It seems that every positive report is matched up with a disappointing one, and with residual strength in Treasuries emerging at the drop of a hat, we think the marketplace has become a little jaded to actual recovery progress in the US.
Global economic progress is apparently faltering, and noted fund managers are warning against having “too much equity market exposure.”
Into the end of April, the US economy was clawing its way toward self-propagating growth, but clearly recent growth has not been strong enough.
Going into the end of April, the economic outlook for the Chinese economy is “unchanged”, the outlook for the US is only minimally improved, and the outlook for the Euro zone is better than most expectations.
The list of positive global data flows expanded last week with improvements in UK Unemployment, China Retail Sales, and US February and March Industrial Production figures.
Into the early April high in equities, global economic sentiment was hopeful of a quick return to a progressive recovery pace.
While the US economy is improving, the improvement probably isn’t definitive enough to satisfy US equities, which have recently carved out fresh new all-time highs.
Geopolitical headwinds and sub-par spring weather continues to hold back the US recovery. Periodic angst from credit concerns in China, speculation that Putin wants more “living space” and lingering deflationary concerns in Europe have also left sentiment bruised all the way into the end of the first quarter!
While the Jury remains out on the situation in China, it is our opinion that most commodity markets have become too bearish toward near-term demand prospects and the global economy.