The Week in Charts – Week 16

· by · in FINANCIAL MARKETS, MACRO. ·

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?

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)

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.

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.

For now, the massive amount of liquidity has, together with a significant increase in political risk, pushed global rates down again.

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.

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%.

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…

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!

 

 

 

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