6/09: A bearish session but no drama

Yes, markets fell on Tuesday, but when we look at the extent of the decline (-0.1% in Europe, -1.0% in the US), it is difficult to belive that investors are pricing the risk of a conflict between North Korea and the USA.

Once again, it seems to us that this event was the occasion to take profit in the USA after the good progress of last week while in Europe, the uncertainty about the announcement of a possible tapering of the European Central Bank (ECB) on Thursday continues to weigh on the indices.

Europe

The Sigma Whole Europe Index remains in its bearish channel and below its rising resistance (pink). A break of these levels is required to consider that summer consolidation is over.

 

 

Looking at individual indices, strong resistances remain in place. So, an important catalyst will be needed in order to break them. M.Draghi can, of course, be this catalyst.

 

USA

The Sigma Whole US Index fell on Monday but remains above the bearish resistance it broke last week. So, we can not considered the situation seriously worsened.

 

 

However, it is important to pay attention to the risk of building a triple top as can be seen in the chart below.

 

Looking at individual indices, the Nasdaq 100 which benefited from a highly impulsive move last week and which has reached new historical highs also remains above its bearish support. As long as this level is not broken on daily close (~ = 5890), we consider that the situation remains constructive.

 

Conclusion

North Korea remains the source of volatility in the market but we do not believe that these events create a real stress for investors because declines are (too) limited at this point. We therefore find it hard to believe that investors (really) believe that a nuclear conflict is possible between the US and North Korea.

In this context, we believe that the major events of this week will be the ECB meeting and M.Draghi's press conference (which should have a significant impact on the euro and European indices).

Even if it is extremely difficult to anticipate declarations of central banks, it would seem normal that M. Draghi tries to stop euro's appreciation in order to preserve the positive effects of his QE. In this context, we have a bullish bias towards the meeting, but we must admit that this is not a strong conviction.

 

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5/09: Indexes remain resilient

Despite the Korean nuclear test of this weekend, European indexes reacted relatively well on Monday and the decline was rather limited. It is the same for US futures which are only declining a few points. Note that US stock exchanges were closed on Monday due to the "Labor Day".

Europe

The Sigma Whole Europe Index remains in its bearish channel but even if Monday's session was bearish, we consider that Monday's limited decline is a sign of relative strength of the market given the nature of weekend events.

It will be important to monitor if the Sigma Whole Europe Index can break its bearish channel in coming sessions.

USA:

US markets were closed on Monday because of Labor Day. So, there is no change in our analysis, and it will be interesting to monitor how US indexes will react (during the session) following the events of the weekend. For the time being,  futures do not indicate a violent reaction.

 

Conclusion

It seems investors are once again interpreting the events of this weekend as a non-event and are ready to continue the recovery begun last week in Europe.

It seems that the state of mind is rather bullish for this "back to school period".

 

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4/09: New North Korean Nuclear Test

The stock indexes ended the week very well thanks to worst than expected employment figures in the US. Indeed, worse figures reduce the risk of overheating the labor market and thus reduce the risk of rapid normalization of rates by the Fed, which has boosted the indexes on Friday.

This Monday, North Korea will (again) dictate the direction of the market following its test of a high power bomb H. These events are polluting the market, but it must be recognized that the impact remains limited up to now. Will this change? Hard to say...

 

Europe

The Sigma Whole Europe Index is close to the ascending (pink) resistance  and is also close to the upper end of its bearish channel. A break of this level would confirm the end of the summer consolidation. Unfortunately, this will not be for this Monday.

 

Some European indexes ended Friday under resistance, which makes the new Korean "stress" annoying because the pullback is likely to be amplified by resistance.

 

USA

The Sigma Whole US Index has broken its bearish resistance and is close to its historical peaks. Volatility has returned to the '10' area while the nasdaq100 reached new all-time highs. The market seems to have ended its summer consolidation but North Korean events of the weekend can (of course) change the direction of the market.

 

Conclusion

The markets seemed to have completed their summer consolidation but the North Korean nuclear test of this weekend could be a new source of volatility in the market. If it is true that (so far) nothing seems to have baffled the market (especially in US), it is always possible that violent reaction appears in the market following some political statements (or tweets...).

While we would have hoped to adopt a more constructive attitude in the market, the events of the weekend lead us to keep a highly defensive approach in the market.

