Risk Off!


Equities move to risk off
Eurozone: Fresh elections in Greece
United States: Small business confident
Australia: Supervision on alert
United Kingdom: Industrial production slows

Good morning,

Somethings just go from bad to worse. The poor Scousers, out of the Champions League! Why? – because the underlying team isn’t strong enough. Sure they can beat lesser English teams, but they can’t even beat Basel, of that giant footballing nation, Switzerland.

When the team isn’t resilient, it gets found out. So too in markets, when the investment case isn’t resilient, it gets found out when conditions change.

Last week we pointed out how the underperformance of high yield and small caps could be early warning signs for a broad-based pullback in the SPX.

If we take high yield as being the fixed income instrument with lots of similarity to equity, we see the squeeze at the front end, hitting high yield and feeding into equity markets.

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Global Macro-Daily Note 10th December 2014


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