So says ANZ in a new note on macro strategy late yesterday:
Our ANZ global lead indicators continue to ease from the late 2011 bounce. We expect that our lead indicators will continue to grind moderately lower through the balance of 2012, but recover through 2013. Markets are disappointed that the modest bounce in global momentum has not been sustained.
Markets are particularly concerned that the composition of global momentum has been dragged down by a sharp loss of Chinese momentum. This has been reflected in large speculative short positions in cyclical assets such as the AUD and copper.
Tactically we consider the capitulation across risk assets is now vulnerable to policy “circuit breakers” from the EZ and China. However, we expect that our lead indicators will continue to grind lower and we remain a seller of short covering rallies in risk assets (and a buyer of high quality bonds) until a clear base forms across our lead indicators.
The good news is that inventory liquidation is easing upstream price pressures and providing scope for further policy easing across the EZ and China. Importantly, relatively lean inventory will provide a base for a solid bounce in momentum through 2013. fundamental lead indicators over the next few months that would drive a more durable recovery in cyclical assets and risk appetite. Therefore, we remain a seller of risk rallies (albeit with risk appetite capitulation limited by our expectation of credible policy “circuit breakers”) until clear signs develop that our global lead indicators have based.
Worth a read and more than reasonable but with China successfully ramping lending and milky wilkies coming in the US, not yet!
