reports
- Cyril Castelli
Rcube Macro 07/09/16: Effects of the Likely Increase of US Deficit
​US economic momentum is diving. A few months ago we explained why higher employment costs, combined with weaker earnings, would hurt corporate profits and consequently business activity and, in the end, employment. Add to this elevated inventory levels, rising credit risks and tighter bank lending conditions and you have a risky business environment...
- Cyril Castelli
Rcube Macro Portfolio 18/08/2016: Market Thoughts
​More and more Equities’ behavioral indicators suggest that, at least from a sentiment standpoint, stock markets have become vulnerable. Bullishness has recently spiked to levels historically associated with major tops. A large consensus now believes that as long as yields will be as low as they are, the grab for yield mentality will force investors to seek returns away from bonds and into equity or equity linked vehicles...
- Cyril Castelli
- Cyril Castelli
Rcube Macro Portfolio 28/07/2016: Large Credit Channel Divergences
​Central banks around the globe are releasing their quarterly lending surveys. The ECB’s survey results were surprisingly robust given the weakness of European banks’ share prices over the quarter. One one side, banks’ willingness to lend is improving, on the other, banks’ relative weakness is a dark cloud.
Short US Small Caps
​US commercial banks have now released their charge-off and delinquency rates on loans and leases for Q1. NPLs are now rising at a faster pace than just before the great recession.In a recent research piece we highlighted why the combination of a significant deterioration of nonfinancial corporate business’ balance sheet health and tighter financial conditions (banks and nonbanks terms) would inevitably lead to rising defaults and NPLs besides the energy sector. This is now unfolding, and in...
Going long USDJPY
​Japan’s current account balance came out on the strong side today. It is the second highest number ever (March 2007 remains the highest); the trade balance was also strong. The yen reacted by weakening sharply. This tells us that the timing to sell it again has arrived.The trade data’s strength is mostly the result of crashing commodities over the last 16 months, more than a jump in exports (-7% yoy in March)...
The US Default Cycle Is About To Accelerate
​Yesterday the FED released its latest quarterly Senior Loan Officer Survey.Results show continuous tightening of lending standards.The percentage of banks increasing spreads of loans over their cost of capital on C&I loans is now at zero. Some banks are already increasing the cost of capital for their customers...
Relative US/European Employment Dynamics Support Treasuries vs Bunds
​Yesterday, French employment data came out strong. This is noteworthy because France is the core of Europe with Germany but has many symptoms of the south. It thus acts as a benchmark for the Eurozone. The job market has improved in the south as well. Spain and Italy have also seen their unemployment rates fall significantly lately. Additionally, the credit channels between US and Europe have diverged as a result of very different nonâ€financial corporate behaviors.As mentioned recently, we ...
Rcube Macro 31/03/2016 US Profit Recession
The latest US GDP report for Q4 2015 revealed that US corporate profits were down 11% yoy. While investors currently believe they will snap back up by the end the year, since the drop was mostly the consequence of lower commodity prices, we think differently.​
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