The collision of global markets and social mood

Wednesday, August 27, 2014

Global Equities Hit A Record Value*

Bloomberg noted today that the value of global equities is now $66 trillion.

*But according to the Bank for International Settlements, the value of global debt is $100 trillion.

At least we're going nowhere fast, and from the sounds of things, having a great time doing it.

AAII investor sentiment is back to 46.1% bulls while the long term average is 39%. Bears are currently 23.7%, below the long term average of 30.5%

Meanwhile in Europe, stocks are mixed today, and the entire German yield curve is negative out to 2017. Deflation has now hit the German bond market. It is trading as if it's in the midst of a major depression.

How much longer can stock markets rally? Until a bond market somewhere says they can't.

Until a bond market refuses to play along and begins to fear default on debt signaled by sharply rising rates, it's one big party worldwide decorated with $40 trillion worth of pretty wallpaper.

Wave-wise, the S&P seems to agree. Even by the simplest of measures (a trend channel), 2020s seem game. Maybe a hiccup into the 1980s at some point, but higher before lower seems the plan.

Too soon to tell if a corrective move started from yesterday's highs, though a move below 1995.76 could raise the odds considerably. Note also the gap at 1988.40. There are several down to 1933.75.

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