Financial Markets Peak

S&P

S & P 500 – Five Year Performance (Bloomberg)

As we approach the Lunar New Year festivities in China all the major western indices are drawing the same picture: it looks like a mountain top. As events unfold China contagion is the only explanation for why the western markets should be trending downward as they anticipate a hard landing in China.

DOW @ 16000

DOW Jones Industrial – Five Year Performance (Bloomberg)

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NASDAQ

NASDAQ – Five Year Performance (Bloomberg)

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NIKKEI 500

NIKKEI – Five Year Performance (Bloomberg)

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Leading the way was reporting from the UK about the market trending down in London:

Europe 600

Europe 600 – Two Year Performance (Bloomberg)

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Heading over to China we can look at the Shanghai and CSI 300 for market data:

Shanghai

Shanghai – Five Year Performance (Bloomberg)

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CSI 300

CSI 300 – Five Year Performance (Bloomberg)

While the two leading indices in China do not resemble the west, there is a probable explanation—the ‘national team’ has been pouring treasure to stabilize the yuan and the markets. Economics tell us that defending a world currency is a fools  errand. The next few weeks should tell the rest although China has enough reserves to drag this process out much longer.

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