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Asset Allocation Outlook Midyear Update – Easing Into Slowing Growth (PIMCO, 9 min read) Equities: overweight US, underweight Europe, neutral the rest. Rates: long US and EM rates and linkers, neutral rest. Credit: long securitised (MBS) and EM, short IG and HY. FX: Short USD and EUR, long JPY and EM.
“Big Short” Investor Michael Burry Explains How Index Funds Will Trigger The Next Crash (Zero Hedge, 5 min read) Argues passive funds are removing price discovery from equity markets and over-promising liquidity. Likes small caps (under-represented in passive funds) and Japan stocks (owned by BoJ)
From FOMO to FONIR (Dr Ed’s Blog, 3 min read) Ed Yardeni reports back from recent client meetings and finds investors are favouring stocks on FONIR (fear of negative interest rates)
A Perspective on Secular Bull and Bear Markets (Jill Mislinkski, 4 min read) Looks at secular bull and bear markets in US equities. Finds that secular bear years make up 40% of years, that current rally looks extended and the ratio of peak earners to elderly population is turning down. Bearish stocks.
Fed Easing Sees Defensive Stocks Come Out on Top (Variant Perception, 1 min read) Over the last five Fed easing cycles consumer staples, healthcare and energy provide the highest average total return above the index one year after the Fed’s first cut (see chart). Financials and utilities the worst.