Info!! The Market's Macro Floor Inwards 3 Charts

Every as well as then often, it is worthwhile to pace dorsum as well as canvass the macroeconomic pic from a global perspective.  Above are iii charts that nation a distinctive macro story:

1)  Deflationary pressures - In a basis of expanding global economical growth, nosotros would aspect to run across greater utilize of raw materials, driving the prices of commodities higher.  What we've been seeing instead (top chart) is a collapse of commodity prices, especially inwards the wake of concerns regarding increase inwards China.  Over the past times year, emerging marketplace pose stocks convey notably underperformed those of developed markets, but equally periphery equity markets inwards Europe convey underperformed heart as well as somebody markets inwards answer to concerns regarding Greece.  One would similar to run across the emerging markets of the basis equally engines of growth, but instead the commodities markets advise that those regions convey teach burdened past times deflationary pressures, fifty-fifty equally debt burdens convey mounted.

2)  Flight to security as well as USD strength - Given the QE dynamics abroad as well as greater economical increase inwards the U.S., the U.S. dollar has soared equally commodities convey fallen (middle chart).  Among equities, SPY is non far from its highs, despite the weakness amidst commodity-related shares, field emerging marketplace pose equities (EEM) are flirting amongst multi-year lows.  USD forcefulness has gear upward an interesting dynamic amidst stocks, whereby companies that import raw materials convey benefited as well as companies that depend upon export sales for increase convey been hurt.  The interplay betwixt the boost to the U.S. economic scheme from falling raw fabric prices as well as the drag on export sales from the rigid dollar, likewise equally the global economical weakness, convey contributed to an abundance of caution from the Fed regarding involvement charge per unit of measurement hikes.

3)  The challenge to rising involvement rates - Most of 2014 saw falling long-term involvement rates inwards the U.S. (rising prices; bottom chart), whereas well-nigh of 2015 has seen a rising inwards rates inwards anticipation of Fed charge per unit of measurement hikes. Most recently, we've seen a bounce inwards bond prices (lower yields), inwards answer to weaker domestic information (Friday's ECI a illustration inwards point) as well as continued commodity weakness as well as concerns over global growth.  To the extent that a debt/deflation dynamic abroad keeps a lid on global economical increase as well as incentivizes greater primal banking concern activism abroad than domestically, it is hard to imagine a Fed wanting to heighten rates inwards whatsoever meaningful way, equally higher rates would encourage farther flows into the dollar as well as add together to export-related headwinds.  

So what does it all mean?  One dynamic seems clear:  if it's burdened amongst debt, it underperforms.  Whether it's domestic equities inwards China, high yield muni bond funds inwards the U.S.with exposure to Puerto Rico, peripheral bonds/credit inwards Europe, or the Brazilian Real, high debt has led to miserable returns as well as considerable volatility.  The winning investments convey been those furthest from debt-deflationary dynamics.

Further Reading:  How Investors as well as Traders Win By Failing
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