* Best December Contrarian Trades are...
...both sector trades: long energy, short telecoms; long industrials, short consumer discretionary. Nov contrarian trades: long Eurozone, short Japan worked well; but long energy, short utilities did not work.
* Overweights increased in Banks…
European PMs have a barbell sector approach: they are long Financials, but also long Pharma (see cover chart). Positioning in Banks is raised to a five month high, standing +1SD above its historical average.
* … while Oil & Gas dropped to all-time lows
Underweights are dominant in Retail and commodity sectors. Allocation to European Oil & Gas drops to an all-time low (history since 2003). The sector is considered the most undervalued and its relative performance has dropped to 15yr lows. Contrarians should go long Energy and short Banks
* 2015: Be wise and not greedy
Hopes predicated on ECB QE seem premature, given that the weakening business cycle and plummeting commodities are working against a true earnings recovery. Be wise and stay with high Quality, Secure dividend yield, large cap, defensive stocks. See our 2015 Year Ahead for our outlook, sectors and stock picks