April Not For Fools: A Macro View

Below excerpt courtesy of Sight Beyond Sight a.m. notes from macro strategy expert Neil Azous.

Neil Azous, Principal /Rareview Macro
Neil Azous, Principal  Rareview Macro LLC


“…Just because today is the start of a new quarter for investors that does mean anyone should expect a pause or a reversal in the themes that ended the last quarter. If anything, the reset argues that real money has a new green light to continue. The key risk is that stronger US data this week actually accelerates the rebalancing.

Yesterday, we highlighted that after being down 7 of the last 9 days and having a 9-day RSI of ~22 the stock Amazon (Symbol: AMZN) needed to hold its 200-day moving average. None of that happened. AMZN closed lower again, broke the 200-DMAVG and now has an RSI of 21.

Today, the MSCI Emerging Markets (EM) Index Futures (Symbol: MESM4) are +92 bps, the EURO STOXX 50 Index (Symbol: SX5E) is +65 bps and the S&P 500 futures (Symbol: ESM4) are +24 bps. The key point here is that the Emerging Markets will likely start the quarter outperforming the Developed Markets, and Europe, both in US Dollar and local currency terms, will likely outperform the US.

Again, these are only three highlights from the many themes of last year that are now reverting and like yesterday, where Small Cap under-performance paused today, we could easily see another one-off theme pause. For example, China Internet (Tencent +4.5% last night) could be a read through for US technology to bounce. But the main point is that on aggregate the start of the second quarter should carry on from where the first quarter ended….”

Sight Beyond Sight is a subscription-based, daily macro-strategy viewpoint authored by Neil Azous and published by Rareview Macro LLC.  Subscribers include a unique assortment of leading hedge funds and Tier 1 investment managers. For additional information, please visit www.rareviewmacro.com