JP Morgan has been one of the more prescient banks on Wall Street in the last few years. Not only did management steer them clear of many of the troubles the other banks were in, but their analysts have been spot-on with regards to the trading environment. They were believers of the reflation trade before the term was even coined. Now, they see many of the trends from 2009 continuing into 2010 and here’s how their 10 favorite ways to play it:
Our top 10 trades are:
(2) short USD versus EM FX;
(3) short USD versus EUR and JPY in 1H;
(4) short US agencies and MBS outright;
(5) long US HY outright;
(6) overweight US HG and EM external debt versus USTs;
(7) long EM corporate credit;
(8) overweight cyclicals within equities;
(9) long lower-tier II bank bonds outright and versus government debt;
(10) long AAA CMBS/RMBS and A-rated CLOs.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.