Credit Suisse’ Andrew Garthwaite has come up with a list of market anomalies, which he suggests should be the focus of your investment ideas.There are some fertile ideas here.
We summarize most of them.
- Bond yields have sharply decoupled from risk assets, and from accelerating US loan growth. Garthwaite expects yields to eventually rise.
- US corporate credit spreads still appear to be pricing in a recession, whereas European spreads aren’t.
- Sentiment is optimistic, but actual fund positioning is positioned bearishly. That’s a sign to buy on dips.
- Mining stocks have done well despite weak performance in Shanghai.
- European cyclicals have performed as well as US cyclicals, despite poor economic outlook in Europe.
- Dividend yield isn’t doing that great, given low bond yields.
- Oil has abnormally lagged PMI.
- Italian bonds are still trading way above France.
- Equity housing bets have done well but the sub-prime ABX has not.