Short Stocks, Short Bonds

This time I agree with the machines

You folks have been kind enough to listening to me blarg here for a while now.

Maybe too long.

So today we’re going to send some views.

For the record, this is not investment advice, but rather my thoughts on what some of our inhouse robot overlords over at Rose think of today’s market conditions.

Otherwise know (in quant world), as signals.

In the United States, the robot is still marginally short both stocks and bonds.

When you looking at signals, remember to reflect, and ask what’s inside the black box.

So we do.

The machine is recommending short stocks, because of the negative flow through from higher spreads, higher real yields, the persistent high levels of inflation, and weak price action in asset prices in general, proxied by the decline in bonds.

Aka “there are bonds in the stocks”

International trade and some medium term strength the equity market are really the biggest stats holding up our indicator.

This bearishness extends to other major developed world stock markets. Japan the only member of the chart below coming out moderately positive.

There’s more divergence across countries with bonds. With the system also looking to accumulate Japanese assets vs other major developed world market.

Tomorrow we will dive more into these numbers, and layer our human intuition and context on top, to convert these signals into actual views.

In the meantime, we can use Rose to test those predictions.

We'll be brief, in the interests of space. So will just include the charts for the US.

But so far so good.

Disclaimers

Charts and graphs included in these materials are intended for educational purposes only and should not function as the sole basis for any investment decision.

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