The US Takes the Lead

Yesterday’s market action brought us an impressive show of broad strength in US stocks which, along with Canada, now lead the global markets. Of course, we shouldn’t neglect to mention gold (though we don’t like it), which has broken out to all-time highs amid reports of  massive demand at bullion banks and coin dealers across Europe.

The daily reading of Dave Fry’s excellent charts (see link at right) shows that most foreign stock markets are rolling over, or have broken down, while the North American markets (Dave doesn’t chart Canada, but check the EWC ticker in your favorite charting service) are amazingly resilient. European and Asian markets are feeling the effects of their various and well known issues, while Brazil seems to be simply running out of momentum after rate hikes. Most commodities – aside from the precious metals – are also rolling over.

Returning for a moment to our ongoing macro theme of inflation vs. deflation, in the US it looks very much like general price and wage inflation is nowhere to be found on the visible horizon, but US investors are showing a distinct preference for inflation indexed over un-indexed Treasuries, and shorter over longer durations. Perhaps to some observers this seems obvious, but it warrants further consideration.

Note: I will be traveling over the next few days, and will not post unless events dictate. Next post will be the weekly market review, over the weekend.

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