The Big Short Vol
The abrupt and uninterrupted nature of the recent freefall in global growth expectations (see iGDP, our GDP index, momentum graph below) is starting to make 2008 look almost benign. For instance, our global financial stress index just spiked 16 standard deviations away from its 15-year mean, twice the 2008 peak level, even as central banks around the world have adopted a no-holds barred approach to prop up the reserves of financial institutions.
Key Stocks to Watch In Your Region And Sector (For Now)
Under the circumstances, the stocks surfaced by Butterwire as offering the best prospects of material future out/under-performance have dramatically evolved over the past few weeks and will certainly do so again when and after global growth expectations bottom out (and a supply crunch meets a wall of money).
For now, we have taken this opportunity to create a rapid digest of Butterwire’s latest insights from its Stock Explorer and from its daily analysis of the fast-evolving fundamentals of 6,000 primary equities
1 April 2020 = 27 October 2008 Redux?
Lehman’s bankruptcy on 15 September 2008 and AIG’s 60% share price drop on the following day were setting the stage for a torrid month of October as the financial crisis went global. While most of the damages were done by the time “peak liquidity crisis” was reached in 27 October, some sectors (e.g. EU banks) never recovered.
Over the past month, the US energy sector has seen share price declines of 50% (Schlumberger, EOG) to 70% (Occidental, Cenovus) and the MSCI World Bank index dropped 33% as covid-19 went global. Is this just the beginning of a torrid month of March and can we hope for a “peak epidemic crisis” by April 1?
Autonomous [ESG] Portfolio Construction
Butterwire’s latest feature enables users to automatically generate portfolios that meet their own investment strategy, that are built from their own stock universe, that match their target number of positions, and have the highest forecast information ratio. With this new feature, users will be able to rapidly construct tailored portfolios to both meet external (e.g. new client) and internal (e.g. reference portfolio) needs.
COVID-19, Gold and High Yield
Three months ago, we concluded our note “Taking stock of the recovery” with the comment that the momentum of global macro indicators was pointing to a premature end of the 2H19 recovery trade, and a likely reversal to the kind of downcycle conditions experienced since mid-2018.
Of course, things have not exactly turned out this way, as markets have started to discount the staggeringly wide range of possible outcomes from the covid-19 virus outbreak