Good morning,
As the sun breaches the eastern shores of Singapore, and memories of the night before become more vivid, helping explain the plant pot in the middle of the bedroom floor, the US housing data is backing my optimism of US growth beating analysts estimates.
Despite my kind gesture of a tree, the misses remains unimpressed.
Equity markets overnight held quite well, considering such a strong run on Monday, I was looking for some pull back yesterday. Stronger than expected US housing starts and building permits help support equities whilst currencies continued strength against the US$ boosts markets in Europe.
European markets saw a big drop in volume overnight, leaving me a little nervous on the recent strong move. With the Euro at such major technical resistance levels, investors seem to be sitting back and waiting for confirmation that "the world is now ok". Bond markets seems to conform, with Spanish and Italian debt firming 11 and 6 basis points, whilst US treasuries gave back last weeks gains, with the 10yr now trading at 1.67%.
FTSE +0.2% avg volume; O/P: telco, industrial U/P: tech, financial
CAC +0.7% v.low volume; O/P: health, cons.services U/P: tech, telco
DAX +0.7% v.low volume; O/P: basic materials, industrials U/P: utilities, telco
IBEX +0.2% v.low volume; O/P: industrials, cons.services U/P: tech, basic mats
Sector maps show very mixed signals, however, the outperformance of industrials would leave us to believe that there is some short covering out there. This is also reflected with basic materials performing. Huge inventories and slowing China growth has seen prices continue to remain weak, leaving every fundamentalist negative not just in the near term, but as far out as 2015 before we see price recovery. As risk is reduced, so are shorts, helping (finally) to see some rotation of capital back into both industrials and basic materials, I expect this to continue.
The financial sector has been extremely strong over the last 3 months, as the market sees efforts from central banks to boost credit and lending, should see revenues increase. Like 2008, this will come at a cost, quality. The sector is starting to look rich here and yes, they will be the first to benefit from policy, but at these levels, it looks priced in.
US markets were have a rough day early in the session, with a sharp sell off mid-way through as Bernanke warns that the central bank has little power if congress cant agree on the up coming tax cuts and spending policy expiry.
But this was soon reversed, as sentiment remains high on the back of Obama being able to agree with Tea Party representative Paul Ryan, and get new policies through without delay.
Data overnight saw housing starts increase to 894k vs expected 840k, whilst building permits came in at 866k vs expected 864k.
S&P 0.1% low volume; O/P: health, financial U/P: tech, oil & gas
Despite the weaker US$, oil and gas gave back some of Mondays gains with Chevron 0.8% easier. Tech also sold down on the back of HP down 12%, dragging the sector lower, and heavy weight Apple, down 0.9% after a strong run on Monday.
The financial sector was also strong again last night and is starting to look top. A number of private wealth guys were trying to sell the idea of going long the sector but personally, at these levels it looks toppy. REDUCE/SELL
Markets.Asian markets trended easier yesterday, with HK closing at the lows. I expect a bounce on the open but we should see them drift sideways for most of the day. With currencies at major resistance levels, I see limited triggers to push us through those levels.
Bank of England minutes due today at 17:30 singapore time.
At these levels, I continue to like coal and oil, as we see rotation into lagging sectors. China property is starting to look rich here, reduce.
Mitsui OSK, which is suffering from weak dry bulk rates, had a fantastic move yesterday on strong volume, I like this. BUY
Data.16:30 Netherlands house prices
17:30 UK Bank of England minutes, public finances
20:00 US MBA mortgage apps
21:30 US jobless claims
22:55 Uni of Michigan confidence
23:00 US leading indicators
Spain trade balance
Events.08:30 Australia RBA minutes
21:30 Spain Bank of Spain governor speaks in Madrid
22:00 Italy Bank of Italy speaks
Euro finance ministers hold meeting on Greece
Bonds.09:30 China 1,3,5,7,10 year auction
11:00 Thailand 1,3 and 6 month auction
12:30 Taiwan 30 year auction
13:30 Philippines 7year auction
17:30 Spain 364 and 509day auction
18:30 UK 5year auction
00:30 US 1 month auction
Earnings.Deere(US), CareFusion(US), Zodiac Aerospace(FR), Johnson Matthey(UK), China resources Ent(HK), Texwinca(HK), Oriental watch(HK), City telecom(HK), Citic(CH), Airaisa(MK), Ukrnafta oil(RU)
Stoddart
Showing posts with label Gold. Show all posts
Showing posts with label Gold. Show all posts
Tuesday, 20 November 2012
Monday, 19 November 2012
Morning note, data, events, bonds and earnings 20th November 2012
Good morning,
Optimism was lifted overnight as strong debt and headlines now support Obama's plans to reduce the US deficit. As expected, equity markets finally start reacting to the currency markets, where the US$ continues to weaken vs majors. Now with the Euro and Sterling at major technical levels, do they have the momentum to push through resistance levels, or are they setting up to move sideways in the near term?
European markets opened at the lows and trended firmer throughout the session, closing on the highs, however, volumes remained below average.
Spanish bad loans are over the headlines today, mostly on loans and mortgages, equating to 10.7% of total loans or 182.2 billion euros in September.
Overnight we also had a French bond downgrade, loosing the almighty AAA rating, now AA1 by Moody's. Fears will be others are to follow. The downgrade cited 1. worse longer term outlook; 2. uncertainty on economic growth prospects; 3. falling resilience to future euro shocks.
This is mud on the face of Hollande, who was looking for increased spending to boost GDP, and tax revenues to pay for the spending.
FTSE +2.4% avg volume; O/P: tech, financials U/P: health, utilities
CAC +2.9% low volume; O/P: financials, tech U/P: health, telco
DAX +2.5% avg volume; O/P: cons.good, tech U/P: health, utilites
IBEX +2.3% avg volume; O/P: tech, financials U/P: health, industrial
A complete reversal from last weeks defensive move into healthcare. With improving housing markets in the UK, investors brush off the Spanish bad loans data, and European bonds remain relatively unchanged. The Euro is also supporting which rallied nearly 1 big figure overnight, now trading at 1.2780.
European indices are looking rich here with German's DAX trading on 14x earnings, vs the S&P also trading on 14x, however, on book value the DAX is only 1.35, and the S&P is on 2.09.
With such negativity since the US election, equity markets were long overdue a bounce, and with volume remaining around average plus the Euro at major resistance levels, this move has little behind it. The longer term outlook is positive for European equities but with growth set to increase slowly, overnight moves on little data will soon correct.
Data overnight saw Italian industrial production fall -4.0% vs expected -1.0% but this is also impacted by floods in Europe.
Greece current a/c came in at 775m, as exports of services fell from 3965m to 2920m month on month, mostly in travel.
The EU construction output fell -1.4% MoM, due mostly to a large fall in the Czech republic, German and Poland. Spain was actually up 1.4%, whilst Slovenia went from a -19.6% to -0.2% quarter on quarter.
US markets traded similar to that of Europe, opening at the lows and trending firmer throughout the session, closing at day highs. UST's saw yields fall slightly but with the 10year still at 1.61, and AAA rated, there will continue to be demand, especially if we see investors increase cash positions into year end.
S&P +2.0% avg volume; O/P: tech, basic materials U/P; utilities, health
Tech seeing a strong rebound, helped mostly by Apple (AAPL), which rebounded +7.2% last night. Expect this stock to squeeze further given the recent stream of negativity on its growth. I have to agree, the outlook for AAPL is limited due to falling innovation, however, short levels would be nearer $600 again.
