Nice Rallies in Asian/EM Equities, Global Bonds, and Both the Yen and Aussie Dollar

Despite the consensus narrative of booming U.S. growth, the Atlanta Fed has taken a knife to its estimate for real final sales. Today's payroll data will not likely help

Key Takeaways

• Rotation Trade in Full Swing, Leaving Nasdaq Lagging: For all intents and purposes, the S&P 500 is plateauing near the highs. It has done nothing more than bob and weave for a month now. The Nasdaq 100 is lower today than it was in early October. But the Dow and the Russell 2000 have clearly been the outperforming indexes. Asian equities remain an even more alluring proposition — absolutely loving the move into the Chips sector with the wobbly U.S. dollar.

• Flat Retail Volumes Clash With the “Strong Consumer” Narrative: I don’t expect this to be reported on TV, but did you know that there has been almost no growth in retail sales volumes from June to December? That ain’t no blip. It’s a pattern. And what it shows is that the weakness at the low-end and mid-end of the income base is now completely offsetting the spending from the equity-filled holy rollers.

• Japanese Yen and U.S. Yields Test Key Trendlines: The yen is now testing the 100-day moving average, and the Australian dollar just hit a three-year high. The global bond market is finding a rare bid in the aftermath of yesterday’s U.S. retail sales data and the benign Chinese CPI data that came out today. After yesterday’s nice -6 basis point yield decline, the 10-year T-note yield is doing the same and about to test its 100-day trendline. A break here opens the door for the next move to 4.0%, which also has proven to have been a major resistance point.