 

01/09: Impulsive break of the bearish trend in the USA, Europe is more shy

The US market continued to rise and was able to break its bearish trend, there is no doubt that current move is impulsive in the US.

In Europe, the situation is less convincing at this stage, but the ECB meeting of September could be the catalyst for a nice rebound. Indeed, as the appreciation of the euro (vs the dollar) weighted on European indices' performance, we can considered that if Mr Draghi does not announce an imminent tapering, the euro should weaken vs the dollar (normally) and allow European indices to rebound.

Europe

The Sigma Whole Europe Index remains in its bearish channel. A break of the (pink) resistance is essential to improve the technical situation of the market. As long as this level is not exceeded, we must remain cautious. The lack of (positive) impulsivity in current rebound also argues in this direction.

 

 

Looking at main European indexes, they all remain under major resistances, and none of them shows a break such as the one we had yesterday on the Nasdaq100. So, the situation remains uncertain.

 

USA

The Sigma Whole US Index broke its downward trend and thus shows that the consolidation phase (of the summer) is probably over in US.

 

 

Volatility fell sharply and we are again around 10, which means that the sequence of higher highs and higher lows is over. The nervousness seems therefore calmed for the moment.

 

 

Looking at main indexes, most of them seem to have reset their rise. The Nasdaq100 is on the verge of achieving new historical highs, and this is clearly positive for the bullish momentum.

 

Conclusion

The US market seems to have completed its consolidation phase and new heights are expected to be achieved in coming sessions. It will be important to monitor if all indexes join the "party" or if some divergences appear.

In Europe, the current rise is not impulsive and it is therefore not possible to confirm that the summer consolidation has ended. The ECB meeting in September could serve as a catalyst for a bearish channel exit.

 

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31/08: The rebound continues, the rise seems impulsive

Following the turnaround that occurred during Tuesday's session, the market was able to record a second positive session this Wednesday. While the move in Europe remains somewhat less convincing, the impulsive character of the rise in the US leaves little doubt.

Europe

The Sigma Whole Europe Index is right below a horizontal resistance, it is important to cross this level quickly in order to be able to test the top of the bear channel in the coming weeks.

Looking at main European indexes, the situation remains tricky and it remains difficult to see whether we are in the presence of a rebound in the decline or a new bullish phase after the consolidation of the summer.

USA

The Sigma Whole US Index tests the resistance of its bearish channel. A break of this level would confirm that the consolidation phase is probably over.

 

 

The Nasdaq100 has already broken its downtrend in an impulsive move while the Russell2000 and DJ Transport seem to want to rise again.

 

Conclusion

The situation is not quite clear at this time, but it seems that US indexes want to rise again (Nasdaq, Russell, and DJ Transport). At the European level, the bullish momentum is not really present and the indexes remain under strong resistance. So a new up-leg is needed to improve the technical situation of the European market and confirm the recovery in the USA.

 

30/08: Europe successfully tested its supports, the USA are impressive

As we feared it for a couple of sessions, the European equity market continued its decline and (successfully) tested the bottom of channel. The fact that the market has been able to rebound on the lower end of its downtrend channel is something positive, no doubt about that. Nevertheless, it will be important to see if an impulsive move can take place from current level and put an end to these 4 months of consolidation.

In the US, indexes opened in negative territory but investors have visibly considered this pullback was a buying opportunity and most major indices ended the session in positive territory. Once again we are very impressed by the ability of US indexes to resist to any negative news. Obviously the weakness of the US dollar and the promises to get a tax reform before the end of the year make investors euphoric.

Europe

As we mentioned in our introduction, the Sigma Whole Europe Index successfully tested the bottom end of its declining channel. Futures indicate a nice rebound at market open but a break of the downtrend is essential before we can consider that the consolidation of this summer is over.

 

 

Looking at main European indexes, we can notice that new lows have been reached yesterday and the market was able to close well above those levels. The question now is whether a sustainable rebound can take place or not.

 

USA

The Sigma Whole US Index remains above its horizontal supports (green lines) and this shows an impressive relative strength. Of course there is the weakness of the US dollar but once again we are impressed by the behavior of US indexes which seem to be immune from any negative news. Even if sentiment indicators (see our weekend analysis) show a rise in bearish sentiment, we really do not feel that this element is reflected in the behavior of the US indexes. In fact, our own feeling would say that American investors are in a state of mind "afraid of nothing".

