Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 28 May 2015 at 9:30 GMT

Daily Shot: Commodities on sale! Team / Saxo Bank
  • Eurozone gradual recovery continues
  • As the dollar rally resumed, commodities are selling off again
  • Broadcom's rally pushed the NASDAQ Composite to a new record
By Walter Kurtz*

The negotiations between Greece and its creditors have turned into a complete circus. First we are in document "drafting" stage.

And then we are not even close. Time is running out and these games are simply not productive.

It's not clear if the Greek leadership fully understands the damage this type of uncertainty is doing to the nation. Deposit levels continue to decline and the banking system is on the verge of collapse.

According to the latest survey, the probability of Grexit has declined. But it takes one missed payment to the IMF to reignite the fears.

Risk of a Grexit
Outside of the situation with Greece, the data out of the Eurozone remains consistent with a gradual recovery. Here is one measure of German consumer sentiment (though I generally find GfK's survey methods less than ideal).

Let's take a look at a few developments in emerging markets.
1. India's business sentiment seems to be weakening. This will be important to watch closely.
2. While the Russian ruble has rallied sharply in recent months it is still down a third of its value from a year ago. In the chart below, green = Turkish lira, black = Brazilian real, blue = Russian ruble (vs. USD).

As the dollar rally resumed, commodities are selling off again. The chart below shows the dollar index (DXY) vs. the Continuous Commodity Index (GCC) - almost a mirror image. 
 Finally, a couple of updates on US markets:
1. The NASDAQ Composite hit a new record on Broadcom's rally.
 2. In US corporate credit HY bonds continue to outperform. Here is YTD total return for HY bonds (blue), leveraged loans (orange), investment grade bonds (red).
US bonds
 3. In the alternatives space, demand is rising for secondary fund investing. Some funds have traded at a premium to NAV as institutions want to put money to work quickly and reduce their J-curve.
 To conclude, here is some food for thought - 5 items:
1. In the US support is rising for doctor-assisted suicide.
 2. The US is an outlier on the religious commitment vs. wealth scatter plot. 
 3. Savings rates by income bracket (non-retirees, US).
Saving rate
 4. Marriage rate in the US.
 5. Young people who are neither employed nor in school by country.
— Edited by Clemens Bomsdorf
* Walter Kurtz is an alias
** This is an abridged version of the Daily Shot. To subscribe to the full version, link to the Daily Shot and select the appropriate command. E-mail addresses are never shared with anyone.


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