Equities at Global Level (II)
In the first post, we wrote about Reagan era fiscal policy by which to spend more than collected tax revenue. Accompanying that, west allies' currencies all depreciated, exports increased, equities values doubled at least in that decade 80s. Japan equity multiplied six times to be on par with the US's.
Paul Volcker began to chair the Federal Reserve from 1979 and showed resolve to crush the inflation, but the US monetary policy eased as early as 1982.
France Equity EWQ was computed as a systemic predictors since some time in tsterm.com, meaning that its prices up to today are computed to be influential for global assets' prices in 6 months generally.
What drives EWQ?
as of 2024-04-10, https://tsterm.com/?q=ewq&h=24w&asof=2024-04-10
1. Biogen BIIB (biotech, crushed under high interest rate)
2. AMD (industrial/semiconductor, P/E ratio 324)
3. Mariott Intl MAR (hotel chain, consumer discretionary)
4. Emerson Electric EMR (industrial, P/E ratio 6)
It is computed that EWQ 6 months out is driven by high interest rate (negative impact), some over-valued semiconductor (positive impact), consumer inflation and industrial. Traditionally, France economy was more based on consumer and industrial.
Earlier April, the Federal Reserve announced intention of interest rate cuts. It remains to see whether BIIB and AMD can be propped up.
What does EWQ drive?
Let's check two things. First, AMD again, https://tsterm.com/?q=amd&h=24w&asof=2024-04-10
1. France equity EWQ
2. Microsoft MSFT (AI, OpenAI partner)
So EWQ and AMD are informative for each other, driving each other at the same time, today for 6 months out. They "band together".
Second, USDCNY, https://tsterm.com/?q=usdcny&h=24w&asof=2024-04-10
1. AIG (insurance, holds US long-term bonds)
2. France equity EWQ
3. USDJPY
Does USDCNY have any key role? If we search for three US stock indices, https://tsterm.com/?q=QQQ.US%3BSPY.US%3BDIA.US&h=24w&asof=2024-04-10
1. US Bills (near-term interest rate)
2. Microsoft MSFT (AI, OpenAI partner)
3. USDCNY