SHARE PRICES ARE UNIVERSALLY HIGHER as all ten of the markets comprising our International Index have risen in tandem, and they’ve done so with some sense if vigor, for four of the ten have risen by more than 1% and as several others were very nearly 1% higher. It is rare when there is this sort of universality in equity prices around the world, and historically such occurrences have taken place either at the very beginning of material new moves or at the very end of sustained bull or bear markets.
Margin debt continues to give us a great reason for pause and concern about equities. There are any number of ways to look at margin debt numbers and we’ve included charts of margin debts several times over the course of the past several weeks noting that the peak in margin usage characteristically… at least since the turn of this century… has led the downturn in equity prices by a year and one half or so.
We have to admit that the trend is up; that the monetary authorities are continuing to supply reserves to the systems around the world and that that supply is making its way into equity prices rather than into plant, equipment and labor. We are seeing, in broad global terms, what we have previously referred to as the Zimbabwe-isation of the global capital markets and we’ve no choice but to accept that fact and to recognize that that trumps all other “fundamental” and/or technical concerns: