The most significant element going into the June low was positioning. Investors were hyper-aggressive buying hedges for equity exposure. Nothing has changed, especially after last Friday’s drop, and investors are still looking quite defensive. This is a positive in so far as it is indicative...
We think we could see a bullish back half of the year for equity markets. Our analysis follows in our Quarterly Strategy Report. Prefer to download this presentation in PDF? Please click here. 1. Summary -In the first half of 2022, markets experienced the largest wealth destruction...
2022 has been a tough year so far for risk management. This appears to us related to the inflation problem the US is experiencing. As long as inflation persists, the ineffectiveness of duration will likely persist. We think inflation will persist and are thus broadening...
We find compelling evidence that seasonal factors exist, historically leading November and December to be the highest 2-month combined returns all year. In our allocation portfolios, we have increased our equity exposure significantly in an effort to capitalize on these year-end trends. Please find below our...
In this quarter's strategy package, we share our analysis on Japan's Reopening Trade. In the full slide presentation, we cover the following: -Japan seems to have crushed the COVID-19 virus (for now at least) with daily new cases under 400/day. Lockdowns are over and the economy...
Just when everyone thought we had COVID-19 whipped, the delta variant came along and US cases inflected higher. The 7-day moving average was about 13,000 in early July and has jumped about 10-fold to 132,000 as of yesterday. The first place this can be seen is...
The oversold condition in stocks that has developed over the last several weeks is more than trivial. I highlighted on Christmas Eve the baker's dozen reasons why equity markets could tactically rally from that point, showing extremes in a variety of indicators. Extremes of the...
The S&P 500 experienced a waterfall decline in December, something rarely seen. Measuring the decline using a 30-day Wilder Relative Strength Index, it is clear the extremes recently experienced. On Christmas Eve, the S&P 500 punctured 30% on the RSI, something that has only happened...
The selling over recent weeks has been fast and intense, providing investors almost no relief. This type of short-term selling pressure has reached fever pitch levels that is usually indicative of some sort of relief rally, even if the ultimate lows are still ahead of...
Oil prices have pushed through resistance and are breaking out while the US dollar has pushed through support and is breaking down. All of the major industrial commodity prices are moving in lock step, while the global economy appears to be accelerating led by the...
For most investors, a negative or low positive correlation between equity prices and long-term bond prices is a preferred and time-tested way of keeping one's portfolio volatility low. However, this has been very difficult over the past two years as the four-year rolling correlation between...
Economic policy uncertainty continues to fall– along with the oft-quoted VIX– as this week’s much anticipated ECB meeting nears. Will Europe’s monetary authority act decisively in an effort to combat increasingly common hints of disinflation/deflation? Does that involve buying asset-backed securities? Will today’s weak inflation...
With an impressive jump in coffee futures and a breakdown in copper, commodities have received a fair amount of attention so far this week....
