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Genghis Weekly Strategy - 19th August 2019

Our Momentum, Income and Value equities portfolios continue to outperform the benchmark index, NSE 20 YTD. Notably, the Momentum portfolio YTD performance is ahead of all the benchmark indices as well as the Zamara Index.
Genghis Trading Ideas for the week…

Equities
For the defensive investor: Consider Barclays Gold ETF, a safe haven asset as a compound of factors signal possible global recession.
Volatility in the global financial markets escalated last week with the US Volatility Index (VIX), the stock market 'fear gauge', maintaining significantly high levels this month (19.7), spiking to 25.6 which is above YTD average of 15.8. From the end of the global financial crisis, a period we could term as 'normal' in financial markets, the VIX has averaged 16.9
Yield curve inversions, possibility of global recession? Last week's US Treasury 2 & 10-year yield curve inversion signaled a possible economic recession (the past 5 yield curve inversions of the two tenors successfully predicted US economic recessions). Key economies around the world including UK, Japan, Australia and Singapore approach curve inversion.
Weak economic activity persists in Germany which last week posted subdued manufacturing output and -0.1% GDP growth in 2Q19 while China posted an industrial production growth of 4.8%, the lowest level since 2009.
Flight to safety: Gold trades at 5-year highs (USD 1,526.75/ounce) as investors retreat to safe assets due to heightened fears of global recession and a downturn in financial markets.

Fixed Income
SELL FXD3/2019/10 at 11.40% We expect demand for the on-the-run 10-year tenor on the back of last week’s primary auction. The 10-year sits at circa 11.50% levels on the yield curve thus 11.40% offers attractive exit positions for trading-biased investors.