Macro Hive Smart Investor Survey: Results
- By Bilal Hafeez and Mehdi Farooq
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- 4 min read
We recently surveyed our Macro Hive network. The respondents were mainly sophisticated investors and analysts from financial institutions covering both buy and sell-side.
In a nutshell, 50% of our participant see W shape global recovery almost double compared to our last survey. Most consider economic and political instability in the US as the top geopolitical risk. They also expect a Biden win be negative for bond and equity markets. Views on Inflation in the US remains divided. In terms of markets, the majority are bullish gold, euro, and the S&P500. As far as bubbles in markets are concerned – popular opinion is that none exists. Finally, we also feature our networks favourite trade ideas.
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.
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We recently surveyed our Macro Hive network. The respondents were mainly sophisticated investors and analysts from financial institutions covering both buy and sell-side.
In a nutshell, 50% of our participant see a W shape global recovery almost double compared to our last survey. Most consider economic and political instability in the US as the top geopolitical risk. They also expect a Biden win be negative for bond and equity markets. Views on Inflation in the US remains divided. In terms of markets, the majority are bullish gold, euro, and the S&P500. As far as bubbles in markets are concerned – popular opinion is that none exists. Finally, we also feature our networks favourite trade ideas.
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) What Will Be the Shape of Global Economic Recovery?
- Compared to our survey two months back, only 9% were in V shape camp compared to 17% today.
- W shape supporters have also almost doubled from 26% our last survey to 50% today
(2) Will Inflation Return in the US by 2021?
- Similar to last results. Inflation expectation remained contested.
(3) 2020 US Presidential Election Winner?
- 63% believed Trump would win two months back. But now the majority sides with Biden.
(4) Favorite Trade Idea if Biden is Elected? (Net Voters)
- Most think that Biden win would be negative equities, bonds and the dollar, but positive green energy, infrastructure and inflation.
(5) Do You Think There Will Be a Second Lock Down in the US
(6) Top Political Risk
(7) US Equities in Terms of Attractiveness (Average Ranking)
(8) Where Do You See the S&P 500 by the End of the Year?
- Last time around only 13% thought the S&P 500 would trade more than 3000. Now, 60% believe it will trade at 3000 or more.
(9) Outlook on Oil for End-2020
(10) Outlook on Gold for End-2020
• Previously, 30% believed yellow metal would cross 2000. Now, it has dropped slightly to 27%.
(11) G10 Currency Average Ranking in Terms of Attractiveness
- Respondents are most bullish EUR, JPY and USD and most bearish SEK, CAD, GBP
(12) Where is the Bubble Now in the Market and Why?
(13) What is Your Favourite Trade or Investment Idea Right Now and Why?
Selected Comments
- Long S&P 500 and long EuroStoxx 50 – policy responses have not fully impacted markets yet.
- Long SPX till mid-October, then to cash until US elections sorted (likely in mid Q1)
- Long Boeing. If it drops again will look to add around the $100 mark (and even $50 if it goes that low; doubt it). Next phase of US/China tensions will lead to investment in the military. COVID has made BA cheap, and it does not need a full resurgence of global air travel to recover well in the next decade.
- Pay CE3 Rates – already cut to the bottom. Inflation returning and fiscal deteriorating.
- Short dollar due to Fed QE.
- I’m mostly in cash now; waiting for opportunity to short market.
- Long NOK – the only CB with assets to back their currency. Long bank stocks – governments will add more stimulus if write-downs/insolvencies accelerate; governments will open economies at the expense of cases/lives
- Peripheral European govt bonds. Risk off-trade and will outperform because of central bank put and EU loan/ grant packages.
- Bank CoCos. Reasonable price with steady income and still relatively protected. Selective credit bottom-up.
- JPY, it is 20% undervalued to USD. 10y yield spread at 40bp is not enough to keep JP investors interested in US bonds.
- EM HY credit.
- 2022 dividend futures, SPX 2023 strangle 3200/2400. Semicore v periphery RV trade and US/GBP swap spread in the belly.
- Long NZD/USD.
- Buy equity and gold lows.
- Long 30yr US nominal rates – inflation expectations will soon start to price in a long period of low inflation as the amount of economic slack hits home.
- Long Chinese equities.
- Crypto assets.
- Long S&P. Long gold.
- Long gold/ real rates / yen / duration.
- Long Tesla Puts OTM, 1 year out.
- Long EUR/USD into European meeting.
- Long Euro, Gold and Silver.
- 6-month out the money call options in Asian growth equity or US equities oversold. Institutional USD flow has been bullish in privates, growth equity names and now China’s exchange. In the US in 6 months could see a strong buyback reaction to improvements in the economy.
- Buy FX vol.
- Long EUR/USD and long gold. Weak $, into election uncertainty, very accommodative Fed, Euro gaining ground as a reserve currency.
- European autos.
- (Equity SPX) Short Gamma, long longer-dated convexity in a larger ratio (net long Vega, short Gamma)
Appendix
Selected Comments – Bubbles
- No bubble though equities will correct in Q1.
- Pharma re-expectations of Covid-19′ vaccine’ that may not even be possible.
- US Bonds. They are not as safe as investors think. May be many years from now but at some point, they are going to be the biggest pain trade for a century.
- Tech. Valuations have detached from the fundamentals.
- All assets, fed support, however they will continue.
- Equities – fundamentals do not support valuations; tech – growing risk of regulation/taxes that clip their wings.
- Some tech stocks; sector seen as a flight to quality in general but there are clearly some standout winners from the pandemic; e.g. AMZN winner from online shopping and AWS services in demand as companies go online; Apple however neutral – challenges in demand and future supply chains.
- Tesla, Facebook, Amazon highly sought after. More buyers than sellers, hence the squeeze.
- Tesla, US stocks. Earnings will plummet.
- Tech stocks, credit markets, EM equity. Just a function of CB stimulus but we are already seeing slow down there.
- US large cap tech. FOMO.
- Everything trading way off fundamentals due to liquidity.
- Bubble is non-sense in an administrated market.
- Credit – inflation will make a comeback.
- Honestly think this sort of question is a function of financial media having way too much influence.
- Equities. Thank the Fed.
- Tesla, pricing in too much future growth.
- Nasdaq – people investing everything in tech
- Tesla.
- Specific tech names like Tesla. However, those with a short book, I’m wary of a rally in 6 months.
- Continuous liquidity. Exchanges are at risk.
Area of Speciality
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.
Mehdi is a research analyst at Macro Hive. He’s currently pursuing an MSc in Finance & Investment at Nottingham University Business School and he is a CFA level 3 candidate. Mehdi has previously pursued roles as an Equity Research Analyst, Junior Economist & in Proprietary Trading.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)