This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Global Macro: Emerging Market Equities and China Sink

Stocks in this article: DBC TLT EEM VEU FXI UUP TIP

NEW YORK ( TheStreet) -- Poor economic data continues to flow from the macro environment's most important countries. Early Wednesday, German business sentiment missed the target of even the most pessimistic analysts. Investors saw this as a final straw in pushing the ECB towards more accommodative policy.

The U.S. durable goods reading gave no form of respite. The release highlighted the drag that higher payroll taxes have had on the U.S. economy. In spite of the negative tone, equities were able to see a silver lining in Goldman Sachs' advice on being "overweight" equities, which kept markets at break even. The deterioration of global growth and tepid inflation is seen within the inter-market charts below.


The first chart, above, is of DB Commodity Index Tracking Fund (DBC) over Barclays 20 Year Treasury Bond Fund (TLT) . Commodities have felt selling pressure due to declining global demand. As industrial production falls, countries find themselves needing less oil, copper, etc. In a risk-on environment this pair should see strength. The fact that the trend broke down in mid-March falls in line with other inter-market indicators. The global economy lost some luster towards the end of the first quarter, further represented in the charts below.


The next chart is of Barclays TIPS Bond Fund (TIP) over Barclays 20 Year Treasury Bond Fund. This ratio directly measures inflation expectation, similar to that of the commodities indicator at the beginning of the article. People are viewing near term inflation as less of a threat with weakening China, euro region and U.S. economies. Growth is necessary for risk assets to see a valid move higher, central bank easing can only do so much. It can create a floor that keeps risk assets afloat, but it looks as if the TIPS market has become weary of this game.


1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,340.97 -75.88 -0.44%
S&P 500 2,013.34 -7.91 -0.39%
NASDAQ 4,678.4870 -4.92 -0.11%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs