jan CPI Fri<\/strong><\/p>\n US Q4 earnings Fri: Exxon, Chevron, Aon, Merck<\/strong><\/p>\n US Jan payrolls Fri<\/strong><\/p>\n US Jan UMich consumer confidence Fri<\/strong><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" With a week to go in January, global stock markets\u00a0are up 3.8 percent \u2013 gently nudging higher after the new year burst and with a continued evaporation of volatility gauges toward new 5-year lows. That\u2019s all\u00a0warranted by a reappraisal of the global economy as well as murmurs about longer-term strategic shifts back to under-owned and […]<\/p>\n","protected":false},"author":7385,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-639886","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/639886","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/7385"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=639886"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/639886\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=639886"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=639886"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=639886"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}