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 āNegativeā 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. Thatās been the mantra since Tuesday. Put simply: itās up. Itās 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? Itās not like they just voted to leave the EU. There…
Are You For Real? Enjoy The Rally, But Remain Incredulous
First thingās first. Hereās the only chart you need to make sense of the two-day risk-on move (i.e. the rally): Youāll likely see several versions of that throughout the rest of the day assuming equities hang on to outsized gains. Basically, Treasurys arenāt buying what stocks err ā¦ arenāt selling. Ok, thatās a confused attempt…
Bulls Make Money, Bears Make Money, (Un)Hedged Hogs Get Slaughtered
Weāve talked quite a bit about what companies and sectors are most vulnerable to Brexit and a rising dollar (see here and here). Letās 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. āBrexitā 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 āremainā camp is going to ultimately prevail. The latest polls showed the āleaveā camp trailing headed into whatās turned out to be a wet day of reckoning in Britain, where ātorrentialā rain forced some polling stations to close. Weāve seen the…
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