Market Perspectives February 2015 Summary

Market Perspectives
February 2015
Feb. 2nd, 2015
www.finlightresearch.com
A retreating tide drops all boats…

“We have a free exchange rate once again”
– Thomas Jordan (SNB President)
“2015 will become a trader's dream but an investor's hell”
– Felix Zulauf (Swiss hedge fund manager)
“For the entire five years from September 2009 to September
2014, more than 25% of the gains in Europe's stock markets
came on the days when the ECB met, probably because Mario
Draghi knew just what the market wanted to hear”
– Jeff Kleintop (Schwab's Chief Global Investment Strategist)
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FinLight Research | www.finlightresearch.com

Executive Summary: Global Asset Allocation
Globally, things are a mess… Every major economy is printing money and
injecting liquidity in the market, hoping for inflation and getting deflation…
The crash in oil, the rise in the dollar, and the slowdown in global growth is a
big-picture concern.
Volatility in commodities and currencies is propagating to stocks. Our
regime switching model is pointing to a major shift in the S&P500 volatility
regime
ECB has finally joined the quantitative easing game. Most investors are
betting on a new rally in stocks.
But not all QE programs are created equal. Mr. Draghi only has one arrow
in his quiver: monetary easing. BCB intervention needs to be completed by
the political consensus for fiscal stimulus and structural reforms…
The divergence theme continues to propel the dollar higher
The bull equity market remains intact. But, between slowing growth,
weakening earnings prospects, coming rate hikes, falling oil, and the strength
of the dollar, we still believe equity markets are on borrowed time.
We remain underweight government bonds and corporate credit overall
(but with an intra-asset class preference for IG vs HY, and Eurozone non-
financials IG vs US IG), Overweight US dollar (supported by divergence Fed
policy from that of the ECB and BOJ) and UW commodities (specially on
energy and precious metals)
We summarize our views as follows
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MACRO VIEW
The Good
ECB announced a larger QE program than expected
Conference Board Leading Economic Indicators increased 0.5% in Dec. ’14, probably
pointing to a steady growth for the next few months.
The strong spending found in the Q4 US GDP data offers some reason for optimism
Conference Board Consumer confidence rose to its highest level since Aug. ’07
The Bad
Q4 GDP came in at a lower growth rate than was expected
It’s amazing to see the market about to reach new highs when two of its largest sectors (banks
~ 16% of the S&P500, energy ~ 10%) are weakening. Earnings season is showing lower
guidance and slower growth. Forward earnings estimates continue to decline.
Because of the European QE, EUR appears to be in free fall. And for the first time since Oct.
‘09, Germany saw Consumer Price Inflation fall in January
US Retail Sales decreased 0.94% in December.
U.S. durable goods orders in December came in weaker than expected
Dallas Fed manufacturing figures were much worse than expected
The Ugly
Escalation of Russian tensions as Ukraine conflict is roaring again…
Deteriorating sentiment around the Greece bailout negotiations
Main systemic risk resides in China : China’s economy is supported by approximately six
trillion dollars of 'shadow debt', which may eventually create major systemic issues.
We are building a boom-bust economy that is increasingly dependent on central bankers
inflating policies. The end game is clear even if the timing is anything but.
4

5
The Big Four Economic Indicators
The overall picture had been one of a slow recovery, but there is no indication of a recession using the
indicators monitored by the NBER.
The Big Four average shows some signs of exhaustion…

6
US GDP
Q4 GDP came in at a lower growth rate (2.6%) than was expected, a decline from 5.0% in Q3.
Despite disappointing nominal December retail sales, the Q4 real personal consumption expanded at
4.3% QoQ saar (adding 2.9% to GDP)

7
Real Retail Sales
Retail Sales decreased 0.94% in December
Real Retail Sales was down a lesser 0.57%, thanks to the disinflationary trend in the CPI.
The trend in retail sales should be watched closely over the next few months

