To The Moon

Learnings and conclusions from this session: US tech stocks have peaked (+rolled over vs US non-tech, global tech). Sentiment is slumping from previously extreme bullish/complacent. Positioning has also peaked, early signs of rotation showing up. Valuations are ticking down from extreme expensive levels. Stretched valuations reflect strong earnings (but that’s also a risk). Overall, tech stocks have peaked for now. The problem is they’re coming from a starting point of overvalued and overhyped. The benign/bullish outcome would be a plateau in tech and bullish rotation (into traditional cyclicals, global), while the bearish outcome would be outright downside (and rotation into defensives). This report looks at the evidence so far and weighs the next steps… 1. Tech Top (Absolute Terms): 

There’s a change in the air. The gloomy macro clouds of the past few years are starting to lift. Once weak and lagging parts of macro and markets are starting to stir, and a major macro theme I’ve been tracking is showing increasing signs of finally kicking full-swing into gear — today’s chart lays it out simply. Basically what we’re looking at here is a procession of policy pivots from big easing in 2020/21, panic tightening in 2022/23, and then back to easing in 2024/25. The result? Major monetary tailwinds are kicking-in right now. And we are seeing this having a clear positive impact on some of the key areas of the global economy that have previously been in deep stagnation: manufacturing, global trade, commodities, heavy industry. Real world, real growth, traditional cyclical parts of

Learnings and conclusions from this week’s charts: Stocks closed up in January (equal-weight beat cap-weight). A positive January is a positive sign for the rest of the year. Seeing apparent rotation out of crypto into precious metals. Also seeing rotation from growth/tech to value/cyclicals. Signs are it’s a case of “bullish rotation” (broadening bull). Overall, we’ve managed to get off to a decent start to the year with the gains and bullish rotations of January. There are a few risk spots to keep tabs on (price action in crypto, tech/growth), but the relative strength in some of the more cyclical parts of the market raise the prospect of a bullish broadening… Happy New Month! the (market cap weighted) S&P 500 $S&P 500(.SPX)$ closed up +

Hi there, Here's the topics I covered in my latest Weekly Macro Themes report: 1. Treasuries: Cheap valuations, very low allocations, and consensus bearish sentiment/positioning make for a contrarian bullish setup, but the tactical elements are lacking right now (monitoring the situation). 2. Inflation Risk: The risk of a second wave of inflation is credible, and therefore higher-for-longer risk remains a threat for nominal bonds (but may help TIPS[breakevens]). 3. Stocks vs Bonds: The longer-term/strategic charts are pointing to downside risk for stocks vs bonds, but the tactical elements are opposite (bullish technicals, benign macro). 4. Oil & Energy Stocks: Remain vigilant to upside risk in the oil price, and in particular for energy stocks (which are under-allocated, undervalued,

Is this the most hated asset class? The composite positioning indicator below seems to suggests so. Everyone hates bonds right now. And fair enough — there are several obvious reasons to hate them. Returns have been terrible, inflation risk is lurking around the corner, fiscal concerns are running high, and political/governance risk for the US is looking and feeling more like what you’d expect in emerging markets. But all of this is obvious and well known, which means it’s time to think. As the old Mark Twain quote goes, "Whenever you find yourself on the side of the majority, it is time to pause and reflect." When you take an objective and quantitative look at treasuries (I am referring to longer-term) a couple of things stand out. Valuations are cheap. Sentiment/allocations/positioning a

Learnings and conclusions from this week’s charts: 1. Bears have the statistical edge in mid-term election years. 2. The global equity bull market is going strong (+getting stronger). 3. Implied correlations are low (a risk signal, similar to dot-com). 4. High valuations are supported by high expectations on profitability. 5. Energy sector equities are undervalued, underallocated, underestimated. Overall, there’s a fair amount of risk signals waving (e.g. seasonal headwinds, correlations, surging sentiment, lofty expectations), but likewise strong momentum, bullish rotation, and compelling fundamental narratives carrying things along. And amongst all this there’s some very interesting opportunities developing… For SG users only, Welcome to open a CBA today and enjoy access to a trading lim

First they said it was uninvestable.Then it broke out —but they said it was still in a downtrend.Now it’s broken that downtrend line.And there are still several reasons to expect further upside.Here’s why I’m bullish on Chinese stocks:Strong Technicals: as alluded to, we’ve seen 3 key breakouts (through the 200-day average, through long-term overhead resistance, and through the down trendline joining the last two major peaks).Stock/Bond Ratio: we’ve also seen a key breakout in an indicator almost no-one else watches; the Chinese stock/bond ratio (important risk-on signal).Cheap Valuations: Chinese stocks are reasonable vs history, cheap vs peers, and cheap vs bonds (very high equity risk premium).Macro Tailwinds: we’ve seen a steady drift lower in interest rates, incremental stimulus measu

Hi there,Here's the topics I covered in my latest Weekly Macro Themes report:1. US Dollar: Remain bearish medium/longer-term given expensive valuations, fading yield support, longer-term technicals, but wary of short-term upsides (sentiment, positioning, seasonality, technicals).2. EM Equities: Remain bullish emerging market equities given supportive valuations, monetary tailwinds, improving earnings outlook, light allocations, and strong technicals.3. China Equities: Remain bullish Chinese stocks given strong technicals, supportive valuations, improving sentiment, and mild but gathering macro/monetary tailwinds.4. Commodities: Remain bullish commodities given cheap valuations, supply tailwinds, improving macro-fundamentals, light allocations, skeptical sentiment, strong technicals.5. Comm

Learnings and conclusions from this week’s charts:Sentiment is getting increasingly consensus bullish. $Cboe Volatility Index(VIX)$ & Credit Spreads are at complacent/confident levels.Transports, shipping stocks, EM, and metals are breaking out.Value is cheaper than usual vs history and vs growth stocks.Growth stocks are expensive vs history and vs value stocks.Overall, the mood remains distinctly bullish and increasingly so —and perhaps justifiably so as more evidence emerges in favor of a global growth reacceleration (and better performance from traditional cyclicals and risk-on assets). But with growth stocks already richly priced, and value still cheap, the next phase of the bull market might look a little unfamiliar to some…

1. Clues of catch-up: this chart shows how far the US has diverged from global equity valuations, but also the nascent catch-up trade clearly underway.2. Peak performance: this one shows US stock market outperformance peaking vs DM and EM. All good trends come to an end, and all good cycles do what cycles do.3. Stocks vs Bonds over the Long-run: the rolling 10-year total return premium for stocks over and above that of bonds looks stretched vs long-term average, and it looks late in the cycle (and it does look cyclical).4. The big reset in Commercial Real Estate: in real inflation-adjusted terms, the CRE downturn has been substantial (-30%) and drawn-out (almost 4 years since peak to initial trough). Some might say that’s “enough” (…downturn done?).5. Tech capex crowd-out: successive waves