The Great Beta Chase

Published on
20 September, 2018
Topic
Trading, US Economy, ETF
Duration
14 minutes
Asset class
Equities

The Great Beta Chase

Featuring Michael Purves

Michael Purves, chief global strategist at Weeden & Co., sees a landscape in which fund managers haven’t kept up with the run-up in U.S. equities. In his view, they will continue to chase returns as the rally in the S&P 500 continues through the end of the year. He shares how to take advantage of the situation with Real Vision’s Justine Underhill. Filmed on September 17, 2018.

Published on
20 September, 2018
Topic
Trading, US Economy, ETF
Duration
14 minutes
Asset class
Equities
Rating
14
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Comments

  • DR

    David R.

    20 9 2018 18:14

    2       1

    As I write this, EUR/USD and GBP/USD are both up 0.82% (dollar down .82%) and S&P500 is up 0.77%. So US stocks are going nowhere in real terms (ie, net of USD devaluation), actually US is slightly down. But Dax, Cac, EuroStoxx, are each up 1%. Thus international is solidly outperforming US equity again today, The big DIVERGENCE between US equity and International that US equity out-performance had created MUST close, either by US stocks going down or International Equities rising; perhaps it's the latter. Japan is looking good too. Anyway, it's clear that US stocks have lately been fueled largely by USD devaluation like has been the case during the dollars 5% drop over the past month. Not good, especially if you must pay the taxman for such non-existent gains in real terms. After-tax, real returns are the only thing that matter.

  • JL

    Johnny L.

    20 9 2018 14:53

    0       0

    WS did not see the earnings misses in Q2 by the FANG+ names, KR, FDX and many others. Q1 Tech names also got clocked on unerring earnings surprises. WS is expecting companies to pre-announce but not of those who missed YTD did pre-announce. I suspect q3 earnings will see more of the same.

  • DR

    David R.

    20 9 2018 11:12

    3       2

    Basically agree, but one must be sure to hedge this trade's exposure to dollar weakness. USD has now cracked 93 today and should drop lots more eventually. The dollar has convincingly broken two key support levels and a big H&S, and now only an immediate close above 95.5 can invalidate USD bearishness. Everyone who bought dollars within the last 2-3 months is now sitting with a loss that's getting worse & worse. As 90% of specs are wrongly long USD, they'll be under increasing pressure to cover or bail, which will hammer USD as they do. You must avoid being long USD, directly or indirectly such as holding US securities, as the dollar decline is setting up to gather pace per the charts. On numerous days lately USD has fallen even more than S&P has risen. So in combo with long S&P, be sure to hedge out the USD exposure, like is possible simply with a currency hedged S&P etf. Sort of like the great long-Nikkei short-Yen trade a few years back.