04 October 2016 at 10:46 GMT
- Selling Deutsche Bank led to 5% return
- Wells Fargo and Teva on the other hand were sold with a loss
- JPMorgan should go up as rate increase is to come
- Going long in Japanese exporters FANUC and Murata expecting stronger USDJPY
By Peter Garnry
A lot of action is taking place in our SaxoStrats Model Portfolio.
As we alluded to in our morning call with clients our long positions in Wells Fargo (WFC:xnys) and Teva Pharmaceuticals (TEVA:xnys) were stopped out in yesterday’s US session. Negative sentiment in both stocks were not overcome and our bet on mean reversion was clearly not a success.
Managing our risk in the portfolio we have closed our long Deutsche Bank (DBK:xetr) capturing around 5% return on the overall portfolio. We believe the likelihood is quite high that the German bank will settle with the DoJ this week and hopefully around €5 billion so no further capital raise is needed. Depending on the price action we might engage in Deutsche Bank again soon.
Current Equity Portfolio (click to enlarge)
In addition we have added a long Pearson (PSON:xlon) position today betting on the stock to be repriced over the coming months. Today’s price action is a major breakout and we have initiated the trade with a stop at 765. Our long Nets (NETS:xcse) position from yesterday is performing well as the stabilization manager (Deutsche Bank) has intervened in the market post the disappointing IPO.
We entering three new long trades today. Long JPMorgan (JPM:xnys) with a stop at $65 and take profit at $75 betting on USD rates to go higher with the Fed moving in December. We are also going long Fanuc (6954:xtks) and Murata Manufacturing (6981:xtks), two Japanese exporters, as we forecast USDJPY to extend recent gains. Especially Murata may see improving earnings as the company is a supplier for Apple which is seeing gains on its new iPhone 7.
Murata CFD performance (click to enlarge)
Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more
— Edited by Clemens BomsdorfPeter Garnry is head of equity strategy at Saxo Bank