Antipodean Capital Macro Strategy Daily Jan 29 - The 3 downgrade cycles - fwd EPS, GDP and inflation – are continuing. Further Fwd EPS falls would be a stocks hurdle. So also may be a Fed that doesn’t fully validate equity market wishes.

Price action: Stock technicals: US stocks are tussling with 50/200 day average resistances, and last night EM stocks failed at their 200 days as well. Our sense is that stocks need to invalidate previously bearish technical signals in order to dispel any chance of a retest of the lows. Until they do, retracement risks are high to the downside still. They just need a fundamental catalyst to get going (or not).

Macro: Data slowing: Global leading indicators continue to slow. Net export components in PMI’s are softening. US PMI’s are sliding from sept highs. Even the bullish Conf Board LEI has paused for breath these last 4mths. All of this is finally impacting Fwd EPS estimates for 2019, which have slid from 11% to around 5.3% now.

Summary: Stocks reversed Friday’s positive upmoves - which were spurred by rumours that the Fed may keep its balance sheet larger than previously expected – last night, due to weaker earnings reports from Caterpillar & Nvidia, via slowing China activity. This weighed on bond yields, commodities and commodity FX rates. The GBP was supported in the run into tonight’s Brexit vote on hopes that the Article 50 deadline may be extended.

New trades: Long $CAD at 1.3350 stopped at 1.3250 (-0.8%). Short NZDJPY at 72 stopped at 75 (-4.2%). Short US Banks Index at 93.25 closed at 98 (-5%). Short Dow Transports at 10375 closed at 1k (+3.75%). Long Feb VIX at 20.2 closed at 18.2% (-10%)
FX: Short $JPY at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. 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.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 17. Bought Gold at 1243 risk 1230 target 1380. Sold WTI at 52.70 risk 54 target sub 49.