8
Conference Board LEI
Conference Board Leading Economic Indicators increased 0.5% in Dec. ’14, probably pointing to a
steady growth for the next few months
At current LEI levels, recession risk still seems very low…

9
PMI Data
At 54.2 in January, up from 53.5 in December, the
Markit Flash US Composite PMI Output Index
points to a further expansion of private sector
business activity
This is, however, the second-weakest reading
over the last 11 months.
Demand’s growth continues to slow…
Markit's flash manufacturing PMI data for
January suggest that the main engines of the
global economic recovery are losing
momentum

10
Durable Goods
Disappointing durable goods figures
make us question the US economic
activity.
Durable goods orders slipped by
3.4%, leading to a 9.5% decline
over the Q4 as a whole. Excluding
transportation goods, orders declined
1.8% over Q4 (sharpest fall since Q3-
2012)
Global growth slowdown seems to
be weighing on US companies
"The January manufacturing and
services surveys collectively recorded
the weakest monthly increase in new
orders since the recession, sending a
major warning light flashing that
growth of demand has continued to
slow at the start of the year“ - Chris
Williamson, chief economist at Markit

11
Dallas Fed Survey
The plunge in oil prices is weighing
on Texas' economy.
The latest Dallas Fed manufacturing
survey came in at -4.4%, down from
+3.5% in Dec. ‘14 and well below
expectations of +3%
The forward looking outlook is also
down from +9.2 in Dec to -3.8 in Jan.
Source: Dallas Fed, Young Capital Management

12
US Housing
Housing remains a weak
spot for the US economy
December's Pending
Home Sales Index, a
forward-looking measure of
demand, slid 3.7% last
month.
Existing home sales
declined over 2014.
But inventory are now
down to 4.4 month supply.

13
US Housing
Compared to median
household income, new
homes seem to be reaching
new record levels of
unaffordability
Bubble 2.0 is forming!
The medium new home price
stands at 35% above the line
induced by its 87-99 trend

14
Consumer Sentiment
The University Of Michigan
Survey Of Consumer
Sentiment came in at 98.2
in Jan (up from 93 in Dec)
This is its highest level
over the last 11 years.

15
Inflation
At -0.20%, HICP shows that Eurozone is now in deflation mode.
5 year breakeven inflation rate stands at 0.44%
The sliding Eurozone inflation has finally tipped the ECB to come out with its widely anticipated QE.
U.S. inflation expectations (5yx5y inflation swaps) have plunged to their post-Lehman lows

16
Chinese Economy
At 7.4% over Q4-2014, China GDP growth continues its slide down. It now stands at the lowest level in
20 years.

17
GS – Global Leading Indicator (GLI)
GLI remains in ‘Slowdown’
phase, defined by positive but
decreasing momentum.
7 of the 10 underlying components
of the GLI worsened in November
We’ve been thinking for a while
that the current acceleration
remains quite modest for a
typical expansion phase.
Available data is more indicative of
a stable macro environment rather
than one with a growth pulse.
More data are still needed to
confirm our fears about the current
economic situation.

18
EQUITY
We still believe “Central Banks-levitated” equity markets are on borrowed time.
Central bank interventions continue to work their magic to keep the bull market going.
The market is rallying to higher levels. This despite deteriorating technical and fundamental
support, and weakening earnings prospects.
The bull trend is still intact, but:
The current rally is driven by an increasingly smaller (high beta) portion of the market (social
media, biotech…)
U.S. equities have started to show signs of indecision… The Dow Jones Industrial, the Russell
2000 and the S&P500 appear to be toppish and fail to develop momentum to move higher
Market correction is long overdue and has been delayed by central banks pumping cash
At current valuation levels, the risk-return profile for equities appears less attractive and should imply
some cautious. Rationally, the upside on stocks is exhausted by a limited multiple expansion and
margins being at peak levels. But the current environment of unprecedented monetary stimulus
across the globe is making rationality irrational.
Volatility in commodities, currencies, and bonds is filtering to stocks. Equity implied volatility is
clearly shifting to a higher regime.

