Archives: March , 2014
Global Macro Strategy

Top Macro-Strategist Says “Now Negative on Index Levels; Bullish on USD..”

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MarketsMuse Editor Note: Below comments from this a.m.’s edition of “Sight Beyond Sight” were among several that jumped off the page..

Neil Azous, Rareview Macro LLC

“..Conversely, Technology has moved to the “Weakening” from “Leading” quadrant and Healthcare is now exhibiting the same early stage relative weakness as Technology. The takeaway is that there is a clear rotation into defensive strategies and for the first time in a very long while the leadership (Healthcare/Technology) is the source of funds. Thematically, 2014 has been “a market of stocks instead of a stock market….So the question that needs to be asked is whether a sector rotation has the ability to finally break the SP500 index level range….”
“..We are becoming increasingly negative about the US index levels for the first time in a long while…and we believe that the USD will begin to appreciate..”

Produced by macro strategy think tank Rareview Macro LLC and authored by Neil Azous, Sight Beyond Sight is a daily newsletter that has become a “must read” for leading fund managers and sophisticated investors..Free 2-week trial (without need for providing credit card info!) is a brilliant way to become introduced to the firm’s insight and content. The archive section for the publication is available via this link to the SBS website.

Global Macro Strategy

Macro-Strategy Synopsis: China is the Story, Not Crimea

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MarketsMuse Editor Note: For those with a “macro mindset”, i.e. investment strategy with focus on global economic events and related opportunistic and/or risk reduction themes, a.m. note from Rareview Macro’s Neil Azous in the “Sight Beyond Sight” note  struck a chord, if only because Azous seems to be continuously ahead of the curve when it comes to focusing on what only becomes clear to others after the opportunity becomes a fait accompli.

“…We begin today asking two hard questions.

1.  How real is the China stimulus conversation and does the Street need to temper its short-term views on local Equities?

 

2.  Will Crude Oil and Gold begin to challenge the Commodity length?

 

Neil Azous, Rareview Macro LLC
Neil Azous, Rareview Macro LLC

What this means is that no one was prepared to start 2014 with a much weaker profile in China relative to outsized gains in Commodities.

 

So the question now becomes: What if that profile started to reverse now and have the signals of that in the market already been sent?…”…

Another critical insight: Continue reading →

ETF News

March Madness ETF Play

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etf-logo-finalCourtesy of Todd Shriber/ETF Trends.com

MarketsMuse Editor note: From the “what will they think of next dept..”

That great American pastime the NCAA Basketball Tournament, also known as March Madness, commences Thursday.

 

The start of March Madness means some lost productivity for American employers as workers sneak a few minutes here and there to watch games and monitor office pools. Those pools are big, but illicit business.

 

While billions of dollars are wagered each year in NCAA Tournament office pools, the Market Vectors Gaming ETF (NYSEArca: BJK) does not make for an ideal March Madness ETF play because although several states have seen fit to legalize marijuana, the moral crusade against sports gambling continues in every state but Nevada though New Jersey is trying to legalize sports betting as well. [Macau is Gambling ETF’s Lucky Charm]

Another March Madness ETF idea is the PowerShares Dynamic Media Portfolio (NYSEArca: PBS). Arguably, PBS is the most predictable ETF play on potential upside for stocks at the hands of the NCAA Tournament, but it is that predictability that means the $324.8 million PBS requires further examination.

To read the entirety, we’re putting the ball back into the ETFtrends.com court…click here for Todd Shriber’s column.

ETF News

How Smart is Smart Beta?

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MarketsMuse Editor Note: We keep reading and hearing about “smart beta”, including (among many others) the front page story in today’s WSJ.  Intrigued with this ever-popular ‘trend’ among professional fund managers, we noticed that Google documents 16,000 references to this phrase alone. Turning the page, we discovered the below snippet courtesy of ETFguide.com’s Ron Delegge. Its a good watch..and Ron keeps on tickin’

[youtube http://www.youtube.com/watch?v=9GQJb3nss7Y]

Global Macro Strategy, Tech Talk

Why the Market Sold Off..

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Courtesy of Josh Brown, “The Reformed Broker”  market pundit for Stocktwit and CNBC

MarketsMuse Editor Note: We don’t often reference stock jockeys or media pundits, but hats off to Josh for his Mar 13 blog–its timeless!  Click the logo to left to visit his blog site

Why did the stock market sell off today?

