The Flow Whisperer – TAARSS says prefer Gold and US Treasuries in March
Deutsche Bank – Synthetic Equity & Index Strategy – Global
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Tactical Asset Allocation Relative Strength Signal (TAARSS) Monthly Update
Top recommendations for March: Gold, US Treasuries, High Grade Credit, US Utilities, and Indonesia.
Recent market relief rally is not consistent with ETF flow trends
Since Feb 11, global equity markets experienced a relief rally of over 5% through the end of February. However the stock market hype was not enough to change investors’ sentiment as reflected in flow trends. Actually, although inflows into safe haven assets such as Gold, US Treasury, and IG Credit, and outflows from Equity both slowed down; the underlying trend of preference for defensive assets over riskier ones remained intact (Figure 1). Therefore we remain skeptic regarding the sustainability of the recent rally, and would rather wait for a clearer signal before calling for a switch back to risk-on mode.
Tactical positioning for March based on TAARSS
- Overall we continue to see stronger support into defensive assets over risky assets.
- For Global Equities we recommend to remain on the sidelines, or look for specific themes with attractive support such as Global Natural Resources.
- For US equity prefer a sector approach. We again favor Utilities and Telecom for March. While for Intl DM equities we prefer Canada.
- And for EM equities we prefer Indonesia and Latin America on recent support build-up.
- In Fixed Income, prefer US Treasuries and IG credit over HY credit. In Commodities, prefer Gold on very strong support.
The Synthetic Equity & Index Strategy Team
Deutsche Bank – Equity Research
