Seven Key Market Recommendations Societe Generale Just Made

In a report published March 24, a team of analysts at Societe Generale presented seven key market recommendations to "reduce risk in an expensive world."

'Panic' Reallocation Out of Negative Yields In Europe:

Long U.S. government bonds in U.S. Dollars.
Long bonds in Italy and Spain.
'More to come' on Euro area equities.
Shift European into Asia ex-Japan credit.
Short gold.
U.S. sovereign curve: short the belly (five-year) and long the wings (two year and 30 year).

The Fed To Exit Zero-Rate Policy:

Remain long the U.S. dollar – preferred shorts include the Australian Dollar and Japanese Yen.
Short the Russell 2000, initiate long on the S&P 500 index.
Long Equity volatility VIX.

Abenomics Largely Priced In:

Remain long on the USD/JPY until 127.
Tourism growth in Japan: buy "SG Visit Japan" stock basket.
Buy the Japan companies with aggressive share buybacks.

Growing Worries Over UK Election:

Enter 10s30s flatteners.
Short the FTSE/long Euro Stoxx 50.
Short the FTSE250/long FTSE100.
Long basket- British Pound sensitive stocks/short FTSE.

Upgrades To Eurozone Growth

Long Euro area equities/short U.S. equities.
Long Eurozone banks.
Long French equities CAC40.
Long Polish equities and local currency bonds.

Prefer Asia Over Latin America:

Long Indian and Chinese equities.
Long Indian local currency bonds.
Short Spanish equities/long Euro area equities.

Commodities To Remain A Laggard:

Stay short on gold.
Position for "steeper" oil curve.
Avoid oil-linked assets (i.e Russian Rouble, Canadian Dollar).
Long base metals/short precious metals.

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