This year’s record-smashing hurricane season comes to a close
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Global bond yields and MSCI World 12m Fwd P/E
Cash on the side-lines getting spent. The fearsome gigantic Cash Mountain is not that gigantic anymore, and the trend is clear. Equities catching some of that cash. Extrapolate this wedge formation and we are in for something uncomfortable (for the general rational psyche)
Below is the 2 versus 8 months spread. If S&P is to follow the pattern again is to be seen, but short term maturities are all but expensive.
Fed's BC, Bitcoin and DXY. Not labelled for the easy pop quiz...
The worst-performing subsectors YTD have rallied MTD, but they still stand near their cheapest relative multiples…
DXY hammer candle, just the inverse of the March high hanging man...copper shooting star candle, the inverse to the hammer candle on March lows.
One of our favourite views on VIX is the 2/8 months VIX futures spread. This one remains in sleepy mode as demand for short term protection continues to fade.
XOM down 8.5% from highs 4 days ago, which saw the biggest volume day during this melt up. Trades like so many that have little clue what Exxon is about got carried away in this "oil trade".
A lot of the dynamics behind the last move higher in many of the "rotation" trades has been the "classical" effect of people chasing calls, resulting in short gamma, resulting in chasing deltas higher...which works the inverse way on the way down.
Second chart showing Exxon call bonanza pointed out on Nov 23.
Tech continues making a come back vs the rotation trade. OnNov 25we wrote:
"Our most recent logic is that people should start chasing tech on a relative basis again. Apple could get interesting should it start breaking above the negative trend line that has been in place since Sep 1.
Note how Apple volatility has come off, offering interesting long premium plays now (opposed to early Sep). Second chart shows a simple Jan 120/130 call spread."
Apple is breaking big above the trend line, but still nobody speaks about it, nor much about Morgan Stanley's Apple "logic" we mentioned earlier today,here.
They have moved in tandem recently, end even before "recently". People love to trade "old biases" and not current "reality".
Do you bet with that longer term trend, or do you bet against it?
Even the constant gold bull we speak to sound they think there is more downside for gold...
US E&P still offers an 8% median ’21 FCF yield at current $45 WTI, which is ~2x the broader market. ’21 FCF yield rises to 12% at $50 WTI, and 19% at $60 WTI.
Equity flow has during November showed that it is no one-trick pony; it can actually flow both ways and not only "out" as it has for the past 2 years prior to this month. All it needed was apparently a democratic president and some vaccine....The big question now is of course if there is real follow-trough from here - a good $500bn to recoup back to January 2019 levels.
It did not take much for EM risk to "suddenly" flare up again. A small reversal in the DYX and VXEEM is well above VIX again...
Consensus is very strong when it comes to the dollar about to crash further. One of the biggest themes in 2020 has been the narratives that got too complacent and suddenly reversed out of nowhere. P/l frustration has been huge in those trades.
DXY attempting some sort of hammer candle. It has worked before as short term reversals after extended moves, just like we saw in early Sep. On highs, a candle is called a hanging man, and we saw how it played out in March.
Dollar positioning remains rather short, despite the last little move higher in shorts covering (chart 2).
Imagine the p/l pain should the DXY start to bounce from here, if nothing else a short term bounce, just when everyone saw the break down occurring today.
It is clear that cases were peaking just before Thanksgiving, and likely would now be starting to fall. But the data for the long weekend now is incomplete and the next few days will say how much of a super-spreader event this was.
Let´s see the lag effect from the Thanksgiving long weekend, but so far the tech vs Russell pairs has worked over past sessions. although small absolute moves.
Then came Greta....
Environmental, Social and Corporate Governance as a 'Topic' Worldwide on Google Trends
Installed power generation capacity by source in IEA's "Stated Policies Scenario", 2000-2040. The agency has raised its outlook for solar renewables on the back of lower cost of capital and positive government policy changes. It highlighted a large decrease in solar developers' cost of capital in Europe: from 7-8% to 2.6-5% in the last 12 months. By 2050, the share of renewables could reach 80%-90% as a percentage of total power generation for the EU, with the rest met via batteries, hydrogen and carbon capture and storage (CCS). Given that solar accounted for just 2.4% of the global generation mix in 2018, one can see solid growth potential going forward.
AMZN went on a hiring spree without equal, per the NYT -- the numbers are genuinely staggering, albeit largely known at this point (AMZN reported 1.125M employees as of 3Q end).
Still, the charts / reminders do help put it all into perspective (+427,300 employees in 10 months, or +50% from a year ago):
AMZN, also this year:
1. Leased 12 Boeing 767-300 cargo aircrafts (bringing its air fleet above 80 jets)
2. Added 220 package facilities
3. Boosted its fulfillment capacity by 50%
"Crypto should play a role in institutional asset allocation.
With today’s environment materially different as compared to the euphoria in the winter of 2018, Strategy star at deep fundamentalists at Sanford Bernstein Inigo Fraser-Jenkins feels differently about bitcoin's role in asset allocation. In short, the greater role that governments will likely play in economies makes cryptos potentially more appealing. In the wake of the pandemic, governments likely become more powerful (relative to corporations and individuals) and we need to get used to its greater role. And naturally, this is the main reason why true believers in cryptos point to as a reason to hold them. However, the attraction of crypto are also what make them potentially an annoyance for policymakers. Thus, he believe cryptos have a place in asset allocation, as long as they are legal.
Not a good idea to work-from-home on a dial-up connection. Or can we solve it by fax?
With some Internet providers reporting increases in traffic of 60% since the start of the pandemic, as people adapt to living and working online, the OECD’s latest "Digital Economy Outlook" reveals the gaps between and within countries in access to fast and reliable Internet. For example, the share of fibre in fixed broadband subscriptions in OECD countries ranges from 82% in Korea and 79% in Japan to below 5% in Austria, Belgium, Germany, Greece, Israel and the United Kingdom, with high-speed connections often sparse in rural areas.
Gold is down big recently, but the US 10 real yield has not done too much over past weeks, despite people saying it has and despite the vaccine news.
Ideally we would like to see even more extreme greed...
One of our favorite indicators when it comes to the short term reopen/lock down narrative is the ZM vs UBER ratio.
ZM continues outperforming after the perfect bounce on that trend line. We stick to out tech over value logic outlined early last week.