Inflation, no inflation, deflation - while central bankers are still arguing, the Exchange seems to hedge their bets by believing in asset price inflation combined with a healthy dose of commodity and bitcoin exposure. The more old school inflation hedge, gold, seems to be out of favor - probably that's justified given that some sources say gold offers only short term protection against rising prices.
Let's have a look at this week's survey results:
1. Market View and Sentiment
@Weston Nakamura mentioned last time that the 3m outlook always looks a little bit bearish (the hedge!) compared to 1m. Interestingly this time we have bullishness for the DXY on 3m vs bearishness on the 1m horizon and also Gold is seen more positively on the longer horizon. However in terms of Equities it's still true, short term outlook is very positive (surprisingly more positive for Europe than S&P this week). Also clearly bullish on commodities and bitcoin (not surprising).
Comparing 1m sentiment this week vs last week
Bond sentiment came back from very bearish to more bullish on yields. Participants follow the current trend on 10y treasury yields. Volatility bullishness has nearly doubled and European equities really made a strong comeback.
Commodities is going really strong. 82% of participants are net long (up from 43% last week). EM equities increased from 57% to 81% being long and VIX from 9.5% to 31.2%.
Biggest loser was gold which came down from 57% being net long to only 25%.
Accordingly the Exchange portfolio is nearly equally long commodities, EM equities and bitcoin. The other assets still make up 6% to 9%, so a little bit underweighted compared to an equal weights portfolio which would have 11% per asset. It's a quite diversified portfolio compared to previous allocations we have seen, where often more than 30% was in one asset.
Now the Bot...he likes Gold because there's a lot of talk in the interviews that seems to be quite bullish. Clearly he is no trend follower this week. The overweight of US equities and non-existing Euopean equities position is also amazing. He's aligned on the Commodity allocation and still likes to have some Bitcoin.
Biggest driver in the recent portfolio performance was clearly Bitcoin. Exchange is nearly at +20% ytd. Despite some crazy choices the Bot comes in at +7.7%. I'm quite surprised actually and will follow up with a more detailed look on the return per asset in each portfolio.
Last week was very interesting from an emotional point of view if we compare it with the same week last year. You might remember 19th Feb 2020...that's the day the S&P started to tumble.
The interesting thing last year was that especially joy in the interviews was spiking right before volatility exploded. However, I had a closer look and the joy was clearly related to retirement related topics. When I looked for the most joyful video during that week it was actually this one on retirement: The risk of ignoring crypto. Wow, you can not say @Real Vision didn't tell us to buy these Bitcoins early enough ...
If you do not want to bookmark all the links, the easiest way is to follow me on the Exchange or the Bot on Twitterso you are up to date. Or bookmark his website, where you can find all the relevant links: www.realvisionbot.com
If you are looking to do your own analysis with the numbers on the Bot's dashboard, you can download the values in each chart as a csv by clicking the little gear box that's at the top right of each chart.
Thank you for your participation! Feel free to contact me if you have any questions!
RealVisionBot & Moritz & Moritz (twoquants.com)