Francesco Filia An Opalesque column for global macro investors.
Benedicte Gravrand, Opalesque Geneva:
According to Fasanara Capital’s investment outlook, published on 31st May, there is more high volatility ahead.
The fund’s Value book remains flat as markets are toppy (i.e. markets are reaching highs that are unstable, and therefore a decline can be expected).
"We will change that stance only once the disconnect between the real world and financial markets tighten from here, as a consequence of market correcting or fundamentals improving," the report states. Furthermore, current credit and equity bubble levels are reminiscent of 2007 and other events.
On the other hand, Fasanara sees most of the opportunities in their Hedging book, thanks to the market mispricing the potential for realized volatility and for toppy markets to be 'gapping markets’ (e.g. gold’s heart attack, Nikkei flash crash…) The book is long volatility.
Two premises that Fasanara is relying upon in the outlook is (1) the expectation of a bubble chain and a deleverage chain; and (2) Japan and China being catalysts as their dynamics may have important repercussions for global markets in the months ahead.
Francesco Filia told Opalesque last week he is expecting a steep correction, as there is a huge disconnect between fundamentals and the levels at which the equity markets are trading. He believe......................
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