WORLD MONEY FLOW: October Week 3, 2022

The following graphs depict percentages gained/lost world-wide for the third week of October for a variety of major world indices, sectors, commodities, currencies and banks.

US Major Indices

US Major Sectors

European Major Indices

Canada, Japan & Australia

EEM & BRICs

Agriculture & Commodities

Currencies, US Bonds, Bitcoin, XLF, EUFN & GXC

Major Banks

At a glance, traders favoured:

• high-risk versus low-risk assets (growth over value),
• US markets versus Europe and Canada,
• the Energy sector, particularly Brent Crude Oil,
• Brazil and Russia,
• Gasoline,
• Silver, Platinum and Copper,
• the Aussie and Canadian Dollars, and, to a lesser extent, the Euro and British Pound Sterling,
• US and European Financial ETFs, and
• major banks (perhaps bank buy-backs were heavily involved).

Losers for the week were:

• US Bonds, 
• the US Dollar, 
• WTI Crude Oil, 
• Agriculture, 
• China, 
• Australia, and
• Japan.

As well as October's end-of-month focus for fund managers, important upcoming dates are: 

• the US Fed meeting (interest rate announcement and press conference) on November 2, and
• the US midterm elections on November 8.

Until the midterm elections are over and all results are fully tabulated and settled, markets may continue to experience volatile, wild whipsaw intraday swings, until we see clear signs of capitulation...as I've discussed in many recent posts.

In this regard, keep an eye on:

• the US Dollar,
• the Energy sector, 
• the Technology sector,
• the Discretionary sector,
• world Financial sectors, and 
• major banks 

for signs of continued risk appetite (e.g., Technology, Discretionary and major banks), or flights to safety (e.g., US Dollar and Energy).

GLOBAL MONEY FLOW: Cash & Crash

I've written a number of posts in the last few months regarding the MSCI World Index and the SPX, several of which are here and here, respectively, (together with subsequent updates) warning of further market crashes.

The following Year-to-Date and One-Week Percentages Lost/Gained graphs clearly depict, at a glance, global money flow for 2022 and for the past week (graphs courtesy of StockCharts.com).

MONEY FLOW YEAR-TO-DATE

U.S. Major Indices

U.S. Major Sectors

European Major Indices

Canada, Japan & Australia Major Indices

Emerging Markets ETF, BRIC Major Indices & BRIC ETF

Commodity & Agriculture ETFs & Commodities

Currencies, BITCOIN, XLF, EUFN & GXC

MONEY FLOW SEPT. 19-23

U.S. Major Indices

U.S. Major Sectors

European Major Indices

Canada, Japan & Australia Major Indices

Emerging Markets ETF, BRIC Major Indices & BRIC ETF

Commodity & Agriculture ETFs & Commodities

Currencies, Bitcoin, XLF, EUFN & GXC

SUMMARY

Overall, the biggest winners have been:

• the Oil and Gasoline sectors, 
• as well as the U.S. Dollar.

The biggest losers have been:

• Bitcoin, 
• global equities (especially U.S., China, Russia, Europe and the emerging markets ETF, EEM), 
• global Financial ETFs (U.S., Europe & China), 
• foreign currencies, 
• U.S. Bonds, 
• copper & precious metals, and
• U.S. Discretionary, Technology, Materials and Financial Sectors.

During the past week, there has been:

• continued buying of the U.S. Dollar, 
• continued selling of Bitcoin, 
• some selling in Oil and Gasoline,
• accelerated selling of the British Pound, the Euro, Aussie Dollar and Canadian Dollar,
• accelerated selling of the U.S., European and Chinese Financial ETFs (XLF, EUFN and GXC), and
• accelerated selling of global Major Indices (including U.S.), and U.S. Major Sectors.

CONCLUSIONS

All in all, I see no pivot away from U.S. Dollar strength and global equity and sector (and Bitcoin) weakness...YET.

So, for the moment, U.S. cash is king, as the U.S. Fed has signalled its intent to continue raising interest rates and keep them elevated for some time after inflation has declined to the Fed's 2% maximum inflation target...which could last well into 2025.

*********

P.S. After I published this post, I came across the following article...which, interestingly, confirms my conclusions...

Source: Bloomberg

And, more analysts' opinions...

Source: Barron's

EMERGING MARKETS ETF: EEM In Freefall

* See UPDATE below...

The Emerging Markets ETF (EEM) has had difficulty holding onto gains above 30.00 since January 2006, major support, as shown on the following monthly chart.

It's been in freefall since June 2021.

A sustained breach and plunge below that level could bring down global equities and financial stocks/ETFs...one to watch as a potential "canary in a coal mine."

* UPDATE Sept. 20...

Emerging markets continue to weaken as the U.S. Dollar gains strength...as of 2:20 pm ET, EEM's current price is 37.63.

We'll see what happens after the Fed raises interest rates at their meeting tomorrow.

Source: ZeroHedge

Is Weakness In China's Financials ETF A Harbinger for the Shanghai Index?

China's Financials ETF, GXC, has plunged dramatically since January of 2021, in contrast to China's Shanghai Index, SSEC, which is teetering on the brink of a downdraft, as shown on the following monthly comparison chart.

Extreme volatility began in GXC in March of 2020, relative to the SSEC, when the WHO declared COVID-19 a "pandemic" (March 11)...following its declaration of the virus as a "public health emergency of international concern" on January 30.

This dramatic and volatile trend reversal in China's financial sector may signal forthcoming weakness and produce problems, in the near term, and, possibly in the long run, for its equity sector, namely the Shanghai Index.

By the way, my post of September 15, 2021 described financial weakness in GXC pertaining to China's second-largest property developer, Evergrande Group (and its major debt obligations and defaults)...thereby, possibly, triggering a negative event in China's Shanghai Index, and, even, other world markets.

Combine those issues with 

• skyrocketing global inflation, 
• parabolic commodity prices, 
• Europe's financial weakness, 
• weakness in U.S. and Chinese Technology Sectors, and
• the invasion and war perpetrated by Russia against Ukraine, 

and you have a world-wide financial catastrophe waiting to happen.

Keep an eye on this comparison for clues on a weakening SSEC, as well as the above global issues.

P.S. More information and updates on Chinese markets can be found here.