Market Notes: Speculative Money Still Dominates Precious Metals
Tiho Brkan | Dec 16, 2012 05:51AM ET
The recently published update of the OECD Leading Economic Indicators "point to diverging patterns across major economies." Eurozone growth rate continues to slow, with Japan joining the recession party.
On the other hand, the US continues to grow above par, while China stabilises for now. Germany looks very disappointing while Canadian, Brazilian and Russia growth rates have also turned down. Finally, India is showing no signs of recovery just yet.
OECD Total indicator is signalling anaemic global growth only three years into the recovery phase, despite the unprecedented global stimulus as mega trillion dollar cheques were written. In my opinion, since we are at stall speed, it is now only a matter of time until some-event, some-where in the world triggers a cascading slowdown that enters into a global recession, as we find ourselves in the massive credit bubble lingering in the background . Most likely, a hard landing will not be avoided.
- Equities: Short positions are held in various US equity sectors, which include Dow Transports (IYT), Technology (XLK), Discretionary (XLY) and Industrials (XLI). Large put options have been bought on Apple (AAPL). Call options have been sold on Homebuilders (XHB), JP Morgan (JPM), Amazon (AMZN), IBM (IMB), Commonwealth Bank (CBA), Adidas (ADS) and others.
- Bonds: There isn't a lot of exposure in the bond space, as we believe this sector is experiencing euphoric investor demand. Call options have been sold on Junk Bonds (HYG). Plans to short Long Bond Treasuries (TLT) in due time.
- Currencies: Long positions are held in Japanese Yen (FXY). Short positions are held in Australian Dollar (FXA). The trade is now essentially short Aussie / Yen cross. Put options have been bought on British Pound (FXB) & Canadian Dollar (FXC). Put options have been sold on Japanese Yen (FXY).
- Commodities: Long positions are held in various commodity sectors, which include Silver (SLV, SIVR, PSLV, Comex futures), Agriculture (RJA, JJA) and Sugar (SGG). Plans to increase longs in PMs and Softs in due time.
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