Macro Hive Smart Investor Survey: Results

We are back with our smart investor survey. The respondents are mainly sophisticated investors and analysts from financial institutions covering both buy and sell-side.

The highlights are:

• Two-thirds of investors expect weaker stocks into year-end.
• Investors are neutral on rates and the dollar, but are bullish on gold and bearish bitcoin
• A significant minority (24%) expect a contested US election
• The clearest trade ideas on US elections are to buy gold, US bonds and ESG products.
• Over one-third of investors think US tech is in a bubble.

I am sure you will find it insightful. Let me know if there are any questions you would like us to ask our network for the next survey.

Enjoy!

1. Where Do You See the S&P 500 by the End of This Year?

With the S&P currently trading around 3,300, only one-third of investors think the S&P will trade higher by the end of the year; therefore, the majority of investors are bearish on US stocks.

2. Where Do You See US 10-yr Bond Yield (bps) Trading by the End of 2020?

Currently, the 10y is trading around 65bps, so most expect a range into year-end. However, the skew is to the downside, with 32% expecting a break to the downside compared to 21% to the upside.

3. Where Will Gold be Trading by the End of 2020?

With gold trading around 1,850, most investors (76%) expect higher gold prices into year-end.

4. Outlook on Commodities (i.e. Oil, Copper, Iron) For the End of 2020?

5. At What Price Will Bitcoin Trade at the End of 2020?

With Bitcoin trading around 11,000, there is negative bias on the crypto-currency with 56% of investors expecting lower prices.

6. In What Range Will USD/JPY Trade by the End of 2020

Investors have a very balanced view on USD/JPY with similar skews to the upside and downside.

7. Are You Currently Looking to Invest in Real Estate?

8. Will Congress Agree on a Fiscal Package Before the US Election?

9. Will Inflation Return in the US by 2021?

Compared to our last survey, inflation expectations have dropped back. Previously, 47% of our participants thought inflation would return compared to 21% now. We have added a new ‘Can’t Say with Certainty’ category this time. If we assume, all the participant in this category believed that inflation would return, even in that case, inflation expectation (33%) is still lower.

10. 2020 US Presidential Election Winner?

Previously, 60% thought Biden was on track to beat Trump. This has shrunk, as concern over a contested election is mounting. Expectations of Trump winning has narrowed (albeit slightly) from 35% before to 32%.

11. Who Will Win the Senate?

12. Favourite Trade Ideas Leading Up to the US Election and Why?

We asked respondents for their trade ideas. In aggregate, they leaned slightly bearish stocks, neutral on the dollar (as many bullish as bearish), but bullish rates, gold and ESG.

Selected comments

• Long fixed income. Expect increased uncertainty and worsening data.
• Mostly flat. Re-establishing a small USD short after the correction, due to technical analysis.
• Long gold after the correction, as despite election, the Fed will do everything it can to get inflation higher.
• Buy USD vs GBP. Betting on Biden winning and negative political noise in UK ahead of Brexit.
• Square is a position. Want to buy any election dip in stocks. Fiscal should be coming post-election.
• Buy Tech weakness as surprise Biden loss will bolster the sector – albeit temporarily.
• Short Nasdaq. Momentum slowing down and no fiscal stimulus.
• Long Agency MBS IO for some negative duration, funded with High Yield. Credit sightly insulated from Dem’s tax hike as interest is deducted pre-tax and valuation seems relatively good compared to other assets.
• Short stocks. The ‘policymakers will save the day’ narrative has stalled.
• Long gold, as it benefits from both a contested election and resolution of the election, which would lead to the next stimulus package.
• Short basket of Apple, Tesla, Nvidia, AMD, Amazon — too many headwinds going into elections and longs probably want to lock massive profits.
• Buy the dips in growth stocks from here on. The stimulus is here to stay, yes we can see further deterioration in the economy if things are delayed on fiscal stimulus, but it will be followed by more injection of money, TINA.
• Short equity / long rates – without a stimulus bill US economy is going to slow and eventually stall. That weighs on equities and pressures Fed to do something.
• Long Euro Stoxx (unrelated to the election): policy-driven rally still has several months left, and the recent sell-off has been too severe.
• Long ESG – the world is taking this more seriously led by climate where even the Chinese are stepping up.
• Hung parliament trade, SPX Call Spread v Sell post-election Vol, positive carry roll.
• Renewable energy stocks – Biden is going to win.
• Short USD. Trump is destroying the perception of US a safe haven.
• Long USD – short squeeze.
• Short S&P on rallies, election risk will not going to away and 2^nd COVID wave.
• Higher vol / lower liquidity. So range trade. Don’t be married to any position.
• Most beaten-down sectors. Stimulus is an absolute necessity. If not done before the election, will HAVE to be done post-election. All states, red & blue will be hurting.
• SPX Nov/Dec put calendar – (long Dec) the shift of Nov gamma upon a contested election will be substantial – Dec 20 and jan21 will collect a considerable bid as uncertainty reigns. Should Biden win – then greater market volatility follows – cheap carry (no greeks) and small long vega.

13. Which Trade Theme Do You Currently Prefer?

14. Where is the Bubble Now in the Market?

Earlier, 15% thought Tech was in a bubble; this number has now swelled more than twofold to 35%. No bubble rhetoric is roughly in line (23% previously). Interestingly, vaccine expectations which was classified as a bubble by 17% of our network, last time, has now vanished. This, in turn, may signal that our network is now more optimistic about widely available COVID vaccine.

Appendix

Selected comments – Bubbles

• Diamonds and gold, but it’s going on for millennia
• Real estate. Changing habits make the outlook bleak
• Perhaps copper, driven by China, massive speculation leading to extreme positioning.
• Nasdaq – regulations and valuations
• Tech stocks. Bullishness around the Fed and the WFH narrative related to COVID
• G-10 Fixed Income, central bank-led demand
• Eurozone peripheral rates
• Tech – growing risk of regulation/taxes that clip their wings
• Credit. Not pricing default risk correctly
• Tech valuations; Election debacle ahead
• Residential real estate. Mkt not pricing end of furlong / mass redundancies
• Tech- retail exposure

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