With equities finally mirroring currencies, oil and basic materials were both strong last night. The US sectors map highlights Paper +3.7%, industrial materials +.3.1% and mining +1.9%, this sector has more to go as funds move to a more equally weighted position, also expect a short squeeze.
With optimism on the US finding a solution to reduce its deficit whilst spending to encourage growth, investors turn to the financial sector. Credit markets are such, that banks remain nervous on lending, ie tight credit markets, which mean real interest rates remain high and loan growth weak. However, as growth estimates improve and housing markets get support, we should see an increased level of lending. Bad credit ratings will improve but a full blown property market rally is some way off.
Markets.Asian markets already priced in some of this move yesterday, but should have more to go. Expect markets to rally on the open to day highs, and then trade easier as the Euro struggles at resistance levels.
Sectors, still not too late to buy Alu, coal, steel and oil. Top picks, Angang(347), Chalco(2600), Yanzhou(1171) and Petrochina(857), but CNOOC(883) will also benefit from improving crude.
As China property prices increase, banks should also see inflows as will property developers, however, due to government intervention the credit markets will remain tight.
IPP has been a strong sector this year and going into China winter, but is now looking rich. SELL
US building permits/housing starts today... lets see if we get some follow-through on US housing.
Data.10:00 China FDI
12:30 Japan industrial activity
15:00 German PPI
16:30 Netherlands consumer confidence (important due to noise on the Euro)
21:30 US housing starts, building permits
BoJ target rate
Events.02:00 EU Van Rompuy meets ministers on budget talks
07:00 Monti in UAE
08:30 Australia reserve minutes
17:00 EU general affairs minister prep budget summit
22:00 US Fed's Lacker speaks on monetary policy
Bonds.09:30 China 1,3,5,7,10 year auction
11:30 Thailand 1,3/12 month auction
12:30 Taiwan 30 year auction
17:30 Spain 1,2 year auction
18:30 UK 5 year auction
19:00 EFSF 6 month auction
00:30 US 1 month auction
Earnings.Campbell soup(US), HJ Heinz(US), HP(US), Medtronic(US), Best Buy(US), British Land(UK), OPAP(GR), easyjet(UK), Digital China(HK), Lee & Man(HK), Guinness Anchor(MK), SK Chem(SK)
Stoddart
Optimism was lifted overnight as strong debt and headlines now support Obama's plans to reduce the US deficit. As expected, equity markets finally start reacting to the currency markets, where the US$ continues to weaken vs majors. Now with the Euro and Sterling at major technical levels, do they have the momentum to push through resistance levels, or are they setting up to move sideways in the near term?
European markets opened at the lows and trended firmer throughout the session, closing on the highs, however, volumes remained below average.
Spanish bad loans are over the headlines today, mostly on loans and mortgages, equating to 10.7% of total loans or 182.2 billion euros in September.
Overnight we also had a French bond downgrade, loosing the almighty AAA rating, now AA1 by Moody's. Fears will be others are to follow. The downgrade cited 1. worse longer term outlook; 2. uncertainty on economic growth prospects; 3. falling resilience to future euro shocks.
This is mud on the face of Hollande, who was looking for increased spending to boost GDP, and tax revenues to pay for the spending.
FTSE +2.4% avg volume; O/P: tech, financials U/P: health, utilities
CAC +2.9% low volume; O/P: financials, tech U/P: health, telco
DAX +2.5% avg volume; O/P: cons.good, tech U/P: health, utilites
IBEX +2.3% avg volume; O/P: tech, financials U/P: health, industrial
A complete reversal from last weeks defensive move into healthcare. With improving housing markets in the UK, investors brush off the Spanish bad loans data, and European bonds remain relatively unchanged. The Euro is also supporting which rallied nearly 1 big figure overnight, now trading at 1.2780.
European indices are looking rich here with German's DAX trading on 14x earnings, vs the S&P also trading on 14x, however, on book value the DAX is only 1.35, and the S&P is on 2.09.
With such negativity since the US election, equity markets were long overdue a bounce, and with volume remaining around average plus the Euro at major resistance levels, this move has little behind it. The longer term outlook is positive for European equities but with growth set to increase slowly, overnight moves on little data will soon correct.
Data overnight saw Italian industrial production fall -4.0% vs expected -1.0% but this is also impacted by floods in Europe.
Greece current a/c came in at 775m, as exports of services fell from 3965m to 2920m month on month, mostly in travel.
The EU construction output fell -1.4% MoM, due mostly to a large fall in the Czech republic, German and Poland. Spain was actually up 1.4%, whilst Slovenia went from a -19.6% to -0.2% quarter on quarter.
US markets traded similar to that of Europe, opening at the lows and trending firmer throughout the session, closing at day highs. UST's saw yields fall slightly but with the 10year still at 1.61, and AAA rated, there will continue to be demand, especially if we see investors increase cash positions into year end.
S&P +2.0% avg volume; O/P: tech, basic materials U/P; utilities, health
Tech seeing a strong rebound, helped mostly by Apple (AAPL), which rebounded +7.2% last night. Expect this stock to squeeze further given the recent stream of negativity on its growth. I have to agree, the outlook for AAPL is limited due to falling innovation, however, short levels would be nearer $600 again.
With equities finally mirroring currencies, oil and basic materials were both strong last night. The US sectors map highlights Paper +3.7%, industrial materials +.3.1% and mining +1.9%, this sector has more to go as funds move to a more equally weighted position, also expect a short squeeze.
With optimism on the US finding a solution to reduce its deficit whilst spending to encourage growth, investors turn to the financial sector. Credit markets are such, that banks remain nervous on lending, ie tight credit markets, which mean real interest rates remain high and loan growth weak. However, as growth estimates improve and housing markets get support, we should see an increased level of lending. Bad credit ratings will improve but a full blown property market rally is some way off.
Markets.Asian markets already priced in some of this move yesterday, but should have more to go. Expect markets to rally on the open to day highs, and then trade easier as the Euro struggles at resistance levels.
Sectors, still not too late to buy Alu, coal, steel and oil. Top picks, Angang(347), Chalco(2600), Yanzhou(1171) and Petrochina(857), but CNOOC(883) will also benefit from improving crude.
As China property prices increase, banks should also see inflows as will property developers, however, due to government intervention the credit markets will remain tight.
IPP has been a strong sector this year and going into China winter, but is now looking rich. SELL
US building permits/housing starts today... lets see if we get some follow-through on US housing.
Data.10:00 China FDI
12:30 Japan industrial activity
15:00 German PPI
16:30 Netherlands consumer confidence (important due to noise on the Euro)
21:30 US housing starts, building permits
BoJ target rate
Events.02:00 EU Van Rompuy meets ministers on budget talks
07:00 Monti in UAE
08:30 Australia reserve minutes
17:00 EU general affairs minister prep budget summit
22:00 US Fed's Lacker speaks on monetary policy
Bonds.09:30 China 1,3,5,7,10 year auction
11:30 Thailand 1,3/12 month auction
12:30 Taiwan 30 year auction
17:30 Spain 1,2 year auction
18:30 UK 5 year auction
19:00 EFSF 6 month auction
00:30 US 1 month auction
Earnings.Campbell soup(US), HJ Heinz(US), HP(US), Medtronic(US), Best Buy(US), British Land(UK), OPAP(GR), easyjet(UK), Digital China(HK), Lee & Man(HK), Guinness Anchor(MK), SK Chem(SK)
Stoddart
Tuesday, 13 November 2012
Morning note, data, events, bonds and earnings 14th November 2012
Good morning,
Equity markets mixed overnight. Strong volumes and rebounds in Europe were overshadowed by a weaker US market.
