2018

After the last week sharp correction, this week was marked by a marked rebound, more extensive on the US indices (+ 4.3% for the S & P) than on the European indices (+ 3.3%) which is due to for two main reasons, the first being EURO / USD, which has fallen back above 1.25, penalizing the European industrial sector. The second factor being the strength of the US technology compartment, and in particular two stocks: APPLE whose title has soared after the announcement of the increased stake of W. Buffet and Amazon (+ 9%) which has already erased the down from the previous week. The behavior of these two US heavy weights was a trigger for the sharp rebound this week.

Strong rebound on US Tech : QQQ PowerShares, daily data

Markets seem to have forgotten the really reasons for the previous week decline and finally reacted well to inflation statistics (CPI) stronger than expected. 10 years rates remained on their highs, at around 2.9% which is for the moment back in the background.

Commodities strongly bounced, petroleum and copper in the lead, which is consistent with the fact that the decline in the markets has no impact on global growth estimated at 4% in 2018.

Copper reactided strongly : JJC (iPath Copper ETN), daily data

However worries are rising, in particular, on the pace of rate hikes by the Fed, which could put an end to the US growth cycle, which is entering its ninth year. The rise in gold primarily reflects the decline of the US dollar, but also begins to incorporate some of these concerns. After a strong bearish start, the strength of this week's rebound is surprising, but could be tricky as psychology has changed and volatility remains above 20 and should not fall back to previous levels.

Previous highs will be difficult to exceed given the high valuation of US markets. Cautious is required pending until what shape could take a possible relapse.