Feels like we are finally leaving this sideways trading and into marginally more bullish territory this week, mainly attributed to better than expected earnings so far. Not that earnings have been great, many top-line earnings have been revised down over the past quarter but expectations have been too pessimistic relative to actual results. Markets are also shaking off the sad OPEC meeting with both Brent and WTI abobe $40, and downward pressure on the greenback persists.
So far only a few of the US banks and blue chips have reported and we have the bulk ahead of us this week and next, but already i believe we will get out of this Q1 reporting season better than already expected which will lead to a short lived rally (2-4 weeks).
Overall this mini rally based on minor adjustments to quarterly results vs expectations doesn't alter my conviction that we are in a multi year bear market based on anemic global growth and still excessive leverage since the GFC
I suspect we'll see the usual summer time volatility come June / July when Q1 is out of the way, and the markets turn their focus to Greece (which needs another tranche from the IMF's €86bn bailout programme in order to repay the ECB in July). Without the IMF, the EU/ECB will be much less supportive to Greece. The other higher impact summer risk is the Brexit vote on June 23. An exit is closer than many people think and even if bad for the UK (in my opinion), it is equally bad for the EU and the euro-zone. This uncertainty is difficult to predict how each outcome will play out and could cause a big upset this summer...
So far only a few of the US banks and blue chips have reported and we have the bulk ahead of us this week and next, but already i believe we will get out of this Q1 reporting season better than already expected which will lead to a short lived rally (2-4 weeks).
Overall this mini rally based on minor adjustments to quarterly results vs expectations doesn't alter my conviction that we are in a multi year bear market based on anemic global growth and still excessive leverage since the GFC
I suspect we'll see the usual summer time volatility come June / July when Q1 is out of the way, and the markets turn their focus to Greece (which needs another tranche from the IMF's €86bn bailout programme in order to repay the ECB in July). Without the IMF, the EU/ECB will be much less supportive to Greece. The other higher impact summer risk is the Brexit vote on June 23. An exit is closer than many people think and even if bad for the UK (in my opinion), it is equally bad for the EU and the euro-zone. This uncertainty is difficult to predict how each outcome will play out and could cause a big upset this summer...
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