As Greece avoids default, equity markets receive a boost whilst bond yields in Spain and Italy hold current levels. CDS's in Europe over the last 20 days have been creeping higher into the Greek budget announcement, which took place on Monday. Since then, investors had expected bonds to firm as CDS's eased back to mid September levels, however, we are yet to see this.
Strongest performers overnight were Spain's IBEX and Italy's FTSE MIB, both up around 1.5% on strong volume, despite the Euro remaining unchanged at 1.27.
FTSE +0.3% v.good volume; O/P: financial, cons.goods U/P: telco, utilities
CAC +0.6% avg volume; O/P: financial, tech U/P: utilities, telco
DAX flat v.good volume; O/P: financial, cons.services U/P: utilities, cons.goods
IBEX +1.7% avg volume; O/P: financial, telco U/P: basic materials, tech
Sectors clearly pointing to a more positive stance. Financial's continue to run due to optimism on growth. With the banking union due in Jan 2013, and the date again confirmed by Italy's Monti, the market is expecting 1. credit markets to start improving, 2. banks will now be protected by Trokia, who are looking to encourage lending.
Earnings from Vodafone yesterday saw a GBP 6bn writedown on Italy and Spain, weighting down on the FTSE as the stock sold down 2.5%, despite a huge buyback program. This didnt stop a strong rebound in Telefonica, boosting Spain's IBEX.
Data in Europe saw the UK RPI come in slightly higher at 0.6% vs expected 0.2% MoM, raising possible fears on inflation. Bloomberg headlines highlight a strong UK property market as overseas buyers continue to purchase high end homes.
Germany's Zew survey saw economic sentiment come in at -15.7 vs expected -10.0, whilst current situation was 5.4 vs expected 8.0.
In the US, equity markets opened in negative territory and sharply rose to the positive, where we saw them range for most of the session. Only in the last hour did we see them sell back down, with the S&P ending the day just 3 points off day low.
S&P -0.4% avg volume; O/P: utilities, cons.services U/P: tech, financial
The sector map shows a polar opposite to Europe. The recent run in financials continues to see outflows, as does technology, which is one of the top performing sectors this year. Heavy selling in Microsoft and Intel hitting the sector hard, whilst defensive names like Home Depot outperforming after strong earnings.
Data in the US, we had small business optimism which came in at 93.1, vs expected 93.0
Markets.Given the news coming out of Europe, I mentioned over the last 2 weeks, I would be looking to go long Euro. In addition to this, basic material names are trading at some rather attractive levels, and with the creation of the banking union in January, we should growth estimates increased in medium term.
Equity markets in Asia have come under some pressure of late, this should see us trend firmer today, opening at the lows and getting to day highs in first session. With currencies remaining steady, I suspect we flatten off in the second session, with indices trading in a tight range.
Stock picks to own today, Yangzhou Coal(1171), Natl Australia Bank(NAB AU), Petrochina(857), Angang Steel(347 HK).
Data.08:30 Australia wage cost
14:30 India monthly wholesale prices
15:45 French CPI
16:30 Netherlands retail sales
17:30 UK jobless claims, earnings
18:00 Eurozone industrial production
18:30 UK BoE inflation report
20:00 US MBA mortgage apps
21:30 US PPI, retail sales
23:00 US business inventories (big number)
03:00 US FOMC minutes
China FDI
Events.15:30 EU budget framework
18:00 Bank of Italy public finance supplement
20:45 EU regional aid recipients hold meeting
22:30 Greek finance minister meets EU lawmakers
22:45 Italy's Monti meets UK's Cameron
Bonds.11:00 Thailand 1,3 and 6month auction
11:45 Japan 5 year auction
17:00 Netherlands 10 year auction
18:00 Greece 1,3 year auction
00:30 US 3,6 month auction
Earnings.
Staples(US), Abercrombie & Fitch(US), Williams-sonoma(US), NetApp(US), Spectrum Brands(US), RWE(GE), Infineon(GE), J Sainsbury(UK), Solarworld(GE), Natixis(VX), CSR(HK), OLAM(SP), Global logistic(SP), Vtech(HK), City dev(SP), China pharm(HK), CIMB(MK), Jollibee(PH), San Miguel(PM), Citic SEc(CH), PTT(TH), MOL(HU), Turkiye IS Bank(TR), Dogan Yayin(TR), Bank BPH(PW), Echo Inv(PW)
Stoddart
Equity markets mixed overnight. Strong volumes and rebounds in Europe were overshadowed by a weaker US market.
As Greece avoids default, equity markets receive a boost whilst bond yields in Spain and Italy hold current levels. CDS's in Europe over the last 20 days have been creeping higher into the Greek budget announcement, which took place on Monday. Since then, investors had expected bonds to firm as CDS's eased back to mid September levels, however, we are yet to see this.
Strongest performers overnight were Spain's IBEX and Italy's FTSE MIB, both up around 1.5% on strong volume, despite the Euro remaining unchanged at 1.27.
FTSE +0.3% v.good volume; O/P: financial, cons.goods U/P: telco, utilities
CAC +0.6% avg volume; O/P: financial, tech U/P: utilities, telco
DAX flat v.good volume; O/P: financial, cons.services U/P: utilities, cons.goods
IBEX +1.7% avg volume; O/P: financial, telco U/P: basic materials, tech
Sectors clearly pointing to a more positive stance. Financial's continue to run due to optimism on growth. With the banking union due in Jan 2013, and the date again confirmed by Italy's Monti, the market is expecting 1. credit markets to start improving, 2. banks will now be protected by Trokia, who are looking to encourage lending.
Earnings from Vodafone yesterday saw a GBP 6bn writedown on Italy and Spain, weighting down on the FTSE as the stock sold down 2.5%, despite a huge buyback program. This didnt stop a strong rebound in Telefonica, boosting Spain's IBEX.
Data in Europe saw the UK RPI come in slightly higher at 0.6% vs expected 0.2% MoM, raising possible fears on inflation. Bloomberg headlines highlight a strong UK property market as overseas buyers continue to purchase high end homes.
Germany's Zew survey saw economic sentiment come in at -15.7 vs expected -10.0, whilst current situation was 5.4 vs expected 8.0.
In the US, equity markets opened in negative territory and sharply rose to the positive, where we saw them range for most of the session. Only in the last hour did we see them sell back down, with the S&P ending the day just 3 points off day low.
S&P -0.4% avg volume; O/P: utilities, cons.services U/P: tech, financial
The sector map shows a polar opposite to Europe. The recent run in financials continues to see outflows, as does technology, which is one of the top performing sectors this year. Heavy selling in Microsoft and Intel hitting the sector hard, whilst defensive names like Home Depot outperforming after strong earnings.
Data in the US, we had small business optimism which came in at 93.1, vs expected 93.0
Markets.Given the news coming out of Europe, I mentioned over the last 2 weeks, I would be looking to go long Euro. In addition to this, basic material names are trading at some rather attractive levels, and with the creation of the banking union in January, we should growth estimates increased in medium term.
