After this nice rebound in equities, we are moving tactically cautious. Actions taken today: we moved to market neutral (long equities / short index futures) on our new Swiss Tactical Equity Certificate and have bought downside protection on the S&P500 in our portfolios.
We believe that :
This was just a bear market rally driven essentially by hedge funds covering their shorts…
Many risks including China/CNY, Oil supply, US economy, German economy/social situation, BREXIT, earnings growth, high valuations, still remain in mind.
Investors are losing confidence in Central Banks hazardous monetary policies and buying gold as the ultimate hedge
And by the way…
Negative: Major equity indices have technical opening-gaps to be closed (15.02.2016) >>> 1860 for the S&P500 and 2756 for the Eurostoxx50
Positive: something interesting might come out of next G20 meeting in Shanghai. Finance ministers and central bank governors are due to meet on Feb. 26 and 27 to discuss issues including China’s excess capacity, oil prices and global growth….
It timed its move well.
We bring it up, because after what appears to have been a smart call on the end of the short-covering rally, GS Bank has followed up with a more disturbing thought: are we now back in February 2008?
Like in 2007, volatility is rising and spreads are widening
Do you remember that there was NO way that Lehman would fail. Well… it did.
Oh but wait. Today is different. No housing subprime, but just $276.5 billion in loans to oil companies and a few trillion $ of derivatives…