There still appears to be a general disbelief in the macro trends of equities, commodities, and real estate assets. It seems that even the slightest trip up results in a flood reappearance of “told you so” perma-bears. We could understand this behaviour if there were breaches of significant levels of support but as one can observe in the charts below the popular ETFs representing equities (VTI), commodities (DJP), and real estate (IYR) are all well above their support levels and are closer to breaking above resistance than breaking below support. Yes it appears that this is still the “most hated rally in history”!
There has been no new highs or lows in each of the asset classes, perhaps this will be the week where we see something breakout. We suspect that the breakout is likely to come from commodities, closely followed by equities and real estate. Of course what happens to US treasuries (IEF) is anybody’s guess over the coming week. Just how US treasury prices can hold up in the face of record debt auctions, rising commodity prices and increasing inflation premiums is totally beyond us. We have been down this road before and it won’t be the last.
We have long held a suspicion that the macro trends that had their origins late last year are going to surprise many in their “duration and magnitude”. We still see little reason to doubt this suspicion now.
These are seemingly complicated times, but the charts above and their respective trends don’t look too complicated to us. We don’t know what the future holds, but we do know that markets move in broad based trends. Let the market do the talking!
