From time to time I need to step back a little bit and look at the big picture especially because the news flow in the last few weeks made me feel noxious.

My summary:
S&P500: it needed only two positive days to be within less than 2% from its previous high. Either impressive strenght or the market is pricing too little risk – up to one’s interpretation.
UST 10Y: Almost a three weeks with only some hovering around 2.65%.
Oil is down approxiomately 10% from its 52 week high as I expected lifting some growth concerns.
DAX, EuroStoxx 50: same two positive days made them bounce back and hit new 1Y highs. Outperformers, normalization is in progress, upside potential with LTRO
EM: global emerging markets are mediocre – tactical overweight could be on the Far-East. I took a look at India (got out of focus after providing some reasons for splashy, clickable headlines – great buying opportunities yet again), and the USDINR cross is strenghtening but probably won’t make it back to pre-endoftheQEsoonannouncement levels and the equities are up for good too (in INR terms though…)

Overall I think the market got scared and overreacted the end of the QE, but in the long term it does put some pressure on emerging markets and fixed incomes. I don’t think it’ll be a fierce panicy process where pheripherial equities drop as we have seen it before. It will rather be a range trading situation for a while since there is no real catalyst for them to outpace their previous dynamics. In the meantime yields slowly but surely start drifting upwards.


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