From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley   

Nobody likes inflation.

The costs of day-to-day necessities rise. Long-forgotten and disliked sectors of the market start to outperform. And many of the cool tech names that were a must-own for every portfolio turn into a pile of hot garbage.

Now that everyone – even the Fed – agrees the current inflationary environment isn’t transitory, cries of a near-term top in inflation have emerged. 

Yes, breakevens and inflation expectations have peaked and are beginning to roll over. Whether this will turn into a substantial downturn in the coming weeks and months is anyone’s guess.

Instead of playing the guessing game, we’re focused on commodities – the assets that benefit most from inflationary pressures. 

Here’s what we’re seeing.

This is a chart of our equal weight commodity index overlaid with the 10-year breakeven inflation rate:

These charts look incredibly similar...

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.

We’ve also sprinkled in some of the largest ADRs from countries that did not make the market-cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let’s dive in and take a look at some of the most important stocks from around the world.

Here’s this week’s list:

...

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

From the desk of Willie Delwiche.

In a year marked by broad weakness in both stocks and bonds, commodity strength has provided some portfolio ballast for those who have been willing and able to expand their asset allocation opportunity set. After several weeks of consolidation, the CRB commodity index is again making new highs. But rally participation looks to be narrowing. Only 12% of the commodities in our ASC Commodities universe have made new 52-week highs in the past two weeks. This was as high as 50% earlier this year. Perhaps not surprisingly, our equal-weight commodity index has not confirmed the strength in the CRB index (which has heavy tilting toward energy-related commodities). I think Bob Farrell’s Rule 7 applies here: “Markets are strongest when they are broad and weakest when they narrow.” Strength in the CRB index is more likely to persist if it’s not just energy fueling the advance.

This is the video recording of our May 27, 2022, All Star Charts Crypto Weekly Strategy Session.

We've adjusted a position in the Paid-to-Play portfolio today:

Coinbase Global $COIN co-founder and director Fred Ehrsam is back on our list with another Form 4 filing for just under $2 million worth of shares.

He’s bought approximately $76 million worth of COIN in the last 10 days.

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley    

When it comes to the bond market, credit spreads are always top of mind. They provide critical information regarding the liquidity and stress of the largest markets in the world.

While most of us aren’t full-time bond traders, in many cases we turn to these assets to offset the risk associated with the equity side of our portfolios. That’s fine.

But when credit markets come under stress, it affects all asset classes, especially equities. We’re seeing this now.

Earlier in the month, we noted that these crucial spreads were widening to their highest level since late 2020 as the high-yield bond versus Treasury ratio $HYG/$IEI hit new 52-week lows. 

It’s no coincidence that the major stock market averages fell to their lowest level in over a year as this was happening.

This is why we pay close attention to credit spreads. They give us information about the health of other risk assets.

Right now, with HYG catching...

This is the video recording of the May 26th Weekly Town Hall w/ Willie Delwiche.

05/26/22 2:00 PM ET

From the desk of Willie Delwiche.

The minutes from the May FOMC meeting were released this week, leading to renewed “will they or won’t they” discussions about potential rate hikes later this year. 

I’m old enough to remember when FOMC minutes weren’t really a thing. I liked it better then. I also preferred when Fed officials (both Board Governors and Regional Bank Presidents) were rarely seen, and even more scarcely heard. But I digress… 

When thinking about where rates have gone in the past and where they could go in the future, it’s helpful to remember the context of the Fed’s dual mandate (stable prices and full employment). The last three tightening cycles all began with lower inflation & higher unemployment rates than we have now.

We had a resting GTC order filled to take us out of a position for a scratch in the Paid-to-Play portfolio today:

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today: