Interestingarticlein The Lancet showing that about 10% of the US population has been infected. This is about 5x the reported statistics.
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BETZ new ATHs....
The JPM Credit Strategy team published their strategy into year-end and a few themes stand out
1. The hunt for yield continues and corporate credit is a primary beneficiary
2. The Fed has reduced vol despite having low $ participation in credit markets
3. Demand remains strong, as illustrated in fund flows and purchases of new issuance
4. Companies have built cash reserves in preparation of a COVID second wave.
5. Credit downgrades have slowed.
6. Valuations are not great unless you increase your duration (maturity).
7. The sensitivity to treasuries is at an all-time high.
8. Leverage is at new highs with more debt and lower EBITDA. Given the cash builds in mentioned earlier, it is unclear if that goes to reduce debt or toward M&A.
Bond volatility waking up slowly?
The 1999 analogy is probably just a fantasy, but things would certainly become very dynamic and interesting should this start to unfold.
Jim O`Neill BRIC+ in memoriam.....
EURUSD and JPY 1 month implied vols.
Time to start looking when "they" start chasing stuff like BGB, Blackstone / GSO Strategic Credit Fund. Note BGB is trading at highest since the bounce started in March.
(BGB invests primarily in a diversified portfolios or loans and other fixed income instruments of predominantly United States. corporate issuers, including first- and second-lien loans and high yield corporate bonds of varying maturities.)
BGB vs Spuz
Small red on the day, but more interesting is the reversal down below the 21 day moving. Nothing huge, but this space has no momentum to the upside.
Imagine if king dollar came back, if nothing just for a few weeks.
More p/l pain ahead...?
As Robin Brooks notes one of the narratives, China boosting stimulus, which will spill over to EM, commodities etc...but there is one problem, there is no stimulus by China showing up in German nor Japanese exports.
Impressive is an understatement.
YTD performance in %
Virus-related lockdowns have eased considerably from peaks
Google trends searches for "trade war" one way street lately.
...be careful what you wish for.
Great little table worth looking over.
As we wrote onSep 21, "time for some tech mean reversion..."
NASDAQ bounced perfectly on the lower Bollinger band and is trading just above the "mid line" now.
Let's see how this ends today, but the short term bounce has played out, here things are becoming more "boring".
It has worked before...
TME pointed out a few points yesterday, and there are more to be added. Our main point is that this market is frustrating bulls and bears (beside a few Twitter traders that are catching every move perfectly). This frustration is creating a lot of p/l pain as very few strategies have worked for the crowd YTD.
Why we could get a melt-up (#1): far from frothy sentiment
Why we could get a melt-up (#2): Cash Mountain starting to get spent
Why we could get a melt-up (#3): 2 most favorable months
Citadel is the biggest, followed by Virtu.
