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Smart Money Most Committed to Falling Rates Since The Last Peak in Long Bond Yields May 21, 2015

By Knowledge Leaders Team in Markets

Commercial traders (AKA the smart money) has massively flip flopped their positioning since the end of last year with respect to the long bond. In aggregate, commercial traders have moved from a net short position (benefiting when rates rise) of about 50K derivative contracts to…

Breakdowns in the Health Care Sector May 19, 2015

By Knowledge Leaders Team in Portfolio Management

Health care stocks have been the leadership sector in the MSCI World, and many (such as biotech) have reached some pretty elevated valuations. Most stocks in the sector have been in multi-year bull markets trends, outperforming the MSCI All Country World Index significantly. In our…

Dr. Copper Is Down, Not Out May 19, 2015

By Knowledge Leaders Team in Markets

While it is too early to really get our hopes up, it is worth noting that Dr. Copper has clawed its way back above the long-term support that it violated earlier this year: And though its efforts to overcome the downtrend seem to have faltered…

Monetary Movements & Economic Mirage May 18, 2015

By Knowledge Leaders Team in Markets

While we entered 2015 with the Federal Reserve talking confidently about lift-off and how many rate increases there would be by the end of the year, the markets didn’t seem to buy it. As weak economic data began to surface, the Fed seemed to quietly…

Stocks And Bonds Remain At A Historically High Correlation May 18, 2015

By Knowledge Leaders Team in Markets

For most investors, a negative or low positive correlation between equity prices and long-term bond prices is a preferred and time-tested way of keeping one’s portfolio volatility low. However, this has been very difficult over the past two years as the four-year rolling correlation between…

Is Equity Volatility Set to Rise? May 14, 2015

By Knowledge Leaders Team in Markets

Even casual observers of the forex markets will have noticed that it has been a bit of a wild ride over the last several months. And, while currency volatility has spiked, equities have remained relatively placid. If this chart showing the historic relationship between the…

Can Crude and Copper Keep Rallying with China Slowing? May 14, 2015

By Knowledge Leaders Team in Economy

Yesterday saw the monthly slue of Chinese economic stats and the key feature among them was the continued broad-based weakness. The weakness in some of these statistics has been so pronounced (some things like IP and retail sales are at levels near or below those…

Long-End Of US Yield Curve Suggests A Stronger Yen May 13, 2015

By Knowledge Leaders Team in Economy

The relationship between the Japanese Yen and the spread between the US 30-year treasury yield and US 10-year yield has had a very tight negative correlation (-0.85) over the past 10-years (since 1986 when the bond spread series begins the correlation is -0.61). Since the…

Could the Bond-Bund Spread Widen Even Further? May 12, 2015

By Knowledge Leaders Team in Markets

We first discussed the historic extreme in the spread between German Bunds and U.S. Treasuries last April (here). And that relationship has continued since, propelling the difference (in red, below) to levels well above those reached over the last two decades: …

US Equity Leadership (Still) Hasn’t Changed May 12, 2015

By Knowledge Leaders Team in Markets

We mentioned two weeks ago how equity performance has flip-flopped in the second quarter and how asset prices are most likely just in a counter-trend rally. Since then, others have picked up on this theme with a lot of folks calling for higher bond yields in particular (we…

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