Improving market dynamics, including better investor sentiment, low positioning and positive price momentum, means the chances of a major equities correction of 10%-plus are low. The likelihood is lessened further by strong corporate fundamentals, as demonstrated by one of the best US earnings seasons in Q2 of the past years; good macro data pointing to consolidation at a healthy level; gradual and predictable central bank policies; and the start of targeted Chinese easing to counter the growth slowdown and negative trade impact. While some market jitters were sparked recently by the unwinding of crowded trades in some of the ‘FAANGs’, including Facebook and Netflix, these developments were not significant enough to derail the market, especially as divergence in their prices and performance means investors do their homework to assess the relative qualities of each company. Patrick Moonen, Principal Strategist Multi Asset, NN Investment Partners, explains: “Some market watchers see these events as the start of a bigger and broader market correction. However, we tend to disagree. “In recent weeks, we have mainly seen an improvement in market dynamics. This of course does not alter the fact that in certain market segments such as the FAANG shares in which positioning is extreme, substantial corrections can or will occur on the basis of an adjustment of expectations. “For the time being, I do not yet see any contagion to other market segments. However, one thing we have done in our allocation is to reduce the weight of US equities in favour of Emerging Markets, in other words a shift from a relatively expensive to a relatively cheap region. We stay neutral Eurozone equities. “All these elements are evidence that a broad correction in risky assets has a low probability. Of course, if the trade dispute between the US and its main trading partners escalates further, we will see lower growth expectations and broad-based weakness in risky assets. The latest data on factory orders in Germany were weak and may be a sign that investment spending is getting affected. On the other hand, the outcome of the meeting between Juncker and Trump has shown that trade risk can go both ways. Escalating trade wars is not our base case or even the main driver of our investment strategy. “Still, none of this detracts from the fact that in some crowded, momentum-driven market segments, we may occasionally witness sharp corrections. It is up to us to steer clear of these vulnerable segments by combining fundamental and behavioural analysis and overlaying a quantitative approach with qualitative insights.”

Eze Software  has expanded its best execution offering with Trade Informatics’ (TI) Strategic & Tactical Analytic Research & Trading tool (START), a broker neutral automated intelligent trading engine. Backed by TI’s advanced pre-trade transaction cost
analytics, START helps firms align investment and trading strategies and seek out better execution opportunities across brokers’ direct market access routes and dark pools. The engine’s broker-neutral, logic-based trading aims to improve performance, manage costs, and allow control of and transparency into the execution strategy.

Eze Investment Suite OMS/EMS users can choose START from their dashboards as they would an algorithm. START will suggest trading strategies based on TI analytics, which the user can validate. Upon execution, START will control the size, type, price, routing, and timing of every child order sent to broker DMA pipes. Users will maintain complete anonymity of the parent order, which is quarantined with the platform and never exposed to the broker. START will provide post-trade analysis across its certified brokers and the venues on which trades are
executed.

Eze Software began its partnership with Trade Informatics last year, integrating TI’s advanced post-trade analytics to its Transaction Cost Analysis offerings. “Delivering best execution in today’s environment isn’t just about finding the best price and liquidity for an order; it’s about finding the optimal way to realize your investment strategy,” said Bill Neuman, Senior Managing Director, Product & Engineering. “We look forward to adding TI’s intelligent trading engine to our trade optimization offerings, and look forward to helping clients
bolster their best execution arsenal.”

“Trade Informatics and Eze Software maintain a shared vision: to help clients retain alpha, minimize investment costs, and drive operational efficiency. Now, as we work to integrate START, we’re excited to offer to Eze users expanded opportunities to further automate and optimize their trading,” said Allan Goldstein, Chief Operating Officer of Trade Informatics. “Our partnership complements our individual strengths, and we look forward to working together to develop innovative solutions that deliver unprecedented value to clients.”