Assuming
/CfplxcHy/
By my fundamental models: EEM/FXI/KWEB are very cheap while IWM/KRE/XBI are extremely expensive.
XBI benefits from an idiosyncratic M&A premia due to ongoing consolidation in the space so nothing we can do about that but it's already rallied a Ton (XBI doesn't trade on fundamentals)
KRE is extremely expensive relative to where the curve & credit spreads are, among others, yes there was a rerating in dividend payouts NTM which are now close to 40% but it is not clear that oil can rally further ( to allow for tighter HYG spreads) : without going into oil too far, OPEC+ shale dynamics simply will not permit that under current demand growth forecasts + IMO 20 disruption.
Why not go Long FXI/Short IWM? because the timing isn't right for that: IWM and FXI have had fantastic advances that put them near upper BBands. so i'd rather express it in a two step fashion: first by shorting IWM or components such as KRE and then by going long HSI/KWEB/FXI on dips.
- Trade resolved / off the radar for the next following months
- Reflation led by China stimulus efforts
- Contained yuan strength as per desire of PBoC as can be seen in yesterday's fixing - This suggests the yuan cap wasn't part of the agreed deal or more to the point that the Chinese disagree with this.
- FED to stay put with very high hurdle to raise rates. this is fact
/CfplxcHy/
By my fundamental models: EEM/FXI/KWEB are very cheap while IWM/KRE/XBI are extremely expensive.
XBI benefits from an idiosyncratic M&A premia due to ongoing consolidation in the space so nothing we can do about that but it's already rallied a Ton (XBI doesn't trade on fundamentals)
KRE is extremely expensive relative to where the curve & credit spreads are, among others, yes there was a rerating in dividend payouts NTM which are now close to 40% but it is not clear that oil can rally further ( to allow for tighter HYG spreads) : without going into oil too far, OPEC+ shale dynamics simply will not permit that under current demand growth forecasts + IMO 20 disruption.
Why not go Long FXI/Short IWM? because the timing isn't right for that: IWM and FXI have had fantastic advances that put them near upper BBands. so i'd rather express it in a two step fashion: first by shorting IWM or components such as KRE and then by going long HSI/KWEB/FXI on dips.