European High Yield CDS At The Widest Level Since April
Shorting Europe
Hedge fund selling of Europe has been very strong lately…with short additions the main driver.
Source: JPM PI
More selling
GS Prime also reports that hedge funds net sold European equities for a 6th straight week, led by short sales in macro products.
Source: GS Prime
Mind the gap
Last week´s widening in XOVER left EU HY CDS at their widest levels since April last year. The gap vs general equity index looks....dangerous.
Source: Morgan Stanley
European stress
V2X is overshooting VIX, highlighting that this crisis is hitting Europe relatively harder than the US.
Source: LSEG Workspace
CTAs in Europe
CTAs puking Europe too.
Source: JPM PI
10 year low
GS Prime: "The Long/Short ratio across our European prime book just tanked to a new 10yr low"
Source: GS Prime
General outflows
We have also seen net outflows from European stocks from general investors (not only hedge funds).
Source: EPFR
Europe hates higher oil prices
Higher energy prices generally lead to European under-performance.
Source: Soc Gen
Tech is no longer the most expensive EU sector
Matthew Garman from the Morgan Stanley European Content Team notes that EU Tech has been the most expensive EU sector 75% of the time over the last 10 years. However, the valuation gap between Tech and the rest has now closed for the first time in 4 years, as Industrials (21.8x) have now overtaken Tech (21.4x) as the most expensive EU sector on a 12M forward PE.
Source: Morgan Stanley
German round-trip in stupidity
Totally unrelated to everything else in this article, we still wanted to include this chart as it is just so crazy and encapsulates Europe at it´s worst: German nuclear power generation down from highs in '06.
