Antipodean Capital Macro Strategy Daily Jan 4 - Weaker Apple revenues, algo driven FX flash crashes, falling US 10yr yields. Whatever the reason, markets are set to downgrade global growth prospects. This will not favour growth assets.

Price action: FX: Flash crash, risk aversion, call it what you will, but yesterday’s wild price action in the JPY, AUD, NZD and EMFX like the TRY implies that a heightened period of contagion and risk aversion, built upon slowing growth concerns, but complicated by illiquidity and algo trading, is now setting in. This simply highlights our views, which we will continue to hold, long JPY, short NZD, KRW & USD against that, but also long EUR v USD as we expect the USD to surprise on the downside.

Summary: Markets traded with a sense of calm overnight after yesterday’s early Asian session flash crash price action in FX markets, with the JPY re-weakening from yae4sterday’s extreme highs. Stocks are closing on their lows suggesting that the 6 day uptrend is now giving way to a new downtrend again. The USD is re-weakening, suggesting that precious metals will continue to extend.

New trades: See JPY trades below.
FX: Short $JPY at 112.80 closed at 105 (+7.8%), reset at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Short NZDJPY 78.30 closed at 72 (+8.5%), reset 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. 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+. Bought Gold at 1243 risk 1230 target 1300.