Here the latest equity picks from the BarCap equity team. There is lack of technical analysis charts to support their recommendations here. But to pick one stock out Lloyds I agree the stock should do well given the UK mini boom underway. They have a large consumer loan book and the UK consumer is looking good and spending again. Technically given the wider market weakness I’d prefer to see an entry around the 75/76 level than here now. (Lloyds should have a negative beta to the wider weakness so I would keep this in mind).
Here the Barcap report:
Here the latest Barcap Wealth “MM” report:
Regarding the UK’s 7% unemployment target. I agree with the Barcap team and so I very much doubt the UK policy team will not want to take their thumbs, hands, etc off the monetary spigots. But the UK has momentum. She is the world alpha for now which is not being reflected in her equity markets yet, by the way. When money supply and money velocity combine dramatic up shifts can occur over night. Policy makers will be forced to act, sooner than they expect, would be my comment. I believe the risks are to the upside for the UK now not to the downside. Timing is everything and the timing given the weak global picture may be dangerous. I.E. in the worst case scenario, policy makers will be forced to act when the pound is strong. Tightening policy against a back drop of an already strong pound would be the worst case scenario as the pound would shoot up further. It is easy to see how this is likely to occur later in 2014 to provide that final cyclical wave vs the euro we have been targeting, btw.
Here the FX Barcap technical analysis of the major FX pairs.
Like UBS they are fairly positive EurUsd. Although unlike UBS positive USD vs EM currencies.
The deflation issue is becoming an ever larger threat in the euro zone. The ECB will be forced to take action one way or another as private sector loan growth remains very subdued, EM market demand for their products and services falls, dramatically in some cases and unemployment keeps rising in many euro states inc France. There is no self sustaining monetary growth in the euro zone, yet. This plays perfectly into the currency pairs as policy is diverging significantly between the US UK vs Eurozone and Japan. These divergences are exactly what speculators like to see.
Here Commerz on the major FX pairs:
And here the Commerz team with their weekly “MM” report picking up the major themes.
And here JP with their usual FX strat technical analysis report:
And here again a day later with their updated technical view:
And here the JP fixed income technical team:
Markets remain with a bearish, correction theme. The bounces although fast are weak and prior levels are not beaten. Its typical correction territory this. We also have a strengthening US$ and ever increasing volatility. This is all consistent with the long awaited correction. In my view the correction has barely started yet. I fully expect volatility to increase over the coming weeks its all technical this move. I am well hedged and holding cash in preparation for entries into deeper Q1 but remain open to this becoming a more severe correction depending on events. Its an ‘outside’ probability at present for me but geo politics and dumb policy moves can always make a good correction into a crash. We see. The bullion remains subdued, for now. The strengthening $ and USTs are providing the safe haven for now. Yield compression on FI is impressive. In my view there is an absence of safe haven assets now so gold should see some in flows but the seasonals with Chinese new year holidays is not supportive in the short term. The delivery issues remain unchanged and bubble away nicely. Patience is needed, as this cyclical bullion bear market has been shallow compared to the 74 to 76 cyclical bear. It may need a little longer to breakout of the 1270 level.
And here finally WF on the EM issues:
All the best
Rich