- Gold was strong.
- The dollar was weak.
- The yen was weak.
- The $NZ was strong.
- Materials and energy stocks were strong.
- The financials were strong.
What does it mean?
The action and the wording of the Fed decision has been interpreted by the markets as inflationary. This is why the dollar was weak and materials, energy, and gold were strong.
Furthermore, the carry trade is alive and well.
- Borrow yen. The yen was weak.
- Buy high yielding currencies ($NZ jumped).
- Buy stocks and commodities. They all soared.
What about the strength of the financial stocks? I would be careful. The inflationary bias suggested by the markets (strong commodities and weak dollar) cannot be good news for financial stocks. The lukewarm reaction of the bond market is a warning the action and wording of the Fed has an inflationary bias.
More on http://www.peterdag.com/
George Dagnino, PhD
Editor, The Peter Dag Portfolio on https://www.peterdag.com/
Since 1977
1 comment:
Thank you George for this posting.
Do you feel we are in a prolonged cycle of global liquidity, a longer term cycle where liquidity will stay high for another 10 or more years?
The savings rate globally is much higher than it is in the US, and these global savings will eventually find their way into the capital markets.
I am just wondering how long you see the global bull market in equities lasting...just rough ballpark...for instance months, or years, etc. And what in your mind would be a sign that the global markets would be turning from Bull to Bear.
Thanks again for making your thoughts available.
Best Regards, Jim P.
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