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VWO - Emerging Market Macro Analysis The macro data from this month's Markit PMI's is sending a bit of mixing signals from the countries that VWO has the most exposure to, but I am still optimistic as to the near-future performance of the emerging markets. Before going into the macro analysis, whats the market allocation of this ETF. The 80% market allocation is the following: - China -> 42.5% - Taiwan -> 16.5% - India -> 11% - Brazil -> 5.9% - South Africa -> 4.1% After a quick look at the list above, we can see that China and Taiwan are almost 50% of the market allocation, so it is important to follow their situation closer. China Macro Overview China PMI's are sending mixed signals regarding the growth of Chianese economy, with a possible hint as to slow down in the next few months. The manufacturing report is showing a slow down in growth in the production and new orders. The new export orders are declining again below the 50 level, which indicates a possibility of contraction, there is also an indication of rising costs. And that's likely to reflect in the results of Q2, or even in the Q3. Taiwan Macro Overview In comparison to Chinese PMI's, Taiwanese reports are much more optimistic, with strong growth in the last months. January Manufacturing PMI is reporting growth in Output and New Orders, which are leading indicators in themselves. Employment has increased substantially, which is a good indicator as to the health of the Taiwanese economy in the current situation. In my opinion, the Taiwanese companies will lead the performance in the VWO for the next few months. Indian Macro overview India is another country reporting growth in January if we keep in mind the allocation size in this country in this ETF, it gives an optimistic outlook for its performance. New Orders, Exports and Outputs are rising for another consecutive month. The employment situation is still contracting but at lower levels than before. That may be an indication of possible employment growth soon. The overall outlook for the Indian economy is positive and in conjunction with positive data from Taiwan, that's good news for the emerging markets. Additional Macro overview Brazil, South Africa are other countries in the top 5 of the allocations for this ETF. Their allocation size is reasonably smaller than the countries above so I won't go into much detail. Brazil situation is not very bright, as to the information provided by PMI reports, even that manufacturing showed slight improvements, the services are contracting again. The situation in South Africa seems to expand but at a slow pace, there are still many concerns as the effects of the pandemic on the overall economy. Final Opinion. As we can see from the macro overview of the countries, which are the key components of the market allocation of this ETF, the outlook is mostly positive. Some may be concerned by the mixed data from the Chinese PMIs since China is the biggest player in this ETF, it may affect the performance. However, there is a positive outlook for Taiwan and India. I believe they will compensate for the possible slow down in China, and it'll drive the EM performance for the next few months. Sources: - Caixin China General Manufacturing PMI - Caixin China General Services PMI - IHS Markit Taiwan Manufacturing PMI - IHS Markit India Manufacturing PMI - IHS Markit India Services PMI - IHS Markit Brazil Manufacturing PMI - IHS Markit Brazil Services PMI - IHS Markit South Africa PMI
AMEX:VWOLong
by jaymastero
My long-term outlook on Silver SLVThe chart is pretty much self explanatory and very simple to understand. I pretty much see silver as a good investment whether if you buy shares or you own the commodity out right. This would be my ideal scenario for silver to climb to all time highs by 2022. Break and hold over $27 would open up a climb to $50. This could also happen much faster based on global requirement to hedge the falling value of fiat. Silver is also a material that is used in some of the fastest growing emerging markets of solar power, electric vehicles, smartphones, green energy and much more. This move in silver could be similar to what you saw in GameStop. Be sure to do your own research and see if what I say make sense to you!
AMEX:SLVLong
by krobby
BROAD MARKET ANALYSIS| DXY | YIELDS & SPREADS | EMERGING MARKETSI'll try to keep this idea short with plenty of detailed charts. With the pricing in of the recent events, I think we're at a pivotal point of what happens next, based on some of the upcoming events (earnings season, Bidens' tax plan etc). Here's why... 1. It's quite obvious from the chart, that the vaccine and election news gave a boost of confidence to investors globally, reflected by the VIX currently sitting near the long-term mean ~19.5. The trading strategy that followed was a rotation into countries/sectors/factors that were underpriced due to the additional cashflow uncertainty. Essentially, a shift from min-vol into value, shift from developed into Emerging Markets, and a boost in inflation expectations as the dollar continued to weaken due to the expected EM recovery potential. However, how long will this strategy work? At some point all strategies reach of point of self-correction, mostly due to overcrowding . Let's start by analyzing US yields first. 2. As it can be observed from the US10Y chart, treasuries picked up selling momentum as the probability of Biden and a Democrats trifecta increased (also helped by FEDs comments about potential selling of long duration assets, fred.stlouisfed.org) Finally we had a breakout after these probabilities realized. Besides, here too there is a self-correcting mechanism, a threshold where yields actually become detrimental to the market. For two primary reasons: 1) Discounted cashflows at higher rates yield lower PV for equities, 2) Increasing (Re) financing costs for deeply indented companies . This threshold was ~3.25% in 2018, however the debt levels are much higher in comparison to 2018 (fred.stlouisfed.org). Of course, we can't know the threshold level until it happens, but considering the chop in the SPX while the US10Y spiked around 1.2%, this implies that the threshold is could be in the range of 1.2% to 1.5%. Considering the amount of US corporate debt that is set to retire in 2021, the sensitivity of US equities to T-yields is something to be carefully watched. Although, knowing that the FED could easily go the Japanese path of YC control, high yields shouldn't cause an enormous sellout, perhaps at most ~-10%-15%. 3. Lastly, the dollar weakness has been one of the drivers behind equities returns globally. Except for the EU, a weak dollar is beneficial to practically all economies. However, considering the increasing amounts of net short dollar positions, the dollar bears had it coming, judging by the short squeeze last week. On a longer time frame, the dollar is near a structural support, implying that the dollar will trade horizontally with a potential upside. Dollar strength should slow down or even put a break on future EM rallies. However, if the dollar continues to weaken backed up by the fiscal and monetary stances, this will furthermore increase the reflation potential for the US. Therein, comes a risk of too high inflation, where the FED would have to step in, where even a single rate hike could turn the leveraged loans market to shreds. Although, judging from the muted reaction in the short end of the yield curve, the market doesn't think that any inflation surprise would force FEDs hawkish hands. Finally, what's not priced in? Firstly, it's hard to say how much Bidens' Tax plan is priced in, but what's certain is that in any case it will dampen the growth in corporate earnings. Considering that currently equities are far above the long term means in the PE and CAPE ratios the question is what are the chances that the multiples will keep expanding for the market to yield similar returns to the last 5-10 years? Likewise, this earnings season we should get a glimpse at the potential of recovery for small caps and value stocks, to see whether the market is overextended or the bullish expectations were rightly priced in. There many other potential quantitative factors to analyze, for now this is it for the broad market analysis. - Step_ahead_ofthemarket ________________________________________________________________________________________ >>I do not share my ideas for the likes or the views. This channel is only dedicated to well-informed research and other noteworthy and interesting market stories.>> However, if you'd like to support me and get informed in the greatest of details , every thumbs up and follow is greatly appreciated! Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels.
