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    • Greg Blotnick – MarketWatch – Hedge Funds February 9, 2017
      Opinion: Investors are dumping hedge funds just when they’re needed most – Greg Blotnick Hedge funds today are about as welcome as a stick in the eye. Endowment funds and pension funds are reducing allocations en masse in favor of indexing and private equity, as outflows reach levels unseen since the financial crisis. Harvard University… […]
      Greg Blotnick
    • Correlations have crashed January 24, 2017
      boon for stock pickers  (per MS) “CORRELATIONS HAVE CRASHED: Editors at Morgan Stanley won’t let analysts use the word ‘crash’ without a good reason and its best way to describe what has happened since election across globe…regional correlations, cross-asset correlations and individual stock and FX correlations have fallen simultaneously. That’s unusual; we haven’t seen a… […]
      Greg Blotnick
    • 1/11/2017 – Macro from RBC January 11, 2017
      McElligott on how “its all the same trade”: The US Dollar is the “grand unifying theory asset” for nearly any and all “profile” global macro or thematic equities trades in the marketplace right now, as it represents investors being long this “new” version of “economic growth.”  As such, performance is significantly tied to the direction… […]
      Greg Blotnick
    • Morning Markets – Dave Lutz – 1/9/17 January 9, 2017
      “Good Morning!   US Futures are starting slightly under pressure, confounding the peeps on CNBC wearing their Dow20,000 hats.   We have pretty much a sea of red across Europe, with the DAX off 55bp in a market that sees Fins and Energy lagging.  Multiple Italian banks are being halted limit down, hitting the MIB for 1.7%… […]
      Greg Blotnick
    • 2017 Forecasts – Stifel, Canaccord January 4, 2017
      Stifel: Our S&P 500 target is 2,400 in 2017 with no recession seen until late 2018 Our S&P 500 target is 2,400 in 2017 with no recession seen until late 2018. The S&P 500 continues to act as if Fed exit began in May 2014 during the QE3 taper and we expect the Fed to… […]
      Greg Blotnick
    • Wisconsin College Using Snapchat to Notify Students of Acceptance December 14, 2016
      UWGB adopts a new way to reach incoming students. Source: UWGB Using Snapchat to Notify Students of Acceptance
      Greg Blotnick
    • McElligott at RBC – Grossing Down December 13, 2016
      RBC Big Picture (Charlie McElligott) – DATA AND TRUMP KICKING-UP ‘ANIMAL SPIRITS,’ AGAINST SIGNS OF Y.E. GROSS-DOWNS –good commentary from Charlie at RBC: OVERNIGHT: Generally higher equities (Estoxx / DAX still holding at highs while Spooz dip ‘red’—highlighting the ‘relative value’ of EU equities against US as they break-out, see Mark Orsley’s piece today) and… […]
      Greg Blotnick
    • CS – “Sticking With Small Over Large” December 8, 2016
      Small caps set to benefit more under Trump administration tax rate the key driver (and lack of foreign revenue) IWM’s “have become a show me story. The main DRIVER supporting small cap is Economic Indicators & Policy, as small tends to lead when real US GDP is 2-3% range. Small caps also benefit from protectionism… […]
      Greg Blotnick
    • OpCo: Revisiting Yield Vehicles In Context of Rising Rates December 7, 2016
      Revisiting Yield Vehicles In Context of Rising Rates & Slower Replacement Cycle
      Greg Blotnick
    • Small caps saw the most PE expansion since April ‘09 – BAML December 6, 2016
      Small caps saw the most PE expansion since April ‘09
      Greg Blotnick

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    Greg Blotnick – Investor Positioning and Equity Funds

    Two articles I wrote for blogs – along with more articles on Greg Blotnick’s SeekingAlpha and answers on Gregory Blotnick’s Quora

    Short Selling In A Bull Market – Common Mistakes In Security Selection

    Greg Blotnick – negotiating fees with your financial advisor

    Equity funds raise exposure to overweight as election polls shift

    Equity funds raise exposure to overweight as election polls shift:

    Historically, close elections have seen a rising uncertainty premium & equities flat in 4 months leading up to the election, followed by a 5% rally. However in last 2 weeks, polls have moved sharply in favor of Hillary Clinton, while those favoring Republicans to retain control of House have also edged up again after a small pullback. Polls are thus pointing to a continuation of the political status-quo which combined with already positive data surprises and a strong start to the Q3 earnings season has seen US equity funds raise their exposure to overweight.

    Equity funds raise exposure to overweight as election polls shift

    Rising active equity fund positioning offset by continued outflows but demand-supply balance to improve after earnings blackout:

    Even as active equity funds have raised exposure, end investors have continued to pull money out of developed market equities despite positive data surprises in the US & also in Europe. The demand-supply backdrop for equities should improve however, as an increasing proportion of companies exit buyback blackout periods after reporting earnings.

    Rising active equity fund positioning offset by continued outflows but demand-supply balance to improve after earnings blackout

    Third straight week of outflow from defensive bond-like equity funds:

    The $3bn outflow in the last 3 weeks is the largest in over a year but still a small fraction of the cumulative inflows of $50bn ytd and over $180bn since 2010.

    Large outflows from money market funds beyond prime-government fund rotation:

    While massive rotation in flows within MM funds out of prime & into government funds has been in spotlight, there has also been a large net overall outflow. These outflows go against typical seasonality which points to strong inflows in 2nd half of the year. With equities seeing persistent outflows & bank deposits flat over the last 2 months, the outflows from money market funds are benefiting fixed income funds.

    Large outflows from money market funds beyond prime-government fund rotation

    Active managers in fixed income markets positioned for a rate hike but bond funds continue to get inflows:

    Aggregate positions in bond futures are extremely short while shorts in Libor rates futures are also at 2 year lows. Across maturities, futures positions are already very short in long-dated bonds & in the 5y & have fallen to neutral across the rest. Active bond funds have largely outperformed with rising yields over the last 3.5 months & look to be underweight duration & overweight credit. Solid inflows into bond funds have continued, mainly benefiting credit while government bond funds are seeing outflows.

    Active managers in fixed income markets positioned for a rate hike but bond funds continue to get inflows

    Dollar creeps higher as long positions rise:

    Rising Fed rate hiking expectations have seen dollar moving higher. The dollar is now 4/5th of the way up flat range it has been in over last 21 months, accompanied by rising long speculative dollar positions. Short positions have risen across most other currencies, led by the euro and the pound while yen longs have fallen. Mexican peso shorts however have fallen sharply in the last two weeks.

    Dollar creeps higher as long positions rise

    Oil prices now more than 30% overvalued, at extreme of historical valuation band , as long positioning jumps to record highs:

    Oil prices are now more than 30% above our estimate of fair value based on dollar & global growth, a level of overvaluation that has marked historical extremes. The strong rally has been accompanied by net speculative long positions rising to new record highs as gross longs rose to extremes while gross shorts fell sharply. Oil long positions are worth over 7 days of global oil production, a record high, & have also disconnected from their earlier tight relationship with dollar longs. History suggests that multiple channels of linkage between dollar & oil will re-assert themselves & see prices converge.

    Oil prices now more than 30% overvalued, at extreme of historical valuation band , as long positioning jumps to record highs

    To know more check out this PDF and get more details on this.

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