Market Watch Weekly- February 13, 2015
Erik Dekker - Feb 13, 2015
It has been a while since stock and bond prices moved in opposite directions, but for a second week in a row the correlation between the two asset classes is sharply negative (which is a good thing).
It has been a while since stock and bond prices moved in opposite directions, but for a second week in a row the correlation between the two asset classes is sharply negative (which is a good thing). This market dynamic seems consistent with reduced tensions on a few fronts such as the ceasefire agreement between Russia and Ukraine and a possible agreement next week between Greece and the EU on the Greek bailout framework. Also, the rebound in resource stocks and commodity prices (especially oil, which is moving above its 50-day average today) adds credence to this week’s market advance.
While bearish investors may argue that the recent round of central bank rate cuts has been precipitated by weak economic conditions, the remedy to stave off deflation is steepening bond yield curves, and acting unexpectedly is a key prerequisite to shift expectations. Another weapon is to act through rising as opposed to falling economic momentum. By this we mean adding more fuel to the fire or reflating while signs of a recovery abound. This is the dynamic in which we find ourselves today, adding this stimulus points to a sharp recovery in H2/15. When the positive impact of lower oil prices is also considered, rising bond yields and steeper bond-yield curves may well support the migration of equity markets into higher trading ranges this year.
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A couple weeks back the Super bowl dominated the sports fan TV time, and this weekend it is Hockey Day in Canada. So if you are a big hockey fan, like our own Alix Rogers, then South Delta might just be the place for you to head out to this weekend.
Delta BC will be hosting a live remote for the west coast division of Scotiabank Hockey Day in Canada. The day will kick off with a free pancake breakfast, live music and fans will have the chance to meet and have their picture taken with Canuck alumni, Kirk McLean.
As part of the celebrations the Ladner Leisure Centre will have a grand re-opening and all local Delta rinks will be participating with hockey games that will include announcers, guest coaches and live national anthems. So if you or anyone in your family is a big hockey fan, or you just want to support your local community team, head out to South Delta.
We thank you for the privilege you have bestowed upon us with taking care of you and your family. We thank you for that trust.
As always, we welcome your feedback. Have a great weekend.
The Dekker Hewett Group