Another quiet day on minimal news.
Next week we should see some more action:
US durable goods orders (Wed) Q3 GDP (Fri)
Europe manufacturing new orders (Mon) inflation (Fri)
UK Nationwide house prices (Mon) Q3 GDP (Tue) consumer confidence (Thu)
Japan Industrial production (Fri)
Really the main driving theme lately has been QE2 – which has dominated over earnings news (very good once again this quarter). On Nov 3 we should hear more specific word on how QE2 would be implemented. So far it has been all speculation on how and when.
On the other hand, economic data continues to be pretty decent in US which is what we expected – that US will NOT fall into recession. However, the continuing strength in Europe – especially Germany – has surprised me. Therefore, I am formally stepping off my view on long US vs short Europe for now. This also means that I would rather not short Eurostoxx. I think we should consider as shorts Nikkei and TSX vs long DAX and Dow Jones. I think Nikkei will continue to suffer on strong Yen, and Canadian economic data has been on weak side as it gets dragged down by US. I still like Dow Jones because these are high quality cash rich international companies.
I also like Hang Seng on both China ties as well as USD peg (HKD is pegged to USD).
I see nothing but bad news on horizon for UK. I think we should increase short on GBP. Maybe ½ against USD and ½ against Euro.
I still hesitate to make a move in bond futures.
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