Are we going to get the 10-20% pull back in stocks that, it seems, everyone in the investing world is calling for? Given the anxiety and market volatility surrounding the Chinese currency devaluation, one might have thought again that this was the week for the long awaited correction. Well, SPY closed at 207.95 on 8/7 and 209.42 on 8/14 a gain of .7%.
Here are some Macro Notes from MRB, a strategic macro economic research partner:
“Global equities have managed to absorb another external shock this week, with the change in China’s foreign exchange policy and devaluation of the yuan. Investors remain nervous, but the cyclical trend for global equities and bond yields are still up.
Chinese policymakers clearly have much to learn in terms of communicating with capital markets, but the economy is not as weak as investors fear. Reliance on outdated indicators is fueling bearishness and creating opportunities for long positions in emerging Asian assets as well as global growth plays.
Euro area anxieties are dissipating, although investors will still be surprised by the degree of improvement in growth conditions that is underway throughout the region. Stay long euro area risk assets and reflation bets.
The Fed will begin lifting policy rates this year, but this is nothing to be feared as the central bank will remain well behind the growth curve and will provide ongoing support for equities. That said, U.S. Treasurys and yield plays are vulnerable from current levels.
The meltdown in the price of most commodities should soon halt, making short positions in physical commodities increasingly risky. Still, the adverse impact on natural resource-based economies has barely begun and is not reflected in their risk asset prices, especially bank stocks. Stay short.”
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For information on Alhambra Investment Partners’ money management services and global portfolio approach, Douglas R. Terry, CFA is reachable at: dterry@4kb.d43.myftpupload.com
This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Investments involve risk and you can lose money. Past investing and economic performance is not indicative of future performance. Alhambra Investment Partners, LLC expressly disclaims all liability in respect to actions taken based on all of the information in this writing. If an investor does not understand the risks associated with certain securities, he/she should seek the advice of an independent adviser.
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