For those anxiously Buying in May...
The machines giveth (in low volume meltup) and the data (Global PMI plunged to cycle lows following China's update overnight, not helped by EU's downgraded growth and inflation outlook) taketh away..
As we noted yesterday, the ECB cannot and will not be able to generate GDP growth or inflation.
The EU is simply too leveraged. You cannot have an entire region sporting a Debt to GDP of over 90%... with banks leveraged at 26 to 1 using sovereign debt as collateral on their derivatives trades, and “fix it” using NIRP or QE.
This is like trying to hold up a 400 lb. weight… and then having someone offer you a floor lamp as additional support. The effect, at best, is largely psychological.
Cue today…
David Siegel is worried, very worried as a matter of fact. The co-founder of Two Sigma, the $35 billion hedge fund said at the Milken Institute Global Conference that he's "very worried" that machines could soon replace a large amount of the workforce.
"Most people in the bulk of the job market are not involved in super-high-value jobs. They are doing routine work and tasks and it's precisely these tasks that computers are going to be better at doing" Siegel said.
Speaking at a panel in the Milken conference titled "Monetary Policy: Out Of Ammunition" moments ago Pimco's global economic advisor Joachim Fels, formerly of Morgan Stanley and Goldman Sachs, had a few observations on QE vs NIRP, not surprisingly nudging central banks that explicitly central bank buying, i.e., QE, is far more powerful than the implicit deflationary signal which is NIRP.
He then proceeded to point out the obvious;
From our friends at Fasanara Capital we get their latest contrarian - and very bearish - Investment Outlook, which can be summarized as follows: "Reflation Phase To Be Temporary, More Downside Ahead", and which also contains four key conviction trade ideas over the next 12 months.
This is what fund manager Francesco Filia cautions about the market over the next year: