Dear Reader,

 

Please find today’s installment of the Bentin Daily.

Have a nice day ahead.

 

Marc Bentin

 

CIO, Bentinpartner GmbH

 

 

Wednesday, March 14, 2018

 

The White House Purge Continues

 

 

US Stocks started with a Goldilocks jolt higher as the US CPI report showed a monthly gain of 0.2% in line with expectations but much lower than last month’s 0.5% push which had triggered inflationary and therefore rate hike fears and lower stocks. The announcement of US Secretary Rex Tillerson being summarily dismissed and to be replaced by CIA Director Mike Pompeo (who is also the former director of a CIA prison which practiced torture, according to national French national TV yesterday and which is totally opposed to Iran’s nuclear deal (this ZH article is not too engaging), was all but a diplomatic appointment. The manner by which Tillerson was fired by a public tweet while he was out in Africa recovering from a bug and mourning the passing away of his father a few days back, was about as low class a form of management as we will ever get to see but it was not enough to sour equity market sentiment in the early going yesterday. As regards the replacement of G. Kohn as Chief economic advisor, D. Trump said “I’m looking at Larry Kudlow very strongly”. L. Kudlow is a loyal supporter of D. Trump from day 1 and a lively character, known so for his opiniated (and unconventional) views as a CNBC economic commentator.

Despite the early push higher in US equities, European markets did not pick up that ball and stayed lower, most likely in response to what looks like an upcoming confrontation between the US and Europe which, as it appears, is the primary target (along with China, see politico article) of D. Trump’ s protectionist measures. European negotiators and European politicians reacted with France's Minister of the Economy Bruno Le Maire telling CNBC on Monday that the EU will join forces with foreign jurisdictions (China?) to counter the US protectionist and discriminating stance. Germany likely understands that it needs to play the European card and avoid a too direct response as this could tempt D. Trump to talk about “bad, really bad people” again... In any case, Europe is now getting the chance to speak with one voice and push back on US unilateralism and divide to reign (exceptions to the tariffs) tactics. Later in the afternoon, the dollar showed signs of fatigue which pushed the German Dax to end the day, nursing a 2% loss. Leadership from the narrow list of US leading tech shares could not hold the tape together as tech shares were weakened after D. Trump blocked the Qualcomm deal, driving its share price down by 5%, dampening appetite for tech shares more generally. GE also received a thumb’s down from a JPMorgan analyst questioning the credibility of the company’s profit guidance which also pushed GE share price into a loss of 4% for the day (to 14.43 with the same analyst expecting GE share price to further fall to 11).

After being resilient for most of the day despite weaker European markets, US stocks finally surrendered to bears towards the close, following a press conference of Tillerson who saw him appear both exhausted and shaken by emotions. This provided more evidence of the chaos reigning at the White House and of an accelerating trend to fire or let experts in their respective fields escape to the benefit of ideologists close to the thinking of the US President who are unlikely to contradict him as he starts to focus on mid-term elections. This is of poor omen ahead of key international negotiations on the economic and geopolitical front and one that paves the way for more confrontation, possible military escalation and certainly less diplomacy. These developments are likely to be toxic for risk appetite.

Gold which started the day lower recovered and closed slightly higher as equities and the dollar traded lower. Bonds were generally stronger with yields dropping 4bps on risk aversion and after inflation remained contained.

Dollar developments offered a mixed picture with dollar liquidity shortage finding (at the same time as EURUSD rallied) their latest expression in tensions on USD/HKD peg which traded at the lowest point of its allowed band, triggering corrective action by the HKMA that said it is fully prepared to take appropriate action if the USD/HKD exchange rate reaches 7.85.

 

After the US close…

 

Nikkei 225 -1% , S&P500 -7 points

ECB President M. Draghi is due to speak today with US retail sales and PPI also due out today.

 

Daily Snapshot

 

 

 

Also check

 

 Daily Equity Sector Performance

 

Risk Appetite+Style Performance+Last 2 weeks intraday

 

The News Room

Check the latest Markets stories…

 

Leaders, Laggards & Z-scores

 

Check what leads, what lags…

…and what is breaking out!

(More explanation for  Z-scores)

 

Models Positioning

Please refer to the technical note here for a description on how “implied views” are defined and monitored and what they mean. In essence, all our views are expressed as a percent of a global risk budget which is deployed taking into consideration the volatility of each market exposure prior to translating them into size positions.

 

 

(Explanation for our Implied Views)

 

The following changes were brought to our model portfolios’ positioning (all expressed in % of 10% independent tracking error; for ex. a 10% overweight in S&P500 means adding 1% independent tracking error on the S&P500):

 

 

 

(Important Methodological Explanation)

 

Model Positioning Change and Review:

 

- We further hedge out our equity exposure, lifting some bond short as well.

 

Our Advisory Services

 

Our Investment approach relies on a three-pillar “All Weather” strategy:

 

- First, we invest your portfolio in an optimally chosen strategic asset allocation. We do so focussing on highly liquid and cost-efficient instruments or first-generation derivatives enabling your portfolio to always remain liquid.

- Then, we add a layer of tactical management, hedging or emphasizing certain elements of the strategic asset allocation, drawing on a portfolio specific risk budget. Our tactical overlay management offers the potential to supplement the strategic asset allocation return while enabling dynamic hedging in volatile periods.

- We offer transparent, professional, tailor-made, and competitive asset management services, fulfilling our fiduciary duty at all times.

 

Results and volatility parameters of strategic balanced Benchmarks in the snapshot picture above do not constitute a track record. They serve as an indication of what to expect from a balanced portfolio, passively managed, automatically rebalanced, diversified and optimized for meeting a “balanced” investment risk profile.

 

We offer two types of mandates:

-With a “Global Strategic” (GS) mandate, the chosen benchmark delivers the portfolio’s “beta” performance while the tactical deviation aims to deliver some additional “alpha” performance and an “all weather” investment solution.

-With a “Global Tactical” (GT) mandate, we consider cash and stocks as dual benchmarks, undertaking positions solely based on tactical considerations with no core underlying strategic asset allocation. With both mandates, the potential maximum risk undertaken at the overall portfolio level is contractually defined in VAR terms and is a function of the client risk profile and investment preferences.   

 

Let us help helping you.  Visit our web site or call us at +41612044665. We’d love to hear from you and see how we can further assist you.

 

Bentin Daily PDF Reports Suite

 

 

Some Live Prices

 

 (free Bloomberg registration required)

 

 

Please visit our web site or call us at +41615444310. We’d love to hear from you and see how we can further assist you.

Join us on Linked In

To be removed from the list, please send us an email by clicking here, mentioning “unsubscribe” in the title.

  

Terms and Conditions

 

Privacy policy

 

 

To ensure that our emails reach your inbox and not your spam folder, please consider adding Marc.Bentin@BentinPartner.ch, Marc.Bentin@BentinPartners.ch and our alternate address Bentinpartner@gmail.com to your safe address book. If you are using Microsoft Outlook, simply right click on our email address, choose "add to Outlook contacts" and then "save".

 

 

Important Disclaimer
© Copyright by BentinPartner llc. This communication is provided for information purposes only and for the recipient's sole use. Please do not forward it without prior authorization. It is not intended as a recommendation, an offer or solicitation for the purchase or sale of any security or underlying asset referenced herein or investment advice. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situation, investment horizon and particular needs. This report does not include information tailored to any particular investor. It has been prepared without any regard to the specific investment objectives, financial situation or particular needs of any person who receives this report. Accordingly, the opinions discussed in this Report may not be suitable for all investors. You should not consider any of the content in this report as legal, tax or financial advice. The data and analysis contained herein are provided "as is" and without warranty of any kind. BentinPartner llc, its employees, or any third party shall not have any liability for any loss sustained by anyone who has relied on the information contained in any publication published by BentinPartner llc. The content and views expressed in this report represents the opinions of Marc Bentin and should not be construed as guarantee of performance with respect to any referenced sector. We remind you that past performance is not necessarily indicative of future results. Although BentinPartner llc believes the information and content included in this report have been obtained from sources considered reliable, no representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of such information. This Report is also not intended to be a complete statement or summary of the industries, markets or developments referred to in the Report.