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Weekly Report
The weekly report is published on Fridays to all newsletter subscribers. The report comprises of three articles which will provide you with our analysis of the markets. The report also includes three trade recommendations picked by our Research Team. This report is available for free to non-Blue Index clients, all you need to do is create a Member account in order to receive this report directly to your inbox every week.
Resilience in the face of terror
Although most of the headlines have surrounded the two terror attacks in the UK at the end of last week, equity markets have been relatively unruffled, with some major indices around the world pushing close to new high ground. In the UK, the Bank of England as expected raised interest rates to 5.75% at lunchtime, but the tone of its associated comments suggested it was comfortable for the time being at that level which was seen as reassuring for the rest of the summer.
Sub-prime concerns give markets the jitters
A very exciting week in the markets saw the usual M&A stories overshadowed by profits warnings, mixed economic news and overall high volume as traders considered the potential fallout from sub-prime problems in the US.
Subtle clues of weakness in the US?
With all the M&A activity happening around the world, it is easy to lose sight of the underlying themes that drive long term equity valuations, GDP growth is crucial, alongside interest rate and inflation expectations and the outlook after tax corporate earnings and dividend levels. This week there have been some interesting statistics from the US that suggest an imminent slowing of GDP growth, with potential ramifications for share prices at some stage.
Focusing in on bond yields this week
Last week we examined the current underlying weaknesses in equities, but for the last few days all the press comment has focused on the weakness of bond markets. The feeling in some quarters is that we are seeing the return of the ‘bond vigilantes’ who were last in force in the late 1980s and early 1990s. By selling bonds, they look to punish governments for lax monetary policy, and the forcing up of interest rates that goes hand in hand with rising bond yields.
Markets take a hard hit this week
Last week we pointed out multiple warning signs coming from sentiment and smart money indicators in the US, and the question was whether or not the S&P 500 index would breach its intra-day all time high.
