Here are a couple of trading ideas from Societe Generale analysts who believe that the USA could be on the verge of a sustained recovery. If the positive economic environment persists the Fed could be forced to act. This could bring lots of moving parts together as Fed tightening and a better economic environment impact asset prices. SocGen says the way to play it is to short hold, short silver, long USD, curve steepeners and a long short global play on consumer cyclicals and non-cyclicals:
The Fed considers exit strategies
We expect the Fed to begin tapering asset purchases in Q3 and to fully stop asset purchases by the turn of the year. The rise in bond yields should be positive for the US dollar, while precious metals are the most exposed to any rise in real interest rates. See our recent reports on US monetary policy, gold and associated FX strategies. Timeline of the call: 12 months.
- Short Gold; short Silver; long USD
US economic recovery
The US economy is recovering and we recommend going long global consumer cyclicals versus non-cyclicals to play this theme in the equity space (timeline of the call: 6-12 months). In fixed income, we recommend putting on a 3s10s Treasury steepener (timeline of the call: 4m). See report.
- Long Global consumer cyclicals/ short Global non-cyclical consumer; 3s10s Treasury steepener
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.
Comments are closed.