Recap 2014-12-16: BAML FMS suggests Risk-On. Long USD and NKY positions at risk


Well, obviously price action today is pretty bad. But I still think we are close to a low. An additional reason for that came from BAML’s Fund Manager Survey, which was published today. The main take away is that cash levels are now higher than October levels:

Almost as few respondents think oil is overvalued as in mid 2009:

But Energy positioning is at the second lowest reading in the survey’s history:

Almost 2/3rds of respondents think long USD is the most crowded trade…

… driven by expectations of ECB QE in 1Q…

… and Fed hikes in 2Q.

Positioning in Japanese equities remain near extreme levels:

Finally, this NYT article was interesting:

In a recent New York Times/CBS News/Kaiser Family Foundation poll of Americans between the ages of 25 and 54 who were not working, 37 percent of those who said they wanted a job said technology was a reason they did not have one. Even more — 46 percent — cited “lack of education or skills necessary for the jobs available.”


  • US Markit Mfg PMI declined to 53.7 vs 55.2 exp and 54.8 prev
  • EU Mfg PMI improved to 50.8 vs 50.5 exp and 50.1 prev. France was weaker and Germany stronger.
  • EU Services PMI improved to 51.9 vs 51.5 exp and 51.1 prev. France was stronger and Germany weaker.
  • Japan Markit Mfg PMI was stable at 52.1 vs 52.0 prev
  • China HSBC Mfg PMI declined to 49.5 vs 49.8 exp and 50.0 prev
  • RBA Minutes:
  1. Domestically, the data that had become available over the month suggested that the forces underpinning the outlook for domestic activity were much as they had been for some time.
  2. Despite the depreciation of the exchange rate, the Australian dollar remained above most estimates of its fundamental value, particularly given the significant declines in key commodity prices over recent months. Members agreed that further exchange rate depreciation was likely to be needed to achieve balanced growth in the economy. They noted that market expectations implied some chance of an easing of policy during 2015 and discussed the factors that might be producing such an expectation.
  3. Members considered that the most prudent course was likely to be a period of stability in interest rates.

US Housing Starts declined 1.6% MoM in Nov vs

UK CPI declined to 1.0% vs 1.2% exp and 1.3% prev. The Core measure declined to 1.2% vs 1.5% exp and prev

German ZEW improved to 34.9 vs 20 exp and 11.5 prev

Russia hikes rates 650bp to 17%.


  • Tue: Japan Trade Balance
  • Wed: BoE Minutes, UK Employment, US CPI, Oil Inventories, FOMC, SEP, NZ GDP
  • Thu: German IFO, US Jobless Claims, Markit Services PMI, Philly Fed, NZ Business Confidence, UK GfK Consumer Confidence
  • Fri: German GfK Consumer Confidence, Canada CPI, Retail Sales
  • Mon: US Existing Home Sales, EU Consumer Confidence, NZ Trade Balance
  • Tue: CanadaGDP, US Durable Goods Orders, New Home Sales, Core PCE