When I Was Away…

Belisarius was mentally away from the market as he was taking an industry exam… He is sorry for wasting half a year on that, but that’s a thing of a past now…

Thanks to my much relaxed time schedule, the TaintedAlpha.com Blog will have receive some new and improved content and features in following weeks.

Returning to the markets. Things don’t look good. The flood of bad news comes from various parts of the world, but important from Europe, for the time being at least. Equity and commodities got softer and quality (or perceived quality) fixed income got stronger.

The main factor moving the markets was weakening Euro. As I wrote earlier, USD/EUR parity is probable quite probable.

Chart  1. U.S. Dollar / Euro Exchange Rate

Source: Bloomberg

The most notable thing in investor sentiment change is complete loss of confidence in monetary means of getting us out of this crisis. Investors realized that government and central bank stimulus measures have only postponed the pain the world economy will have to bear. Debt restructuring will be the theme for next couple of years.

The reduced global growth expectations pulled down most of the mayor world indexes

Chart 2. S&P 500

Source: Bloomberg

Chart 3. NIKKEI 225

Source: Bloomberg

Chart 4. DJ EUROSTOXX 50

Source: Bloomberg

And maybe the most important of it all, the key to this puzzle – China is not looking good. Rumors are that China real-estate has come to a halt because of government measures to curb real-estate speculation via. reducing (abolishing) credit availability. Chinese equities are world laggard this year despite everything.

Chart 5. Shanghai Composite

Source: Bloomberg

And maybe notable of all, the China import iron ore prices are softening.

Chart 6. China Indian Iron Ore Import Price

Source: Bloomberg

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This entry was posted on Tuesday, June 8th, 2010 at 5:18 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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