hello and welcome back to the note it's
tempting to suggest that we can ignore
the year so far as virtually all the
most dramatic trends that we saw in the
first six weeks or so of the year have
now completed reversing even the sp500
itself was briefly up for the year at
one point today it's tempting but on
balance I still think we should resist
that temptation we start by taking a
look at the dollar this is the
trade-weighted index against a basket of
other significant currencies a very
sharp move down in the last two days
following the very dovish statement we
got from the Federal Reserve put in
perspective you can see we're still very
much stronger for the dollar than we
were two years ago it's still not
necessarily clear that the the trend has
been emphatically reversed but a
distinct clear relief of the pressure a
weak dollar makes life a lot easier for
a lot of people particularly in emerging
markets reduces some of what's known as
the tail risk the risk of a significant
crisis now if we take a look at WTI
crude you can see again if we look at it
in long-term perspective perhaps you
shouldn't get too carried away by what's
happened so far this year but we are up
for the year we're back above forty
dollars per barrel there is still a long
way to go before this very dramatic
downward trend can be emphatically
reversed but plainly there are reasons
why we have seen the recovery of the
last few weeks now if I'd shown you a
surprise data for how US economic data
have come in that would have shown you a
v-shape so would volatility so would
inflation breakevens there's a
persistent pattern that we've seen a
v-shape as people suffered a very
significant recession or deflationary
scare in a stir about the second week of
februari and then steadily recovered
from it does that mean that all is well
no there are still some significant
signs that all is not totally as it
should be let's take a look at the S&P
500 and compare it to the sp500 dividend
aristocrats
index this is an index of companies
which are particularly reliable at
paying out their dividends generally
something that begins to appeal to you
when you're nervous when you want to be
sure that you actually get your money to
show me the money index and as you can
see it has a radically outperformed over
the last few months when people are that
concerned to see money upfront it's
generally a sign that they still lack
confidence bear in mind still obviously
that the SP remains well below its peak
from last May and I don't think we can
discount all that has happened over the
last 12 weeks plainly there was a very
significant scare that scare has been
reversed we are still unfortunately left
with rather a worrying situation where
there is still a lack of confidence