All posts by globalmacroresearch

Market outlook, US stock market

Fed rate hikes will reverse portfolio rebalancing and end QE bubbles

The investors are trying to be prepared for the Fed’s raising the interest rate in late 2015 and 2016, worried about how much it could affect the markets, but they seem to have forgotten what has been supported the markets for several years.

Have we already overcome the termination of the Feds’ QE? The answer is no. Although the interest rates are kept relatively low, and the US stocks remain near the all-time high, the markets are just supported by QEs by Bank of Japan and European Central Bank.

The portfolios of the investors of all kinds have been distorted by the QEs. According to the paper by the Fed, due to the QE the owners of Treasury securities and MBS shifted their funds into riskier assets. For example, the households sold Treasury bonds and MBS to the Fed and bought riskier assets such as corporate bonds, commercial paper and municipal debt and bonds.

Continue reading Fed rate hikes will reverse portfolio rebalancing and end QE bubbles →

Trading strategies

How to evaluate growth stocks with fundamental analysis

This article explains how to evaluate growth stocks with fundamental analysis.

First of all, growth stocks are stocks that are highly appreciated in the markets due to their expected future growth, even though at the moment they haven’t yet achieved any notable profit.

The P/E ratios of those stocks sometimes exceed 100. It seems that this kind of evaluation simply ignores the fundamentals, but the prices of the growth stocks are actually decided by evaluation based on the fundamental analysis.

Continue reading How to evaluate growth stocks with fundamental analysis →

Stocks, US stocks

Iran nuclear deal and sanctions relief could boost oil tanker stocks

On 14 Jul, the West and Iran agreed to freeze Iran’s nuclear programme and, in exchange, gradually relieve the sanctions on the Iranian economy.

This agreement allows Iran to export oils and natural gas to the western countries to increase the oil supply of the world, which has already been greater than the demands. Iran has the 4th greatest oil reserves and the 2nd greatest natural gas reserves in the world.

The oil prices have already been declining due to the US shale oil and Saudi Arabia refusing to decrease its production, but the markets haven’t fully reflected the benefit that oil tankers would get from the increasing oil supply.

Continue reading Iran nuclear deal and sanctions relief could boost oil tanker stocks →

Trading strategies

A hedge fund manager explains how to short sell

For hedge fund managers, too, short selling is more difficult than mere buying. A stock price, for instance, has a theoretical bottom line, and buying would be simply justified when the price is close to it, whereas overvalued instruments could go any higher as a bubble occurs.  Roughly saying, you may predict, “it wouldn’t go lower than that”, although it’s much harder to say, “it wouldn’t go higher than that”.

Then, how can we short sell if it’s difficult to predict the peak of the bubble? This article explains what institutional investors consider in this kind of situation. Continue reading A hedge fund manager explains how to short sell →

Market outlook

How long will oil price remain cheap?: 5 ways to trade on crude oil

Thinking to write about the recent fall of oil price, I found an article on Reuters with a similar opinion to mine:

Therefore, leaving the detailed analysis to the article, I’d like to summarize the major arguments and explain how to trade on the financial markets according to the cheap oil.

As the article describes, it’s much easier to predict how long oil will remain cheap than to say how low it will fall. As long as Saudi Arabia is serious about destroying the shale oil industry in the US, it won’t decrease its oil production till it succeeds. Thus, we can expect that oil prices will remain low until many shale oil firms in the US stop producing or go bankrupt. Continue reading How long will oil price remain cheap?: 5 ways to trade on crude oil →

Currencies, USD/JPY

Is USD/JPY reasonable at 120?: The comparison of the manetary bases

After the Bank of Japan (BoJ) decided the additional monetary easing on 31st of November, USD/JPY reached 122 once and is now traded around 120. We review if the rate is appropriate from a long-term viewpoint, after the radical depreciation from about 110.

Screen Shot 2014-12-09 at 14.41.58 Continue reading Is USD/JPY reasonable at 120?: The comparison of the manetary bases →

Market outlook

The consumption tax rise can’t be compensated by monetary easing or public investment

The government of Japan published the 3Q GDP on 17th, confirming that Japan had got into a recession. The Japanese media reported as if it was struggle of Abenomics against the deflation, but the real cause of the recession is the consumption tax rise in Apr. What is worse is that the bad effect of the tax rise can neither be wiped away by the monetary policy nor by the public investment that Abenomics has been engaged in, and thus another strategy is required. We firstly review the contents of the GDP:

Screen Shot 2014-11-24 at 06.39.03 Continue reading The consumption tax rise can’t be compensated by monetary easing or public investment →

Trading strategies

How to hedge risks with global-macro strategies

The global-macro strategy is the method of investment that buys or sells all kinds of financial instruments according to macroeconomic affairs. The strategies used by hedge funds are known for profiting without depending on the trends of the markets, hedging various risks. In this article, we review how to hedge risks with the global-macro strategies, introducing examples from the current markets. Continue reading How to hedge risks with global-macro strategies →

Chinese stocks, French stocks, Japanese stocks, Stocks

Reviews: Wacom, Heiwa Real Estate, Gecina, CNNC International

Here are the reviews of the stocks introduced before:

The stock rose by 5.46% on Friday and the price is now ¥579. The volume has increased significantly. Goldman Sachs increased their short position by 4th, selling 4.51% of all the issued shares in total. Deutsche Bank also added their position, meaning they’re now being short squeezed. Continue reading Reviews: Wacom, Heiwa Real Estate, Gecina, CNNC International →