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Worries prevailed in the markets and dragged particularly German stocks lower.

Italian budget worries linger on as the confrontation with EU is approaching

Italian politicians believe they can play with markets, which backfires

German political volatility is unsettling

US interest rates at over 3% rattle the markets

Flatt yield curve seen as harbinger of the next recession

Good read from Federal Reserve Bank of San Francisco (click)

China still unresolved trade conflict

New tensions with Saudi Arabia which could potentially lead to higher oil prices

German ZEW expectation index is falling, indicating investors worry

All this lead finally to the equity markets in Germany falling thorough resistance and finalising a head and shoulder formation

DAX index weekly Price

DAX 2018-10-17

Source: Bloomberg

A rally above last week’s heights could bring some relieve. However the structure of the market is badly damaged which usually take more than just technical rebounds.

Investor sentiment on both sides of the Atlantic is really weak

CNN Greed and Fear indicator is at extremes (click) 

Greed and fear 2018-10-17

Investors’ expectations of economic deterioration as polled by Bank of America Merrill Lynch is at 2008 highs

Good corporate numbers are disregarded by the stock markets

Stable economic numbers not supportive

Just realised that I can add more negative than positive. This is amazing and scary.

At the moment the old saying comes back: markets climb the wall of worries.

However, it is also very difficult to “cry wolf” in the face of the market Action.