Equity markets in Asia have come under some pressure of late, this should see us trend firmer today, opening at the lows and getting to day highs in first session. With currencies remaining steady, I suspect we flatten off in the second session, with indices trading in a tight range.
Stock picks to own today, Yangzhou Coal(1171), Natl Australia Bank(NAB AU), Petrochina(857), Angang Steel(347 HK).
Data.08:30 Australia wage cost
14:30 India monthly wholesale prices
15:45 French CPI
16:30 Netherlands retail sales
17:30 UK jobless claims, earnings
18:00 Eurozone industrial production
18:30 UK BoE inflation report
20:00 US MBA mortgage apps
21:30 US PPI, retail sales
23:00 US business inventories (big number)
03:00 US FOMC minutes
China FDI
Events.15:30 EU budget framework
18:00 Bank of Italy public finance supplement
20:45 EU regional aid recipients hold meeting
22:30 Greek finance minister meets EU lawmakers
22:45 Italy's Monti meets UK's Cameron
Bonds.11:00 Thailand 1,3 and 6month auction
11:45 Japan 5 year auction
17:00 Netherlands 10 year auction
18:00 Greece 1,3 year auction
00:30 US 3,6 month auction
Earnings.
Staples(US), Abercrombie & Fitch(US), Williams-sonoma(US), NetApp(US), Spectrum Brands(US), RWE(GE), Infineon(GE), J Sainsbury(UK), Solarworld(GE), Natixis(VX), CSR(HK), OLAM(SP), Global logistic(SP), Vtech(HK), City dev(SP), China pharm(HK), CIMB(MK), Jollibee(PH), San Miguel(PM), Citic SEc(CH), PTT(TH), MOL(HU), Turkiye IS Bank(TR), Dogan Yayin(TR), Bank BPH(PW), Echo Inv(PW)
Stoddart
Tuesday, 2 October 2012
Stoddart's model ETF portfolio 2nd October 2012
Good afternoon,
Below is an update of the ETF model portfolio, as of close of US markets 1st October 2012.
I have put the MSCI world for reference, but ideally, this is a multi-strategy fund, that aims for absolute return.
Inception was 2nd July 2012
The correction in high yield has hurt my portfolio, however, with annualised distributions of 6.3% for HYG and 3.8% for LQD, I will continue to keep these in the fund. There are fears that with rates currently low, there will be a large amount of higher grade companies coming to market, putting even greater pressure on the high yield market. Despite this, I feel global credit markets will improve over the next 12 months, increasing return of the high yield investments.
European equities, I will continue to added to this position. I expect Spain, and in turn Italy, agree on taking support from the EFSF, easing tensions and improving sentiment. Dont get me wrong, the data is UGLY, but this is now priced in. The market needs to avoid looking at Price to Earnings, we know these have taken some rather heavy writedowns and mutliples look expensive. This is not the case. With credit markets set to improve, analysts will start to revise up their forward earnings.
US equities, I'm looking to reduce. After such a strong outperformance and investors rushing for the defensives again, its time to sell into the strength, in favour of higher beta.
Asian equities have seen some mixed results. Malaysia, Indonesia and Thailand have all been strong, whilst China continues to lag. Time to increase the weighting in China.
Junior gold miners, up 30%, and I will still continue to hold. My view on the US$ is that it continues to weaken, as European credit markets defrost. It will also be aided by supply chain distruptions in Africa, causing physical prices to increase. Junior miners is the leveraged play.
I will look to reweight this fund over the next week, inline with the release of the monthly macro note.
Stoddart
Below is an update of the ETF model portfolio, as of close of US markets 1st October 2012.
I have put the MSCI world for reference, but ideally, this is a multi-strategy fund, that aims for absolute return.
Inception was 2nd July 2012
| ASSET CLASS | TICKER | WEIGHTING | PERFORMANCE % |
| EQUITY | RWL US | 0.05 | 6.22 |
| SPY US | 0.05 | 5.74 | |
| FXI US | 0.02 | 3.85 | |
| EWY US | 0.02 | 9.97 | |
| EEM US | 0.07 | 6.68 | |
| BRIC LN | 0.03 | 6.16 | |
| VGK US | 0.07 | 6.12 | |
| SX7EEX GY | 0.03 | 13.09 | |
| EWP US | 0.01 | 10.29 | |
| EWI US | 0.01 | 7.54 | |
| EWG US | 0.01 | 8.55 | |
| EWQ US | 0.01 | 4.76 | |
| GDXJ US | 0.02 | 29.64 | |
| DEBT | EBMMEX GY | 0.05 | 1.60 |
| IBGS LN | 0.05 | 3.43 | |
| IBGX LN | 0.15 | 4.41 | |
| EMB US | 0.15 | 5.22 | |
| HYG US | 0.15 | 0.87 | |
| LQD US | 0.05 | 3.30 | |
| PERCENT | 6.014 | ||
| MSCI WORLD | 6.356 | ||
| PERFORMANCE | -0.341 |
The correction in high yield has hurt my portfolio, however, with annualised distributions of 6.3% for HYG and 3.8% for LQD, I will continue to keep these in the fund. There are fears that with rates currently low, there will be a large amount of higher grade companies coming to market, putting even greater pressure on the high yield market. Despite this, I feel global credit markets will improve over the next 12 months, increasing return of the high yield investments.
European equities, I will continue to added to this position. I expect Spain, and in turn Italy, agree on taking support from the EFSF, easing tensions and improving sentiment. Dont get me wrong, the data is UGLY, but this is now priced in. The market needs to avoid looking at Price to Earnings, we know these have taken some rather heavy writedowns and mutliples look expensive. This is not the case. With credit markets set to improve, analysts will start to revise up their forward earnings.
US equities, I'm looking to reduce. After such a strong outperformance and investors rushing for the defensives again, its time to sell into the strength, in favour of higher beta.
Asian equities have seen some mixed results. Malaysia, Indonesia and Thailand have all been strong, whilst China continues to lag. Time to increase the weighting in China.
Junior gold miners, up 30%, and I will still continue to hold. My view on the US$ is that it continues to weaken, as European credit markets defrost. It will also be aided by supply chain distruptions in Africa, causing physical prices to increase. Junior miners is the leveraged play.
I will look to reweight this fund over the next week, inline with the release of the monthly macro note.
Stoddart
Monday, 1 October 2012
Morning note, data, events and earnings 2nd October 2012
Good Morning,
Firstly, a big hats off to the rescue services in HK, who risk their lives in very aggressive under-currents of the HK habour, and saved so many.
Equity markets saw a strong rebound overnight, on relatively stable volumes.
European markets moved aggressively higher as the Euro rallies back above the 1.2940 level, now trading slightly easier at 1.2895.
France:+2.4% avg volume, o/perform Health,Utilities; u/perform O&G,Con.Service
Spain: +1% volume +32%, o/perform health,basic mat; u/perform O&G,Telco
Germany:+1.5% volume -22%, o/perform basic mat,financial; u/perform telco,tech
UK: +1.4% avg volume, o/perform financial,basic mat; u/perform teclo,heath
Defensive outperforming as investors increase weightings in Europe, but with the correct level of caution. The financial sector seeing inflows as the European debt situation improves. Spain got a strong boost as stress test showed banks needed considerably less than the Eur 100b set aside by the EFSF.
