Barclays

How A Major Bank "Calculated" That 20x P/E Is Now "Fair Value"

"Post-election rally closed the valuation gap with the P/E now near “fair”. The current fitted S&P 500 trailing P/E of 19.6x reflects "animal spirits." Accordingly, the current P/E of 19.4x, although high by historical standards, is far from pricing excessive optimism, based on our model." - Barclays

Frontrunning: February 15

  • World stocks at 21-month highs on Yellen, U.S. outlook (Reuters); Dollar notches longest run of gains in five years before CPI data (Reuters)
  • Nervous About the ACA, GOP Divisions Emerge Over Repeal Effort (BBG)
  • Flynn Probed by FBI Over Calls With Russian Official (WSJ)
  • Russia Questions Mount for Trump White House Reeling From Flynn Fallout (BBG)
  • Trump knew for weeks aide was misleading over Russia (Reuters)

Here Are The Best Hedges Against A Le Pen Victory

According to BofA, the best ways to hedge increased risks of a potential Eurosceptic win in the upcoming French election is favouring 10y peripheral spread wideners in Spain vs France, longs in 5y5y Germany and 5y Dutch sovereign CDS. In the options space, the banks recommends going long vol with a hybrid 6m10y strangle. In inflation, it likes 5y5y French CPI v HICP widener and a long 30y OATei breakeven vs inflation swap.

Frontrunning: February 13

  • 'Trump trades' on boost to economic growth come back with a bang (Reuters)
  • Trump's national security adviser Flynn trying to survive crisis (Reuters)
  • White House Is Sifting Options on Immigration Ban (WSJ)
  • North Korean Nuclear Ambitions to Be Defining Issue for Trump (BBG)
  • Netanyahu opposes Palestinian state, Israeli minister says ahead of U.S. visit (Reuters)
  • Speed Limits on Trump’s Infrastructure Drive: Federal Laws, Rare Species and Nimbys (WSJ)

Fischer Admits Fed Is Clueless About What Happens Next

"There is quite significant uncertainty about what's actually going to happen, I don’t think anyone quite knows what’s going to come out of the process which involves both the administration and Congress in the deciding of fiscal policy and a variety of other things."

Barclays: "Significant Change Is Coming To The Fed Over The Next 18 Months"

"Tarullo’s resignation only further cements our view that significant change is coming to the Federal Reserve Board of Governors over the next 18 months. Depending on the plans of Governor Lael Brainard, we would not be surprised to see five or six new faces on the board by the middle of 2018."

How The Coming Wave Of Job Automation Will Affect You

What percentage of the workforce is at risk of being replaced by automation? Where will the displaced find new jobs? What job skills will remain largely immune to automation? How will the US government, which is funded to the tune of 92% by income-related taxes, replace the lost revenue… a robot tax?

This Is What America's Top Trading Partners Export To The US

With concerns about protectionism rising, whether in the context of the Border Adjustment Tax or simple tariffs, Barclays has compiled a useful table sumamrizing what goods America's top trading partners export to the US for - mostly cheaper - consumption, compared to domestically produced equivalents.

Frontrunning: February 6

  • The Patriots’ Insane Comeback: One for the History Books (WSJ)
  • Euro fades in face of French election risks (Reuters)
  • Legal battles to test Trump and his travel ban (Reuters)
  • Standoff Looms Over Travel Ban; Trump Rips Judge (WSJ)
  • Trump Set to Attend NATO Summit in May (WSJ)