·         Wall Street Journal: Tensions in Ukraine and the Crimean peninsula

·         Yahoo Finance: Russians

·         Fox Business: Obamacare

·         CNBC: It didn’t sell off at all, it was actually a reverse rally

·         Forbes: Taxes are too high

·         Huffington Post: Taxes are too low

·         Fox News: Gay marriage

·         Motley Fool: Sign up here to find out!

·         Bloomberg TV: The opposite of whatever CNBC said.

·         Quartz: Chinese shadow-banks

·         FT Alphaville: Chinese derivatives

·         Washington Times: Fallout from explosive Benghazi revelations

·         StockTwits: Here’s a chart

·         USA Today: Let’s take a poll

·         DealBook: lack of M&A

·         Zero Hedge: Better question, why would it have gone up?

·         MSNBC: I’m not sure I’m comfortable with the term “stock market” per se…

·         Business Insider: Ten reasons, actually (view as single page?)

·         Financial Times: Please take a moment to register and accept cookies

·         MarketWatch: 1929

·         The Reformed Broker: More sellers than buyers

·         Buzzfeed Business: It’s like that time on Party of Five when Charlie was giving Julia the silent treatment…

·         Reuters: HFT

·         Barron’s: Valuations got ahead of themselves

·         Investors Business Daily: drop in momentum. And record deficits.

·         History Channel: Ancient Aliens

Global Macro Strategy, People Profiles

Macro-Strategy Pro’s Having Difficulty Digesting Day’s Data

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Rareview Macro Logo MarketsMuse is pleased to profile market insight provided by Rareview Macro’s “Sight Beyond Sight” aka “SBS”, a daily debriefing of global market events, related impact on various asset classes and highlights of trading strategies proffered to some of the trading world’s “smartest folks in the room.”

This morning’s e-blast to Sight Beyond Sight subscribers included “SBS” model portfolio updates (yes, Rareview is one of the rare few who embrace transparency by offering a “rolling results record” of recommended strategies), a look at US Dollar weakness,  last night’s JGB mini-flash crash, a kiss blown to the Kiwi trade, what “nobody seems to get re China’s pause on a pending Preferred Share announcement, and why Crude Oil “longs” are sweating.

We’ve been allowed to share this morning’s edition (link below); for those wanting to stay in the know, this platform suggests that our viewers take a tour of the publisher’s site and decide on their own why RareView’s Sight Beyond Sight is a rare commodity in the world of macro-strategy content offerings.

Sight Beyond Sight – Morning Edition – 3 13 14

ETF News, Tech Talk

Sec Lending and ETFs: Reading Between The [Disclosure] Lines; A Good Primer

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morningstarExtract courtesy of Morningstar/ Abby Woodham reporter

“..A well-run index fund is typically characterized by its ability to effectively track its index, lagging only by the amount of its expense ratio. In theory, it should not be possible for an index fund to come any closer to its benchmark’s return–but some do, including funds that utilize full replication of their index’s holdings. A handful of funds even beat their benchmark while perfectly replicating its holdings. How can this be? In many cases, this is an example of securities lending at work…”

“..Mining for Data
There are a handful of ways to get more information on the securities-lending practices of the ETFs in your portfolio. If you notice that your ETF (which is employing full replication) lags its benchmark by less than its expense ratio, it may be an indication that the fund is engaged in securities lending. Morningstar also publishes a calculation called the “estimated holding cost” that directly measures the performance of a fund relative to its benchmark over the past year. There’s a good chance that an ETF with an estimated holding cost that is lower than its expense ratio is also engaged in securities lending.”

For the full article (which necessarily incorporates subliminal promotion of products/services delivered by the ‘masthead’, please click here

ETF News, People Profiles

What’s Next? A Kosher ETF..

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bloombergExtract courtesy of 11 March story from BloombergBusinessweek reporter Gabrielle Coppola

Steven Schoenfeld staked his career on a single belief in 2010: there was latent demand in the U.S. Jewish community to invest in Israeli stocks.

That year, the Wall Street veteran founded a company that would create an index that includes Israeli shares traded both in Tel Aviv and abroad. Schoenfeld’s BlueStar Israel Global Index includes Caesarstone Sdot Yam Ltd. and Taro Pharmaceutical Industries Ltd., which don’t trade in Israel and are up more than 90 percent over the past year. Van Eck Associates started in June 2013 an exchange-traded fund tracking his index, under the ticker ISRA.

