The People’s Republic, US Earnings Reports and Commodity Concerns

By Jim Dondero | July 27, 2015

  • Chinese markets continued to dominate the news last week, as well as drive markets globally. While it remains to be seen whether the government’s actions will be able to stabilize their market, US Treasuries may well benefit from the volatility and a 2.50% yield on the 10-yr US Treasury may prove to be fleeting.
  • US equities, however, felt the aftershocks from Shanghai with upbeat domestic earnings reports offering little in the way of support. Even positive outliers such as GOOG and AMZN were not enough to keep their respective market sectors out of the red for the week as stocks were led by asset-backed sectors to the bottom of their recent trading range.
  • In addition to China, deflationary concerns also continued to weigh heavily on the minds of investors. Technically speaking this is well founded, as all commodity subsectors remain in long term downtrends and the US dollar appears poised to reassert its uptrend.
  • Finally, regarding the overseas markets, it remains a mixed bag within the BRICs. India has been able to hold support while both Brazil and Russia are clearly in downtrends. Developed markets are in far better shape, and we believe both the DAX and Nikkei could be positioned for a possible buying opportunity.

The views and opinions expressed are for informational purposes only and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice. There is no guarantee that any of the forecasts will come to pass. Past performance is no guarantee of future results.

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