Gold holdings as % of Nations private net wealth
Source: QuantInvestor.substack.com
Chinese real estate bonds are negative again in 2023!
Chinese real estate bonds have turned negative since the beginning of the year, erasing its big rally earlier this year. Investor sentiment has been dampened since the collapse of one of the only offshore 2023 new issues (Wanda Group / -30pts), doubts about the ability of SOEs to meet their obligations (Sino-Ocean / -46pts) and as restructuring plans seem to be a very long way to return on investment. Yet the (modest) recovery appears to be taking hold, with new home prices and home sales rising for the second consecutive month in March and the sector growing yoy in the Q12023, after six quarters of contraction. Source: Bloomberg
Favouring high-quality bonds over other asset classes in the coming months?
BofA's traditional monthly survey of global fund managers has been released and shows that investors are the most overweight bonds over stocks since March 2009! Investors are also the most record longs in Investment Grade vs. High Yield since inception (2015). Source: Bank of America
Short squeze 2.0?
Hedge Funds are still massively short. This could lead to another massive short squeeze. Source chart: Alessio Urban, Goldman Sachs
This time, higher oil prices will not contribute much to the performance of high yield?
Since the surprise OPEC+ production cut, oil prices have gained over 7%. At first glance, this could be seen as a positive for U.S. high yield, as energy is a large component of the index (>12%). Unfortunately, HY Energy spreads are already historically tight relative to its index and the potential for further tightening is low. Source : Bloomberg
OPEC is less worried about market share. Hence the production cut
Great point made by John Arnold on Twitter. The OPEC cut was only possible because of the inability/unwillingness of the US shale oil sector to grow at the same rate as it was in 2016-2020. With much less supply elasticity in the market today, OPEC is less worried about losing market share if it defends higher prices. Source chart: EIA
Commodities: why this time is different
To address the recent comparisons with 2008: today's macro setup could not be more different than the Global Financial Crisis. Back then, capital spending for oil producers was at record levels after a decade-long bull market in natural resource businesses. Today, aggregate capex is historically depressed while the commodities-to-equities ratio is near 50-year lows. Source: Tavi Costa, Crescat Capital, Bloomberg
Digital gold (bitcoin) correlation with gold is on the rise
While Bitcoin's $BTC correlation with the S&P 500 has been declining over the last year, it has been rising with Gold over the same period. Source: CNBC, Cryptoquant, Barchart
