Stress Indicators - weekly. update

Not much to add. Trends are extending for now..

 

·        Disflation vs. FED hike – the US issue as Dual mandate becomes harder to lift…

·        QE a game changer on deflation? The EU question, plus of course – Let's ignore risk of Greece leaving the Euro-zone

·        Shanghai vs. HK trades @ 5 yr high premium.

·        Lower energy means: Consumer keep money rather the rogue states, but also…..wider bonds spreads and increased focus on bank exposure. Noting that Oil/Gas is 1/3 of non-housing investments! CAD short?

·        S&P up 11%, Nikkei up 7%, but MSCI-exl US down!

 

·        Bond (all types) returned 7.8% in 2014 best since 2002 (8.96%) – best risk-adjusted 2014 macro trade: Long Bunds (Thank you very much!) according to Barclays. Global DM yield fell from 2.10% end of December 2013 to 1.57% end of December 2014. DM budget deficits remains stubbornly high @ 3.4% of GDP & 7.7 TRILLION US Dollar worth of government debt needs to be rolled over led by US (3.0 trln), Japan (2.0 trillion) and Italy (0.4 trln) – Pattern here?

 

 

Good luck in 2015, and as always safe travels,

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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