Tuesday, 18 August 2015

The capitulation call on the average fund manager (?)

Yes it is that day of the month when the BoA-ML Fund Manager survey comes out.  Do you recall last month's offering?  Do you remember this chart?

'No surprises where the biggest 'tail risks' are given the macro newsflow of the last few weeks...step forward Greece (aka 'Eurozone breakdown') and China. Strikingly the 'Fed falls behind-the-curve' option has completely...fallen off a cliff.  That says something about the evolution of the investment backdrop over the last month': 


So how about this month?  No surprises that with events over the last four weeks China and the emerging markets have risen dramatically up the list...and Eurozone breakdown fears have sharply abated.  

I note however that the survey writers note something even deeper than this: yes 'capitulation' on emerging markets, commodities and related...


You can see what they mean.  First energy...


...then the emerging markets...


...and gold valuation:


Over the last couple of weeks I have noted on Financial Orbit Speaks enhanced podcasts the role of the US dollar on many of the above variables.  It is noteworthy just how loved investors perceive the US currency.  I would agree on this - although I am slightly concerned that this is a consensus view.  This tells me that the US dollar may just pause/fade slightly rather than dramatically fall.  Still sufficient in my view for at least a tradeable bounce / good position augmentation opportunities in the aforementioned emerging markets/gold/energy spaces. 


Linked with the US dollar level is of course interest rates.  Interesting to see Q315 (aka September) firming as a time for the inaugural US interest rate rise. 

Remember this chart from a couple of weeks ago?


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