Is it time to call a bottom in the US and China?
Lee Hong Wei
Singapore Sales Trader
Are we finally seeing equity markets take a breather? US equities rebounded sharply towards the end of October. The S&P 500 corrected almost 12% from its high in early October to a whisker above 2,600 before finding some support at the significant level. President Trump, in what may well be a ploy to save himself from midterm election woes, is now striking the right notes (at least from the market’s perspective) and has been more conciliatory in his approach to China this week as he expressed his willingness to strike a deal with President Xi in the G20 meeting in Argentina later this month.
The move higher was also helped by a slew of positive earnings: Facebook in the tech industry lifted sentiment while Ford/General Motors boosted the industrial sector massively last Wednesday. At the time of writing, Apple was down 6.5% post-market, but sentiment remains strong with the S&P 500 still grinding its way 0.6% higher. The bigger picture, however, still remains the trade spat.
The slide in the VIX volatility index towards the low 20s level could also indicate that the equity market is beginning to show lesser signs of fear. If VIX>18 is a gauge of fear in the market, then the first half of 2018 saw two brief “fear momenta” with VIX trading above 18; each of them lasted around just under 20 trading days. We are currently at day 17 of the count since the VIX climbed substantially in early October and both the VIX and the broader fear in the equity market might have seen a temporary top, in my opinion.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.