- Dawes Points Global Boom well on track
- US equity markets heading for new highs
- US economy doing well
- US Consumer confidence continues to rise
- US bond rally complete?
Equity market roundup – Heralding the Asian Century
- Asian markets recovering or making new highs
- Shanghai up 27% in 2019
- India looking robust
- Japan market recovering
- ASEAN markets OK
- European markets also looking robust
- Resources sector showing text book breakout
- A$ is looking firm
- Link to my podcast on global resources platform Palisade Radio
Call me to participate:
+61 2 9222 9111
2019 certainly has been interesting. The sharp sell off in US equity markets in Dec Qtr 2018 seems all but forgotten as markets continue to rally. Remember the `1929 revisited’ calls? Remember who said it all? Well you will recall it wasn’t Dawes Points!
Economic growth is continuing in most important regions and no sign of a real slowdown. The US markets are recovering. The channel analysis here of the major indices has helped again.
Asian markets have been quite unperturbed about that Dec Qtr 2018 sell off. What me worry?
They have been robust and you can see they are indeed heralding the Asian Century.
But the commentary focus at present is on the US and the President on domestic issues.
This seems to be a key time to indeed `Heed the markets and not the commentators’. The economic commentators are about on par with the so called MSM experts on the Mueller Report.
The US economy does seem to be running smoothly and all those announced new capital projects together with the low unemployment can only be positive. It might even mean a declining budget deficit at some stage.
But how can commentators be calling for a recession in late 2019? Is it just the Fake News?
Consumer confidence has also recovered and is encouraging.
With the strong economy and the apparently contradictory near-concensus of pessimism for the near term I just keep coming back to focus on US housing.
This graphic of housing starts still suggests a housing shortage exists and with the recent influx of illegal immigration of another 1m pa the pressure must be increasing, particularly in the South West of the US.
Regionally, the South is doing well and better than the national aggregates.
Source: Federal Reserve Board of St Louis
The housing sector stocks had a savage sell off in 2018 but it seems to be bouncing back.
It is also useful looking at what those parts of the stock market that deal with the real economy.
Consumer Discretionary stocks and the Retail Sector seems to be looking reasonable.
Retail Sector ETF
So when looking at the major indices the picture looks quite reasonable.
The DOW 30 seems to be leading and wanting to make new highs.
Will we have a panic rally now?
And the NASDAQ Technology stocks are not far behind and with new highs beckoning.
NASDAQ is leading the broad S&P 500.
And the very broad Wilshire 5000 is holding very well indeed.
The Russell 2000 Small Caps is lagging though.
As would be expected, the outlook is not so rosy for bonds. The 35 year rally is over and the last gasp rally back to the break line for the `goodbye kiss’ may also be over.
The ‘Good bye Kiss’ rally peaking.
The US$ is looking firm and is likely to go higher.
It seems the Euro is likely to weaken and may go as low as parity against the US$. With the UK the second biggest economy in Europe, its leaving could leave a big hole.
The Dawes Points thesis over the past five or six years has been that the global equity markets are looking good.
Germany has been a great leader of this entire bull market post 2009.
Even France looks very powerful.
Interesting to note this comment from Bank of America on major fund manager activities in early 2019.
Short European equities is the most crowded trade
A slowdown in China, at 30 per cent of those surveyed, leads the list of biggest tail risks cited by investors, followed by a trade war, at 19 per cent,, which had topped the list for the previous nine months; third on this month’s list is a corporate credit crunch, at 10 per cent.
Short European equities, at 19 per cent, is cited as the most crowded trade for the first time in survey history, replacing Long Emerging Markets, at 16 per cent, which drops to fourth.
I guess there will be significant short covering in the months ahead.
But this is the Asian Century.
So look at these Asian markets.
India has about 1365m people and is growing at about 14m each year.
Japan is a bit messy but still looks OK.
South Korea has pulled back and is bouncing off the break line. So much for the hysteria about Nth Korea destroying Sth Korea. Were these the same people that said……
Taiwan looks OK.
As does Singapore.
And China proxy Hong Kong is behaving constructively.
And Shanghai is doing well. Up 27% from the Jan 2019 low. And it seems like a consolidation to me before another upmove coming.
And this Emerging Market ETF just looks excellent with a massive ascending triangle.
Australia, with it’s A$1520bn in savings deposits, is being led higher by resources.
Equities are looking good in this Asian Century Dawes Points Global Boom.
And finally the best to come is the resources sector led by the Leaders.
Text book long term breakouts.
The A$ should be a beneficiary of all this.
The US$/A$ rate might seem to be only holding tenuously but just note how low that 106 year downtrend is now.
Just around US$0.77. Think of iron ore prices, coal prices, copper prices and LNG (oil) prices. Big boosts to export revenues.
And just keep watching this too.
Palisade Radio kindly invited me to join a list of global resources contributors that includes Eric Sprott, Rick Rule, Frank Holmes, Ross Beaty, Ronald-Peter Stoeferle, Jim Rogers, John Hathaway and Bob Moriaty.
The link is here: https://palisaderadio.com/barry-dawes-a-much-higher-gold-price-is-coming/#DawesPoints
Call me to participate.
Barry Dawes BSc FAusIMM MSAFAA
Martin Place Securities
I own BHP RIO and NCM mentioned in this report.
+61 2 9222 9111
2 April 2019