Oil, the U.S. Dollar and Bond Yields

All three undercut the risk-on equity trade

Highlights

• Finally, I see one factor behind the generalized run-up in government bond yields — investors have been making room for the deluge of high-grade corporate issuance

• The most compelling statistic for China is a 10.8x forward P/E multiple on the MSCI China index, about half the valuation being applied to the S&P 500

• Japanese equities have outperformed the S&P 500 YTD to little fanfare — the Nikkei 225 still trades at a 90% discount relative to the S&P 500 when it was at the 1989 peak

• Investors seem to believe profits are doing just fine — they may not be collapsing but we are still in the throes of what can be considered a mild earnings recession

While We Were Sleeping

Finally, I see one factor behind the generalized run-up in government bond yields (couldn’t have been due to a -2.1% pullback in July factory orders in the U.S. or the -0.5% drop in Eurozone producer prices) — investors have been making room for the deluge of high-grade corporate issuance (at least 40 tapped the global market yesterday, totaling over $36 billion).