 

 

The large white candle visible on most US indexes highlights the impulsive character of yesterday's session. There is therefore no doubt that the "buy on the dips" mentality is still intact on the US market, which is no longer the case in Europe since mid-May.

 

Conclusion

Contrary to what we thought yesterday at the same time, Tuesday's session has been positive from a technical point of view because it allowed to successfully test major supports on the European market and it allowed US indexes to realize an impulsive session and to show that the “buy on the dips” mindset is still in place in US market.
The strength of the rebound which has just begun will be decisive for the evolution of the market in the coming weeks.

 

28/08: Weed-end update

While we were prepared for a boring week-end with non-event news coming from J.Hole symposium, we have to admit this week-end was very intense in terms of events and news. In order to be short, here is a non-exhaustive list of main events:

  • North Korea launched 3 short range missiles but the USA consider it is a sign of de-escalation because it was “only” short range missiles. To be honest, we are rather surprised with this comment…
  • A violent Hurricane hit the Texas and this will have major implications for the US economy. Insurance companies and reinsurers will be hardly hit while other industries and refineries will be shut during a couple of weeks. The direct consequence of the shutdown of some US refineries (located in Texas) is a sharp increase in gasoline price. This is not good for the US consumer. On the positive side, we can consider that companies associated to the rebuilding phase (Caterpillar, Home Depot, …) should benefit of this situation. The auto manufacturers should also benefit from this situation because a lot of cars need to be replaced.
  • Once again, D.Trump sent some tweets during the week-end. Those tweets were related to the building of Mexican Wall and the end of NAFTA. On top of that, some US media reported that President Trump required adopting tariffs against Chinese products. If this news is confirmed, it could trigger a commercial war between the USA and China.
  • M.Draghi didn’t announce any change in monetary policy during J.Hole’s symposium. On top of that, as he didn’t mention the strength of the euro as a problem for the European recovery, some market commentators interpreted this as a sign the ECB is not ready to intervene on the FX market in order to stop the euro strengthening. In this context, the euro continues to strengthen this morning and it is now trading at 1.1930 vs the USD.
  • During her speech at J.Hole, J.Yellen talked a lot about the benefits of the financial regulation that has been implemented after the 2009 financial crisis. There is no doubt that her view is in total contradiction with D.Trump’s intention to deregulate the financial sector with the withdrawal of the Dodd-Frank act. So (after her speech), there is now a high probability that J.Yellen won’t be reconducted as Fed chairwoman.
  • Even if Brexit negotiations are now out of the radar screen (it seems the equity market doesn’t care about it), the third round of negotiations will start next week and divergences are still very important between the EU and the UK. In this context, it is unclear if an agreement will be found in the near future.

With all these tensions in the market, the gold price is finally breaking above its key resistance at usd1305/Oz. A close above this level would clear the way till the next resistance at usd1350-1370/Oz.

Economy:

Following a sharp decline in US economic surprises during several weeks, the US economic surprises are now bouncing back (blue line) but remain in negative territory. On the other side, European economic surprises which were highly resilient during the US decline are now deteriorating but remain in positive territory. So, the European economy continues to surprises to the upside but much less than few weeks ago while the US economy continues to disappoint but much less than a few weeks ago.

Valuation:

Following the sharp appreciation of European equities in early 2017, our European valuation score (red line) declined from ‘3’ (neutral) to ‘2’ (unattractive) and it remains at this level this week. So, we can consider that, based on historical price multiples, the European equity market is relatively expensive even if it is much less expensive than the US equity market (in absolute terms).

 

The US valuation score remains at ‘2’ (unattractive). It is true that the US equity market is trading close to all-time highs while positive earnings revisions are rather limited. This situation implies that the US equity market is getting more and more expensive.

The US 12months forward P/E (PENTM, second chart) is trading at unseen levels since early 2003. The 12 months trailing P/E (third chart) is currently trading above 20 for the first time since 2001 and the EV/Sales ratio is trading at levels close to the ones from the internet bubble (in 2000).

Sentiment:

The « bull/bear spread » (blue curve) is going down which underlines that the bearish sentiment is gaining some momentum in the market. On top of that, as the neutral sentiment (pink line) is below 30%, this means the « bull/bear spread » is relevant (when neutral sentiment is above 30%, too many investors are neutral and then the « bull/bear spread” is meaningless). Nevertheless, as the bearish sentiment isn’t extreme at this stage, we can’t adopt a contrarian approach (right now), we still have to wait for further deterioration.