With Spanish 10 year bonds trading at 5.83%, its not the lowest they have traded recently, but possible delays in Spain taking funds from the ECB have seen CDS's increase of late, expect yields to fall as Spain negotiates terms for the use of the EFSF.
With the US$ weakening, basic materials are seeing inflows. With prices making or trading near multi year lows, inflows are 1. bottom fishing 2. US$ expectations helping support prices. I doubt, with current inventory levels, that anyone can expect demand driven price increases for the next 6/12 months.
US markets traded small up, however, tech under pressure as heavy weight Apple continues to ease. Given were is has come from, and the hype, I would still be happy to short this name.
S&P: +0.3% avg volume, o/perform health, cons.goods; u/perform utilities,telco
NASDAX flat, volumes -5%
US markets followed Europe with demand for defensive names. Factory orders data last night showed orders growing (a number over 50), which is a very strong performance, but we are going into a high demand period. That said, the market will be more optimistic with future data. Sentiment right now is "wait and see" if the data improves ahead of stimulus working its way through. After being burnt before, I still little interest from interestors in rushing to get long growth.
Bernanke plays to sentiment by highlighting that low rates until 2Q 2015 does not mean low growth... this will certainly be true, and given comments, I expect rates will not be considered until will see GDP above 3%, the last thing they want is to spook the market, enjoying high to hyper inflation over a deflationary enviroment.
Markets.
Korea, Australia and Japan all trading firmer, but the do feel like they are running out of steam... in line with the Euro.
I expect Europe to give up some of yesterdays gains on the open so Asia should start to trend easier from current levels.
Defensive will continue to see inflows, basic materials also, as short sellers are quick to cover.
Data:09:30 Japan earnings
12:30 Australia RBA rate announcement, expect no change but talks of possible rate cuts if the market continues to ease. Limited inflationary pressure currently.
14:00 UK house prices
14:30 RBA commodity price index
15:00 Spain unemployment, big jump expected to 57k MoM, but upside surprise last time round
16:30 UK PMI construction
17:00 EU PMI
21:45 US ISM New York
Bonds.10:30 S.Korea 3yr auction
11:00 Tahi 1/3/6/12 month auction
17:30 UK 10yr auction
23:30 US 4 week auction
Earnings.Wolsely(UK), Mosaic(US), Mechel(RU), Xyratex(US), Bonduelle(FR), St Ives(UK), HALS Development(RU), Tatneft(RU)
All times British Summer Time(BST) +7 hours
Stoddart
Firstly, a big hats off to the rescue services in HK, who risk their lives in very aggressive under-currents of the HK habour, and saved so many.
Equity markets saw a strong rebound overnight, on relatively stable volumes.
European markets moved aggressively higher as the Euro rallies back above the 1.2940 level, now trading slightly easier at 1.2895.
France:+2.4% avg volume, o/perform Health,Utilities; u/perform O&G,Con.Service
Spain: +1% volume +32%, o/perform health,basic mat; u/perform O&G,Telco
Germany:+1.5% volume -22%, o/perform basic mat,financial; u/perform telco,tech
UK: +1.4% avg volume, o/perform financial,basic mat; u/perform teclo,heath
Defensive outperforming as investors increase weightings in Europe, but with the correct level of caution. The financial sector seeing inflows as the European debt situation improves. Spain got a strong boost as stress test showed banks needed considerably less than the Eur 100b set aside by the EFSF.
With Spanish 10 year bonds trading at 5.83%, its not the lowest they have traded recently, but possible delays in Spain taking funds from the ECB have seen CDS's increase of late, expect yields to fall as Spain negotiates terms for the use of the EFSF.
With the US$ weakening, basic materials are seeing inflows. With prices making or trading near multi year lows, inflows are 1. bottom fishing 2. US$ expectations helping support prices. I doubt, with current inventory levels, that anyone can expect demand driven price increases for the next 6/12 months.
US markets traded small up, however, tech under pressure as heavy weight Apple continues to ease. Given were is has come from, and the hype, I would still be happy to short this name.
S&P: +0.3% avg volume, o/perform health, cons.goods; u/perform utilities,telco
NASDAX flat, volumes -5%
US markets followed Europe with demand for defensive names. Factory orders data last night showed orders growing (a number over 50), which is a very strong performance, but we are going into a high demand period. That said, the market will be more optimistic with future data. Sentiment right now is "wait and see" if the data improves ahead of stimulus working its way through. After being burnt before, I still little interest from interestors in rushing to get long growth.
Bernanke plays to sentiment by highlighting that low rates until 2Q 2015 does not mean low growth... this will certainly be true, and given comments, I expect rates will not be considered until will see GDP above 3%, the last thing they want is to spook the market, enjoying high to hyper inflation over a deflationary enviroment.
Markets.
Korea, Australia and Japan all trading firmer, but the do feel like they are running out of steam... in line with the Euro.
I expect Europe to give up some of yesterdays gains on the open so Asia should start to trend easier from current levels.
Defensive will continue to see inflows, basic materials also, as short sellers are quick to cover.
Data:09:30 Japan earnings
12:30 Australia RBA rate announcement, expect no change but talks of possible rate cuts if the market continues to ease. Limited inflationary pressure currently.
14:00 UK house prices
14:30 RBA commodity price index
15:00 Spain unemployment, big jump expected to 57k MoM, but upside surprise last time round
16:30 UK PMI construction
17:00 EU PMI
21:45 US ISM New York
Bonds.10:30 S.Korea 3yr auction
11:00 Tahi 1/3/6/12 month auction
17:30 UK 10yr auction
23:30 US 4 week auction
Earnings.Wolsely(UK), Mosaic(US), Mechel(RU), Xyratex(US), Bonduelle(FR), St Ives(UK), HALS Development(RU), Tatneft(RU)
All times British Summer Time(BST) +7 hours
Stoddart
Sunday, 30 September 2012
Morning note, events, data and earnings 1st October 2012
Good Morning
Mixed feeling in the press this weekend. As expected, after the recent run, investors are now looking for clarity in the data... which will take time. Having been burnt by other stimulus packages, running out of steam, fears are that improved liquidity in the interbank market in Spain and Italy, will not be passed on to consumers. Similar to that of the US back in 2009.
The correction in the currency markets, with the US$ firming, was to be expected and with noise of a possible Spanish ratings cut by Moody's, outflows of European debt are expected once again.
Equity market volumes have remained strong, but are destined to ease given sentiment is now turning negative again, as Spain drag their feet, and others follow suit. After watching "To big to fail" at the weekend, it looks and feels very similar to Dick Fuld's position.
US markets outperforming on Friday, which will continue, until we start seeing some of these plans for growth coming out from the European leaders.
France's new wealth tax will not be well received. With Hollande's appointment over Sarkozy, it was not mentioned how he planned to reduce the deficient... now we know. This will certainly raise concerns that manufacturing, industrial and R&D will either be reduced or move overseas.
Spain's budget is targeting cuts rather than tax hikes. Initial cuts will hit the unemployment data, however, with France making it harder to do business and Germany coming up for an election next year, we could see investment move to the South.
Markets. Lots of holidays this week in Asia. Australia, Korea, HK and China off today.
Japan is easier 80bps and volumes look 22% lighter vs avg volumes at this time. We should equity markets continue to ease inline with currencies. Once again, defensive inflows will pick up but to a lesser extent than back in May.
