Like China in Your Hand
The Quotedian - Vol VII, Issue 3 | Powered by NPB Neue Privat Bank AG
“A crisis is an opportunity riding the dangerous wind.”
— Chinese Proverb
To listen to the 1987 T’Pau hit “China in Your Hand” click on the picture below:
From here onwards, it gets darker for a moment…
Your investments should not be as fragile as China Dinnerware. Need consulting?
Contact us at ahuwiler@npb-bank.ch
Of course, the (short) introduction to today’s Quotedian is all about the fiasco taking place on the Chinese stock market.
After all, a $100 invested in the Chinese equity market is worth, in price return terms, a bit less than $50 today:
That’s not an awful lot of investment return for an investment period of a bit over three decades, to put it mildly.
Let’s have only a quick glance at some charts today, as I am working under I major time constraint (and at 11 pm …)
Quiet contrary to the Chinese equity market, the US market is steaming higher, rain or shine:
And with the recent breakout to new all-time highs (ATH), a cup with handle pattern (I kid you not) got successfully completed:
Quite according to the textbook, the March 2020 COVID-bottom rally that stalled out in late 2022, saw a 50% retracement and started building a major base (the cup). Then in July of last year, that recovery rally stalled and retraced but quickly found support in October as yields started to drop in the interest rate realm. The handle was formed. Now with the break above 4500 and then 4,800 last week, the price target counts to above 5,600. Fight it or enjoy it…
The Nasdaq in the meantime continues to move higher within its perfectly fitting uptrend channel:
The real danger is only below 16,250, though short-term “things” are getting a bit overheated as measured by several OBOS indicators. However, little doubt for now that a pull-back should be used to build up further positions.
European stocks are, as usual, somewhat lagging, but with about five percent to go also closing in on new ATHs (SXXP):
In Japan, it is just a piece of beauty to watch the Nikkei 225 closing in on the 1989 all-time highs:
Hey, wait! I hope you are not only watching but actively participating in this epic rally. You are, right?
And imagine it breaks above that ATH … not on the first attempt probably, but imagine … we would have a 35-year base or so and as we know, “the wider the base the higher in space” …
In the interest rate complex, yields have been pushing higher with equities ignoring it for now:
Which is fine, as long rates are moving higher in an “orderly” fashion. Above 4.30 we would probably start considering increasing bond duration slowly again.
The yield curve is steepening again, mainly due to that rise at the longer end of the curve:
The European (German) yield rally is more advanced (courtesy of a hawkish ECB?) and should stop at around 2.45%ish, else the chart starts crying for higher yields:
All this whilst credit spreads are agreeing with the equity rally by compressing hard:
In FX-land, the EUR/USD continues its year-old sideways journey:
The USD/JPY continues to be a cross of interest, as the BoJ continues to disappoint Yen bulls such as yours truly by stubbornly hanging on to Yield Curve Control:
We will skip the commodity section today and once again I apologise for a very short letter today. We should be back in full swing and normal release schedule latest next week, so please …
André
P.S. You may still hit the like-button. TA!
Ok, those of you of the “buy low, sell high” religion, may want to skip this section today, as feelings may get hurt or, in other words, the following is not for the sensitive eye…
As the chart below shows, money invested when the market is at all-time highs (such as now) has outperformed money invested on any given day.
BOOOM!! (as my kids would say)
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
The views expressed in this document may differ from the views published by Neue Private Bank AG
Past performance is hopefully no indication of future performance