Here a couple of regular weekly reports from the respective wealth management teams at the above institutions.
CS remains concerned on world interest rates and expects the Fed minutes later this week to bring forward the taper discussion once again. That would be a head wind for equities.
Nonetheless they point out the strong seasonal and ye window dressing and make some good stock picks on this basis for their high net worth private clients.
On the commodities they pick up the same issue we did a week or so ago. Ie the narrowing of the WTO Brent spread. To be played via trade ideas short Brent, long wti. Or to capture the positive directional path, long wti for the bottoming of oil prices and the narrowing of the spread between the two. The trouble i have with the directional trade is the US$ which CS wealth also consider may strengthen on the taper issue which would also be a headwind to oil prices. There are some key equity picks for the likely YE rally. Ill leave the detail of these picks to their report but we can pick up any individual stocks on the forum pages, as usual.
Report here:
Next up SC wealth
They take the other side, to an extent. They don’t believe in the taper near term and are less hawkish than the CS team. They are more bullish equities than the CS team but nonetheless forecast a strengthening US$ and a weakening commodities sector.
Report here:
It seems the institutions are bullish equities and fairly bearish commodities no matter whether they forecast more or less ‘non standard’ monetary measures. To my mind this is a comment on the state of the ‘real economy’ and real demand which remains very weak here. A stronger US$ usually indicates less liquidity in risk asset markets as the US$ remains the world funding currency. YE seasonals remain strong so i remain long equities with no shorts in this market with some leverage. But post the YE window dressing and on specific sector over bought levels and or key resistances on individual instruments i’m taking profits. If the market breadth issues improve I’d stick with it but many technical issues remain with this market and the spread to the fundamentals is very significant now. Its a very unbalanced market which as the put call ratio suggests is an all in market with downside risks unrepresented. That makes it a market that is grinding higher but very susceptible to to downside surprises. Its all probabilities this. As its been a great year I’d rather be prudent here than go all in for those last few percentage gains.
All the best and the other Swiss team later today as usual.
Rich