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EQUITY
Some of the biggest industrial names (Caterpillar, Pfizer, P&G…) are saying that the rise in the dollar,
the crash in oil, and the economic slowdown in places like China and Europe are starting to impact their
bottom lines - and will likely continue to do so.
Strong US dollar and currency volatility are headwinds to earnings guidance, specially for multinational
companies
We don’t agree with those who continue to assert that lower oil prices are good for the US economy
and the stock market, as the benefits to consumers is supposed to outweigh the decline in the energy
sector (less than 10% of corporate earnings and market valuation). The sharp decline in oil prices is
simply killing the growth from a sector that have generated a double-digit growth over the last
years.
The coming rate hikes (probably in Q2-2015) will depress all asset prices for at least part of next year,
in our view
Initiated by the ECB QE, the rally in European equities has been concentrated in defensive sectors and
core indices. It is already losing momentum as uncertainty about the implication of Greece’s new
government next steps

20
EQUITY
Bottom line :
We remain Neutral equities. At this stage, expansionary monetary policies, low interest rates and
abundant liquidity are keeping us from moving to an underweight on equities. Even bad news for
the economy (in Europe, Japan and China) appear as good news for stocks, as they allow for
further stimulus.
We may revise our view to OW after a clean break of the 2075-2125 range on the S&P500, and to
UW below the trend from Nov. ‘12 lows
We think it is wise to incrementally "de-risk" your portfolios by focusing on higher quality / more
defensive / more favorably priced companies
We remain Neutral on Europe vs. US, despite the ECB QE program. We think that markets are
too reliant on the ECB. If the ECB loses the market’s confidence, European stocks would
underperform severally.
We remain OW on Japan (always on an FX hedged basis) as we see further upside for
Japanese stocks from the improvement in corporate earnings momentum
We remain UW in US small caps vs large caps, and UW EM stocks vs US large caps

21
Earnings
The forward 12-month P/E ratio for the S&P 500
now stands at 16.6, well above historical
averages: 5-year (13.6), 10-year (14.1)
The 12-month EPS estimate is now at $124.04,
decreasing from $126.87 at Dec. 31st (-2.2%).
Nevertheless, analysts are still projecting
record-level earnings over Q2, Q3 and Q4-2015
For Q1 2015, 12 companies have issued
negative EPS guidance and 2 companies have
issued positive EPS guidance.

22
Investors Sentiment
According to the weekly survey from the AAII, bullish sentiment among individual investors dropped from
46.11% down to 37.1%. From a contrarian point of view, this is rather bullish.

23
Risk Aversion
Safety trade is still in play: The ratio of stock to bonds is sliding down…
Jan. ‘15 was the third-highest return month for USTs of the past 10 years

24
SNB’s Action continues to make Waves
The Swiss National Bank’s
decision to suppress the
minimum exchange rate peg, is
still making waves...
Poland is probably taking Hungary’s
path with respect to CHF
denominated consumer loans.
Banks may be forced to bear the
losses on these loans. Croatia and
Serbia may follow.
Austrian bank Raiffeisen
International (€280 Bln in assets),
which has already suffered large
write-downs in Ukraine and Russia,
is now one of the possible victims of
such a decision.

25
S&P500 – A Long-Term Perspective
Whatever the long-term approach
you use to look at it, the stock
market appears to be significantly
overvalued.
Based on the Buffett’s Indicator
(ratio of total market cap to GDP),
currently at 119.7%), US stocks are
positioned for an average
annualized return of 1%-2%
(including dividends) for the next
decade.
The Buffett’s indicator is 83%
negatively correlated to future 10-
year returns dating back to 1950.
Source: Guru Focus

26
S&P 500 – A Short-Term Perspective
All exhaustion patterns
have been ignored to date.
Technically, the S&P500
seems to be forming a
“mega-phone” pattern
At this stage, we favor a
top formation within the
2075-2125 range
Our view will prove wrong
if the uptrend going
through the highs since
mid-2013 (~2100) is clearly
broken.
1980 is the level to watch
on the downside.
A similar pattern is forming
on the Dow.

