Market report #1: The Good, the Bad, the Ugly

Dear all,

This is my first “The Good, the Bad, the Ugly” market report which kind of kicks off my blog.

This market report will be publish every week or two !

If you like it, share it !

Have a wounderful week-end,





Market report #1: The Good, the Bad, the Ugly

The good

  • Risky assets still fueled/drugged by central banks
  • Oil export countries seems to be [finally] agreeing on production and price stability
  • Market talk that ECB might step into buying European equities = tailwind for EU markets
  • Even though it’s not very impressive, global economic expansion remains steady (…)
  • A lot of cash is sitting on the sidelines = ready to be deployed in stocks?
  • Great rotation from bonds to equities might start soon or might have already started
  • US recession fears unclear following latest PMI/ISM [better] reports
  • Eurozone : latest economic data was encouraging
  • China : latest economic data suggests stabilization
  • FED: every time the FED is close to hiking, markets drop postponing decision
  • UK : stronger economic data fueled by weaker GBP
  • EUR: the weakening currency is having positive effects on European exporters
  • Corporate activity : good M&A activity + share buybacks

The bad

  • Upside risk for [US] rates. Will the other central banks follow? Historically they did, this time (…)
  • Asymmetric risk for US stocks (upside-potential limited, downside-potential important)
  • US: S&P500 technical picture (rounding top) suggests caution. 2120 = strong support
  • Rising USD could have negative effects on US corporates
  • Uncertainties surrounding BREXIT impact on UK/EU
  • Uncertainties surrounding Italian constitutional referendum
  • Chinese desperate need to invest abroad (creating real estate bubbles) and weakening CNY
  • Australian + Canadian housing bubble fueled by … the Chinese
  • Central bankers incapacity to restore moderate growth in developed countries

The ugly

  • US elections pathetic drama
  • Ongoing and rising tensions between Russia and western powers
  • BoJ hazardous monetary policy trying to fight a complex problem >> aging of the population
  • Central banks accommodative monetary policy’s exit strategy nightmare
  • Rising income inequality leading to social unrests
  • Tech bubble 2.0 lead by social media fantasy
  • Global rising debts leading to concerns about the value of Fiat [not the car maker] money
  • Fixed income bubble
  • EU-US tax/economic war – tax my “Apple” and I will destroy your [German] banks

My Positioning

  • Equities: favor European equities. Buy downside protection on S&P500 and/or Nasdaq (more vulnerable) to hedge against global risk.
  • Fixed income: avoid sovereign bonds and buy dips on corporate investment grade and high yield
  • Currencies: long USD, long CAD/AUD, short CHF
  • Commodities: long oil, watching to go long agriculture
  • Gold : great level to accumulate the only currency that central banks can’t PRINT
  • Hedge funds: favor global macro and CTA’s and volatility stratégies

Important Chart

Today’s close (weekly close) will be very important. Market has to close > 2135 otherwise fasten you seat belt for more downside!

Loïc Schmid

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