Eta Carinae

Eta Carinae

2018-07-30
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Categories: Commentaries
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Somewhat calming news in the midst of red-hot trade tensions provided the impetus for a strong bull run in equity markets – particularly those of Asia-Pacific and the US – and this rally was the dominating contributor for Eta Carinae’s (EC’s) strong showing in July.  The program held long positioning across the global equity markets and notched a +2.26% net return on the month. By the 2nd half of July, our Signal-to-Noise indicators for each equity subregion traded (Asia-Pacific, Europe and North America) were on the descent; reflective of choppier conditions and, perhaps, foreshadowing some bouncier moves in August.

ASIA-PACIFIC (APAC)

EC’s APAC trading was the biggest contributor to the P&L returning 2.92% (gross) on the month.  Even with the US adding $200 Billion (USD) in new tariffs against China mid-month, Japanese equities (per the SIMEX Nikkei price chart shown below) generally led the way in the region, staging a strong rally during the first half of the month.  

EUROPE (EU)

Interestingly, strong performance was garnered in spite of EU trading which was down -1.20% (gross).  While the calming trade war news was due primarily to President Trump’s discussions with European Commission President, Jean-Claude Juncker, where both agreed to lower or scrap tariffs on non-auto industrial goods and re-scrutinize WTO trade policies for unfair practices, Europe’s response (compare Euro STOXX 50 Index vs SIMEX Nikkei vs E-Mini S&P price charts) was a much more skittish bull run. Ultimately, EU equities did end the month higher than June’s close, but the ascent was interspersed with relatively sharp reversals throughout the month, possibly reflective of concerns surrounding the European Central Bank’s agenda for a tightening in monetary policy. 

NORTH AMERICA (NA)

Meanwhile, the US had another round of great economic reports showing a Q2 GDP growth rate of 4.1% – the strongest since 2014 – and corporate profits (well, Facebook being the exception proving the rule) up 24.6% year on year.  So that investors wouldn’t get completely comfortable with the “risk-off” trade while sipping pina coladas next to the pool, Facebook took a 20% nosedive in late July after its investor call revealed a decreased growth outlook.  NA equity trading gained 0.72% (gross).

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