Former FX trader Mark Cudmore is a man who changes his mind about things when circumstances change.
That’s not necessarily a bad thing and indeed, sometimes it’s prudent, but that doesn’t stop it from being amusing when you write this on Monday…
Momentum remains negative and down should still be the direction of choice for U.S. stocks in the short-term
…and then this on Tuesday…
Fundamental developments suggest that global equity markets may soon start making record highs again
But that’s exactly what Cudmore did to start the week and if you were looking for reasons to feel good about yourself this morning, Mark has some for you below.
- A month ago, all the marginal developments seemed to be negative. Now — barring a tragic misstep on the Korean peninsula — it’s the other way. Asset prices will soon react to the improving outlook
- Outside the U.S., the data overall is strong. Industrial production in both China and Japan is increasing at the fastest year-on-year pace in more than two years. ZEW indicators in Germany are at multi-year highs
- Hyped tail risks keep failing to materialize as we overcome multiple hurdles. Trump’s meeting with Xi brought increased cooperation rather than friction. The Treasury hasn’t named any country a currency manipulator. Forget about aggressive tit-for-tat trade wars
- North Korea’s latest missile launch was a failure. Syria related tensions between the U.S. and Russia already seem to be fading
- Commodities topping out in February was the canary in the coal mine for the recent pullback in equities. But now commodities have stabilized, helped by oil rallying sharply. The iron ore correction has been the most extreme but after an almost 30% fall from its February peak, the cleanout is done and the balance of risks will now be for higher prices this year
- French presidential election? Sure, it’s an obvious risk event. But it’ll soon be behind us and most likely prove another positive catalyst. The polls have never wavered: it’s extremely unlikely Le Pen becomes president. On the very slim chance she does, she’ll have a divided parliament and find it hard to exit the euro
- Asia, and specifically China, remains at the forefront of this global recovery. However, it’s broad enough to be a positive driver for all risk assets as investors releverage. The future is bright