Salient to Investors:
Jim O’Neill writes:
- Nothing has materially changed by the US election and the Chinese leadership handover.
- The positive surprise in Korean exports in October indicates a pick up in world trade.
- Japan reported its first seasonally-adjusted current account deficit following other generally grim economic news.
- It is tough to see good news for the foreseeable future in the Euro area.
- UK pension funds now hold 43.2% of their assets in gilts, 38.5% in equities.
- Australia might not be a winner from the ‘New China’ due to its dependence on commodities.
- The Chinese and US economies look notably better. The improvement in the US external deficit is starting to look more and more structural – the US is changing itself. Exports are now at 80% of the level of imports.
- Chinese data is very encouraging and the Chinese economy is rebalancing.
- Despite encouraging US data, market momentum has turned down. The S&P 500 is forming a negative chart pattern similar to early summer of 2012 and summer of 2011, when the spot price and its 21-day moving average had dropped below the 50-day moving average. A number of other market chart patterns suggest that ‘risk off’ is in charge.