IS THERE ANY CORRELATION BETWEEN WALL-STREET AND MAIN STREET?

I am not sure about that. But my longer answer is the following, sometimes yes, sometimes not. Many folks, especially the fundamental investors out there are the real believer of the macro numbers determines the direction of the markets. Normally I don’t like the easy and cheap answers. If that would work in trading that could be the easiest job in the world, just take a look at the GDP chart of US and if it is positive territory buy the S&P and vice-versa.

I could bring hundreds of examples when the macro numbers were horrible and the market did nice returns – juts take a look of the performance of Venezuelan, Spanish and Greek stock markets in 2013.

Or here is a great chart by Alliance Bernstein, which proves clearly the macro parameters don’t give any determination to stock market’s performance. This chart is more than interesting and help us to understand the underlying the psychology of the mass and the investors.

In the last two decades the Chinese economy boosted by 15% and during the same period the stock market has basically gone nowhere. And, on the contrary the Mexican GDP is closely flat, but the stock markets performed much better.

The BFM Assets Team.