Viewpoint: Bullish

US based plumbing business RWC has rallied strongly since delivering an excellent half-year result back in February i.e. the company delivered a 56% increase in net profit to just shy of $100m.

Sydney based JHX continues to expand its product offering into the US, a market its very successfully navigated since the GFC, they are even lifting margins in their North American business.

Building products supplier BLD has rallied strongly post COVID acting like a perfect proxy for the recovery trade.

US stocks that are exposed to the whole spectrum of their residential housing industry continue to make all-time highs as they dance the same jig as the lumber price.

The British Pound, or “Cable” as its referred to by most professional traders, continues to consolidate its post COVID gains.

We have already looked at currencies today but the Euro is one we haven’t covered in great detail this year and in our opinion it’s now painting a clear picture to what comes next for both stocks under the hood and bond yields

The $A also remains in sync with bond yields and the $US targeting another break above 80c before MM would adopt a more neutral to slightly bearish stance – a great example of how financial markets act like an interlocking mosaic with a few major pieces dictating where the others fit into the puzzle, the dominant force tends to vary with market mood & sentiment.

Similarly European indices are rallying but with diminishing momentum, we have no sell signals but it doesn’t feel like an ideal time to chase European stocks, however we do see them reversing some of the post COVID outperformance by the US over the months ahead.

Another MM position which has enjoyed a fruitful few weeks is XRO which has recovered strongly after falling well over 30% as global bond yields rallied.