Markets have priced in rainbows but no rain

There is a lot of sunshine and rainbows in economic stats recently:

Morgan Stanley’s leading trade indicator:


Consumer confidence is generally up in the US:




And in Europe:




With US construction still strong:



The dark clouds? Not many. Rising interest rates and a rising US dollar choking off any recovery are the main ones, but there have been a few employment stat wobbles in the last week. It’s worth remembering though that employment is usually a lagging indicator, so this could “wash through” as higher confidence is reflected in actual spending:


Also worth noting on the employment front that the situation in Italy is getting worse again. Poor employment conditions in Italy probably means more votes for Five Star which wants to leave the Euro:


It is hard to be too bearish in the face of these stats – but therein lies the key issue: markets have priced a lot of good news in already – have they priced too much?

Next week we will publish a deeper look at that issue.



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  1. Hah, as they say, the truth lies somewhere in the middle. Too much positivity for too long makes me nervous…

  2. Seems like the GFC has been paper over for now. This means that our bubble will likely continue to grow along with other bubbles + government and private debt worldwide. Not sure what the next crisis will be but probably Europe as implied. Trump could also play a major role.

    • Can Trump engineer massive spending (and tax cuts??????) blowing the US CAD to hell and gone while maintaining confidence in the USD as the world reserve currency without steep interest rates rises????
      Very tricky!!!!!

  3. DodgydamoMEMBER

    How about including the aussie big banks (and hence ASX) in your deeper review – they’ve gone up like crazy in the last month for… what reason exactly? Trump? Malc? more likely priced in rainbows…