Positioning For a Bull or Bear Market

The U.S. stock market has moved lower this morning following Standard & Poor’s cut Greece’s credit-rating outlook, a rise in  Spanish and Italian 10 yr. borrowing costs (bonds), and a move by the Bank of England to sharply cut its forecast for medium term growth in Britain’s economy.

Ten-year Spanish government bond yields jumped to over 7 percent while Italian bond yields moved to over 6 percent.

Sentiment is decidedly more cautious until more economic data becomes available and the global economic picture becomes clearer about potential easing measures undertaken by central banks across the world. 

Before today’s downturn the markets have rallied three consecutive days since Friday’s positive U.S.  jobs report and amid renewed hopes for further easing measures by central bankers.

Chinese CPI data will be released later tonight. If Chinese inflation levels appear to be manageable, there is a potential for further policy easing measures undertaken by China’s central bank which will positively support commodities.

A stronger U.S. dollar is a concern for U.S. retailers. Popular clothing retailer Ralph Lauren said on Wednesday that its first quarter net income rose 5 percent, but it forecasted a revenue decline in the current quarter and cited concerns about a strengthening U.S. dollar impacting European sales and weak global economy hurting consumer spending.

“The outlook for consumer spending and global economic growth remains challenging and we are planning our business accordingly,” said CEO Roger Farah.

About Johnathan Schweitzer 1466 Articles
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