27
S&P500 – A Short-Term Perspective
In October 2014, the Dollar
Index to S&P500 ratio turnd
upward by broking its upper
trendline
.
Since then, owning US
Dollars has been a better
strategy then holding the
S&P 500
Is that the start of a major
correction?
Source: opportunityidentified.com

28
DJI – A Short-Term Perspective
A similar consolidation is
taking place on the Dow.
A bounce is still possible on
the lines 2-4.
Only a clean break above line
1 (~17850) would give a
bullish signal.
A bearish signal will be given
by a break below 16 400.

29
Trading Model – S&P500
Our prop. Short-Term trading model went massively long on Jan. 6th at 2002.61 on the index. The
model increased its longs on Jan 28th (@2002.16), then on Jan 30th (@1994.99)
The model targets 2041, 2062 and 2083 on the upside. Above 2083, it reverses its position and
becomes modestly short with 2062-2041 as targets.

30
Equity Volatility
Implied volatility on the Russell
2000 is shifting higher
The 200-wma seems on an
inflexion point. The trend should
be watched closely.

31
Equity Volatility
On Oct 13th, 2014, our regime
switching model pointed to a
major shift in the S&P500
volatility regime
Since then, the VIX index has
left the “Low Vol” regime, and
started to migrate between the
“Medium Vol” and “High Vol”
regimes
The last time we’ve seen a
similar behavior on the VIX
was in July ‘07.

32
FIXED INCOME & CREDIT
Nothing new compared to our previous reports. Undeniably, the global central bank landscape remains
highly supportive of fixed income markets. We still look for the bear market on USTs to resume but the
timing looks more and more uncertain….
US yields are set to stay low both because low inflation will transmit to the US via the strengthening
dollar but also because yield hungry investors in Japan and the Eurozone will simply buy USTs.
We’ve been Neutral UST since end of Nov. ’14. The 10y UST yield continues its slide below 2.00
We remain neutral on German yields despite the ECB QE that we expect to keep German bond
yields at very low levels. But until fiscal solutions are seen, the potential for a reflation trade (similar to
the one we initiated in the US after Fed’s QE3) remains very limited, in our view. We stop our HICP
(1yx1y) breakeven trade.
We expect the Fed to start tightening from Q2-2015 and will hike rates more than is currently
priced in: The markets are still only pricing in about one hike from the Fed next year. Based on Fed’s
speech, we expect 3 or 4 hikes instead. Thus, the re-pricing of Fed expectations is likely to take
place very soon in the short end of the curve.
While US yields in the short end are expected to go higher, the medium to long end of the curve will be
supported by abundant liquidity. We continue to bet on a significant flattening of the US yield
curve.

33
FIXED INCOME & CREDIT
In the credit landscape, we see investors moving up the quality spectrum, selling high yield bonds and
growth sectors and getting into investment grade bonds, govies and defensive sectors. This is
probably a sign we are moving into the final stage of the bull market and economic expansion
Given the ECB QE, many strategists expect the search for yield to resume in Europe, tightening
spreads, especially in HY
We remain UW on corporate credit, due to valuation, to rising corporate leverage (specially in the
US), to position within the credit cycle, to the expected rise in government bond yields and given the
weak total return forecast
Within the credit pocket, and over the very short-term, we continue to prefer Eurozone
corporates (especially IG and non-financials) to US corps, because of the coming ECB massive QE
In the medium-term (6 months), we expect the pattern of European outperformance to reverse during
2015.
We still prefer IG over HY on a risk-adjusted basis as we expect higher volatility on spreads
Bottom line : Neutral Govies, Neutral Eurozone vs. US Govies, Long flatteners on the US yield curve,
UW credit, OW Eurozone vs US IG credit, Neutral TIPS and OW HICP Inflation, UW High Yield vs
High Grade, Neutral on EM corporates

34
10-year USTs
The 10y UST yield continues its
plunge below 2.00
At this stage, there is no sign
of a base forming
10-year yields have broken (on
weekly and monthly basis)
below the 1.77 level (76.4%
retrace of the rise from 2012
lows)
We target the 2012 lows
(~1.38)
Market rejection of the 1.77
resistance would increase the
likelihood for a base pattern
formation. In that case, a bounce
to 1.9-2.0 becomes possible.
.