Following a sharp increase in the volatility index (VIX) few weeks ago, this index seems to be (now) in consolidation. As the VIX printed higher lows (blue circle) and higher highs (red circle) there is a meaningful probability we are in presence of a trend reversal. We consider a close above the ‘17’ level would confirm the market environment is changing from ultra-low volatility (around 10) to normalized volatility (range between 15 and 20). If this situation is confirmed, investors will have to face deeper setbacks in the equity market because, usually, more volatility means more and deeper consolidation phases.

Technical analysis:

The number of companies trading above their 20 weeks moving average sharply declined in recent weeks (grey line). This underlines a major deterioration in the internal dynamic of the equity market. Nevertheless, current levels are not extreme (yet) which means it is still too early to adopt a contrarian strategy.

 

 

The number of companies printing new 6 months highs (green line) sharply declined while the number the number of companies printing new 6 months lows (red line) increased in recent weeks. This situation underlines a meaningful deterioration in the internal dynamic of the equity market..

 

 

Following the loss of momentum on major European indexes since Mid-May, our European technical score (red line) declined from ‘5’ (strong uptrend) to ‘4’ (uptrend) in June and to ‘3’ (neutral) in July. This week, the European technical score is unchanged at ‘3’ (neutral)

 

 

In the USA, the loss of momentum seen on some major indexes (Russell2000, S&P Mid Cap400, DJ Transport, …) reduced our US technical score (red line) from ‘4’ (uptrend) to ‘3’ (neutral).

 

 

The Sigma Whole Europe Index remains in its downtrend (blue lines). The index looks in danger and the low end of the trend channel will probably be tested in coming sessions.

 

 

The CAC, DAX and the EuroStoxx50 remain above the lows of the North Korean tensions which is rather positive.

 

 

The Sigma Whole US Index remains above its major supports (green lines). Nevertheless, it is too early to say if last week rebound was a short term bounce back or the beginning of a new leg up. It is important to keep in mind that Harvey hurricane will have major financial impact on the US economy and both internal (debt ceiling, financial tax reform, …) and external tensions (risk of commercial war with China, tensions with North Korea, NAFTA, Mexican wall, …) are not over. According to some financial analysts, more than 300 companies out of the S&P500 will suffer from negative consequences of the hurricane. In this context, we would not be surprised to notice further selling pressure in the US equity market in the near future.

 

 

Despite last week rebound, US indexes remain in danger because most of them are still trading in a downtrend channel. It will be important to monitor the Russell2000 and the DJ transport and to see if they can stay above their major support (have a look at following charts)..

 

Conclusion:

After staying for several months in an environment of low volatility, equity indexes seem to become more nervous. The factors justifying this increase in volatility are of course the tensions between the US and North Korea but also the tensions within the Trump administration itself. The financial consequences of Hurricane Harvey in the US will also have a significant (negative) impact on the US economy. In Europe, the strength of the euro continues to cause fear of a significant loss of competitiveness for European companies on international markets and the European indexes therefore (logically) suffer from this situation. Moreover, in a context of tight valuations, deterioration of economic surprises and a climate of high complacency of investors (reflected by low volatility), a market decline seems inevitable. The question is not whether such a decline will take place but only when it will take place and what the trigger will be. In this context, we maintain a highly defensive profile (with a large portion of cash) because we consider that the risk vs expected return is not at all favorable at the moment and we fear further increase in volatility in coming weeks.

10/09: Weekend review

Following the volatility induced by market rumors related to Deutsche Bank financial health two weeks ago, it is now the turn of the GBP to make investors nervous. Indeed, recent declarations from both F.Hollande and T.May are pointing to tough negotiations for the Brexit and investors are now anticipating a hard landing for the UK economy. This negative sentiment around Brexit's negotiations sent the GBP to unseen levels for more than 30years. Even if the equity market remains quiet at this time, we can't believe this kind of volatility won't have any direct (or indirect) impact on the European equity market.

Economy:

Both US and European economic surprises are now close to zero. This means the market didn't have to digest any major negative surprise this week. Nevertheless, even if the macro-economic situation is now in line with economists' estimates and even if it means the risk of negative revisions is more limited, it also means the probability to get positive revisions is also more limited. In this context, we believe that equity analysts won't upgrade their estimates for 2017. So, current equity rally could run out of steam because valuation are rather demanding: the equity market needs positive earnings revisions in order to move higher.

