Are earnings and manufacturing about to rise?

Highlights:

Market Summary: Markets were higher yesterday as the S&P 500 rose 0.67%. The top performing equity market was emerging markets, which moved up 1.62%. Interest rates dropped 2 basis points on the 10-year yield and bonds went up as a result. The dollar was also stronger by 0.17%. Gold, copper, and oil fell as a result of dollar strength. Small caps also moved lower, diverging from other equities.

Economic Data: Yesterday, initial jobless claims came in at 214k, down from 223k previous. Continuing jobless claims were up to 1803k from 1728k.

Emerging Markets: Emerging markets rallied against the S&P 500 yesterday, beating the U.S. market by 0.95%. The ratio of emerging markets to the S&P 500 is still in a negative trend, below its 200-day moving average. If global growth was accelerating, we would expect this ratio to move upward.

Volatility: The VIX retreated back to below 13 and is close to testing support again. The VIX failed to rally above the 200-day moving average and made another lower high. It is surprising that the VIX index has not sustained a break below 12 and moved to new lows. The VIX has not made a new low since the beginning of 2018.

Oil Priced in Gold: If you look at West Texas Intermediate Crude oil, priced in gold, it becomes clear that this ratio remains in a negative trend and well below the highs of 2018. It has made a series of lower highs since that peak and is below the 200-day moving average. The recent breakdown has us questioning whether the inflationary move we have seen recently is just a flash in the pan.

Chart of the Day: Are earnings and manufacturing about to rise? Cornerstone macro outlines several indicators, like interest rates, money supply growth, and housing that suggest that is precisely what should happen.

 

 

Futures Summary:

 

News from Bloomberg:

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