Lower-Risk/Higher-Reward Spread Trade Idea Useful for Those Looking to Deploy Excess Cash Balances
In the following chart we show the ratio of the Nikkei vs. gold. Into its 2012/2013 low of ~5, this ratio had fallen ~90% from its 2000-era high of ~70. However, upon hitting 12.38 last week, note the ratio has…...
Though Down 30% in a Year, More Declines Likely in This Ratio
Since our 11/14 post highlighting the likelihood that the Nikkei would not experience another short-term, 20% decline and would instead begin to rally sustainably again into our long standing 45K-50K target, the index has rallied 450 bps. By comparison, the…...
More Thoughts on Global Equity Allocations
Over the past two months or so we have become increasingly bearish / less bullish on the U.S. from an intermediate-term cyclical standpoint. We first began questioning the remaining intermediate-term upside of this 46 month cyclical rally in the U.S. in…...
Global Equity Spread-Trade Update
I want to reiterate my belief that Europe, like China, is set to out-perform U.S. equities moving forward. That thesis remains grounded in the chart below, which shows the ratio b/t the Vanguard Euro Vipers ETF and the SPX. The…...
Spread Trade Idea in Global Equities
As you know, I’ve gotten structurally bearish over the past two weeks. Even if I’m wrong, I’m of the opinion that any U.S. equity upside is going to be more limited from current levels, likely no higher than Dow 16,250…...
As Suggested in May, Risk-Free Rates Have Risen Materially
We have absolutely nailed the US treasury/rate trade (and its implications to other asset classes) and have no shame in stating as much. We were prescient enough in October of last year to suggest that if one were bearish US…...
Will Emerging Market Underperformance Ever Cease?
I’ve been very mute on the topic of EMs for most of the site’s history. The only topic of conversation that has been seen on these pages has revolved around the idea that the decade long bull market in commodities…...
Is the Recent Increase in Rates Sustainable?
I believe it is. As we pointed out last week in this post, the ratio of the SPX vs. TYX was suggested a large and imminent move in one of two asset classes – either the SPX or rates. Turns…...
Prospect of Consolidation Could Support Out-Performance of this Industry
In the recent past there’s been some noise in the beleaguered publishing/media industry re: consolidation/M&A. Just last week GCI announced they’d pay a ~30% premium to acquire the media assets of BLC. On Friday, TWC shares rose by ~9% on…...
Incremental Thoughts on the “Reach for Yield” Trade
This is an update to our post last week discussing the potential risks associated with the global investment community’s “reach for yield” if/when risk-free rates began to rise. In the first chart below I plot the ratio of the Yen…...