Ben Hunt PhD's picture

A brief note today on what might be an arcane subject for some but is a great example of the most basic question in risk management — are you thinking about your risk questions in a way that fits the fundamental nature of your data?

Chris Puplava's picture

The biggest sector weights of the major indices like consumer discretionary, technology, and financials were holding the markets back as they lagged more defensive sectors like utilities and consumer staples. However, these sectors are showing signs of life as their momentum is picking up steam and helping to push the markets higher.

Chris Puplava's picture

The ECB brought out the monetary bazookas as expected and hinted their plans to do more in the coming months. We are likely to see the ECB’s balance sheet expand at a faster pace than the US Fed which implies the Euro should weaken relative to the USD in the months ahead.

Doug Short's picture

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.

Tom McClellan's picture

Suppose that all you knew was that the NYSE's daily cumulative A-D Line was at a new all-time high, or even a 3-year high. What would that tell you? Generally speaking, the A-D Line does well when liquidity is strong.

Puru Saxena's picture

The economies of the developed world are improving; their housing markets are on the rebound and unemployment rates are sliding. On the monetary front, central banks remain accommodative, interest rates are at historic lows and the yield curve is steep.

Ryan Puplava CMT's picture

The market was hit with a “significant (stimulus) package” today as Mario Draghi pointed out in his conference call. The head of the ECB also said that they aren't finished, which helped pushed markets into new record territory.

John Kosar CMT's picture

Crude oil prices have historically been an economic barometer that can indirectly indicate, and sometimes lead, upcoming direction in other financial asset prices. This can be seen in the periodic positive correlation between oil prices and the S&P 500 during the past decade.

Marc Chandler's picture

One of the most stunning facts about the investment climate is the unusually low volatility throughout the capital markets. The reason that is increasingly worrisome is not just because trading profits of the major banks suffer or that hedge funds find it difficult to make money.

Chris Puplava's picture

Markets entered this week at a short-term overbought condition and are likely to pause. Adding support for a pause are the two big news events that come later in the week: the ECB meets on Thursday and we are treated to May’s jobs report on Friday.

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