Mind The Equity Risk Premium

So we made it through non-farm payrolls Friday unscathed. In fact, we got a humdinger of a number that at one point during the session propelled the S&P to new record highs. The next hurdle for markets: earnings season. On the whole, y/y earnings growth for S&P 500 companies is expected to come in somewhere…

Life In A ‘Negative’ World

This morning, following a blockbuster of a June payrolls report, we flagged the disparity in how US Treasury yields should have behaved and how they actually behaved. If you truly want to understand how distorted this market has become, have a look at the following chart going back to 1998: As you can see, this…

The Brexit, the brally, and the brutal reality

TheoTraders must zero in on where the risk is in the market. Let's look at a comparison chart of the bonds, gold, and stocks. This will help us determine whether or not risk is still on the table.

Love It? Well Then Buy It!

If you see something, buy something. That’s been the mantra since Tuesday. Put simply: it’s up. It’s all up. Every single bit of it. Stocks, oil, gold, Treasuries, bunds. All of it. UK equities have rallied an astounding 10% since Tuesday. And why not? It’s not like they just voted to leave the EU. There…

Are You For Real? Enjoy The Rally, But Remain Incredulous

First thing’s first. Here’s the only chart you need to make sense of the two-day risk-on move (i.e. the rally): You’ll likely see several versions of that throughout the rest of the day assuming equities hang on to outsized gains. Basically, Treasurys aren’t buying what stocks err … aren’t selling. Ok, that’s a confused attempt…

Bulls Make Money, Bears Make Money, (Un)Hedged Hogs Get Slaughtered

We’ve talked quite a bit about what companies and sectors are most vulnerable to Brexit and a rising dollar (see here and here). Let’s look, for a moment, at asset classes and equity drawdowns. Over the past several days, the need to hedge against long tail events has become readily apparent. Unfortunately, hedging against macro…

Markets Rally - Out Of The Woods Already?

And now, back to our regularly scheduled programming. Well, not entirely, but US traders woke up Tuesday to green screens, a welcome reprieve from two days of mayhem. “Brexit” discussions still dominate the airwaves and headlines, but you can count on the dip buyers and knife catchers for what may or may not be a…

Is It Time To Load Up On US Treasurys?

Here we are, UK referendum day and markets seem all but certain that the “remain” camp is going to ultimately prevail. The latest polls showed the “leave” camp trailing headed into what’s turned out to be a wet day of reckoning in Britain, where “torrential” rain forced some polling stations to close. We’ve seen the…