Belkin Report

Buy Buy Buy as Sentiment is far too Bearish

Conference call with Michael Belkin

Michael discussed the way his rate of change and time-series models work and their accuracy since he set up the report in 1991. They forecast asset class, regions, sectors and stock moves through analysing direction, position and intensity. The models are screaming a raging Buy signal across most sectors, particularly cyclicals including industrials, basic resources, auto parts, as well as tech. Anticipates a long period of outperformance for energy stocks. Gold still has the highest outperform signal. Investors should look for value stocks that have seen significant falls, but are not going bankrupt and could double or even triple from here - look at hotels, retail and auto parts for example. Confident that banks will start moving upwards - seen predicting a buy signal in next three weeks having been negative for some time. If you want to sell sectors and stocks then you should look to defensive areas - utilities, food and beverage, real estate and telecoms. Michael touched on the huge fiscal stimulus packages, with more and more bail out programmes coming to market, meaning the Fed balance sheet is increasing by $60-80bn each week. Sees the market rallying throughout the summer. On Belkin’s macro forecasting he has been long Treasury bonds since the beginning of the year, but from March had a fresh sell signal and would now recommend shorting most government bonds. The dollar is topping, is over-owned and will be undermined by the stimulus. This will benefit EMs - highlights Thailand, Chile, South Africa, Russia, Hungry, India, China, Korea, Peru and Mexico in particular. So far this quarter, Belkin’s recommendations are up a staggering 71% ($100mn portfolio, 50 positions, market exposure hedged out, pure alpha) and 5 of the last 7 quarters have produced positive alpha.