2. 2
Accuvest Weekly Update
Global Financial Conditions
• Global Financial Conditions have improved since the “Q.E. Taper Tantrum” in June
• Macro Risk and Financial Market Stress increased rather sharply this week
• The VIX Index (implied S&P 500 volatility) closed @ 14.37, and is gaining upward momentum
• This week - Treasury yields surged, Stocks fell, and Metals rallied
Global Equity Markets
• The S&P 500 is trading at 16x current earnings, the MSCI ACWI is trading at 15.8x current earnings
• The S&P 500 was down 2.1% this week, and is testing its 50 Day MA
• Post WWII data shows that after gaining 15% through July (12 cases), the S&P 500 has an average loss of -1.54% in August
• The MSCI All Country World Index is losing momentum and failed to break above May 2013 highs
• The MSCI Emerging Market Index has shown improvement, and has broken decisively above its 50DMA
• Gold Miners were up 12.5% on the week, while US REITs were down 6.5% on the week
Interest Rates and Fixed Income
• 10 year US Treasury Yields closed the week at 2.82%, up sharply from 2.58% last week
• 10 year US Treasury Yields are forecasted to be 2.74% at the end of 2013
• Investment Grade Bonds lost 2.1% this week, but spreads remain narrow @ 1.63%, down from 1.68% last week
• High Yield Bonds sold off -1.1% this week, confirming a lower high as the 50DMA approaches the 200DMA
• High Yield credit spreads narrowed slightly to 3.49%, down from 3.57% last week
• Mortgage Rates, @ 4.67%, have dropped on the month despite the surge in 10 year Treasury Yields
3. 3
Accuvest Weekly Update
The Economy
• US Retail Sales grew +0.2% on the month, missing expectation by 0.1%
• US Industrial Production grew 0.0% on the month, missing expectations by 0.3%
• Philly Fed and Empire Mfg also missed expectations
• Mortgage Applications dropped 4.7% on the month.
• Next week’s U.S. economic calendar includes data on Home Sales, FOMC Minutes, Home Prices, and LEI
• US Economic Data is starting to come in slightly worse than expectations
Major Currencies
• All major currencies, except the British Pound, are weaker relative to the USD over the last 6 months
• MXN/USD @ 12.91, weakening from 12.61 last week
• USD/EUR @ 1.333, at the high end of the Year-to-Date range
• USD/AUD @ 0.92, flat on the week, but momentum has improved
• JPY/USD @ 97.53, weakening from 96.21 last week and potentially changing trend, primary resistance @ 103.57
Commodities
• Gold @ $1376/oz., up from $1200/oz. on June 27th, and now above key resistance at $1340/oz..
• The Gold to Gold Miners Ratio has broken to the downside, currently at 6 month lows
• Crude Oil @ $107.75, up from $105.97/barrel last week but struggling with resistance @ $108/barrel
• Copper @ $336.00/lb., up from $316.90/lb. last week and rallying sharply towards 6 month highs
disclosure: The opinions expressed in this Weekly Chart Book report are those of the author. The materials and commentary are strictly
informational and should be used for research use only. This bulletin is not intended to provide investing or other advice or guidance with
respect to the matters addressed in the bulletin. All relevant facts, including individual circumstances, need to be considered by the reader to
arrive at investment conclusions that comply with matters addressed in this bulletin. Charts and information used in this report are sourced
from Bloomberg.
