Antipodean Capital Macro Strategy Daily Jan 16 - Why are Junk/HY credits so sharply outperforming IG credit at this point of the cycle? And why have Gold equities not outperformed the Gold metal price?

Price action: HY credit: Why are junk and HY credits outperforming IG credits at this stage of the cycle? Is it more due to positioning swings in and out of HY, rather than due to weakening credit quality and softening US data?

Price action: Gold shares: Gold shares are up $120 from their September low, and over $200 since their early 2017 low, but over the same period indices of Gold shares listed in the US are down 25% or so since early 2017, and despite rising by 15% since September, have endured a torrid 2 weeks of retracement. Gold equities underperforming the metal is not the usual.

Summary: Markets in the US continued to rise, up by 1% or so across the main indices, despite a weaker NYK Empire PMI survey (3.9 from 11.5 prev) and softer PPI prints (-0.1% core, -0.2% headline). In the EU, German Q4 GDP came out marginally positive, just avoiding technical recession, and the ECB’s Draghi noted persistent downside risks to the EU area amidst weaker recent data, sinking the EUR FX rate.

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.