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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (19264)	5/24/2017 12:11:03 PM
From: John Pitera	Respond to of 33421

HI Bob, Yes the XLU Utility index has been performing very well and the daily prices are above the bollinger band, which is bullish..... the XLU has made the biggest push above the old high back in 2016... Investors seem pleased to have yield to grab. Yale's Shiller is out today talking about his CAPE Cyclically Adjusted Price Earnings Ratio being able to move higher from it's current level of 30. His view is that it's a function of investor psychology..... 7. Surveys continue to get *unsolicited comments favoring the current government’s economic policies.* Source: @M_McDonough; Read full article 8. Finally, here are some charts on the White House budget proposal. • Spending cuts: Source: @WSJ • Spending increases: Source: @WSJ • Next is the projected debt-to-GDP ratio compared to the CBO forecast and the projections from the two previous administrations. Source: @WSJ; Read full article • As discussed previously, the 3% growth forecast embedded in this budget proposal remains unrealistic. Either the workforce would need to grow substantially (which would require more immigration), or productivity must improve dramatically. Neither is likely at this point. Source: @WSJ; Read full article China Moody’s has downgraded China’s government debt. Rating Action: Moody’s downgrades China’s rating to A1 from Aa3 and changes outlook to stable from negative Singapore, May 24, 2017 — Moody’s Investors Service has today downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative. The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government. … Moody’s expects that economy-wide leverage will increase further over the coming years. The planned reform program is likely to slow, *but not prevent, the rise in leverage*. The importance the authorities attach to maintaining robust growth will result in sustained policy stimulus, given the growing structural impediments to achieving current growth targets. Such stimulus will contribute to rising debt across the economy as a whole. Asian currencies fell slightly on the news. Here is the offshore renminbi 12-month forward (about a 0.2% decline). JJP