Global markets have found themselves at an interesting juncture of underlying new year bullishness stalled by trepidation over several short-term headwinds (US debt debate, Q4 earnings, Italian elections etc etc) \u2013 the net result has been stalemate, something which has sunk volatility gauges even further. Not only did this week\u2019s Merrill funds survey show investors overweight bank stocks for the first time since 2007, it also showed demand for protection against a sharp equity market drops over the next 3 months at lowest since at least 2008. The latter certainly tallies with the ever-ebbing VIX at its lowest since June 2007. Though some will of course now argue this is \u201ccheap\u201d \u2013 it\u2019s a bit like comparing the cost of umbrellas even though you don\u2019t think it\u2019s going to rain.<\/p>\n
Anyway, the year\u2019s big investment theme – the prospect of a \u201cGreat Rotation\u201d back into equity from bonds worldwide – has now even captured the sceptical eye of one of the market\u2019s most persistent bears. SocGen’s Albert Edwards still assumes we\u2019ll see carnage on biblical proportions first — of course — but even he says long-term investors with 10-year views would be mad not to pick up some of the best valuations in Europe and Japan they will likely ever see. “Unambiguously cheap” was his term – and that’s saying something from the forecaster of the New Ice Age.<\/p>\n
For others, the very fact that Edwards has turned even mildly positive may be reason enough to get nervy! When the last bear turns bullish, and all that…<\/p>\n
In the meantime, we’ll just have to keep monitoring the incoming news and data for direction. The balance of risks is still on the upside over the course of the year, but there will be bumps. Year-to-date on the MSCI World is still up almost 3 percent as vol ebbs and euro peripheral debt auctions and sovereign debt prices continue to fly.<\/p>\n
We still have to see Q4 China GDP this week and the US earnings season is just cranking up. Judging by JPM and Goldman on Wednesday , the banks look ok so far. GE will get into the real world economy a bit more on Friday. Next week we then have the big techs like Apple and Microsoft and this is the sector making many anxious. Beyond that, the radar captures potential signals from Lower Saxony\u2019s elections\u00a0 on Sunday for September’s German parliamentary polls, we have the first eurogroup of the year on Monday and outstanding issues such as legacy bank debts, a Franco-German summit in Berlin, January\u2019s flash PMIs worldwide and UK Q4 GDP. Israel elections jump into the mix and a South African interest rate decision too as the\u00a0 drums sound again on the notorious ‘currency wars’.<\/p>\n
As Moscow takes up the helm of the G20 grouping this year, Russian central banker Alexei Ulyukayev said on Wednesday: \u201cWe\u2019re on a threshold of a very serious, confrontational actions in the sphere that is known \u2026 as currency wars.\u201d<\/p>\n
GLOBAL<\/span><\/strong>\u00a0DATA\/EVENTS TO WATCH<\/strong><\/span> <\/strong><\/strong><\/p>\n Germany\u2019s Lower Saxony regional elections Sun<\/strong><\/p>\n Euro group first meeting of 2013 Mon<\/strong><\/p>\n African Union summit Mon to Mon, 28th <\/strong><\/p>\n ECOFIN meeting Tues<\/strong><\/p>\n German Jan ZEW index Tues<\/strong><\/p>\n UK 10-yr gilt auction Tues<\/strong><\/p>\n UK Dec govt borrowing data Tues<\/strong><\/p>\n Israel national elections Tues<\/strong><\/p>\n France\u2019s Hollande visits Berlin Tues<\/strong><\/p>\n US Q4 earnings Tues: IBM, DuPont, Google, AMD, Texas Instruments<\/strong><\/p>\n US Dec existing homes sales Tues<\/strong><\/p>\n Europe Q4 earnings Weds: Unilever, Novartis, Siemens<\/strong><\/p>\n French Jan business climate Weds<\/strong><\/p>\n EZ Jan consumer confidence Weds<\/strong><\/p>\n UK Dec jobless Weds <\/strong><\/p>\n BoE mins Weds<\/strong><\/p>\n Jordan national elections Weds<\/strong><\/p>\n Davos WEF forum Weds-Sun<\/strong><\/p>\n US Q4 earnings Weds: Apple, MacDonalds<\/strong><\/p>\n Global flash Jan manufacturing PMIs Thurs<\/strong><\/p>\n OECD public debt forum Paris Thurs\/Fri<\/strong><\/p>\n Europe Q4 earnings Thurs: Nokia<\/strong><\/p>\n SAfrica rate decision Thurs<\/strong><\/p>\n US Q4 earnings Thurs: Microsoft, Amgen, Xerox, AT&T, Bristol Myers Squibb \u00a0<\/strong><\/p>\n U.S. 10-yr TIPS auction Thurs<\/strong><\/p>\n German Jan Ifo Fri<\/strong><\/p>\n UK Q4 GDP Fri<\/strong><\/p>\n US Q4 earnings Fri: Halliburton, Honeywell, Proctor & Gamble<\/strong><\/p>\n US Dec new home sales Fri<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Global markets have found themselves at an interesting juncture of underlying new year bullishness stalled by trepidation over several short-term headwinds (US debt debate, Q4 earnings, Italian elections etc etc) \u2013 the net result has been stalemate, something which has sunk volatility gauges even further. Not only did this week\u2019s Merrill funds survey show investors […]<\/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-639891","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/639891","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=639891"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/639891\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=639891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=639891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=639891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}