With the European banks now having access to liquidity, the environment has improved. Budget releases are causing quite a stir, with riots in Madrid, but this will come to pass as the easing debt burden will promote reconstruction plans of Southern Spain after some heavy floods.
With some aggressive moves and volumes easing/expected to ease, I would be looking to pick up some of the distressed names. In particular, basic materials which although the firming US$ will hurt spot prices in the near term, a low rate environment, and China's new infrastructure stimulus talks, should help ease over supply.
Like many stimulus packages, the pressure will be put on the banks. Especially in China, where funding will be needed to pursue these government projects. Credit and liquidity both remain tight. Banks do not want to lend at a risk of raising Non Performing Loans(NPL'S). But given the governments control, and nervousness of the housing market, banks will be encouraged. This does not look good for the sector.
Events.Japan to appoint new finance minister
13:30 Philippines 3,6+12 month auction
17:30 Netherlands 3+9 month auction
21:00 France 3,6+12 month auction
23:30 US 3+6 month auction
Data.12:00 Indonesia inflation, trade balance
12:00 Thai CPI
13:00 India PMI
15:15 Spain PMI
15:45 Italy PMI
15:50 France PMI
15:55 German PMI
16:00 Greece PMI
16:00 Italian unemployment
16:00 EU PMI
16:30 UK PMI, mortgage approvals, consumer credit, money supply
17:00 EU unemployment
22:00 US ISM, construction spending
Earnings.Eurobank Ergasias(GR), Shimamura(JP), Neo Group(SG), Central Euro Dist Corp(US), Razgulay(RU), U10(FR), FFP(FR), Weborama(FR)
Stoddart
Mixed feeling in the press this weekend. As expected, after the recent run, investors are now looking for clarity in the data... which will take time. Having been burnt by other stimulus packages, running out of steam, fears are that improved liquidity in the interbank market in Spain and Italy, will not be passed on to consumers. Similar to that of the US back in 2009.
The correction in the currency markets, with the US$ firming, was to be expected and with noise of a possible Spanish ratings cut by Moody's, outflows of European debt are expected once again.
Equity market volumes have remained strong, but are destined to ease given sentiment is now turning negative again, as Spain drag their feet, and others follow suit. After watching "To big to fail" at the weekend, it looks and feels very similar to Dick Fuld's position.
US markets outperforming on Friday, which will continue, until we start seeing some of these plans for growth coming out from the European leaders.
France's new wealth tax will not be well received. With Hollande's appointment over Sarkozy, it was not mentioned how he planned to reduce the deficient... now we know. This will certainly raise concerns that manufacturing, industrial and R&D will either be reduced or move overseas.
Spain's budget is targeting cuts rather than tax hikes. Initial cuts will hit the unemployment data, however, with France making it harder to do business and Germany coming up for an election next year, we could see investment move to the South.
Markets. Lots of holidays this week in Asia. Australia, Korea, HK and China off today.
Japan is easier 80bps and volumes look 22% lighter vs avg volumes at this time. We should equity markets continue to ease inline with currencies. Once again, defensive inflows will pick up but to a lesser extent than back in May.
With the European banks now having access to liquidity, the environment has improved. Budget releases are causing quite a stir, with riots in Madrid, but this will come to pass as the easing debt burden will promote reconstruction plans of Southern Spain after some heavy floods.
With some aggressive moves and volumes easing/expected to ease, I would be looking to pick up some of the distressed names. In particular, basic materials which although the firming US$ will hurt spot prices in the near term, a low rate environment, and China's new infrastructure stimulus talks, should help ease over supply.
Like many stimulus packages, the pressure will be put on the banks. Especially in China, where funding will be needed to pursue these government projects. Credit and liquidity both remain tight. Banks do not want to lend at a risk of raising Non Performing Loans(NPL'S). But given the governments control, and nervousness of the housing market, banks will be encouraged. This does not look good for the sector.
Events.Japan to appoint new finance minister
13:30 Philippines 3,6+12 month auction
17:30 Netherlands 3+9 month auction
21:00 France 3,6+12 month auction
23:30 US 3+6 month auction
Data.12:00 Indonesia inflation, trade balance
12:00 Thai CPI
13:00 India PMI
15:15 Spain PMI
15:45 Italy PMI
15:50 France PMI
15:55 German PMI
16:00 Greece PMI
16:00 Italian unemployment
16:00 EU PMI
16:30 UK PMI, mortgage approvals, consumer credit, money supply
17:00 EU unemployment
22:00 US ISM, construction spending
Earnings.Eurobank Ergasias(GR), Shimamura(JP), Neo Group(SG), Central Euro Dist Corp(US), Razgulay(RU), U10(FR), FFP(FR), Weborama(FR)
Stoddart
Sunday, 16 September 2012
Morning note, events and data 17th September 2012
Morning,
After a strong performance in Europe on Friday and US markets adding to the recent gains, I expected a bit more optimism in the press over the week.
With Europe and the Euro clearly dominating the headlines, along side the US QE3 program, I was expecting a more upbeat sentiment, like talks of improving growth targets, increased liquidity supporting lower rates and talks of "now we can concentrate on jobs". We didnt get it.
Headlines in the FT and Economist, highlight, Spain's reluctance to apply for the bailout. Rajoy's stalling, they blame, is due to the Spanish elections due on 21st October. This has part to play, but the main reason comes from the lack of clarity regarding the terms attached to the bailout. Current procedure is, you ask for support, then you get the cash and terms.
Rajoy's fears are justified. With his Government desperately trying to cut is deficit, currently 8.9% of GDP, conditions under the bailout could put additional austerity measures, further hurting employment. A major concern, when Spanish unemployment is at 24.7%, and protests for independence are increasing in size.
This is sounding more and more like Greece's predicament. Once again, fears are creeping in that delays could hamper job creation and in turn, the growth outlook.
Now moving to the US. Headlines in the FT highlight mortgage processing delays slowing US growth. In reality, regards of QE3, real interest rates across the globe have not reflected central bank rates. For example, with FED rates at 0.25%, mortgages rates are still at 3.50%. Now that is for a 30 year fixed rate, however, it has not changed over the last 6 months, despite 30 year treasuries getting as low as 2.5%.
Banks are still extremely nervous of NPL's. Given the pressure they face from new regulation, capital adequacy requirements and constraints on selling packaged debt products, it is not surprising that they reluctant to lend.
In addition to this, mortgage brokers and alternative lending sources have been squeezed out of the space, reducing competition. Prices have been impacted and with barriers to entry, now higher than ever, I suspect its a long time before we see this environment changing. A more relaxed stance on capital requirement and lighter regulation, would certainly support the market. But with the presidential election due, and lack of regulation being blamed for the recession, a policy of less regulation could be political suicide.
Its a good job people quick to forget the bad.
Markets.Given the recent rally in everything from basic materials to industrials, I expect to see some outflows today. Ok, we have QE3, but QE1 and QE2 outcomes have been shorted lived. Investors now want to see the data improving.
This should encourage profit taking, especially in gold miners, which looking at the junior gold miner ETF, GDXJ US, has rallied over 30% since July.
I agree with many, that the Euro squeeze has more to go, given how heavily underweight the market is, but the sudden movement will soon run out of steam as the data is slow to react. For example, Spanish unemployment is highly unlikely to come in below 18% before 1Q 2013.
