As we progress into Q4 of Fiscal Year 2021-2022, this playbook outlines our thoughts on every asset class and our plan to profit.
This playbook will cover our macro view, touching on Equities, Commodities, Currencies, and Rates, as well as outline our views on the major nifty indices and the sector/thematic indices.
We also cover individual stocks we want to be buying to take advantage of the themes discussed in the playbook.
I get to talk to traders and investors of all shapes and sizes every day of my life. This is something I like to do for fun, and it's also a great way to learn. But remember, I do this for a living. So not a day goes by where I'm not talking to market participants.
This has gone on for decades now. Everyone from the largest banks and hedge funds on the planet to recent grads first learning how to trade.
I have a lot of conversations with these investors. And one common theme I've heard over the past few months is just how difficult of an environment this currently is.
A lot of traders are getting chopped up in this mess of a market. And it's not anything new, it's been messy for quite some time.
On this episode of Pardon The Price Action, we're talking about the implications of rising interest rates. This is no longer an environment where Growth stocks outperform. It's actually the exact opposite.
We're also seeing these signs from other countries around the world with much more exposure to the Value sectors like Energy, Materials, Industrials and Financials.
US Investors have a lot more exposure to Technology and Growth than almost every other country in the world.
I think Latin America is worth watching, China and many other emerging markets.
What if the outperformance we've seen from the United States stock market for so long is behind us?
Is your portfolio prepared for an environment where US stocks underperform the rest of the world?
What about your peers?
Do you think Financial Advisors across the country have positioned their clients to take advantage of outsized returns outside the United States?
I talk to a lot of people.
And my answer is no. A big fat obnoxious NO.
I don't think they're ready at all. And the pain could last a while.
By the time your average financial advisor gets off the golf course and notices how poorly positioned their clients are, it's usually much later in the cycle.
I don't have a lot of faith in people, or media or economists. But bonds are something we certainly take seriously.
There's no bullshit with them.
The biggest players in the world have no choice but to be intimately involved in fixed income markets. So if you're curious which way the pendulum is swinging, you'll be able to see it in bonds.
Here's a quick look at US Interest Rates making new highs - from the 1yr to 10yr yields these are going towards the upper right:
Until now, the answer to the Growth vs Value question has depended on what type of market cap conversation you're having.
Through the end of 2021 Large-cap Growth was still a leader. It was the Small-cap Growth stocks that had been crushed most of the year, particularly when compared to the performance of Small-cap Value.
You can see the new 52-week lows in IWO / IWN coming into 2022:
And we already know that Individual investors (AAII) and Financial Advisors (II) are much more bearish going into 2022 than they were over the prior two years.
It's always fun having Paul Ciana on the podcast. You guys familiar with the show have already heard some our conversations over the years. They're always insightful, and he always gets me thinking.
While here at Allstarcharts.com we approach the world through the lens of an equities investor, and use other asset classes as a supplement, Paul does the exact opposite. His days both begin and end with the study of fixed-income markets, commodities, and currencies. Paul is the Chief Global FICC Technical Strategist at Bank of America.
In this episode, we dive right into it starting with the US dollar, gold, crude oil, and the most important currency crosses for stock market investors to focus on.
