Garbage rules - forget about the (non) stress tests

* The (non) stress test; No stress - no sweat, apart for institutional investors. Buying panic.

With most of the so called stress test well known in advance this too should pass without any sweat. Besides, the market does not seem to have been positioned for a moderate outcome.

This combined with a continuation of better than expected macro numbers and institutional investors lagging retail when it comes to asset buying, it would seem we are set for further asset buying short term. Especially as further asset moves higher combined with a further fall in volatilities and narrowing corporate bond spreads seems to be the biggest pain trade for benchmarking institutional investors.


* Increasing riskappetite remains for now - weaker Usd
China has started to reduce its demand for Usd denominated assets and suggested a change in its currency reserve policy stance. Official Chinese GDP rates are currently at 8%. Combined it would seem China is in the process of further promoting its domestic demand. This should help any countries with specifically strong trade relationships with China, such as Australia and the Aud. The Usd will suffer, especially against Latam and Asia as US corporates "exports" Usd. Europe should not be the main beneficiary since the Eurozone economy is still very much debt burdened.


* IMF revised their CEE debt numbers - providing further boost to risk appetite
With the IMF revising debt numbers from previously released CEE debt reports downwards, this region have received a further boost. How long will it last for? In this environment it could continue from here as further institutional equity and bond investments are encouraged by the news. However, in the near term it seems HUF might be close to a temporary base vs the Euro in the low 270;s.


*New positions and position changes
- Sold my SAS Airline stock after 20% profit in two days. Looking to reenter on dips below 4.00, alt chase it on a break of 5.00.
- Long Eur/Usd and Gbp/Usd via options
- Sold LOIL, the leveraged Crude oil ETF, after 25% profit in a week. Looking to reenter on dips sub 4.00 alt chase on a break above 4.60.

As usual, good luck








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