The charts that matter 14.01.2015 - Je suis Draghi

The Charts That Matter January 14, 2015

published twice a month

Investir.ch powered by SEQUOIA Group Loïc Schmid – 14.01.2015

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In a nutshell

Assets 14.01 S/T view

14.01 L/T view

22.12 S/T view

22.12 L/T view

Comments

Cash Keep cash for opportunities

Investment grade bonds Bubbly, buy on dips

High yield bonds Only special situations

Sovereign bonds Bubbly in Europe, US OK

Convertibles bonds Buy on dips

European equities Waiting for Draghi…

US Equities Closer to a top than a bottom!

Japanese equities Trend is positive

Emerging equities Chinese stocks have room for improvement.

Precious metals Bottom in place?

Oil Capitulation phase

Hedge funds CTAs and Macro strategies continue to be attractive

Volatility Buy volatility on dips

USD Looks stretched short term

Investir.ch powered by SEQUOIA Group - L.Schmid – 14.01.2015

Negative Positive No view

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All eyes on Draghi (again) and ECBs next meeting scheduled on the 22nd of January 2015 Q/E or not Q/E ? Is it already priced by markets? EUR/USD >>> How much is USD strength, how much is EUR weakness ? “Q/E Combinazione” started in Q1 2014 especially when EUR/USD was close to 1.40

EUR/USD

EUR/USD Is QE fully or partially priced?


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European equities In Draghi we trust hope

Seems that European markets need some fuel to break THAT triangle pattern Fuel = QE No fuel = bye-bye

Eurostoxx50

Eurostoxx 50

QE

No QE


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European government bonds German 10Y yields @ 0.43%. Seriously?

Deflation is looming Deflation is not good Is QE the solution?

Eurozone CPI

German 10Y yields


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Oil slump Guess who is going to make money [as usual]?

Biggest oil trading companies (Vitol, Trafigura, …) are storing oil in super tankers due to low prices and contango price curve. >>>> Buy low, sell higher …

According to sources : spot rates are expected to average 37’000 USD in 2015 a day up from 27’000 in 2014

WTI Crude oil – curve in contango


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Oil producing countries = negatively impacted [obviously] Other countries mostly positively impacted Asian countries especially happy

Oil slump Countries are not all impacted the same way …


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Oil slump Ship-owners are enjoying it

Companies like Frontline Limited that own crude carriers and Suezmax tankers have seen their share prices surge higher !

They are making money They will make money if the curve continues to be in contango …

Frontline Limited


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Copper slump Support level?

Is this due to hedge funds? Is this due to slower growth perspectives? Buying opportunity?


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Natural Gas Collapsed too

US natural gas prices dropped from $4.50 to $2.78 MMBtu in a few weeks! The heating season from November through March is the peak demand period for U.S.

gas consumption. If you are married to a US meteorologist then you can start to trade NatGas futures

Natural Gas


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Gold [$ ounce] You can do it …

Gold is [finally] breaking out from its downtrend However, one might want to wait for a strong confirmation (>1300$) Are investors starting to finally consider [again] the ultimate currency?

Breakout


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S&P500 Ego trip?

Commodities are falling Rates are falling Economic growth is falling Will US stocks fall?

S&P500 Oil

2015 World Economic Growth forecasts

Copper

US 30Yr Yields


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The dollar Hedge funds are in love

Perfect correlation between the CTA index (index composed of CTA hedge funds) and the Dollar Index shows that HF are enjoying the ride…

By the way, net long positions on the USD have never been so high When its obvious, its obviously wrong

Source : businessinsider.com/Citigroup

Dollar Index net positioning

Newedge CTA index

Dollar index


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Global Purchasing Manager’s Index for Manufacturing Good, but declining

Ireland is rising from the ashes #Draghi Australia is struggling #Housing #China France is not doing well #Hollande


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2015 World GDP Forecast Down baby, down

World growth is continuously being revised down Blame the Chinese and the Europeans Don’t blame it on the Americans

Eurostoxx50

China 7.00%

US 3.00%

World = 2.78%

Eurozone = 2.78%


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Bonus Chart : SMI Index A good year, but an average year!

The SMI rose 9.51% in 2014 On average the Swiss index delivered +10.21% per year since 1 9 5 0 Worst years : 1974 and 2008 Best years : 1997, 1993 and 1985 !

Gold Ounce USD

1986 9.71%

1950 9.68% 1996 19.54%

2014 9.51% 1951 19.53%

1952 8.37% 2003 18.50%

1977 8.09% 2009 18.27%

1976 7.89% 1991 17.67% 1959 29.20%

2000 7.50% 1992 17.64% 1983 27.29%

1957 -10.25% 1963 -0.16% 1980 6.07% 2006 15.85% 1954 26.14%

1970 -10.65% 1978 -0.51% 1955 5.99% 1971 15.50% 1995 25.45%

1981 -11.91% 2010 -1.68% 1999 5.72% 2012 14.93% 1988 23.61%

1973 -20.00% 1966 -12.09% 2007 -3.43% 1984 4.52% 1998 14.29% 1958 22.76% 1961 49.39%

2001 -21.10% 1994 -12.26% 1964 -6.93% 1969 4.48% 1982 13.26% 1989 22.59% 1967 47.19%

1974 -33.14% 1987 -27.48% 1962 -17.71% 1965 -7.00% 2004 3.74% 1979 10.93% 1972 20.73% 1968 39.49% 1975 46.76% 1997 58.93%

2008 -34.77% 2002 -27.84% 1990 -19.31% 2011 -7.77% 1956 2.12% 1953 10.48% 2013 20.24% 2005 33.21% 1960 44.46% 1993 50.81% 1985 61.36%

SMI Index - yearly price returns distribution since 1950

50% to 60% 60%+ 10% to 20% 30% to 40% -40% to -30% -30% to -20% -20% to -10% -10% to 0% 40% to 50% 0% to 10%

1950 - 2014 Yearly Average: 10.21%

20% to 30%

Source : investir.ch, Sequoia, Bloomberg


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Bonus Chart : Tesla Shares are dropping fast. Back to reality?

Is it because of the [over]valuation? Is it because investors have finally realized that Tesla will not be the New Volkswagen Is it because of weak oil prices or … owners fed up of only driving in the same

neighbourhood due to the lack of Tesla-plugs

HFRX – Global Hedge funds index

HFRX – Macro / CTA index

Petrobras CDS

Tesla


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Key takeaways

Oil is still in capitulation-phase

European stocks are QE-dependant. Watch the ECB.

US stocks might have topped or … not if #QE4

Volatility is back

Watch gold

Watch the EUR/USD

Stay away from fantasy growth stocks

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Disclaimer

ECB

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The information contained in this material should not be construed as a recommendation or solicitation to buy or sell any security, or to participate in any investment strategy. It does not take into account the specific investment objectives, financial situations, or the particular needs of any specific entity or person. Investors should make their own appraisal of the risks and should seek their own financial advice regarding the appropriateness of investing in any securities or participating in any investment strategy. This material should not be construed as legal, business or tax advice. While the information (including any historical returns) in this material has been obtained from sources deemed reliable, SEQUOIA Asset Management S.A. does not guarantee its accuracy, timeliness or completeness. Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice. Past performance is no indication of the future return. This information document or any part of it should not be copied, reproduced or distributed to anyone without the prior written approval of SEQUOIA Asset Management S.A.


The charts that matter 14.01.2015 - Je suis Draghi

Economy & Finance

Transcript of The charts that matter 14.01.2015 - Je suis Draghi