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Thinking

Who In The World Is Buying All These (Low and Negative Yielding) Bonds?

A lot has been written recently about negatively yielding bonds in the press. In full disclosure, this author has been writing about negatively yielding bonds for almost five years, though what seemed like a conundrum in the beginning has become all too normal for professionals today.  But now that this […]

What Are The Best Places To Be In The Equity Markets?

With US equities making new highs and monetary policy taking another step towards easing, I looked at the long term performance of different styles of equity investing to see if there were any simple strategic conclusions we could make.  This is an especially important time to take a close look […]

Trading Sardines: The Case Of Currency Hedged Negative Yielding Bonds

You might have heard the story about the three traders who decided to go into the business of trading sardines.  The first trader bought a can of sardines for $5. He sold the same can of sardines to the second trader for $10, doubling his money. The second trader again […]

Watch The Fed Walk-Back The Walk-Back

For traders it has become something of a game to forecast how quickly Mr. Market can make the newly “data-dependent” Fed change its tone. In the fourth quarter as the Fed Chair became somewhat hawkish, the market sold off and discovered that the pain point and the strike of the […]

The Fed ‘Put’ And The Return Of BTD (Buy The Dip)

Three “rules” I learnt almost thirty years ago still hold true today: (1) Don’t fight the Fed, (2) The Fed targets asset prices even though they won’t admit it, (3) The market will test the Fed’s resolve. I believe the truth of the first two statements has been verified yet […]

“Tech Crash Echo”: It’s Beginning To Feel A Bit Like 2000

Everyone in the market remembers the Global Financial Crisis.  Very few on trading desks remember the Tech crash of 2000.  I remember it all too well after the partying of 1999: it was exhilarating (or painful if you were short) to watch the exponential rally in Tech and dotcom stocks […]

How To Ride A Bucking Bull: Stay Calm And Hang On…For Now

This bull market in U.S. stocks is now the longest, and by many measures the most hated in history. After almost quintupling since the global financial crisis of 2008, I look back and see an incredible rally that has never been totally convincing. Behind the bull market lurk apparent culprits […]

Making the Most of Spread Product Tails

Price action since the February volatility shock suggests that investors continue to grow more confident in the durability of US risk assets. Central bank quantitative easing (QE), robust corporate earnings, share buybacks, and tax incentive-driven repatriation have muted the negative impact of unexpected election outcomes, strains on geopolitical and economic […]

Time To Bail Out Of Bonds Into The Relative Safety Of Stocks?

Trouble is afoot, again, for the bond markets. Could bonds today be more unsafe than stocks? For the long maturities in the global bond market, it appears so, at least in the near term. Despite the jawboning known as “forward guidance”, central bank support for bonds is naturally beginning to […]

More Volatility Means More Selling

Remember when just a few months ago, every dip in the stock market was met with a strong bid. Now, it seems, every rally is met with strong selling. There are several reasons for this shift, which is entirely rational. Most important is a sharp rise in volatility, which has […]