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The so called correction in global markets which started last week seems to be continuing this week. I however think there is too much "white noise" now to form a view. Last night the Dow shed 2.4% and the Nasdaq 3.4% on the back of a negative World Bank comment about the global economy. There is however nothing new in the World Bank report which states that the Global economy is set to contract 2.9% in 2009 while total trade falls 10%. But in 2010 and 2011, the Global economy is expected to grow by 2.0% and 3.2% with the developing countries reporting growth of 4.4% and 5.7% over the same period. That to me seems to be consistent with the "green shoots" view that the economic cycle has bottomed. So why the sell off......maybe investors are just looking for an excuse to take some profit.
There are many more macro announcements and data due this week including the Fed meeting which could increase market volatility. I have also noticed that the recent weakness in markets has been on low volume which to me suggests that many investors (especially the funds) have not sold and what we are witnessing is some easing in retail and trading activity. But the funds could be waiting for the end of the June quarter before locking in some profits. Most long only mutual funds are up at least 40-50% this year and are probably inclined to take some profit into Q3-2009, ie the Q2-2009 reporting season. Read more...[caption id="attachment_2778" align="alignright" width="150" caption="Photo by Kyknoord"][/caption]
The so called correction in global markets which started last week seems to be continuing this week. I however think there is too much "white noise" now to form a view. Last night the Dow shed 2.4% and the Nasdaq 3.4% on the back of a negative World Bank comment about the global economy. There is however nothing new in the World Bank report which states that the Global economy is set to contract 2.9% in 2009 while total trade falls 10%. But in 2010 and 2011, the Global economy is expected to grow by 2.0% and 3.2% with the developing countries reporting growth of 4.4% and 5.7% over the same period. That to me seems to be consistent with the "green shoots" view that the economic cycle has bottomed. So why the sell off......maybe investors are just looking for an excuse to take some profit.
There are many more macro announcements and data due this week including the Fed meeting which could increase market volatility. I have also noticed that the recent weakness in markets has been on low volume which to me suggests that many investors (especially the funds) have not sold and what we are witnessing is some easing in retail and trading activity. But the funds could be waiting for the end of the June quarter before locking in some profits. Most long only mutual funds are up at least 40-50% this year and are probably inclined to take some profit into Q3-2009, ie the Q2-2009 reporting season. Read more...
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The so called correction in global markets which started last week seems to be continuing this week. I however think there is too much "white noise" now to form a view. Last night the Dow shed 2.4% and the Nasdaq 3.4% on the back of a negative World Bank comment about the global economy. There is however nothing new in the World Bank report which states that the Global economy is set to contract 2.9% in 2009 while total trade falls 10%. But in 2010 and 2011, the Global economy is expected to grow by 2.0% and 3.2% with the developing countries reporting growth of 4.4% and 5.7% over the same period. That to me seems to be consistent with the "green shoots" view that the economic cycle has bottomed. So why the sell off......maybe investors are just looking for an excuse to take some profit.
There are many more macro announcements and data due this week including the Fed meeting which could increase market volatility. I have also noticed that the recent weakness in markets has been on low volume which to me suggests that many investors (especially the funds) have not sold and what we are witnessing is some easing in retail and trading activity. But the funds could be waiting for the end of the June quarter before locking in some profits. Most long only mutual funds are up at least 40-50% this year and are probably inclined to take some profit into Q3-2009, ie the Q2-2009 reporting season. Read more...