35
QE Effects
Long-term German bond yields have converged
to Japanese yields!
Southern European bond yields have tightened
to new lows

36
Inflation Breakevens
As a direct effect of the European QE,
the German 10-year breakeven has
risen significantly over the past week.
But 5yx5y breakeven inflation is
back to its all-time lows (in the US,
like in the Eurozone).
We still believe that fiscal policy has
to take over from monetary policy in
order to win the war on deflation.
Until fiscal solutions are seen, the
potential for a reflation trade (similar to
the one we initiated in the US after
Fed’s QE3) remains very limited, in our
view.
We’ve got out of our HICP (1yx1y) long
breakeven trade.

37
Inflation & Real Rates
ECB QE optimism has faded sharply,
leaving EUR (like US) 5yx5y inflation
forwards at lows
Amazing! 20yx10y forward real yield
stands at -0.45%. The market is now
pricing negative real yields over the
next 30 years!
Actually, the market prices a
breakeven inflation around 2% on all
horizons, but still considers that the
ECB will never normalize its policy
rates for the next 3 decades
Thus, current breakevens and long-
end rates seem completely
incompatible. Which indicator is right?

38
US Credit
High yield funds are back in favor. The search
for yield has resumed (mainly in Europe),
tightening spreads, especially in HY
Over the last week, HY took advantage of lower
treasury yields and renewed retail inflows. That
mitigated the global market stress.
CDX.HY and CDX.IG continued to trade in line
despite the high volatility

39
Eurozone Credit
iTraxx Main (Xover) continues to trade in line with CDX.IG (CDX.HY)
For IG, as for HY, iTraxx has underperformed since

40
Yield Curve Slope & Recession
The yield curve slope remains
one of the best predictors of
recessions
As the curve continues to flatten, the
probability to see an inverted curve
increases
At this stage, the 5/10-year yield
spread seems protected by the
bottom of its LT channel (~33bps)
Breaking through this support would
give a very concerning signal.

41
EXCHANGE RATES
Policy divergence between the US on one hand, and Japan and the Eurozone on the other, should
continue to provide an environment supportive of the dollar.
European QE continues to break the Euro
We see further medium term USD gains against the major crosses, especially EUR and JPY
EUR-USD underlying structure still looks very heavy. We remain UW EUR-USD as long as the pivot
stays below 1.21 and move Neutral above to play the correction towards 1.25-1.30
Although a short-term consolidation is plausible, we still target 1.10 in Q3-2015 and parity early 2016
We remain OW USD-JPY as far as the pivot stays above 116 (lower bound of the consolidation triangle).
Our ultimate target remains at 124-125 over the medium-term

42
US Dollar Index - DXY
We continue to expect the USD to
strengthen against the major
crosses
Our ST target of 92.5 was finally
reached. The spot is now very close
to our next target at 96.00
Our ultimate target remains at 101-
102 over the medium-term.

43
EUR-USD
Our ST target of 1.16-1.15 has
already been reached. The spot was
as low as 1.11. A rebound took place
on our following target of 1.12-1.10.
Our medium-term view remains
biased towards a strengthening of
USD
Although a short-term correction
(towards 1.146 – 1.15 - 1.166) is more
and more plausible, we still target the
psychological level of 1.10 in Q3-2015
and parity early 2016. A clean break
of 1.1235 is needed for that.
If we break below 1.10, momentum
should accelerate.
We remain UW EUR-USD as long
as the pivot stays below 1.21 and
move Neutral above to play the
correction towards 1.25-1.30

44
USD-JPY
After reaching a local high around
120.80, a consolidation seems
underway (as expected).
Pivot could remain range-bound for
a while.
We remain OW USD-JPY as far as
the pivot stays above 116 (lower
bound of the consolidation triangle).
Our ultimate medium-term target
remains at ~ 124-125.

