The Most Encouraging Sign for World Equities

Posted by Don Valiloux - Timing the Market

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U.S. equity index futures are higher this morning. S&P 500 Index futures are up 4 points in pre-opening comments. Equity markets are responding to encouraging comments on the U.S. economy offered by President Obama during his press conference last night. Today, President Obama meets with Democratic leaders in Congress to discuss his budget.

Economic news released this morning was mildly encouraging. February durable goods orders improved from -4.5% in January to +3.4% in February, the first increase in seven months. Consensus was a decline of 2.5%. Excluding transportation, February durable goods orders rose 3.9% versus consensus of -2.0%. Equity index futures gained slightly following release of the news at 8:30 AM EDT.

The Yen/Euro cross has broken above a five month trading range, an encouraging technical sign for world equity markets. The Yen/Euro cross is a barometer measuring global appetite to assume risk in equity markets.

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Chart courtesy of StockCharts.com www.stockcharts.com

Ken Lewis, CEO of Bank of America noted that his bank plans to start repaying TARP money before the end of the year. His comment follows rumors that Bank of America’s personnel on Bank of America’s trading desk are threatening to leave to set up a hedge fund due to the bonus cap for firms taking TARP money proposed by Congress.

Bond traders in the United Kingdom received a rude surprise last night when a U.K. government Gilt issue valued at about $40 billion U.S. failed. The failure comes at an interesting time when the U.S. government is coming to the bond market with a large Treasury issue.

Technical action by S&P 500 stocks remains bullish. Another 11 S&P 500 stocks broke resistance yesterday. None broke support.

Technical action by TSX Composite stocks also remains bullish. Another four TSX stocks broke resistance. None broke support.

…go HERE to see First Quarter Consensus Earnings Estimates for TSX 60 Companies