Institutional clients selling, and the selling is accelerating. Private or retail clients are buyers.
Institutional clients rotating in favor of the “undervalued” European stock market.
“The 15 % surge in Nordic Equity markets this year has taken some steam out of the bull market. This has coincided with one of the longest periods of earnings downgrade we have recorded.” (SEB)
But conclusion is that valuation look resonable, there is still plenty of headroom in a historical perspective and yield is to be found in the stock market.
Blackrock on why the stock market is far from bubble territory:
“Valuations are well below peaks reached in 2000 and 2007.” (Russ Koesterich, CFA, iShares Global Chief Investment Strategist)
After bouncing and reaching new all time highs it was time for a pullback and once again we’re at the 50 DMA. Another bounce or a bigger correction on the way.
November 19, 2013
After once again bouncing of the 50 day moving average the market the market has now reached its upper boundary. Will the market explode higher or is there time for a recess and some “profit taking”.
More on OMXS30: http://brokenmarkets.wordpress.com/2013/11/13/omx-6/
Federal Reserve have been absorbing almost all of the supply of US Treasury debt lately. Even a modest reduction (tapering) could therefore effect interest rates quite negatively. Many of today’s bond fund holders have never experienced a rising interest rate environment.
“The two biggest supporters of US Fixed income are the FED and foreign central banks. The FED is still buying roughly 80 % of all net bond issuance and approximately 60 % of all 10y issuance. In addition, foreign central banks have re-added the UST holdings they cut (and then some) from the summer.” (Goldman Sachs)
Percent of incremental duration of Treasury absorbed by the Federal Reserve.
“We now hold roughly 20 percent of the stock and continue to buy more than 25 percent of the gross issuance of Treasury notes and bonds. Further, we hold more than 25 percent of MBS outstanding and continue to take down more than 30 percent of gross new MBS issuance. Also, our current rate of MBS purchases far outpaces the net monthly supply of MBS. We own a significant slice of these critical markets.” (Dick Fisher, Dallas Fed)
Correlations breaking down left and right. Between asset classes, countries, factors and stocks.
“A natural response as the nadir of the crisis recedes further into the past and normality returns to markets that can respond to their own ‘fundamentals’ rather than one common risk-on-risk-off dynamic. That means that asset markets can start to diverge.” (Nomura)
Absolute correlation among asset classes continues to fall rapidly:
“Global equity mkts could easily be up another 25% next year. supply side constraints have been significantly mitigated – there is a plentiful supply of energy/commodities/labour/capital looking for a home – that seems like the ideal combination for a significant increase in non-inflationary growth and it is the job of central banks to promote that growth in order to get inflation back up towards target – also seem investors generally very wary of the equity mkt rally to date so positioning remains cautious/defensive.” (Goldman Sachs)
“November Final GLI – momentum flat from October’s revised reading of 0.43%mom – level of growth at solid levels – supports our positive outlook for global growth – although phase of high acceleration might be behind us at least for now. (i) The November reading signals stable global activity growth and locates the global industrial cycle on the border between the ‘Expansion’ and the ‘Slowdown’ phase, and does not confirm the sizeable deceleration visible in the earlier November Advanced GLI. (ii) After a strong signal of improvement in global data throughout the summer the GLI has continued to signal solid activity growth, albeit with no clear evidence of further acceleration.” (Goldman Sachs)