Stabilisation within the housing market

·         US ECONOMY : stabilisation within the housing market (at a very low level) coupled with a slight tendency to destocking and possibly a price stabilisation or even a slight recovery. This parameter is psychologically crucial as all that misery started with the real estate. On the production front, companies are still reducing their output and destocking. When this phenomenon is over and consumers are building inventories again, there might be a dramatic surge in output and some mismatch. Hence don’t neglect heavy cyclicals but it is probably to early to step in.

·         INTEREST RATES : India has cut rates for the 6^th consecutive time and they are at historical lows. In Europe, the ECB is likely to reduce leading rates by another 25bps. It seems that those measures have not had any significant impact on consumption so far as banks are still very found of cash. Some can even get a temporary 7% in the Netherlands.

·         REBOUND : markets are in a good mood again. Nothing abnormal with profit taking after 6 weeks of positive correction. Today’s session will be decisive for the trend over the coming weeks.

·         VIX is bouncing back at 39.2. Gold as well at 890 USD per oz and the oil price (BRENT CRUDE SPOT) is down at 49.4 USD. The USD is stable against the EUR at 1.29. 10-2 years spread is stable at 1.50. The 5y CMS stands at 2.746 and the 3y at 2.242.

 

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