Enis’s Macro Wrap – Picking Winners and Losers

by Enis September 17, 2012 6:37 am • Commentary

With central bank policy a mainstay in the market for at least the next 6 months, my focus has shifted to the winners and losers from that policy.  Who are the potential winners and losers from Fed and ECB policy?

CC commented on Thursday that the choice of purchasing MBS was an immediate boon for homebuilders and residential-housing heavy banks.  The materials and commodity names have also seen rapid rallies in the past 2 days.  Some of the potential losers might include consumer staples and insurance companies.  Consumer staples companies will continue to contend with high agricultural commodity input prices on businesses with tighter margins than consumer discretionary.  Insurance companies will have a more difficult time managing their long duration liabilities, given that the supply of long duration assets is being seriously restricted by Fed purchases.    

These sector themes are likely to extend for several months.  I will be looking for favorable entries on both sides of those trades.

Markets overnight:

  • Quiet overnight session in Asia, with most markets closing near the unchanged mark by the close, excluding the 2% decline in the Shanghai Comp as growth concerns appear to trump the exuberance of the easy monetary policy in the West.
  • Europe has spent most of the session in the red, but only marginally so, down about 0.5% at 6:35 am EDT.  SPX futures are down 0.2% in sympathy
  • Commodity are slightly lower, but small moves across the complex again, less than 1% in most cases
  • The dollar is marginally higher vs. most crosses after its biggest down week of the year last week.