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:
