Tensions between the US and North Korea took center stage earlier this week. Risky assets halted their ascent, while stocks in China fell by 3% in just four trading days. The news flow on the topic decreased somewhat during the week, but it doesn’t feel that comfortable, now does it?
In case you missed it! #China's stock market is down more than 3% during the last four trading days. https://t.co/tPOUwbEEKD
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jeroen blokland (@jsblokland) April 19, 2017
In case you missed it! #China's stock market is down more than 3% during the last four trading days. https://t.co/tPOUwbEEKD
—jeroen blokland (@jsblokland) April 19, 2017
Meanwhile, China’s GDP growth increased for a second quarter in a row. China’s economy grew 6.9% YoY in Q1. More on the ‘stability’ and ‘level’ of China’s GDP growth next week… (teaser)
#China's #GDP growth accelerated in Q1, according to China. https://t.co/tn4pJnO07m
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jeroen blokland (@jsblokland) April 17, 2017
#China's #GDP growth accelerated in Q1, according to China. https://t.co/tn4pJnO07m
—jeroen blokland (@jsblokland) April 17, 2017
Bank of Japan Governor Kuroda told investors he will continue with very accommodative monetary policy and maintain the current pace of asset purchases ‘for some time.’ Let me remind you that the Bank of Japan already owns 39% of all outstanding Japanese government debt, which amounts to 234% of GDP.
Good #QE morning! The #BoJ, which owns a whopping 39% of all outstanding Japanese government debt, will continue it… twitter.com/i/web/status/8…
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jeroen blokland (@jsblokland) April 21, 2017
Good #QE morning! The #BoJ, which owns a whopping 39% of all outstanding Japanese government debt, will continue it… twitter.com/i/web/status/8…
—jeroen blokland (@jsblokland) April 21, 2017
Other central banks have blown up their balance sheets as well, and it’s hard to imagine a ‘soft landing’ of central bank assets going forward.
Extremely scary @business chart! https://t.co/HLKFsjfOBR
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jeroen blokland (@jsblokland) April 19, 2017
Extremely scary @business chart! https://t.co/HLKFsjfOBR
—jeroen blokland (@jsblokland) April 19, 2017
For now, the massive amount of liquidity has, together with a significant increase in political risk, pushed global rates down again.
#Yieldless! The average 10-year bond #yield in Germany, Japan, the UK and the US is back below 1%! https://t.co/qcpT1p0RPY
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jeroen blokland (@jsblokland) April 19, 2017
#Yieldless! The average 10-year bond #yield in Germany, Japan, the UK and the US is back below 1%! https://t.co/qcpT1p0RPY
—jeroen blokland (@jsblokland) April 19, 2017
But everything will be fine, Easter said so. When stocks are up through Easter, the chance of a positive return year increases to 90%, with an average return of almost 10% in the remainder of the year.
Happy #Easter! If stocks are up through Easter; 90% chance of positive year & average return of ~10% the rest of th… twitter.com/i/web/status/8…
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jeroen blokland (@jsblokland) April 16, 2017
Happy #Easter! If stocks are up through Easter; 90% chance of positive year & average return of ~10% the rest of th… twitter.com/i/web/status/8…
—jeroen blokland (@jsblokland) April 16, 2017
Some investors, however, have had it with equities. Take Yale’s endowment fund, in which the allocation to equities fallen dramatically over the last 30 years or so. The current exposure to US equities, which are pretty expensive, is just 2%.
Wow chart! #Yale endowment equity allocation down to just 2% from over 60% in 1985! via @TihoBrkan https://t.co/8sEIb1j9bn
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jeroen blokland (@jsblokland) April 16, 2017
Wow chart! #Yale endowment equity allocation down to just 2% from over 60% in 1985! via @TihoBrkan https://t.co/8sEIb1j9bn
—jeroen blokland (@jsblokland) April 16, 2017
We had fresh PMI data on Friday, which revealed that when it comes to soft data, we are still in the first synchronized global uptick since 2009. You would expect this to end up in the hard data, at least to some extent, as well…
This is the first synchronized global economic upswing since 2009! https://t.co/UE3mhtq6qf
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jeroen blokland (@jsblokland) April 21, 2017
This is the first synchronized global economic upswing since 2009! https://t.co/UE3mhtq6qf
—jeroen blokland (@jsblokland) April 21, 2017
And finally, we get yet another weekend packed with European politics, as the first round of the French presidential elections is held on Sunday. Weekend!
Forget stock prices, this is all you need the coming days! #polls https://t.co/JQ0hbkhzJ8
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jeroen blokland (@jsblokland) April 20, 2017