Schoenfeld, who has created indexes for the World Bank, Barclays Plc (BARC) and Northern Trust Corp., is seeking to raise $1 billion from the $60 billion he estimates is held by Jewish federations, endowments and charities in the U.S. and Canada. He says the investment will benefit Israel’s stock exchange and economy. So far, Schoenfeld has raised $36.7 million, including funds from the Greater Miami Jewish Federation and the Chicago federation. The gauge is up 26 percent in the past year, beating the Standard & Poor’s 500 Index’s 22 percent gain.

For the full story from BloombergLP, please click here

Tech Talk

Buy-Side Trading Desks: Eye On Electronic Capabilities

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tradersmag   Extract courtesy of TradersMagazine / Phil Albinus

Although the buyside has been known for its cautious and conservative approach to change and adapting to new market conditions, those days may be over. According to a new study by market research firm Tabb Group, the rate of change within the US buy-side equity trading desk is accelerating even though commissions have declined 19 percent since 2010.

In the first of three new reports entitled US Institutional Equity Trading 2014: Bellwethers of the Buy Side, partner and director of research Adam Sussman, senior analyst Sayena Mostowfi, and research analyst Valerie Bogard interviewed 108 asset managers in the U.S. Along with identifying firms that are on the IT leading edge, they found “a middle majority of firms who recognize the threats of being behind and are actively engaged in bringing similar capabilities to their firm.”

Last year saw the biggest increase in electronic trading, up to 41 percent of shares traded with bellwether firms auto-routing program trades and parent orders with share sizes of less than 5 percent of average daily volume (ADV). But as more of these firms sought to automate pieces of their order flow, the asset managers told TABB a quantitative overlay was critical. “This issue came up repeatedly in different forms, from portfolio manager alpha modeling, to venue analysis and internal routing optimization,” said Sussman.  

Among some of Tabb Group’s findings are: KEEP READING VIA TRADERS MAGAZINE

ETF News

Soup Du Jour: Merger-Arb ETFs

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zachsMergers and acquisition activities across a number of sectors are picking up rapidly this year. Continued low interest rates are making borrowing cheaper and allowing companies to shore up their balance sheets. This suggests optimism over the global economy.

As per Dealogic , the value of mergers and acquisitions across the globe has risen 13% so far this year to $552.4 billion with 4,880 deals. This represents the highest level since the pre-financial crisis level of 2007. U.S. deals make up for nearly three-fifths of the value while China accounts for less than 10% of the deal value.

Hot Deals

The telecom space so far has been at the forefront with the $45.2 billion takeover of Time Warner Cable ( TWC ) by Comcast ( CMCSA ). The transaction, pending shareholder and regulatory approval, is expected to complete by the end of this year (read: 3 ETFs to Watch on Comcast-Time Warner Cable Deal ).

The second biggest deal comes from generic drug maker Actavis ( ACT ), which agreed to acquire Forest Laboratories ( FRX ) for $25 billion. The deal is expected to close in mid 2014 subject to regulatory approval.

ETF News, Global Macro Strategy

Fixed-Income ETFs Poised For Bigger Use By Big Insitutional Fund Managers

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etf-strategy-header-940-92

Excerpt courtesy of Mar 1 ETF STRATEGY columnist Simon Smith, CFA

Fixed income ETFs are poised to take on a bigger role in institutional portfolios, according to a new report from Greenwich Associates.

Institutional investors are making sweeping changes to their fixed income portfolios in response to the post-crisis regulatory changes in the bond markets, current interest-rate environment and expectations of future rate increases.

The results of this new research, conducted at the end of 2013 by Greenwich Associates and sponsored by iShares, the ETF business of BlackRock, suggest that these responses could provide a significant boost to ETF use by institutions.

“As institutions move to shorten duration and find new sources of yield, current users of fixed income ETFs expect to increase their use of the product and some non-users will elect to employ ETFs in implementing their portfolio strategies,” said Greenwich Associates consultant Andrew McCollum.

The research demonstrates clearly that institutional investors experimenting with fixed income ETFs quickly begin increasing their use of and allocations to these products. About 60% of the institutional ETF users participating in the study allocate more than 10% of fixed income assets to ETFs, including almost one-third allocating between 10% and 30%.

For the entire story from ETF STRATEGY, please click here.