Saturday, 7 February 2015

Trades I have undertaken this week

In the glow of the US jobs number on Friday (don't hold your breath for a quick interest rate rise in my view)...let's get back to some realities: the S&P 500 index is struggling to decisively break the 2,000 index point level.

Certainly the US dollar's rise does not help - and I am still of the opinion that the continued depression in earnings trends is more than just energy sector revisions (which are admittedly pretty poor).  3.1% overall S&P 500 earnings growth expected now for 2015?!

Negative preannouncements remain a little worse too than the last two quarters.

However I do admit that Q4 2014 earnings have been quite good including upward revisions for a number of sectors since 1 January.  Too much pessimism into the earnings season?  Could this happen again for FY 2015?
I guess it is possible but unless you see weakness in the US dollar I just do not think it is going to happen.  In short I doubt if both US local currency stock market strength AND continued US dollar strength is a combination that works in 2015.

And that is not a good tone for wider markets/risk appetite.

So what about trades this week?

There was a good amount of profit-taking/short covering over the last five working days.  I sold my trading position in BP following results (and a very pleasing share price bump over the last 7 weeks or so).  Similarly I trimmed my position in the Belgian recycling/refining company Umicore after good numbers on Friday but a share price that is now more up with events.

I covered my short position in the Canadian bank RBC early in the week as I could not really see it falling further.  This was a slow burner but ultimately worked out very nicely (would have been even better if I had been short C$s too).

Finally I got around to selling my residual McDonald's position after reviewing their dull numbers/progress recently (small profit made, mostly in the US$ move back into Sterling to be honest).

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