The 2016 market can be described as a sequential bursting of pain trades: first it was the momentum trade; then it was the whipsawed action in Treasurys where record shorts were burned on the way up, and then longs screamed when central banks unleashed the latest coordinated attempt at reflation, then it was the FX whipsaws where central bank easing led to the opposite reaction in the underlying currencies (as noted earlier), then the sudden trapdoor under the USD which many had expected would continue rising, then it was the healthcare sector where hedge fund hotels got crushed in the latest Valeant fiasco, and so forth.
But while all those are known – especially to those who have been steamrolled by them – according to Bank of America’s Michael Hartnett, the biggest pain trade is the following:
The World’s Most Painful Chart...uncanny correlation between Chinese renminbi & Facebook/Petrobras pair-trade (Chart 1); few have been positioned for 2016’s biggest pain trade…appreciation of the renminbi; CNH (China renminbi), CL1 (oil), H0A0 (high yield) = lead indicators of risk rally, drivers of performance pain.
And with surprising headlines such as this one hitting on a daily basis:
- KEN GRIFFIN’S MAIN CITADEL FUNDS DROP 8% IN 2016 MARKET SWINGS
we expect many more pain trades to materialize in the coming weeks as the central banks once again do everything they can to steamroll the market in unleashing another burst of inflation, even as the end demand is simply not there.
Запись Hartnett: “This Is The World’s Most Painful Chart” впервые появилась crude-oil.top.