Triple M Musing

Happy Monday Morning Musings!

We are starting the week with a triple “M” tongue twister Musing and including for a second time a simple high level view of the markets we call “Skyview”.

Excitement continues to build over China and EM. We remain constructive (See Jay’s appearance on BloombergTV last week) but think better opportunities lie elsewhere right now.

Namely Japanese and European equity, which no one is talking about and which will be big beneficiaries of a China growth bottom. Euro shorts are at 2 yr highs while outflows from EU equity are characterized as “extreme”. Japan has the 2nd largest individual country weight in ACWI at 7% but gets virtually no attn.

Our latest Monthly piece introduced the 3 Steps we see needed for risk assets. Step 2 is to confirm the growth bottoms in China and Europe. That confirmation needs to come from the Government bond market in each case.

There seems to be a big dichotomy between Stocks/Credit in the US and Europe and Bunds/USTs. A back up in LT yields would seem necessary to confirm growth bottoms.

Soon enough Q1 Earnings will be upon us – it will be interesting to see US investor reaction to down #s on y/y basis. Ultimate test of “look thru” investing?

Let’s have a great week!

Jamie & Jay