Market Inquisitor

Tamen Dubito

Golden Opportunities

The ongoing portfolio readjustment continues following a surprise Trump victory, one of the casualties of the latest market turbulence has been the yellow metal, falling over $100 US from a high of $1338.3 to the $1220 range. Periods of volatility like these provide an excellent opportunity to add position in anything that has exposure to precious metals, as the reasons for owning gold have increased significantly.

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Junk Bonds: Painful Memories – New Opportunities

During the early 2016 market sell off, few expected the sharp rebound that occurred shortly after, with high yield bonds rising close to 15%. With the election of Donald Trump heralding higher yields and lower crude prices, a lack of clear policy blueprints from both DJT and OPEC are leading to a junk bond sell off.

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US Election Trade: IShares Mexico ETF

Arguably the best gauge for the outcome of the US election has been the Mexican Peso, trading in lockstep with Trump’s polling results. For investors that don’t trade forex, the iShares MSCI Mexico Capped ETF (EWW), which tracks the MSCI Mexico IMI 25/50 Index, works just as well.

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Gold Positioning shift

With gold treading water above the key $1250, I created some analytics to take a closer look at positioning.

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Deutsche Downtrend

As part of her re-election campaign Angela Merkel, Germany’s chancellor re-affirmed the promise that her government would not bail out Deutsche Bank (DB) in the case of failure.

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Will Gold hold the line? Strategy for FED

It’s always interesting to see technical indicators at work. Gold is hitting a key resistance level before the FED’s announcement tomorrow. If there’s ever a make-or-break moment, it’s likely this week.

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LIBOR Tightening

As detailed in a Bloomberg article last week, a regulatory overhaul due to take effect October 14th, targeting money-fund industry has lead to a sharp increase in LIBOR as banks raise the cost of funding. The summer trading period was marked by surprisingly low volatility in the markets and strong cross asset correlation; this could be the explanation.

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Crude Positioning Pain

The spectacular failure of the Doha freeze negotiations on Sunday, where the 16 member delegation of major OPEC and Non-OPEC producers has led to an end of a 2 month rally in oil. Iran’s ambition to increase their production by 1 million barrels/day has led to a gridlock between Saudi Arabia and other players vying for market share. How is managed money positioned and what happens next?

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OPEC & Oil: Doha Meeting Outlook

Oil has seen a strong recovery since the February lows of $26.05, as the hope of an OPEC/Russia oil freeze lead to aggressive short covering by speculators. The DXY has also weakened signficiantly after comments by Janet Yellen, falling from the 98.5 level at the end of February to a current, dreary level of 94. Subsequently, as the dollar falls against major currency pairs, commodities, like oil denominated in USD rise inversely. Although investors continue to breath new hope into the oil price, like the OPEC deal will likely be an overall disappointment and lead to another leg lower in prices.

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ZPR.TO ETF Update

After recommending the BMO Laddered Preferred Share ETF (ZPR.TO) in January, there has been an unexpectedly aggressively rally which saw the security rise from a low of $8.49 to the current price of $9.91. This post will serve an update on the security and future outlook on the performance of these shares.

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