 

Valuation:

Following the sharp decline in the European equity market at the beginning of this year, the European valuation score improved from '3' (neutral) to '4' (attractive). It remains at this level this week.

In the USA, the valuation score remains at '2' (unattractive). Indeed, the US equity market is close to all-time highs while earnings estimates have been cut in recent months. So, valuation is rather stretched on this market.

 

Sentiment:

Bull-bear spread is close to zero. On top of that, with a neutral sentiment close to 40%, we consider that market sentiment is not relevant at this time (too much uncertainty in the market).

 

Technical Analysis:

The number of companies trading above their 20weeks average (grey curve) sharply declined this week. This situation underlines a major deterioration in the market internal dynamic. On top of that, as the curve is still in the middle of its historical trading range, current situation cannot be considered as extreme. So, current decline could continue in coming weeks.

We can also notice on the second chart that the number of stocks printing new 6 months highs (green curve) was roughly unchanged this week while the number of stocks printing new 6 months lows (red curve) sharply increase.

So, both charts are pointing in the same direction: the internal dynamic continues to deteriorate and this is a warning signal for medium term investors.

 ab20wk20161009
24wk20161009

 

Thanks to the summer rally in the European equity market, the Sigma European technical score improved from '3' (neutral) to '4' (positive). It remains unchanged this week.

 

In the USA, thanks to the strong performance of US equities, the Sigma US technical score has been unchanged at '4' (positive) for a couple of weeks.

 

Looking at the Sigma Whole Europe Index, we can notice this index has been unable to print new highs. The European equity market is clearly losing some momentum and the risk of a meaningful pullback is increasing day after day.

 

Thanks to J.Yellen inaction, the Sigma Whole US Index has been able to print new all-time highs. Current resilience of the US equity market is impressing. It seems US investors don't care about any bad news. Nevertheless, even if the US equity market looks very strong at this time, we consider recent action looks like a distribution phase and a building top process. So, we fear the US equity market is much more vulnerable to a meaningful pullback than most investors believe it.

Conclusion:

Central Banks are doing their best in order to extend current bull market. Nevertheless, this situation won't last forever and sooner or later, another bear market will take place. So, it would be better that Central Banks reload some bullets in their guns before the next recessions because with zero interest rate levels, it will be difficult for them to fight the next recession.

It seems investors don't care about this situation and everyone enjoy current party organized by J.Yellen and M.Draghi. In coming weeks, equity investors will have to digest the earnings season and we hope results won't disappoint the market because current consensus is pointing to an earnings recovery in H2 2016 as well as in 2017. It will be very important that companies deliver on hopes because current valuation are rather demanding and any major negative surprise during the earnings season could send the equity market in corrective territory.

On top of that, Deutsche Bank financial situation as well as the GBP situation continue to worry investors and could continue to bring some volatility in the market, mainly in Europe.

 

09/22: No rate hike from the Fed

As the bank of Japan (BoJ) did it earlier yesterday, the Fed did its best in order to please the market and decided to keep its interest rates unchanged. Even if some analysts consider that J.Yellen's statement was "hawkish" we don't agree with this view. Indeed, we watch the whole press conference on CNBC and we consider that chairwoman gave a lot of justification in order to delay any rate hike. She was clearly on the defensive side. On top of that, the updated interest rates forecasts published by the Fed ('dot plot') came in well below the ones published at previous meetings which means the governors will be more dovish (or less hawkish, it is up to you) than early anticipated. We believe this new information was the trigger for the current rally. So, it seems the Fed won't move short term interest rates above 1% before the end of 2017 which means it will remain highly accommodative. Once again, the market won the battle and the Fed gave up...

Europe:

The Sigma Whole Europe Index jumped on Wednesday thanks to the BoJ and this move will continue today thanks to the Fed. The European equity market should be able to test recent tops in coming sessions and if it can move above those levels, we will probably get a new upleg.

USA:

The Sigma Whole US Index enjoyed a strong rally on Wednesday (thank you J.Yellen) and the Nasdaq is trading on new all-time highs. It will be very important to monitor if the Nasdaq is leading the market to the upside or if other indexes which are lagging (DJI, Russell 2000, SPX) refuse to print new highs. In this case, we would have a negative divergence between the Nasdaq and the rest of the market and this would be a bearish sign. Nevertheless, we are not there yet and current situation looks rather bullish (bullish breakout).