45
COMMODITY
Over the short-term, the trend remains bearish. We still watch for a bottoming process.
USD strengthening remains a big headwind to commodities
WTI continues to slide as US crude inventories rise to new highs
We remain UW commodities. We continue, however, to like owning the GSCI index, and think
that commodities hold value as cross-asset portfolio diversifiers.
Bottom Line :
Many factors are weighing on base metals: US Dollar strengthening, the Chinese slowdown,
weaknesses in construction / housing sectors in major economies (mainly affecting Copper and
Nickel) We remain Neutral on base metals (but we prefer Aluminium, Zinc and Nickel to Copper)
We remain UW on agriculture (except on Cocoa and Coffee), as we think supply will continue to
grow relative to demand. We still anticipate that agriculture prices will revert to 2009 levels. Within the
Agri complex, we’ve been OW Cocoa and Coffee for a while now. We like Cocoa for its long-term
underlying demand driven by consumption in Asia. The recent pullback in coffee prices provides a
better entry opportunity into this market after the sharp surge we’ve seen in prices because of the
drought in Brazil.

46
COMMODITY
Despite the steady slide in oil prices, there is no sign of a supply contraction yet. In fact, inventory
data show that oversupply has accelerated over the past 2 months We remain UW oil and target
‘08 lows (around $35) as long as the OPEC doesn’t decide to stop the bleeding. We will move to
Neutral if WTI breaks above $52/barrel
The stimulus provided by the ECB & BoJ is already factored in gold prices. Precious metals are
vulnerable to higher US real yields and stronger dollar
Our strategy on gold remains unchanged: We remain UW above 1150-1170 band. We will move
Neutral below 1150 and switch progressively to OW (accumulate) as the spot slides down
towards 1000-980, which is likely the final leg down.
Our first target on silver stands at 14.70. We still think that Silver (like gold) is probably ready for its
final leg down towards 12.50. At current levels, we are UW. we will switch progressively to OW
(accumulate) as the spot breaks the first material resistance around 14.70 and slides down towards
12.50
Although Gold/Silver ratio looks extremely high, we expect gold to continue outperforming silver over
the short-term.

47
Crude Oil
The supply/demand imbalance in the oil market deteriorated
in the past 2 months.
US inventory data point to an oversupply exceeding 1.5
million barrels per day. Aggregate global oversupply may
significantly exceed this level.
Spare storage capacity at Cushing has been declining at a
rapid pace
Inventory dynamics at Cushing, Oklahoma confirm the
supply acceleration in November-December

48
Crude Oil
Spare storage capacity in the
U.S. is quickly shrinking,
pushing the short-term
contango to widen..
The 12-month contango in WTI
increased by $5.60 (to $9.47)
per barrel since mid-December
incentive cash & carry trades
(and, thus, more storage)
In the absence of significant
supply cuts, the 12-month
contango may reach $20 per
barrel, like in 2009.

49
Copper
We’ve avoided Copper over the
last 2 years.
Our previous targets at 6400-
6000 was finally broken to the
downside. Now, the momentum
is building.
We remain bearish on Copper,
as far as the 6000 resistance
is preserved.
Next level to watch is the 200-
mma at 4856..

50
Gold
Gold has rallied considerably, reflecting increasing investor concern.
But it is now facing an unfavorable environment (stronger US dollar, higher ST interest rates). And ECB
QE is already factored in its prices.
We expect the Gold not to break its Jul. ‘14 highs (~1345).
Our first target stands at 1230. The way we get there would tell the rest of the story.
If the next support holds, we may see the Gold breaking up to 1340 and 1430. Once the rise is
complete, we expect gold to test its November lows, and very likely make new lows.
If not, Gold will directly target its Nov. lows and very likely make new lows.

