A Year-To-Date Look At The World
Click to enlarge

Source: All Star Charts



The chart above, from JC, shows how the world has been doing since the start of the year.

I can only think of three possible future outcomes, from best to worst:

1. Rally! The rest of the world bottoms, reverses, then gets pulled higher by the US and Japan. China and India resume their torrid growth.
2. Meh! The US & Japan soften a little, the rest of the world improves a bit, we muddle through.
3. Look out Below!  The rest of the world drags US & Japan down.

These divergences tend to not last very long . . .

Category: Earnings, Economy, Markets, Valuation

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9 Responses to “A Year-To-Date Look At The World”

  1. wally says:

    Door #3 is scary.
    Will the Germans deliberately drive the whole world into an austerity-driven recession? They’ve already shot themselves in the foot and are pretending they meant to do it.

  2. Concerned Neighbour says:

    Is it coincidence that the two countries with the most aggressive (reckless?) QE have the best performing stock markets?

    I think most would agree that if those two markets are ever allowed to trade on fundamentals again, then look out below, indeed.

  3. pintelho says:

    I think i have seen a chart similar to this in “wall street waltz” I say door number 3 monty

  4. JEHR says:

    And the US drags Canada down as Canada depends on US trade for their economy.

  5. AHodge says:

    i am with this
    tho to me its more about global economy than the stock markets
    which stocks cam roughly lead and track–wih due regard to the QEs these days
    I speculated global macro divergence could maintain, global non Europe maintaining if slower
    in spite of Europe getting flushed, EU GDP there likely down overall 1.5% or more this year
    but EU downside accelerating right now— last months March auto sales awful for example
    will it drag the rest of world down?
    so i have some small US and non commodity emerging market longs
    but i am getting nervous for them
    and big EU shorts that work and may work better

    but for the world, this weeks bad ex europe signs are
    global industrial commodity price collapse–a great prompt global indicator
    much larger daily stocks swings and volatility, also VIX
    even if both daily up or down–its almost daily sawtooth-but prices losing stabilizing trading?
    slower US data which i could fade some on its own
    slower china which is bad mainly for commodity producers
    but there are a lot of them
    not pulling the plug, and dont need to do much selling, but it is starting to add up

  6. AHodge says:

    another small nervous sign
    the forward VIX curve which is often inverted
    now rises from about 17 now to 19.4 in the out contract

  7. AHodge says:

    also the tips yields rose–for them–dramatically today- their implied inflation outlook fell even more.
    for me a nervous sign, one days worth of sharply lower disinflation outlook, we see if it extends.
    this is not necessarily a good thing as folks may be talking deflation soon.
    but wages not slowing yet
    just real low growth and inadequate to crank an income recovery

  8. ZevCapital says:

    Nothing can rise indefinitely, so why is outcome #1 even considered? The danger with China is that most people do not understand the profound risks that exist. When US investors finally realized the risks that falling home prices would have on the broader economy we got a recession and the tea party. Imagine what you get when you have a similar economic crisis but this time you have 1 billion people who live in abject poverty and were told that if they went along with the central government they would become rich and help create a China that would compete and ultimately replace the USA as the world hegemony. Not a good situation,