Con-Cor Model: Long EU equities esp. Poland, India/Vietnam vs short Mideast, Mexico/Brazil, Thailand


Conviction-Correlation ('Con-Cor') Model: Long EU equities (especially Poland), India, Vietnam vs short Mideast, Mexico, Brazil, Thailand, Shcomp, oil

Our Conviction-Correlation ('Con-Cor') Model forecasts weekly returns on almost 70 assets based on our qualitative macro convictions as well as historical cross-asset correlations.

Some themes:

  • Long European equities - especially Poland: We predict a moderately bullish week for the USD (and moderately bearish one for EUR), which would be supportive for European equities, especially those with political tailwinds: Spain Ibex (+0.9%), Italy MIB (+0.9%, if Five-Star Movement indeed hast lost momentum in Sicily weekend elections), Euro Stoxx 50 (+0.3%) and Poland WIG20 (+0.7% on positive growth momentum, which would also benefit the Zloty; PLN-USD +0.5%).

  • Short Middle East equities: Geopolitical uncertainty may weigh on Saudi Tadawul (-0.7%) and Qatar DSM (-0.8%), Egypt (-0.4%).

  • Short oil, RUB, NOK: We are bearish Brent oil (-0.8%) on mean-reversion from last week as well as possible doubts over an output extension, particularly from Russia - which will use its currency as a shock absorber (RUB -0.7%). Potential weakness in the Norwegian Kroner may fall on weaker CPI (NOK-USD -0.5%).

  • Asia equity RV: In Asian equities, we prefer India Sensex and Vietnam VNI relative to Thailand SET (-0.5%) and China Shanghai Comp (-0.6%).

  • Risk-off hedge: Risk-hedging activity could benefit long VIX as well as Gold (+0.3%) and Silver (+0.4%).

  • LatAm equities: Expectations of weak data and a trough in CPI make us cautious Mexico Bolsa (-0.7%) and Brazil Bovespa (-0.5%), respectively.


Featured Posts
Recent Posts
Search By Tags
No tags yet.
Follow Us
  • Twitter Metallic

CONTACT US

Email: strategist@emgist.com

Disclaimer: All communication on EMgist.com is provided for information purposes only, it is general in nature and does not take into account the objectives, financial situation or needs of any person. You should consider whether it is appropriate for you and seek independent advice before acting on it. EMgist.com is not acting in an advisory or fiduciary capacity and all communication is not an offer or recommendation to buy or sell any product or enter into any transaction. EMgist.com does not guarantee the completeness or accuracy of any information presented on this site. You should do your own independent research before making any decisions.