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Latest from Lyxor

Latest from Lyxor

14 January 2019: A week of peculiarly British Mayhem

Market sentiment improved last week as trade tensions seemed to ease and the Fed made more dovish noises. This prompted a recovery in bond yields and a softening in the US dollar. In Europe, activity data suggested GDP growth slowed in Q4. Germany may already be in ‘technical recession’ (two quarters of negative growth) while a sharp slowdown is now apparent in France, Spain and Italy. This is forcing the ECB to think again on the pace of its policy normalisation. 

The week ahead will once again be dominated by political developments in Europe with the UK parliament set to vote on Brexit. The week will also mark the kick-off of the latest US earnings reporting season. Even if results are strong, greater visibility on the geopolitical concerns is a pre-requisite for a sustainable rebound in risk assets.

 

Source: Lyxor International Asset Management. Figures reported in local currency terms. Past performance is no guide to future returns. Data as at

Our key calls

Week commencing 14/01/2019

Brexit: We still prefer UK gilts if the deal is not approved

The Brexit vote is due to take place next Tuesday. There’s little likelihood of approval. Plan B probably involves delaying the 29 March deadline. Parliamentary willingness to avoid a “no deal” seems greater after last week’s defeats for the government. Away from Brexit, there’s little data of note due, but inflation data is expected to have decelerated across Europe in November.


Lyxor Core FTSE Actuaries UK Gilts (DR) UCITS ETF

Still favouring US banks ahead of the earnings season 

The earnings season kicks off this week with 35 companies listed in the S&P 500 reporting earnings (of which 22 are financials). 64 companies will then report in the week 21-25 Jan. 122 will follow in the week starting on Jan 28. Overall, 221 companies will report over the next three weeks.

China should outperform in Asia

China’s December trade data will be the main focus (Monday). The key question is whether the recent front-loading of exports ahead of a potential US tariff hike in March has run its course. Recent progress on trade talks, and the more optimistic tone struck by negotiators, suggest there may be room for a partial agreement such as an extension of the 1 March deadline.

Things we are watching out for

The Main Event

coming soon video

 Jan ‘19

Next video release

Other major events

4 more things to put in the diary

15
Jan

Parliament vote on Brexit deal

23
Jan

BoJ meeting

24
Jan

ECB meeting

30
Jan

FOMC meeting

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These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists as at  29 November 2018. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/ or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to   ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees. Click here for more.