Wednesday , August 17 2022

It's August for investors. "Put on your pants," says Merrill Lynch



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A roundup of what The Globe and Mail market strategist Scott Barlow is reading online today

On Monday, I scored 17 best buys from Merrill Lynch's quantitative strategy team. The ideas had a defensive bent, opting for companies with minimal exposure to the global economy and potential credit problems.

Later in the day, Merrill Lynch released her list of short ideas – stocks are likely to fall – in a report called "Put on your pants … It's the end of summer." The methodology identified companies that were widely owned by active portfolio managers, with weaker earnings forecasts, and where Merrill's technical analyst saw a high probability of declines. Featured names on the list include Nike Inc., Molson Coors Brewing Co. and News Corp.

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"SBarlow_ROB ML: Shares short" – (table) Twitter

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I read all about Nomura strategist Masanari Takada, about whom I can draw.

Mr. Takada is doing a great job tracking and forecasting the trading of the world's most aggressive, algorithmic, short-term funds. The strategist expects liquidity ahead,

"It is important to highlight the role that ultra-short-term investors have played in the latest slide in the world stock market. [They] long positions in US and European equities have been wasted, and we estimate that they are now inclined to either neutral market or rather short. .. market developments below the surface suggest that investors have returned to prices in a global economic downturn and / or recession. We note specifically that defense sectors outperform cyclical sectors (going by the MSCI ACWI Indexes), and that the yield curve has quickly flattened to the point that the spread between 10yr and 2yr USTs has been all but erased. feeling bent pessimistic , we still see a lingering risk that overly large position adjustments by speculative players could drag investors out to make panicky deals longer (sell shares and buy bonds). "

"@Barlow_ROB Nomura:" ongoing risk that too large of a position adjustment by speculative players could drag investors into longer term to panic trades "- (research excerpt) Twitter

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I was a bit obsessed with the real (but not a basic case) that Government of Canada bond yields could go into negative territory in the next few years.

The Financial Times discussed the issue in a Monday column,

“Making an investment that guarantees you lose money sounds like something that would cost you your job. But in market bonds, it has become real life … "When the world economy comes into hibernation, US Treasuries – the safest haven besides gold – are probably no exception," said Joachim Fels, global economic adviser at Pimco, the giant. an investment giant based in Newport Beach, California. "And if the trade war continues to grow, we may get there faster than you think." … Although bond yields have been historically low for years, fund managers have more than made up for a lack of performance with high prices in their portfolios. as bonds broke. Once the price gains start to rise, they will remain contemplating an exceptionally dark exchange rate.

"Negative rates: investors go through looking at glass to below-zero yields" – Financial Times (payroll)

Newsletter: "What to do with negative yields" – Barlow, a Global Investor

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Merrill Lynch's popular monthly survey of world portfolio managers sees many active investors preparing for a global recession,

"August BofAML FMS has been at the highest rates since 2008, as trading warnings send recessionary risk to an 8-year high; investors slow down exposure to cycles to buy U.S. Treasuries and US growth stocks; with global policy incentives at 2.5-year low, onus is on Fed / ECB / PBoC to restore animal spirits About growth: 1/3 of FMS investors expect global recession in next 12 months, the highest since 2011 … FMS investors say US equities are the most preferred region over the next 12 months, despite 78% saying the region is overvalued; a note combination of two most extreme on record (# 1 Aug & # 39; 18). "

"@SBarlow_ROB ML PM survey:" business military concerns send recession risk up to 8 years high "- (Research Survey) Twitter

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Tweet of the Day:

Diversity: "What's the greatest movie quote of all time?" – Atlantic

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