Flows, Market Snapshot and Axes…
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On Exchange Equity Turnover:
– Valuesabove100% indicatean above average turnover compared to either the prior 30 trading days or the prior 260 trading days.
– Feedback from almost every technical analyst/trader states an expected rally of equities during the next weeks/till the end of the year. In these cond half of last week on-screen turnover came up slightly and we expect this trend to continue during the next weeks.
UniCredit OTC ETF TurnoverLast Week
Although equity markets edged up equity ETFs were only 20% of UniCredit’s OTC ETF turnover last week. Largest sellers we have seen in the markets old iShareseb.rexxGovernment Germany 1.5 –2.5 (RXP1EX), iShareseb.rexxGovernment Germany 5.5 –10.5 (RXP5EX), DB x-trackersSovereigns Eurozone YieldPlus (XY4P). Investors boughtfromUniCredit large sizesin iShareseb.rexxGovernment Germany 1.5 –2.5 (RXP1EX), iShareseb.rexxGovernment Germany 5.5 –10.5 and ComstageDAX (CBDAX).
Fundamental Highlights
The big story last week was that Western equity markets left their multi-month sideways channel to the upside. The FOMC Minutes, US core CPI inching down from 0.9% to 0.8% yoyas well as a speech given by Ben Bernankeon Friday confirmed a high probability for the Fed to embark on fresh quantitative easing (QE) measures at its next meeting on 2/3 November. Equities and commodities benefited from this view while the USD suffered. US Treasuries, in turn, did not react enthusiastically; market talkhas been that the details of the Fed’s QE program might fall short of expectations. ??In a related area, the “currency war” discussion received attention not only from the ongoing weakness of the greenback; Thailand imposed a 15% tax on foreign bondholders and Singapore, in contrast to other Asian countries, widened its currency band to allow for a stronger SGD in an effort to stem domestic inflationary pressures. Currency issues will be at the top of the agenda at the next important multilateral events (18 Oct: IMF conference Shanghai; 22/23 Oct: G-20 MoF& CB summit South Korea; 11/12 Nov: G-20 Meeting South Korea). -The coming days will bring some important data releases (ZEW, Ifo, US IP, to name a few). However, those indicators will be of secondary importance for market participants as the US earnings season is gaining steam and the crucial FOMC meeting draws closer. No less than 15 officially scheduled Fed member speeches plus the release of theBeige Book will keep analysts busy reading the tea leaves. The outlook for tons of fresh liquidity is likely to drive risky asset markets and gold up further in the short-term, while the medium-term drawbacks of yet another global liquidity tsunami currentlydo not appear on the traders’ screens
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