The Latest On The Global Economy: China And South Korea Rise But Not Enough To Make Global Growth Enticing

The decline of global growth that’s implied by the recent action in the $US will eventually rattle US financial markets. The volatility risk premium points to a higher market over the next few days, but my technical reading of key stocks in the S&P 500 is neutral. Yesterday's cross-asset action brought only one positive factor for US stocks: oil's chart is again signifying global growth. Expect the S&P 500 to bounce along its recent highs and be effectively range-bound over the next few days.

The global economy has lost some momentum and is muddling through as COVID races against vaccination rates and geopolitical strife detracts from growth across much of Eurasia. The constant turmoil in the middle East, central Asia and Myanmar is offset by a select few East Asian economies that are gaining confidence. China is getting its recent COVID outbreak under control while South Korea is doing so well with exporting goods that there is chance the central bank will raise rates there. By contrast Europe is muddling through as business expectations in Germany are down lately, and now that the UK is out of the EU there isn’t anyone else who matters much to European growth. Europe’s loss of the UK is a mixed blessing since the Scotland independence issue is again on the table and that could eventually derail UK growth. The US economy is slowing on both the consumer and corporate fronts and that makes passage of the infrastructure bill important; cultural polarization in the guise of progressive democrats may derail that.

Yesterday I sold my position in Titan Machinery (TITN), and my current market positions are in American Express (AXP), Facebook (FB), Korn-Ferry (KFY), MKS Instruments (MKSI), Starbucks (SBUX), and a short position in the SPX (SPXU).