Rising equity prices, better profits. What comes next for corporations? Capital spending. Right now capital spending rests near a 40 year low as corporations are still cautious about spending capital to invest. However, sooner or later, you have to come out of the foxhole. I say it happens sooner.
Market worries? Forget the VIX. Forget The Dollar. Use the share prices of Walmart (WMT) and Exxon Mobil (XOM) as indicators to judge if fear is creeping back into the market. Those credit crisis outperformers have been recovery underperformers. If the investment world decides to take risk off the table, those cash rich, stable companies will be back in vogue, a bad sign for the direction of the overall market.
Last week's Fed meeting tells me that an easy monetary policy with low rates is sticking around for the foreseeable future. However, the end of support for Agency and Mortgage Backed Securities is in sight. High yield corporate bonds seem like the optimal play.
The G-20 meeting has ended with much chatter about nothing. It is important to understand when investing in currencies that China must grow their economy, providing jobs at an annual rate near 10%. To do so they need an extremely competitive currency. Therefore, a collapse in the value of the U.S. Dollar is the worst scenario for the Chinese economy.