• Clifford Bennett, Chief Economist at ACY Securities


• 08.12.2021 04:45 pm
#stocks

The US equity market just had one of its biggest day's ever, as expectations that Omicron will be mild indeed and even replace Delta, grow. Wishful thinking? Too early to say but is hopefully an accurate view of things.

That said, purely economically speaking, markets are undoubtedly over-valued. It has been all about free money availability to borrow and invest and leverage up. There have been clear warning signs in the price action that this may still be a major top. There is no doubt it has been a significant high already, and we may still be in a very volatile overall topping out process. Which may now see mostly sideways, and indeed chaotic price action for several weeks from here.

The Nasdaq has still only recovered half its losses even with yesterday's large rally. If another fresh high is immediately seen, this upward momentum should be respected, but am equally watchful for signs we are near the top of a new vast consolidation range.

US Trade had a record month.

Imports and exports were at record levels as the port of LA, and land transportation in general across the USA began to free up and run more smoothly. Allowing both the loading and unloading of the massive backlog.

This momentary spike in trade balance, exports and imports as shown below, may persist for another month or two as the back log is worked through. However, these figures do do not represent the on-going outlook. Obviously, things will be better than during the pandemic's worst, but massive trade deficits will remain with the USA.

German Investor Morale declined.

The ZEW Indicator of investment sentiment is consolidating well down on the opening-up peaks, but in reasonable territory.

Japan is going nowhere.

Annualised GDP negative and revised lower. Q3 contracting 3.6%.