Antipodean Capital Macro Strategy Daily Jan 15 - What should equity investors believe? Should they follow lagging data and EPS estimates, and a dovish Fed? Or leading data that is collapsing but still not in analyst and market forecasts?

Macro: Global: Global data outcomes are surprising global analyst forecasts by the greatest degree since the GFC, but stocks and other markets don’t seem to care, having spent 3 weeks now rallying from their lows. But will global data outcomes rebound strongly with stocks, buoyed by an on hold Fed, or keep decelerating from here? Our sense is we are not yet past the worst of the global growth downgrade cycle.

Macro: EU/China: There clearly is a problem in the global trade data. In China, exports and imports data yesterday softened sharply, and while cyclically weak, seasonal Lunar New Year effects explain much of the plunge, although that effect is not yet past. In the EU, IP data is the weakest since the 2012 European Financial Crisis. But markets seem to think that doesn’t matter, much, anyway!

Summary: Markets were modestly lower last night as US earnings season kicks off, with Citigroup beating estimates on EPS but not on RPS. On the data front, EU wide IP fell -3.3% in yoy terms, as IP sinks to the lowest levels seen since the depths of the EU Financial crisis in 2012, and the GFC before that. Bond yields and the USD did little, although Oil prices retraced from their recent 20% gains, perhaps signalling exhaustion.

New trades: None.
FX: Short $JPY at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Short NZDJPY at 72 risk 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. Bought US 10’s at 2.91% risk 3.1% target 2.6%. Sold HYG at 83.55 risk 85 target 80.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Short US Banks Index at 93.25 risk 100 target 80. Stay short Dow Transports at 10375 risk 10800 target 8000. Bought Feb VIX at 20.2.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+. Bought Gold at 1243 risk 1230 target 1300.