Stopped out of utilities, but the rest of the portfolio performs nicely

We have closed a profitable long with a double digit return

It’s important to ride ones’ winners, but we think it is time to cash in on these three very profitable trades. Meanwhile, we add exposure in fixed income.

We have closed 3 positions as the risk/reward from here has weakened.

We are entering a new trade to benefit from an expected reversal/stabilization of Manufacturing in the US and increased anticipation of a Chinese Stimulus. We enter the BCD US Equity (Broad Commodity Long ETF) ticker: BCD at spot 33.025 with a target of 35.95 and a stop loss of 31.65 .. We hope to use a slight reversal of trends today to get some exposure to the commodity trade as a good counterweight to our portfolio allocations. The USD has been easing against peers over the past weeks and even though we wouldn’t be surprised if the Greenback wins back some ground we find it compelling that commodities still have some short-term relief to catch up: Chart 1: Commodities vs DXY Chinese Credit impulse may be a bit distorted at this point due to extensions of debt but given that the PBoC don’t have many tools left in their toolkit at this point. Intervening to keep up the Yuan up whilst pushing for more credit creation is a tough ask- especially with households balance sheets remaining contracted and businesses facing less foreign demand.- We wager that Beijing intervenes with fiscal spending to fight the deflationary trends in the Chinese Economy and the Global Manufacturing PMI cycle could see some tailwinds from Chinese credit trends. Chart 2:  ISM vs China Credit Impulse We too think we may be nearing a local bottom in US manufacturing- at least when we look beyond cars and overly rate-sensitive expensive stuff; the latest ISM report […]

We bet on a weaker EUR/USD. IF you have been following our research you are not going to be surprised that we are engaging in this trade now. So why now you may ask?