Monday, April 27, 2020
Please
find below our latest Weekly Trend Update Report covering major
asset classes and currencies.
Today’s
report needs to be abbreviated. I apologize for the inconvenience.
Have
a nice week.
Marc
Bentin
Bentinpartner GmbH
Trend
Status Update
Friday saved the week however, supported by news that the S&P rating
agency refrained from taking away Italy’s investment grade, a concern that had
led the ECB change its criteria for bonds it can purchase to include potential
fallen angels a move that should have covered
for an Italian downgrade. The rating agency affirmed Italy's BBB rating (with
negative outlook), still saying "we could lower the ratings if government
debt to GDP fails to shift onto a clearly discernible downward path over the
next three years, or if there is a marked deterioration in borrowing conditions
that jeopardizes the sovereign's public finance sustainability, including for
example due to insufficiently supportive policy measures at the eurozone
level."
The second news that saved the day and the week on Friday was D. Trump
signing a $484bn (fourth) spending package that includes more money for small
business, bringing the total amount of support to almost $3trn (or the equivalent
of the French GDP), far outpacing the
aid granted during the 2008 financial crisis.
Over the past week, the S&P500 dropped -1,3% (-12,1% YTD) while the
Nasdaq100 dropped -0,7% (0,6% YTD). The US small cap index gained 0,3% (-26,1%
YTD). The S&P500 traded above its 50dMa. Economic data were of the same horrendous
vein as most recently but are being discounted. So is a worse than expected
-24% yoy decline in Q1 2020 earnings so far which is
coming so far -9% below earnings estimates.
Cboe Volatility Index sold off by -5,8% (160,7% YTD) to
35,93.
The Eurostoxx50 sold off by -2,7% (-24,5%), underperforming the
S&P500 by-1,4%. European Banks were particularly strong on Friday with BNP
gaining +6.2% (-48% YTD)
Diversified EM equities (VWO) dropped -1,5% (-21,1%), outperforming the
S&P500 by -0,2%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7
currencies gained 0,6% (4,6%) while the MSCI EM currency index (measuring the
performance of EM currencies vs. the USD) dropped -0,7% (-6,6%).
10Y US Treasuries rallied -4bps (-132bps) to 0,60%. 10Y Bunds were
unchanged (-29bps) to -0,47%. 10Y Italian BTPs climbed 5bps (43bps) to 1,84%,
outperforming Bunds by -10bps.
US High Yield (HY) Average Spread over Treasuries climbed 70bps (439bps)
to 7,75%. US Investment Grade Average OAS climbed 4bps (106bps) to 2,07%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 7bps
(57bps) to 1,09%.
Gold rallied 2,8% (14,0%) while Silver gained 0,5% (-14,6%). Major Gold
Mines (GDX) played catch up, rallying 13,3% (15,9%).
Goldman Sachs Commodity Index sold off by -10,8% (-47,7%). WTI Crude
sold off by -7,3% (-72,3%).
This morning…
Global stocks are starting the week, jolted by a boost to stimulus
measures from the BoJ which removed limits on
its purchases of government bonds and a decline in the number of deaths in
France and Spain as Europe prepares for the economy to restart “as fast as
possible but as slow as necessary”. The dollar retreated across the board.
Oil markets relapsed into weakness with no impact on risk aversion so
far.
Italian Bonds are rallying in response to S&P’s decision (-11bps).
Trend Score Card
Click here for technical
annotations.
US
& International Equities
Check out US and International Stocks’ Technical
Trend Status.
Sector
Trend & Momentum
Check equity sectors’ trend and performance …and when
they break out!
Fixed
Income
Check out 10Y US Treasury and Bund yields, their
trend, expected Fed rate moves and speculative positioning in 10-year Treasury
Futures.
US
Recession Risk Radar
A comprehensive list of
economic indicators to compare the current situation with previous recessions.
The
Dollar
Check out where the Dollar stands Trendwise and Breakoutwise vs.
G7 and EM counterparts.
Precious Metals
Check out where precious
metals stand Trendwise
and Breakoutwise.
Get a sense of options (cumulative open interests on calls and puts) and
futures traders’ sentiment (non-commercials open positions).
Check out how precious metals, the dollar and the
Stock market correlate with each other and speculative futures positioning
on Gold and the Dollar.
Why Trend Following Matters and How It Can Help
You?
A disciplined and rule-based
trend following investment approach can serve as an effective portfolio
insurance technique.
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using a
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applies a rule-based Trend/Momentum methodology to adjust this “trend neutral”
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your portfolio in a semi automatic (there is always a pilot in the plane)
fashion applying trend changes signals.
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