51
ALTERNATIVE STRATEGIES
Over January, HFs managed to mitigate losses on equity markets. During the risk-off phase, performance
came from L/S market neutral funds. CTAs started 2015 as they finished 2014, with strong performance
on long dollar, long rates and short commodities trades. Global Macro funds made money fro their short
Euro trades. Event-Driven managers have continued to suffer from their exposure to the energy sector.
We continue to see inflows in HFs as investors position for volatility.
We reiterate our preference for risk diversifiers (pure alpha generation strategies) over return enhancers.
We maintain our previous positioning and remain OW on:
Equity Market Neutrals both for their “intelligent” beta and their alpha contribution. On several
occasions in 2014, our preference for variable bias and market neutral managers has proven to pay
off (compared to long bias) on the back of adequate short positioning.
CTA’s and Global Macro as a diversifier and tail hedge.
Vol. Arb strategy and prefer funds that trade volatility globally (all assets / all regions). This strategy
has shown a great ability in terms of protecting capital during adverse periods, and a volatility that
compares favorably with the hedge fund industry

Bottom Line: Global Asset Allocation
Globally, things are a mess… Every major economy is printing money and
injecting liquidity in the market, hoping for inflation and getting deflation…
The crash in oil, the rise in the dollar, and the slowdown in global growth is a
big-picture concern.
Volatility in commodities and currencies is propagating to stocks. Our
regime switching model is pointing to a major shift in the S&P500 volatility
regime
ECB has finally joined the quantitative easing game. Most investors are
betting on a new rally in stocks.
But not all QE programs are created equal. Mr. Draghi only has one arrow
in his quiver: monetary easing. BCB intervention needs to be completed by
the political consensus for fiscal stimulus and structural reforms…
The divergence theme continues to propel the dollar higher
The bull equity market remains intact. But, between slowing growth,
weakening earnings prospects, coming rate hikes, falling oil, and the strength
of the dollar, we still believe equity markets are on borrowed time.
We remain underweight government bonds and corporate credit overall
(but with an intra-asset class preference for IG vs HY, and Eurozone non-
financials IG vs US IG), Overweight US dollar (supported by divergence Fed
policy from that of the ECB and BOJ) and UW commodities (specially on
energy and precious metals)
We summarize our views as follows
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53
Disclaimer
This writing is for informational purposes only and does not constitute an
offer to sell, a solicitation to buy, or a recommendation regarding any
securities transaction, or as an offer to provide advisory or other services
by FinLight Research in any jurisdiction in which such offer, solicitation,
purchase or sale would be unlawful under the securities laws of such
jurisdiction. The information contained in this writing should not be
construed as financial or investment advice on any subject matter.
FinLight Research expressly disclaims all liability in respect to actions
taken based on any or all of the information on this writing.

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carry, volatility), real assets (real estate, infrastructure, farmland, timberland and natural resources).
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made quantitative
analysis of your
portfolios in terms
of asset allocation,
risk profiling and
risk contribution
Provide tailor-
made quantitative
analysis of your
portfolios in terms
of asset allocation,
risk profiling and
risk contribution
•Risk Profiling
Offer a turnkey 3-
step factor-based
process in GAA
with factor
selection, risk
budgeting and
dynamic portfolio
protection
Offer a turnkey 3-
step factor-based
process in GAA
with factor
selection, risk
budgeting and
dynamic portfolio
protection
•Factor-based GAA Process
Provide assistance
with alternative
investments
(including real
assets) in terms of
profiling, and
integration in a
GAA
Provide assistance
with alternative
investments
(including real
assets) in terms of
profiling, and
integration in a
GAA
•Alternative Investments
Provide assistance
with asset
allocation and
related risk control
and/or risk
budgeting
techniques
Provide assistance
with asset
allocation and
related risk control
and/or risk
budgeting
techniques
•Global Asset Allocation
(GAA)
55

Market Perspectives February 2015 Summary

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Market Perspectives February 2015 Summary