If the Yen/USD keeps strengthening, the odds of Japanese stocks rising appear slim.
Over the last five years, the CBOE Volatility Index (VIX) has had an 87% correlation with high yield spreads. If the VIX keeps rising, high yield spreads are likely to widen.
We divide the MSCI World index into cyclical (including materials, industrials, technology and consumer discretionary, financials and energy) and counter-cyclical baskets (including consumer staples, health care, telecom, utilities). The relative performance of cyclicals vs. counter-cyclicals generally improves when the economic news is improving and contracts when it is deterioratinig.
S&P 500 futures fall to 10 day lows this morning. The VIX is close to breaking out above 20.