With the weakness in the US$ supporting basic materials, coal, iron and copper should continue to run, but with inventories so high, physical prices have a very heavy ceiling as firms look to maintain revenue through increased sales. Oversupply will continue for some time to come.
China banks.
Have seen some strength, mostly on the back of short covering. Time to look at shorting again. With Reserve Rate Requirements(RRR) and interest rate cuts due, margins will decline whilst NPL's increase. Not a pleasant position to be in.
HK Property.
Very strong performance last week as the US signal low rates til 2Q 2015. With the HK$ peg, HK property is seen as a strong US$ hedge and investors are looking for a strong pick up in demand. My issue here, HK property prices have hardly corrected. Property developers for years have controlled supply, supporting prices and the mark to market of its inventory. My fear is, the HK government have already shown concerns of a property bubble, which will need to be addressed. Looking to short the sector into strength.
China utilities and telecoms. Looking to buy on weakness. Recent strength has seen yields fall, but with a strong pull back as investors increase risk, should leave these names look attractive. Not a buyer at these levels, but are on the radar.
China railway.
Huge short covering on the back of the rail minister pushing of increased roll out of projects. Near term earnings look dramatically improved, however, the outlook passed 2015/16 is limited. Increasing competition for maintenance contracts has reduced margins, and unless exporting products and services increase, new projects will once again start to slow. Short into strength
China oils.
Very strong rally helped by pump price increases, weaker US$ pushing crude higher and to a less degree, improving growth outlook. Time to take profits in the sector. PTR(857) up HK$1 in a week, now trading at $10. We can look at buying again on the pull back.
Markets today, open at the highs and trade sideways early session, then in the afternoon as Europe come in, we should see them trend easier.
Events.Merkel Q&A with Journalists in Berlin, Romney speaks in LA
Data.13:30 Indian repo rate
15:00 Turkey unemployment rate
16:00 Eurozone current account
16:00 Italian trade balance
17:00 EU labour costs and trade balance
20:30 US empire manufacturing
Also due is China FDI, Russian industrial production
Stoddart
After a strong performance in Europe on Friday and US markets adding to the recent gains, I expected a bit more optimism in the press over the week.
With Europe and the Euro clearly dominating the headlines, along side the US QE3 program, I was expecting a more upbeat sentiment, like talks of improving growth targets, increased liquidity supporting lower rates and talks of "now we can concentrate on jobs". We didnt get it.
Headlines in the FT and Economist, highlight, Spain's reluctance to apply for the bailout. Rajoy's stalling, they blame, is due to the Spanish elections due on 21st October. This has part to play, but the main reason comes from the lack of clarity regarding the terms attached to the bailout. Current procedure is, you ask for support, then you get the cash and terms.
Rajoy's fears are justified. With his Government desperately trying to cut is deficit, currently 8.9% of GDP, conditions under the bailout could put additional austerity measures, further hurting employment. A major concern, when Spanish unemployment is at 24.7%, and protests for independence are increasing in size.
This is sounding more and more like Greece's predicament. Once again, fears are creeping in that delays could hamper job creation and in turn, the growth outlook.
Now moving to the US. Headlines in the FT highlight mortgage processing delays slowing US growth. In reality, regards of QE3, real interest rates across the globe have not reflected central bank rates. For example, with FED rates at 0.25%, mortgages rates are still at 3.50%. Now that is for a 30 year fixed rate, however, it has not changed over the last 6 months, despite 30 year treasuries getting as low as 2.5%.
Banks are still extremely nervous of NPL's. Given the pressure they face from new regulation, capital adequacy requirements and constraints on selling packaged debt products, it is not surprising that they reluctant to lend.
In addition to this, mortgage brokers and alternative lending sources have been squeezed out of the space, reducing competition. Prices have been impacted and with barriers to entry, now higher than ever, I suspect its a long time before we see this environment changing. A more relaxed stance on capital requirement and lighter regulation, would certainly support the market. But with the presidential election due, and lack of regulation being blamed for the recession, a policy of less regulation could be political suicide.
Its a good job people quick to forget the bad.
Markets.Given the recent rally in everything from basic materials to industrials, I expect to see some outflows today. Ok, we have QE3, but QE1 and QE2 outcomes have been shorted lived. Investors now want to see the data improving.
This should encourage profit taking, especially in gold miners, which looking at the junior gold miner ETF, GDXJ US, has rallied over 30% since July.
I agree with many, that the Euro squeeze has more to go, given how heavily underweight the market is, but the sudden movement will soon run out of steam as the data is slow to react. For example, Spanish unemployment is highly unlikely to come in below 18% before 1Q 2013.
With the weakness in the US$ supporting basic materials, coal, iron and copper should continue to run, but with inventories so high, physical prices have a very heavy ceiling as firms look to maintain revenue through increased sales. Oversupply will continue for some time to come.
China banks.
Have seen some strength, mostly on the back of short covering. Time to look at shorting again. With Reserve Rate Requirements(RRR) and interest rate cuts due, margins will decline whilst NPL's increase. Not a pleasant position to be in.
HK Property.
Very strong performance last week as the US signal low rates til 2Q 2015. With the HK$ peg, HK property is seen as a strong US$ hedge and investors are looking for a strong pick up in demand. My issue here, HK property prices have hardly corrected. Property developers for years have controlled supply, supporting prices and the mark to market of its inventory. My fear is, the HK government have already shown concerns of a property bubble, which will need to be addressed. Looking to short the sector into strength.
China utilities and telecoms. Looking to buy on weakness. Recent strength has seen yields fall, but with a strong pull back as investors increase risk, should leave these names look attractive. Not a buyer at these levels, but are on the radar.
China railway.
Huge short covering on the back of the rail minister pushing of increased roll out of projects. Near term earnings look dramatically improved, however, the outlook passed 2015/16 is limited. Increasing competition for maintenance contracts has reduced margins, and unless exporting products and services increase, new projects will once again start to slow. Short into strength
China oils.
Very strong rally helped by pump price increases, weaker US$ pushing crude higher and to a less degree, improving growth outlook. Time to take profits in the sector. PTR(857) up HK$1 in a week, now trading at $10. We can look at buying again on the pull back.
Markets today, open at the highs and trade sideways early session, then in the afternoon as Europe come in, we should see them trend easier.
Events.Merkel Q&A with Journalists in Berlin, Romney speaks in LA
Data.13:30 Indian repo rate
15:00 Turkey unemployment rate
16:00 Eurozone current account
16:00 Italian trade balance
17:00 EU labour costs and trade balance
20:30 US empire manufacturing
Also due is China FDI, Russian industrial production
Stoddart
Thursday, 13 September 2012
Morning note, events and data 14th September 2012
Good morning,
Wont ramble on too much about the FOMC, you've read the headlines and that tells the story. My 3 main thoughts:
1. Buying housing or Asset Backed Securities (ABS) does not increase jobs, it just reduces the burden on banks
2. The US will make an absolute fortune in 2014 - 2017 when they "job these out"
3. Get ready to short the hell out of US 10yrs in 2013/14
This whole exercise was about making nice happy numbers and headlines. The FOMC wanted to highlight that stimulus is unlimited, and it will stop at nothing to encourage growth, in this case, using near zero interest rates till mid 2015.
How did the markets react?
Europe closed before the announcement, with equity markets mixed.
