Welcome to this week’s State of the Markets. Please click the following link to review this week’s SOTM. In this week’s episode, we catch up on some of our market quantitative studies, rationalize the bond market sell-off that is equating a VaR shock in equities, and look at the yield curve more in depth. One thing is for certain, there are no…...
...
Cross-asset strategy: Almost irrespective of macro tremors like the Texas energy shock, Bonds continue to telegraph confidence in the economy and skepticism of Fed guidance. That’s unsurprising given a Fed/fiscal experiment with a Yellen Treasury slogan (“go big”) to rival a Yellen Fed slogan from 2016 (“high-pressure economy”). It seems premature to fret about an…...
A strong US consumer setup at a time of economic reopening to unleash pent-up demand and drive growth. Our positive 2021 outlook was anchored on stronger and earlier-than-expected consumer recovery and pickup in mobility post-Covid-19 vaccine, releasing cyclical and pent-up demand. We expect consumers to blowout expectations for rest of the year given: (1) economic…...
Many believe that bond yields will not be able to move up much, partly as there is no sustained inflation, and partly as the economy is holding a lot of leverage. Further, the general sentiment is that, if the bond yields do move higher, that could become a problem for the broader market, given the…...
Welcome to this week’s State of the Markets. Please click the following link to review this week’s SOTM. In this week’s episode, we take a look at the best time to own stocks, fund flow strength, breadth strength and misnomers about valuations. Can the S&P 500 make it to 4,000 before having a more protracted consolidation period? “Markets change minute by minute.…...
When can the US achieve broad vaccination of its population: Using the current rate of daily vaccinations (red line, Exhibit 1), we simulated different scenarios that forecast potential vaccine uptake by YE21 (black lines, Exhibit 1) which could lead to herd immunity (see our note here). In our analysis, we consider only the US population…...
The strong start to the year for risk assets was upended in the final week of January, as the rise of Reddit retail traders managed to produce outsized fear amongst the hedge fund community. With that, came massive deleveraging that hadn’t been seen since March 2020 and prior to that in 2009. Morgan Stanley: Monday…...
Welcome to this week’s State of the Markets. Please click the following link to review this week’s SOTM. In this week’s episode, we take a look at some breadth studies with respect to 3 of the major indices to dissect overbought conditions and to validate why we remain of the opinion that market pullbacks are breeding grounds for investor opportunities. “Learn…...
Alpha over Beta. The wild price swings of the past month are a function of two things in our view: 1)excess leverage in the financial system and 2) the market contemplating the transition of the economy from early to mid cycle as the reopening draws near. The good news is that VAR shocks that happen…...
