Macro: Asia:  Global Investors Lose Faith and more

• Global managers are at their lowest ever allocation in Asian equities.  From a peak of over 17% in 2018, average exposure has fallen to just 12.94%.
• Declines were led by China & HK Consumer Discretionary and Communication Services, whilst investors also scaled back exposure to Japan Communication Services, Industrials, Health Care and Consumer Staples
• Among Global investors, overweight the benchmark in Asia is by far the non-consensus trade.

• The Fed appears intent on tightening policy to fight inflation. . It’s difficult to see how the U.S. economy can sidestep a recession.
• The good news is the S&P 500 is at or near fair value, as long as earnings don’t significantly deteriorate.
• Renewed insider buying as the market reached its recent lows is another sign that downside risk may be low.

• The surprise SNB decision to raise rates by 50 bp last week sparked a disorderly VAR-driven unwind that rattled global markets.
• We are seeing numerous signs of capitulation by traders and investors.
• This volatility too shall pass. Hopefully, the markets can return to a more normal state next week.

Bond market volatility continues to lead all markets lower, triggering a further round of deleveraging.

Cryotos have been crushed and Credit markets appear to have hit capitulation, even if equities have not.

FX volatility, especially in the Yen, is also causing, as well as reflecting, distress in terms of forced buying/distressed selling and is being exaggerated by the (VaR) volatility based risk management models that trigger further deleveraging of balance sheets.