All-Time Highs are Not Bearish...The Bull Case Continues to Play Out
This week, we continue with a bullish tilt toward equity positioning as the SPDR S&P 500 ETF (SPY) and the QQQ Trust (QQQ) trade at new all-time highs.
Drilling Down on US Equities With New Highs in Sight for SPY
This week we drill down on the trends in the US equity market as the SPDR S&P 500 ETF (SPY) puts the February highs in its sights. The trends across the major market ETFs remain to the upside.
Trends & Momentum Across Asset Classes Remain Intact
Despite the drumbeat of narratives about the reversal of the growth trade and even some advocating for outperformance on the part of small cap value, the bigger picture trends have not changed.
Little Growth + Inflation = Stagflation
The odds of a stagflation environment are continuing to rise in our opinion. Over the past few weeks/months we have made this view clear by looking at both sides of the coin, growth and inflation. Over that time, the evidence continued to mount in favor of our view.
Was That the Rotation? Growth Re-Asserts Leadership
The start to earnings season was not all that exciting as the banks were met with mixed reviews that saw the trading shops put up outsized profits thanks to the explosion of volatility in the quarter and the Fed backstopping the credit markets.
Earnings Season Begins with Low Expectations; Will it Be a Catalyst?
It is safe to say that expectations are low as the bottom up consensus for the S&P 500 calls for a year over year earnings decline of about 45% in the 2Q. This would be the largest year over year decline since 2008. But that is well understood at this point.
Better Economic Data: Rising COVID-19 Cases...For Now
The market does not care about our opinion regarding what it “should” do. Right now the market does not seem to care that COVID-19 cases and positive test rates are on the rise in the US. What the market cares about now is that economic data has been better than expected...
Where Do We Stand at the Half-Way Point in the Year?
As we reach the half-way point of what has been an extremely eventful year in asset markets, this week we take a step back and assess the current landscape from a momentum perspective. Where is the momentum and how likely is it to persist?
Are We Heading Toward Stagflation?
The unprecedented amount of fiscal and monetary stimulus that has been showered on the US and global economies has the potential to lead to inflation...an environment of generally rising prices. Unfortunately, this could be playing out in an environment of little to no economic growth.
We Are Not Even Thinking About Thinking About Raising Rates
If Chairman Powell’s comments are interpreted as signaling the likelihood of anemic economic growth over the next two years, we would expect the prevailing trends (growth over value; large over small) to reassert themselves shortly.
Was March the End of a Bear Market Rather Than the Beginning of One?
In the spirit of full disclosure, this week’s note largely serves as a set-up piece. The main market ETFs are all currently overbought after making dramatic rallies from the March 23rd lows. The strength has been largely driven by a rotation into the more cyclical areas of the market...
The Bull Case, The Bear Case and What "The Market" is Saying About Them
In the current market environment, both the bulls and the bears have data points on which they can stake their case. In this note we highlight both sides of the argument and then look at each asset class in an objective way to get a sense for what the market truly believes.
The Battle at Resistance Rages On; Will the Shorts Capitulate on a Break?
The narrative moves on with investors focused on economic re-openings and the path to a COVID-19 vaccine. We have written at length about how while many think that the market is disconnected from the economy, we do not think that is the case.