* Still looking for risk aversion to dominate
* Long-term CAD fundamentals positive
* G-20 likely to see more talk than action
* Bank of England set to stay cautious
* German export data should show signs of improvement
We look for the inter-market correlations that have prevailed throughout 2009 but broke down into the latter part of the summer to resume. We’ve seen some of this in the first week of September, with higher EUR correlating with higher stocks and commodity currencies. The market seems to be in the process of putting in a short-term top as better than expected economic data of late have failed to elicit any material extension in equities. The more than 50% rally off the lows in the S&P is unsustainable in our view and we would expect a China-like correction in US stocks in the weeks ahead. Full text »
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