Beijing Focuses on the Stock Market Instead of the Property Market

Asia was green across the board for a change on the back of a wave of stimulus measures out of Beijing

Highlights

• A wave of stimulus measures out of Beijing lifts Asian markets — notably there was a cut in the stamp duty for the first time in more than 15 years

• The American consumer will be heading into the fourth quarter free of all stimulus

• The Citi “inflation surprise index” has dialed its way back to where it was in April 2020 and the Baltic Dry Index is now off -80% from the cycle peak — so much for inflationary concerns

• A tactical opportunity to go long duration over the next two months

While We Were Sleeping 

We start the week off with equity markets in rally mode. U.S. futures are squarely in the green with all the major averages staging attempts at their respective “resistance” 50-day moving averages (while Friday’s bounce was nice to see for the bulls, this merely continued a pattern where rallies only seem to take place in recent weeks on light “no conviction” volumes). Market breadth and leadership have also been narrowing of late — the internals have turned weak again (the regional banks are slipping badly, the retailers are almost back in correction mode, the homebuilders look at risk of breaking down, and the small-caps are lagging once again which is an anti-cyclical move).