Remember back in April when we noted how equity trends had completely flip-flopped during the first several weeks of the second quarter and we wondered aloud whether this was a trend change or simply a counter-trend rally? Well, so far in May the market is…
Read MoreCommercial 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…
Read MoreWhile 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…
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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…
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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…
Read MoreEven 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…
Read MoreWe 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: …
Read MoreWe 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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With Apple’s (ticker: AAPL) announcement that are selling more debt in order to buy back more shares and pay out dividends, a client posed an interesting question to us: Do you think Amazon (ticker: AMZN) will announce something similar soon? Our short answer is most likely no…
Read MoreThe 30-year treasury bond has experienced a rather large selloff by historical standards over the last three months. Yields have risen from roughly 2.2% to almost 2.9% in just over three months – a nearly 25% increase in yield – putting it on par with…
Read MoreWith April in the rearview mirror, it’s a good time to look back on which factors had the strongest relationship to market over the past month. USD correlation had the tightest relationship to the market.
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Long-dated US Treasury bonds have been treading water of late, leaving many rate watchers wondering in what direction the next big move is going to be. One variable in the next move is of course trader positioning. The two charts below show how the ”smart money” is betting.
Read MoreLast week we wrote that 2014 marked another year in which Chinese companies increased the leverage on their balance sheets. In fact 2014 marked the 10th consecutive annual increase in aggregate leverage as measured by total liabilities as a percent of equity. Meanwhile profit margins are down by more than half over the same period.
Read MoreThe percent of stocks in the MSCI World Index that have had positive EPS revisions compared to six months ago currently stands at 45%. Over the past 7+ years, the average level of this statistic is 56%.
Read MoreNot to take anything away from what has become a bona fide bull market in China, but we have been pretty skeptical that the rally in domestic Chinese shares has anything to do with corporate fundamentals. It more likely has to do with central bank stimulus.
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