SP:SPX
by step_ahead_ofthemarket
10-yr market cycle for FX, commodities, value, & global stocks?The US dollar tends to trade in a ten-year cycle relative to global currencies. It outperforms for ten years, then underperforms for ten years, then outperforms, and so on. This year we seem to have ended a cycle of outperformance when the US dollar broke its ten-year trend line (orange line on the chart). The dollar is inversely correlated to all sorts of other things, including alternative currencies (including Bitcoin), commodities (including metals), global equities (developed, emerging, and frontier markets), and perhaps the value/growth ratio (mostly because value companies like energy majors and miners benefit from strong commodities prices). That means that the ten-year dollar cycle also tends to create ten-year cycles in these other markets. The downward dollar breakout has already led to an upward breakout in the ratios of global and emerging markets equities to US equities (purple and green lines on the chart). A recent survey of investment managers showed that they believe emerging markets will be the best performer over the next ten years. Commodities also rank highly in those investment manager surveys, and we are nearing a trend line break for commodities (red line on the chart). The value/growth ratio (black line on the chart) has been showing a little life as well, and it's possible that we will also head toward a trend line break in that ratio.
AMEX:USCILong
by ChristopherCarrollSmith
2
Inverse H&S on the Verde Agritech weekly chart targets $1.00The weekly chart of Verde Agritech is showing an inverse head and shoulders pattern that appears to have completed. A breakout from the current level (~$0.57) will confirm the pattern. The distance from the head to the neckline is $0.43, so the target of this chart pattern is $1.00. Fundamentals are supportive in that the company is establishing itself as a domestic supplier of potash to the Brazilian agricultural market and is steadily growing production and revenues. The product has been shown to be highly effective for coffee, soybeans and other crops while also being less damaging to the soil.
ALong
by carbon8ed
Big Russian long is comingRussian equities look really good at the end of 2020 & 2021-2025! We take into account declining dxy and rising em currencies, sector rotation and increasing demand for commodities in china, with a favorable pace of capex L-shaped recovery in the energy sector... we also expect reduction of political risks in Russia more, than in other em... the recovery of the Russian economy after the 2008 crisis was frozen in 2014 due to the "sanctions wars"... - in the context of the end of the pandemic and the change in the socio-political paradigm.., we expect the growth of Russian economy (next 8 years) and the growth of equities (next 5 years)...
INDEX:RTSILong
by MITCapital
1
$EEM: Interesting indicator, flashing caution by mid DecemberEmerging markets are flashing an interesting signal here, the weekly trend is up, and strongly, but will expire its current advance by the week ending on Dec 18. If we get some kind of unexpected issue before COVID vaccines are widely available, we could get some kind of correction here perhaps. Alternatively, we get a sideways consolidation and the markets keep rallying until vaccines roll out, by March give or take. This is what many charts seem to indicate. Definitely vital to monitor the action here and be ready to react once we get confirmation of one or the other. Cheers, Ivan Labrie.
AMEX:EEM
by IvanLabrie
4
Investors are bullish on US TreasuriesThe tide in the $20 trillion Treasury market appears to be turning in favor of the bulls for now, with expectations growing that the Fed will boost purchases of longer-maturity debt as soon as next month after Mnuchin requested the FED to return the money set aside for lending programs in the US. This implies we could see a weak US Dollar moving forward. However the pandemic situation could keep investors uneasy for now. A September 2020 pivot Low stands between the currency's next level of major support zone at 88.2xx. I'll take this play from a Commodities and Emerging Markets currencies perspective. Silver is an interesting precious metal that could see this year's pivot high breached to the upside with a $34.xx being a possible target 🎯 for 2021. The USDSGD is in play to breach a storng level of support that held the price twice in both January 2019 and January 2020. If the monthly candle closes below this area, it's next support 🎯 will be around the 1.30xx - 1.31xx supply area.
NASDAQ:TLTLong
by GrizzlyBearBee