Putting the Pieces Together: An In Depth Chart Review of Global Financial Markets

One of our favorite grounding exercises is to peruse our chart library and review what has happened in the global financial markets so we can opine about what those prices and patterns are telling us about the world. We'll save the opining for another time, so we present the following charts with little commentary.

Stock Market: 

Global stocks have fallen recently, led by cyclical sectors and Europe. The US is the best performer of a major economy by a mile:




EM performance not so good either and now underperforming DM over the last month:


From a country perspective, market leadership is at a major low according to our breadth indicator measuring the number of DM countries outperforming the MSCI World Index:


The Draghi "whatever it takes" trend line has been clearly broken:


Small caps badly underperforming:


As counter cyclical stocks pivoted higher relative to cyclical stocks:


Thanks in large part to European cyclicals:


But also helped by Japanese cyclicals:


North American counter cyclicals have been a good place to hide:


Market breadth is fading quickly:








Especially in Europe and Asia, but also in NA and EM:









North American Health Care doing just fine, however:



North American Staples not so bad either:


The percent of stocks with positive performance is shooting lower:


And the percent of stocks outperforming remains near the lows:


Which makes it easy to see why the median stock fared much worse than the overall index in Q3:


Almost a quarter of DM stocks are in a bear market:


And 61% are in a correction:


Worse in the EM:




Europe takes the cake though with 42% of stocks in a bear market and 85% in correction:




Japan is making all efforts to catch down to Europe:




Equity volatility seems to have put in a low:


Bond Market:

The 30-year made new 1-year lows yesterday:


Keeping intact the long-term downtrend in yields:


Same goes for the 10-year (though the 10-year is just at the lows for the year):




Which means our model showing Fed tapering and lower yields remains in effect:




The drop in rates is all due to lowered inflation expectations:


Though real rates have fallen a little too:


The bear flattener at the long end continues:


Which is good news for the USD:


But not so good for junk spreads:


Speaking of which, junk spreads continue to widen:


Which is not good news for stocks as they share the same low position in the capital structure:


BAA spreads hanging in there ok:


Munis ok too:


The asset backed commercial paper market continues its slow death:


In Europe, yields are plummeting and Germany may soon be moved over to the left axis on this chart to join Japan:


The UST-Bund spread remains at an all time high:


Corporate spreads in Europe are steady:


Our bond volatility indexes are on the move again led by Europe of course:






FX:

It's been a one way bet on the USD recently no matter how you slice it:












But the USD isn't overvalued against any of the major currencies from a PPP perspective (save the yen):










Global FX volatility made a 2-standard deviation low a few months back, but now seems to be on the rise again:


Which might mean the VIX could follow along higher:


All the USD strength seems to be permeating the equity markets:




Justifying the counter cyclical outperformance:

Especially in Europe:


Commodity Market:

Commodities have had a tough go recently:


And the weakness has been widespread as our commodity diffusion index shows:


The downtrend in copper continues:


And WTI broke its trendline:


Gold is doing all it can to stay above $1200:


But silver is already on it's way lower:


Weeakness in commodities is not so good for EM stocks:


Our commodity volatility index put in a low recently: