2012-when bad news becomes good news
Soc Gen’s top calls for 2012. Bad news will become good news, we just need some patience.
Key Call 1: Buy Gilts with Sterling exposure
Key Call 2: Buy US investment grade corporate bonds
Key Call 3: Buy 10Y US Treasuries, expect the curve to flatten
Key Call 4: Buy Emerging Asia curve steepeners (but caution on EM FX)
Key Call 5: Long US Dollar / Short Euro
Key Call 6: Long Gold / Short Oil
Key Call 7: Long European Telecoms / Short European Utilities (equity)
Operation Pancake
Latest out of PIMCO, on central bankers around the World.
In removing interest rate risk from the bond market – by removing “duration,” the Fed through QEI and QEII prods investors to move out the risk spectrum. Call it a rebalancing effect – QE actually never was QE, because that entails banks lending their $1.6 trillion of excess reserves and expanding the money supply, which amid a liquidity trap just ain’t happening, as they say. The goal is to boost asset prices and loosen financial conditions to promote increases in aggregate demand to spur economic growth.
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