Autos will lag other rate-sensitive sectors

The auto and housing sectors are two parts of the economy that are highly sensitive to interest rate changes. In light of the Fed’s dovish pivot at the start of the year, culminating in 3x25bps of interest rate cuts, we would expect activity in both sectors to surge....

Intermarket Gauges suggest recession or risk-on

The S&P has been very resilient this year in the face of slowing growth, falling earnings and trade war uncertainty. However, underneath the surface, market rotations have been very bearish. Over the past year, high-yield credit has underperformed investment grade...

Momentum under fire as confidence softens

With consumer confidence measures released a couple of weeks ago, we have observed an interesting divergence between the University of Michigan consumer sentiment index and Conference Board consumer confidence index (top-left chart). When we plot the spread and...

High Dividend Yield Strategies Require Care

Falling yields across the developed market world have posed greater hurdles for investors with yield and income targets. As the spread between bond yields and equity dividend-yields diverge, these investors move up the risk spectrum to meet their targets. As such, we...

Complacency sees Vol Sellers Return in Numbers

Short volatility positions are back at extreme levels once again, showing the growth of complacency among market participants. The more dovish than expected Fed has allowed volatility sellers to become more emboldened, and speculative VIX future positions are back up...

Trading a Bear Market

This post was taken from our January 8th weekly report. We would characterise US equity indices today as being in a bear market. The official definition is a 20% decline from the recent high, close to close, but what does this mean in practice for investors? (The...