REITs

REITs

RBC: "Commence Pain Trade"

Commence 'pain trade.' Expect there to be significant buy-side performance pain today with regards to the below key “long USD”-linked “US reflation” trades (as quoted above) seeing real capitulatory / unwind flows.

To RBC, This Is The Single Largest Risk To The Market Right Now

The US Dollar is the “grand unifying theory asset” for nearly any and all “profile” global macro or thematic equities trades in the marketplace right now, as it represents investors being long this “new” version of “economic growth.”  As such, performance is significantly tied to the direction in the US Dollar.

Frontrunning: January 10

  • Immigration in focus as U.S. Senate confronts Trump nominees (Reuters)
  • Jeff Sessions to Be Grilled on Race in First of Hearings (WSJ)
  • Libya Ramps Up Oil Production, Threatening OPEC Plans (WSJ)
  • Valeant to sell assets for $2.12 billion to ease debt load (Reuters)
  • Industry Lobbyists Champ at the Bit, Awaiting Business-Friendly Policies (WSJ)
  • Yahoo to be named Altaba, Mayer to leave board after Verizon deal (Reuters)

The Bank of Japan Was The Top Buyer Of Japanese Stocks In 2016

The Bank of Japan is set to become the biggest buyer of exchange-traded funds in 2016 for the second straight year. According to data through Thursday, the value of the BOJ's ETF purchases this year has topped 4.3 trillion yen, up 40% from 2015. As a result, the BOJ "will become the largest buyer of ETFs this year," according to Mizuho Securities.

"Trump Trade" Leads To Ninth Biggest Weekly Inflow To Equities, More Bad News For Active Managers

The "Trump Trade" continued with global equity funds receiving $21 billion in inflows in the past week according to Bank of America, as investors rushed into reflation assets, while money flowed out of bonds for seventh week in a row. For one more week news for the "active managed" community was negative: of the $20.7 billion in equity inflows, $31 billion was in the form of ETFs, which meant another $10 billion in outflows from mutual funds and other active vehicles.

"A Watershed Month" - November Sees Greatest "Asset Rotation" Since 2013

The final November fund flow numbers are in, and as BofA's Michael Hartnett puts it, November was a "watershed month" for fund flows with the largest 5-week bond outflows in 3.5 years (Chart 1), largest 3-week precious metals outflows in 3.5 years (Chart 3) and largest 4-week equity inflows in 2 years.

Obstacles To Trump's "Growth" Plans

Mr. Trump rather unfortunately may find that his chief task will not be the management of this Great Re-orientation, but more prosaically, fending off the headwinds which he will face as he hauls on the tiller of the economy. In short, there is a real prospect that his ambitious economic “remake” may well be prematurely punctured by financial crisis. These headwinds will not be of his making, and for the main part, represent the accumulation of an earlier monetary doctrine which will fetter the President-elect into a small corner from which any chosen exit will carry adverse implications.

Brace For A Year Of "Peak Everything, Big Rotations" - Here Is BofA's Guide How To Trade It

1) Peak Liquidity: era of excess liquidity is over; 2) Peak Inequality: more fiscal stimulus to address inequality; 3) Peak Globalization: free movement of trade, labor, capital ending; FX wars starting; 4) Peak Deflation: low point in bond yields now behind us; 5) Trough Volatility: era of “flash volatility” and “pain trades” continues; 6) Peak Passive: active investors to outperform passive; 7) Transforming World: robotics, eCommerce constrain inflation upside