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Germany's mid-cap MDAX index is gaining traction as analysts highlight its potential for growth amid new government plans for increased defense and infrastructure spending. With a rise of nearly 11% in the past month and over 15% this year, the MDAX is seen as a "cheap" investment option, featuring several "conviction buys" like Lufthansa and Delivery Hero. The recent agreement to ease borrowing limits and establish a 500 billion-euro fund reflects a strategic response to growing defense concerns in Europe.
UBS strategists, including Max Grinacoff and Gerry Fowler, report a significant decline in the VIX index following recent volatility spikes linked to news from DeepSeek and tariff threats. Approximately half of the initial surge has retracted in under a week, influenced by record dispersion levels and a long gamma overhang.Despite the market's swift recovery, UBS's "Early Warning Signal" remains neutral, indicating a 60% chance of returns fluctuating within +/- 5% over the next month. The strategists recommend selling SPX straddles in this neutral phase while favoring VIX upside positions, emphasizing the need for strategic entry and exit points during volatility spikes.
UBS strategists, including Max Grinacoff and Gerry Fowler, report a significant decline in the VIX following recent spikes linked to news from DeepSeek and tariff threats, with about half of the surge retracted in under a week. Factors such as record dispersion levels and a long gamma overhang are contributing to reduced volatility, while systematic strategies are re-leveraging post-sell-offs. Despite the market's swift recovery, UBS's "Early Warning Signal" remains neutral, indicating a 60% chance of returns fluctuating within +/- 5% in the coming month, prompting a recommendation to sell SPX straddles during this neutral phase.
UBS strategists, including Max Grinacoff and Gerry Fowler, observed a decline in the VIX index following recent volatility spikes linked to news from AI company DeepSeek and tariff threats. Factors such as record market dispersion and a long-gamma overhang are contributing to reduced volatility.Despite the market's recovery, UBS's Early Warning Signal remains neutral, predicting a 60% chance of yields fluctuating within +/- 5% over the next month. The strategists recommend selling SPX straddles while favoring VIX upside positions, emphasizing the need for timely profit-taking during volatile periods.
UBS forecasts elevated S&P 500 volatility in 2025, driven by macroeconomic uncertainty, shifting policy rates, and geopolitical risks. With government stimulus waning, slower nominal growth is expected, particularly in China and the US, leading to intermittent volatility spikes.The potential for significant policy changes and escalating tariff tensions under the current administration adds unpredictability. UBS anticipates the key measure of market volatility to average around 20% in 2025, with volatility-of-volatility exceeding 110%, as earnings dispersion narrows and stock correlations rise.
UBS forecasts elevated S&P 500 volatility in 2025, driven by macroeconomic uncertainty, policy shifts, and geopolitical risks. With government stimulus waning, slower nominal growth is expected, particularly in China and the US, leading to intermittent volatility spikes linked to growth data.The firm anticipates the volatility index to average around 20%, with volatility-of-volatility exceeding 110%. Additionally, concerns over tech earnings and potential tariff tensions could further complicate the economic landscape, particularly affecting European equities and US markets.
UBS forecasts nearly 9% downside risk for European stocks by the end of 2025, projecting the Stoxx 600 index to fall to 470 due to weak earnings and macroeconomic challenges. The bank anticipates a 5% contraction in earnings per share next year, with sectors like autos and luxury goods facing pressure from China's economic slowdown. Defensive sectors such as utilities and renewables are favored, while cyclical sectors like semiconductors and energy are expected to struggle.
Gerry Fowler
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
germany's mid-cap index poised for growth amid increased defense spending plans
Euro
LEG Immobilien SE
Knorr-Bremse AG
Delivery Hero SE
DEU
Friedrich Merz
Sven Jari Stehn
Olaf Scholz
Gerry Fowler
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