The macro picture remains ambiguous. Outperformance from the U.S economy and the prospect of worldwide loosening monetary policy remains counterbalanced with a worsening Eurozone crisis and a slowing global economy. This confluence of factors will likely yield increased volatility as investors become flummoxed over which macro trends triumph. Over the short-term and after a 20% rally from the October lows, the S&P 500 seems increasingly vulnerable to negative headlines. A lot of good news has been priced in. View full article »
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Below is my updated thesis as of January 2012. Categories are in order of importance (i.e. the factors that lead the development of my thesis). For example, I believe that the most important factor for the U.S. economy and financial markets in general is what direction our global economy takes; therefore, this topic is first. Government Policy is the second most important factor towards shaping the trajectory of the US economy and financial markets; hence, it’s second on the list… and so on.
To keep tabs on how my thesis is progressing, check out my previous outlook. For a list of all my past outlooks, click here.
Want to cut straight to the chase and read my thoughts on the markets? Click here.
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Overall, U.S. economic activity remains positive. The primary debate among investors centers around a possible U.S. decoupling and positive U.S. equity market performance as a result. I remain very cautious and admonish against piling bullish bets in the S&P 500. View full article »
Good Afternoon and Happy Thanksgiving,Risk markets are losing their patience. The Eurozone situation is approaching a major climax. This is by far the most important story to follow in the coming days and weeks. U.S. Economic data has been quite encouraging and the economy remains muddling along. If Europe took care of business quickly (a huge early Christmas gift for the bulls), global stock markets would rally sharply. The S&P 500 could possibly make a run at the bull market highs.
It’s important to account for factors, which may help unlock the macro puzzle in the months ahead. In my bi-annual macro outlooks, I specifically include a sub-section named “Keeping An Eye Out”. In it I list what I believe will be important ingredients in accurately forecasting the macro picture in the quarters ahead. My latest outlook can be found here. This research is designed as an addendum to my latest (Mid-year) outlook and therefore may seem a little choppy in its presentation. I suggest reading it along with my latest outlook. Factor cited here will contribute to my updated thesis due in the beginning of 2012.
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Good Afternoon,
Risk markets seem to be at a crossroads. Both bulls and bears can point to a myriad of factors to bolster their case. I’d like to provide a quick rundown of the strongest points for both sides. View full article »
I have updated My Portfolio Breakdown and Investment Ideas. The previous update can be found here. I increased my Bearish Investment exposure as well as raised more cash from my Bullish Positions.
The S&P 500 is at resistance and I am taking this opportunity to further sell into strength. Note that I intend to keep some dry powder in case we indeed break through the 1,200 area to the upside, providing a better shorting opportunity. I understand that risk-markets may rally in the days ahead and am therefore preparing to implement some hedges, should the S&P 500 rally strongly past 1,200.
On the Bullish end, the U.S. remains in growth mode. Recent economic data has been coming in better than expected (albeit still very weak). The level of bearishness remains quite high and the market may already be discounting a mild recession. The sheer fact that we aren’t in one is bullish. News from the Eurozone has been encouraging as well. Merkel and Sarkozy have drawn a line in the sand in developing a comprehensive package to bailout banks and stem the contagion. If the package satisfies investors, markets would be in a prime position to rally (hence my recent affinity for hedges). The biggest headwind to global growth would be removed.
I have updated My Portfolio Breakdown and Investment Ideas. The previous update can be found here. I increased my Bearish Investment exposure as well as raised some cash from my Bullish Positions.
Conditions in the Eurozone remain accommodative for continued pairing in risk. I am also slighly increasing my short exposure due to a significant danger on a negative resolution resulting in adverse economic conditions at home. Given that the US economy is almost at stall speed, if not there already, a Eurozone blow up would be the straw that breaks the camels back in my opinion.
Recent financial turbulence stemming from a deteriorating Eurozone has me speculating how the financial landscape could look like should the Euro dissolve. View full article »
