Economics, financial markets and the occasional fiction
02
Alpha Sources Blog
Data for charts are sourced from FRED, OECD, Eurostat, IMF, BIS, Market Watch, Yahoo/Google Finance, Investing.com, COT, Bloomberg or Quandl unless otherwise stated.
I want to wish all my readers a Merry Christmas and a Happy New year. I am averaging one market related post a week since I moved to this new site, and I hope to keep that up in 2017.
The original entry contained a little Christmas story, but I reckon that I should keep my fiction and market commentary a little more separate than just putting it all up here above the fold. To make amends, I have created a new blog here where I will put up my non-market related content in the future. If you only come here for the occasional musing on the market, rest assured that this is what you'll get, and only that. I might still nudge you across from here once in a while, but I won't inundate you RSS readers with long tales of fiction. the original story which was posted here has been moved to the new blog. Josh is in a spot of bother. He is hungover, he has a lot of work to do, and someone just handed him an encrypted message.
I wonder how many fixed income strategists had the famous exchange between Goldfinger and Mr. Bond in mind when they penned their missives this week. The Fed came and went, erring on the side of hawkishness, and bond holders once again found themselves at the front of the queue for the proctologist. U.S. yields surged across all maturities, adding fuel to the story of a regime change and genuine reflation story under the leadership of Mr. Trump. Trying to pin the U.S. bond market down in a few charts is not easy. Last week, I noted that my valuation scores suggests this is a good time to add exposure, but also that stock-to-bond returns, while high, weren't yet extreme. That situation has not changed even with last week's rise in yields. It is the same if we look at flows.
Equity bears were further humiliated last week. Even investors positioned cautiously had to suffer the pain of watching the market destroy their relative performance. If you're coming into the Christmas period with a good bag of returns, it won't matter much. But if you have underperformed, it will sting to watch the market run away with the prize into year-end [1]. Luckily, the portfolio falls in the former category this year; no matter what happens 2016 will be a good year. The shorts in FTSE and Home Depot have been scathing in recent weeks, and the so far ill-advised punt on Syntel also remains a severe drag. But the overweight in financials via Wells Fargo and Sabadell, and the push higher in Japanese equities, has spared yours truly the worst embarrassment in the amateurs' peanut gallery.
These exercises inevitably turn into a "look how smart I am" post, but I love when others do them. My friend Jonathan Tepper usually does one every year, and I always find something interesting on it. Tyler Cowen's 2016 non-fiction list is here, and is full of gems. The FT editors’ recently gave their suggestions too, Shane Parris has chimed in, and Toby has listed the favourites of FinTwitter where my suggestions, inexplicably, have been left out. No matter, however, because I have listed them all below.
Some of the titles invariably are from 2015, but I thought I that I would include them anyway. In addition, I should note that over half of them have been consumed via Audible. If you don't already have a subscription, go get one. I have separated fiction and non-fiction. I dare you not to find one or two that would be worth your time.