Mostly Twitter and some early September Thoughts

All of my comments in August have come on Twitter, but access on the right here anyway.

The central theme in August was the weak China equity market performance and the decoupling to the rest of the world equity markets. As the chart below shows it seems like China have been leading global equities since the crisis started in the Summer of 2007, so any decoupling can not continue.

I don't know how many times, I have heard about that there is no correlation between China and the rest of the world equity markets and that China A-shares is just a small local market closed for foreign investors. That might be correct in the short run, but as the chart above shows it's surely wrong in the medium term.

Maybe the link is that the China A-share market is an indicator for excess liquidity in China and therefore a good leading indicator for the influence to global growth from China.

One way of investing in A-shares is the Morgan Stanley A-share ETF, but as can be seen the track of the the A-share index is not the best in the short run, but year to date it's better.

So I believe China will be important in the next few months. Either China equities begin to support the global equity bull or it will die again.

There is a lot of talk about September historical being the worst month of the year. The bulls argue that this is consensus and the consensus is normally now correct, so in their mind the bull market will continue. But maybe the consensus is that we all believe bulls and then that get to be the consensus ... and then we could go down after all.

Most likely the data will continue to be positive in the short run driven by the global inventory correction and auto support. For a very good update of data see here.

One of the supportive factors in August apart from the data was the dovish central banks and the fact that bond yields actually went down in August. How long can this correlation continue and how long can central banks continue to be supportive if the data continues to be strong. Where are the bond vigilantes?

It might not be a surprise that my global macro view is more in line with this story. http://www.bloomberg.com/apps/news?pid=20601087&sid=auGWGWlnohNo

Dshort has updated his Mega with the current market being part of a bear market that began in 2000.

Finally an update of my old chart illustrating just how positive the move have been so far.