SocGen

IMF Greenlights Addition Of Chinese Yuan To SDR Basket: Wall Street Responds

While the world was following the tragic events unfolding on Friday night in France where hundreds of innocent civilians were killed or injured, an important economic development took place at the IMF, whose staff and head Christine Lagarde, officially greenlighted the acceptance of China's currency - the Renminbi, or Yuan - into the IMF's foreign exchange basket, also known as the Special Drawing Rights. Here are the initial early responses by various Wall Street analysts.

SocGen Explains Why "Shorting During US Reporting Season" Is A Bad Idea

"During the busy reporting weeks, upgrades rise relative to downgrades only for this to reverse during ‘quiet’ periods when companies revert to guiding numbers back down again. Why is this important? History shows that during the busiest reporting weeks the S&P 500 has risen 60% of the time versus less than 50% during the quietest weeks. The simple message is this: don’t be short during US reporting seasons."

Last Week's "Savage Reversal" Was The "Biggest Momentum Whiplash Since 2009"

We noted previously that last week's face-ripping rally was the biggest short-squeeze sicne 2011, but, as SocGen notes, this "savage reversal" - as the biggest losers rebounded - was the worst price momentum whiplash since 2009. Bear market rallies are typically characterised by sharp reversals and elevated levels of volatility, and as SocGen warns there are several things which point to this being a technical bounce (rather than longer-term supportive value-seeking).