CAC -1.2%, DAX -0.45%, IBEX -0.7%, UKX +0.7% all on roughly average volumes.
Sector performance saw defensives stronger and profit taking in materials and financial, not surprising after such a strong run.
Markets have rallied on the headlines and now, as reality sets in and Greece unemployment higher, fears start to creep back in. However, the market is hugely short the European region, inflows will continue as investors take a more neutral weighting. There is also more short squeeze to come, when the markets take the next leg up. Technicals out early next week will show this.
Greece unemployment came in at 23.6% vs last quarter 22.6%
US markets rallied aggressively on the FOMC meeting, with the S+P up 1.6% and market volumes up 20-70% across all indices. The weaker jobs data, with initial claims of 382k vs expected 370k was explained by the recent tropical storm - I think is just another excuse used to justify a weaker number.
Sector performance highlights aggressive inflows to growth names, out of defensive.
Outerperformers: Basic materials, financials and oil & gas
Underperformers: Health, industrials and telecoms
The NASDAQ also underperformed the S+P and industrials for the first time in quite a while.
Expect further inflows to growth. The market has rather large positions weighted in government debt and defensive equities. Outflows will now be looking at improving growth and corporate credit/high yield.
Markets today:
Going gang busters for the laggeds. With the US$ weakening, physical metal prices have stabilised, some have even started to rebound. This looks like it has more to go but please note, inventories are huge and we have yet to see a pick up in demand... this will run out of steam. Oil, now 98.75 WTI, finally seeing inflows, which although the US$ had moved, up until last night, oil hadnt reacted and was trading around the $95 level. This has more to go and is an alternative hedge to gold, with the kicker of improving growth.
Trading.
I am looking for a pull back in the defensives. This throws up huge opportunities to pick up quality assets, on improving yields. It might take a month to get to these levels, but they are now being watched closely.
Basic materials are all at breakout levels, which I will highlight in next weeks technicals. They still have room to run, but I would not be paying up just yet, we will see fast money outflows next week as the hype dies down and everyone goes back to looking at the data.
We could see China over the weekend, following in the footsteps of the US giving the markets a "triple macro boost". Some plans have already been realised but am watching for support on the industrial side. We already have infrastructure in road and rail projects.
Events:
SEC meeting on price stability, G27 finance ministers meeting and announcement of Greek stimulus measures.
Data: In Singapore time (GMT +7 hours)
12.30 Japan industrial production and capacity utilisation.
14:30 India whole sale prices
15:00 Spain labor costs and house prices - some negativity expected
15:30 Thai foreign reserves
17:00 Eurozone CPI and employment
17:00 Italian current accounts
20:30 US CPI and retail sales
21:15 US industrial production and capacity utilisation
21:55 U. of Michigan confidence
22:00 US business inventories - watch for follow through from the wholesale inventories strong number earlier this week.
Earnings - top securities
Suntor(US), Nexus(AU), Kagara(AU), Norilsk Nickel(RU), JD weatherspoon(GB), Swisher Hygiene(US), Virco Manu(US), Marcus(US)
Have a great weekend.... expect some heavy news papers over the weekend, with all the data this past week.
Stoddart
Wont ramble on too much about the FOMC, you've read the headlines and that tells the story. My 3 main thoughts:
1. Buying housing or Asset Backed Securities (ABS) does not increase jobs, it just reduces the burden on banks
2. The US will make an absolute fortune in 2014 - 2017 when they "job these out"
3. Get ready to short the hell out of US 10yrs in 2013/14
This whole exercise was about making nice happy numbers and headlines. The FOMC wanted to highlight that stimulus is unlimited, and it will stop at nothing to encourage growth, in this case, using near zero interest rates till mid 2015.
How did the markets react?
Europe closed before the announcement, with equity markets mixed.
CAC -1.2%, DAX -0.45%, IBEX -0.7%, UKX +0.7% all on roughly average volumes.
Sector performance saw defensives stronger and profit taking in materials and financial, not surprising after such a strong run.
Markets have rallied on the headlines and now, as reality sets in and Greece unemployment higher, fears start to creep back in. However, the market is hugely short the European region, inflows will continue as investors take a more neutral weighting. There is also more short squeeze to come, when the markets take the next leg up. Technicals out early next week will show this.
Greece unemployment came in at 23.6% vs last quarter 22.6%
US markets rallied aggressively on the FOMC meeting, with the S+P up 1.6% and market volumes up 20-70% across all indices. The weaker jobs data, with initial claims of 382k vs expected 370k was explained by the recent tropical storm - I think is just another excuse used to justify a weaker number.
Sector performance highlights aggressive inflows to growth names, out of defensive.
Outerperformers: Basic materials, financials and oil & gas
Underperformers: Health, industrials and telecoms
The NASDAQ also underperformed the S+P and industrials for the first time in quite a while.
Expect further inflows to growth. The market has rather large positions weighted in government debt and defensive equities. Outflows will now be looking at improving growth and corporate credit/high yield.
Markets today:
Going gang busters for the laggeds. With the US$ weakening, physical metal prices have stabilised, some have even started to rebound. This looks like it has more to go but please note, inventories are huge and we have yet to see a pick up in demand... this will run out of steam. Oil, now 98.75 WTI, finally seeing inflows, which although the US$ had moved, up until last night, oil hadnt reacted and was trading around the $95 level. This has more to go and is an alternative hedge to gold, with the kicker of improving growth.
Trading.
I am looking for a pull back in the defensives. This throws up huge opportunities to pick up quality assets, on improving yields. It might take a month to get to these levels, but they are now being watched closely.
Basic materials are all at breakout levels, which I will highlight in next weeks technicals. They still have room to run, but I would not be paying up just yet, we will see fast money outflows next week as the hype dies down and everyone goes back to looking at the data.
We could see China over the weekend, following in the footsteps of the US giving the markets a "triple macro boost". Some plans have already been realised but am watching for support on the industrial side. We already have infrastructure in road and rail projects.
Events:
SEC meeting on price stability, G27 finance ministers meeting and announcement of Greek stimulus measures.
Data: In Singapore time (GMT +7 hours)
12.30 Japan industrial production and capacity utilisation.
14:30 India whole sale prices
15:00 Spain labor costs and house prices - some negativity expected
15:30 Thai foreign reserves
17:00 Eurozone CPI and employment
17:00 Italian current accounts
20:30 US CPI and retail sales
21:15 US industrial production and capacity utilisation
21:55 U. of Michigan confidence
22:00 US business inventories - watch for follow through from the wholesale inventories strong number earlier this week.
Earnings - top securities
Suntor(US), Nexus(AU), Kagara(AU), Norilsk Nickel(RU), JD weatherspoon(GB), Swisher Hygiene(US), Virco Manu(US), Marcus(US)
Have a great weekend.... expect some heavy news papers over the weekend, with all the data this past week.
Stoddart
Wednesday, 12 September 2012
Stoddart's Weekly G&T
This issue of Stoddart's Weekly G&T was first published on 28 May 2012, following a week that saw little relief for global markets:Debt
Corporate or emerging markets - Corzine vs Kim Jong?
Currencies
Show me the money - if I want to sell my IDRs
Commodities
Keep digging and you'll end up in Australia
Copper ' load of that
Equities
"Got my Roley on my arm and I'm pouring Chandon"
Read the full report for more in-depth insights
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