Rare Buy Signal on Gold; Potential Short-covering Rally

Over the past three weeks we have had two rare buy signals on gold. Previous buy signals have returned 5-10% over the next month. The signal is a measure of selling or buying exhaustion.  The returns are very good, and…


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EM Money Growth Improving

Capital outflows from emerging markets continued into the second quarter of 2015.  Once again the outflows mainly emanated from China and from CEE and Russia.  The flipside is growth Treasuries held in custody for foreign accounts is stuck at zero…


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Buyback Boom Peaked, Debt Hangover Ahead

Over the past four years, companies that have bought back their stock have outperformed the market significantly. Most companies did not finance the buybacks with internal cash flow and borrowed at low rates to buy their own shares. The cost…


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Profit Cycle Turning Down

The corporate profit cycle is now turning down, and our leading economic indicators point to further declines in return on equity (ROE) and profit margins.  This is not a short-term call on equity markets but a major structural factor investors…


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Higher Volatility and Credit Spreads Ahead

All of our leading indicators for credit spreads and volatility point to wider volatility and higher credit spreads over the next two years.  The credit cycle is long in the tooth, and the best predictor of future credit spreads is…


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US Unemployment Rate is Not its Former Self

Structural factors are ensuring that the unemployment rate in the US today is not what it was in periods past.  Yellen has seemed to be more in the camp that the decline in the labour participation rate (PR) since the…


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Market health warnings

Variant Perception keeps clients informed of market themes, trading strategies and tactics.  For example, here is something we wrote for clients on August 12th before the recent market correction. If you would like to become a client, please contact sales@variantperception.com…


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Despite the rout, excess liquidity will prove to be supportive

  Stock markets are experiencing a classic crash pattern.  Volatility has spiked and sharp sell offs are often being followed by powerful rallies.  As with previous crash patterns, we would expect markets to continue to gyrate wildly for around the next…


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EM Capital Outflows Gather Pace

We discussed in April that global reserve assets had begun to fall on an annual basis.  This has continued, and the level of contraction is now as great as it has been since at least 2004. Capital flight from EM…


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Spanish Economy Remains on Cyclical Upswing

For all of Spain’s entrenched structural issues (as we detailed in our April thematic, Spain – Still a Hole in Europe’s Balance Sheet), leading economic data continues to point towards a cyclical recovery in Spain. Real M1 is growing at…


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