 

Conclusion:

There is a couple of months we fear a remake of late 1999 rally/bubble. In 1999, we had an excess of liquidity in the market and this excess of liquidity pushed the market to unsustainable levels (in a huge rally from October 1999 till March 2000). We don't say we are in the same situation and we don't say we will have a 5 months rally from current levels but we consider that there is a clear excess of liquidity at this time and the Fed refuses to withdraw this excess of liquidity. So, the probability to get a 10% to 15% rally (on the SPX) by the end of the year is not neglectable and the risk of a market bubble in the equity market is also material.

09/18: Weekend review

Following a very quiet (and even boring) summer, the volatility sharply increased in the last 2 weeks. The major event for next week will be the Fed meeting on the 20th and 21st of September. Nevertheless, following the (mega) dovish comments (last Monday) from governor Brainard, the probability to have a rate hike next week is close to zero percent. In fact, the bond market gives a 10% probability for a rate hike next week. But, the rate hike (or not) is not the only element to focus on. Indeed, it will be important to analyze J.Yellen's speech and to detect if there is any element pointing to several rate hikes in coming months. This would be bearish for the equity market because this situation is not priced in the bond market. At the opposite, if J.Yellen talks about "data dependent" decisions, we will probably have a rally in the equity market because this will be interpreted as a dovish statement and investors will feel comfortable with the scenario implying one rate hike in December 2016 and another one in June 2017.

Economy:

Macro data are coming below market expectations in both Europe and US. This can be noticed on the chart below where the economic surprises in both Europe and US are in negative territory. This means there are more macro data coming below expectations than macro data coming above expectations. In this context, strategists and economists will probably have to reduce their expectations for H2 and FY2017 at the macro level and this will have a negative impact on earnings estimates because those results are depending on the macro scenario. At the end of the day, this should put the equity market under pressure in coming weeks.

 

Valuation:

Following the sharp decline in the European equity market at the beginning of this year, the European valuation score improved from '3' (neutral) to '4' (attractive). It remains at this level this week.

In the USA, the valuation score remains at '2' (unattractive). Indeed, the US equity market is close to all-time highs while earnings estimates have been cut in recent months. So, valuation is rather stretched on this market.

 

Sentiment:

Bull-bear spread is close to -10%, but there is no sign of panic in the equity market. On top of that, with a neutral sentiment close to 40%, we consider that market sentiment is not really relevant at this time (too much uncertainty in the market).

Technical analysis:

The number of companies trading above their 20weeks average (grey curve) sharply declined this week. This situation underlines a major deterioration in the market internal dynamic. On top of that, as the curve is still in the middle of its historical trading range, current situation cannot be considered as extreme. So, current decline could continue in coming weeks.

We can also notice on the second chart that the number of stocks printing new 6 months highs (green curve) sharply declined this week while the number of stocks printing new 6 months lows moved slightly higher.

So, both charts are pointing in the same direction: the internal dynamic is currently deteriorating and this is a warning signal for medium term investors.

 

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Thanks to the summer rally in the European equity market, the Sigma European technical score improved from '3' (neutral) to '4' (positive). It remains at this level this week.

In the USA, thanks to the strong performance of US equities, the Sigma US technical score has been unchanged at '4' (positive) for a couple of weeks.

Looking at the Sigma Whole Europe Index, we can notice the market is close to a major support. The Fed meeting will determine if the market bounce back on this support or if it breaks it.

Following the sharp decline last Friday, the US equity market has been able to stabilize this week. This stabilization is a positive sign but at the end of the day, J.Yellen will determine the direction of the next big move.

Conclusion:

While the equity market was betting on better earnings for H2 2016 and FY2017, we can notice the economy is slowing down in both Europe and the USA. It is difficult to know if it is a 'pause' in the cycle or if it is something more substantial. Nevertheless, current slowdown will have a negative impact on earnings revisions. On top of that, with different Fed members talking about rate hikes coming soon, it is possible that the Fed statement will be more hawkish than actually anticipated by the market. This would very bearish for the equity market: each time the Fed is talking about normalization, investors become nervous and each time the Fed decide to postpone the rate hike. We will know very soon if the Fed finally decides to fight investors or if it gives up again like in May 2013 and September 2015.