7 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.