Antipodean Capital Macro Strategy Daily Dec 14 - ECB keeps a foot in both camps. Policy as expected. The weakest US stock segments – Banks, Transports, Small caps – are making new correction lows, which is bearish. Buy US 10’s, Gold, sell H

Macro: ECB: On the one hand, the ECB has decided to end asset purchases (QE) and is still committed to raising rates in Q3 ‘19 with no mention made last night that any such hikes would be delayed. This approach is designed to engender confidence in the EU economy and EU asset markets. On the other though, EU GDP staff forecasts were lowered (only by 0.1%), and while the ECB suggested the balance of risks was balanced to tilting softer, issues around Italy were not mentioned and trade issues were noted as better than months ago. This should have been more EUR positive than it appears to have been so far.

Summary: US markets closed flat in terms of the DJIA & S&P, but the weakest segments – Banks, Homebuilders, tech, small caps – continued to suffer heavy falls, with small caps and banks at new correction lows. Somewhat surprisingly US 10yr yields rose to 2.91% presenting an opportunity to buy. The USD was marginally stronger due to a falling EUR, though the ECB didn’t validate that weakness really.

New trades: Buy Gold at 1243 risk 1230 target 1300. Buy US 10’s at 2.91% risk 3.1% target 2.6%. Sell HYG at 83.55 risk 85 target 80.
FX: Short $JPY at 112.80 risk 114.20 tgt 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Sold NZDJPY 78.30 risk 78.90 target 75. Long JPYKRW at 9.85 risk 9.76 target 10.30
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s short NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Stay short 1 unit Homebuilders at 751. Short US Banks Index at 93.25 risk 100 target 80. Stay short Dow Transports at 10375 risk 10800 target 9000.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+.