Only utilities did not bounce back up due to fear of another rate hike in December.
This was enough to push the Euro/US$ lower.
On the interest rates front, we can see that the US/German and US/Japanese differentials pushed higher, which in itself should somehow attracting money into US assets.
On a longer term view, we can see that the early strong interest rates push of last Year was due to Trump's election, while a steady decrease has occurred since January as reforms still need to be negotiated and voted for.
Both the NQ8 and the small caps were sold yesterday, but for different reasons: The NQ8 selling was due to AAPL while the small caps probably reacted to higher rates.
The small caps continued to outperform, but we did not reach the top of the envelope. I believe that this level will be reached when the Tax deal will be announced.
Two days ago, the S&P published an interesting report on share buybacks:
http://eu.spindices.com/search/?Cont...e=Announcement
The main information is below:
For the 12-month period ending June 2017, S&P 500 issues spent $500.8 billion on buybacks, down 14.5% from the $585.4 billion set during the 12-month period ending June 2016.
The ability of companies to increase buybacks remains strong, as available cash set a new record, surpassing $1.5 trillion for the first time
In other words: share buybacks are diminishing, but companies are still awash in cash.
I found the Table below rather interesting: it shows that in 2017 sharebiubacks have offered greater returns than dividends (2.43% VS 2.12%.) Note that the dividends yields only are lower than the 10Y yields (2.28%.) I believe that equities will start becoming less attractive, but such a move could take 12 Months.
Conclusions:
There does not seem to be much stress in the markets. Only currencies are adapting to the new Fed reality. The Trump tax deal will also be positive for the US$ and will push the 10Y rates higher.
I am still looking at a possible exuberant move on the tax deal announcement.
