BAML is bullish on stocks heading into Fed meeting/G20: “we expect SPX>3000 in coming weeks, clear peak in US$ .. we are buyers of KOSPI, semiconductors, resources, China property stocks, high yield bonds, gold, and sellers of volatility.”
1. We are encouraged by stats released from Facebook showing strong improvements in audience and engagement at Facebook Watch.
2. We increasingly see Watch as a scalable long-term revenue source. We think most investors view Watch as “meh” to the investment case, skeptical it can scale despite some solid numbers released in Dec…[Read more]
1. MS economists expect the Fed to leave the federal funds rate target range unch’d at 2.25 – 2.50% at the conclusion of the June 18-19 meeting, but stress that it’s ready to act “as appropriate” should there be “material downside risk” to the outlook.
2. They anticipate only minor adjustments to the modal forecasts in the SEP (Summary of Eco…
1. Global equity vs bond flows have now hit a 3-standard deviation extreme, the lowest level since 2004.
2. Last week saw the largest weekly net inflow into Bond funds in over 4 years at USD 17.5bn and investors redeemed USD 10.5bn from their holdings of global equity funds, taking the cumulative flows for these 2 asset classes since the…[Read more]
1. Algorithms have learned key words and respond to the news or tweet language.
2. Human traders pile on, perhaps taking the other side from the computers which are already cashing out.
3. The punditry, charged with imposing meaning on chaos, exaggerates the effect of minor news.
4. Mainstream…[Read more]
“Fed could cut as soon as July but it may not halt slowdown/recession.”
“.. we would be wary of any claims that costs will be passed along to end market consumers or absorbed by cost efficiencies .. companies are already struggling to take price or maintain margins. Thus, we believe an exogenous cost shock would be very hard to absorb.”
The VIX and SPX were both higher on Friday. This happens more frequently when perceived risks are elevated as they were going into this weekend with the possibility of tariffs moving into place on Mexico. Below is a table of the occurrences where the VIX is above 15 while the SPX is up 1%+ on the day.
1. With yesterday’s market rally, the S&P now crossed through the medium-term threshold for the systematic community at ~2797. While this doesn’t mean systematic supply will suddenly halt, it does mean it will abate.
2. For US equities as a whole, the GS macro sales desk currently estimates the CTA community is net short -$5…[Read more]
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