From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge
They say the Bond Market is where the smartmoney is. Maybe it is. I have no idea.
What I do know is that it's where a lot of the smart information is.
Due to the diversity among credit instruments, there is a swath of unique data that we can use not just for Bond prices and Interest Rates but also to glean insight into other asset classes.
I'm talking about things like TIPS for inflation expectations and Emerging Market or High Yield Bonds to analyze risk-appetite for other assets such as the stock market.
Alpha has been in Equities and risk-assets for a while now. As such, we haven't needed to discuss bonds from a portfolio perspective... but that doesn't mean we aren't paying close attention to these assets.
The Bond Market is overflowing with information. We'd be foolish to neglect it.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
The market is giving us absolutely no reason to play defense right now.
Regardless of the asset class, it's the risk-takers that are having their way in this environment.
Investors stretching out along the risk spectrum is a point we've been hammering home for some time now, particularly in our weekly RPP Reports - like this one.
Not only is this true on absolute terms, but we're also witnessing cross-asset relationships progress higher and in favor of risk-asset which can only be taken as a positive.
It's not often we see all asset classes in agreement with each other, but when we do, it's a significant driving force that supports the risk-on trade and suggests higher prices to come.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
We continue to experience a bullish expansion in participation from stock markets around the world.
Just a few days ago we discussed buying Israeli stocks and explained how their strength at the index level was being driven by their heavy exposure to Technology.
Mega-Cap Growth and Tech stocks (we're including Communications and Discretionary here -- "Tech but not Tech" names such as Alibaba, Tencent, Meituan, JD.Com, etc.) are also a dominant market force in China.
We wrote about this exact topic in November, and how strength from these names would likely continue to propel these Large-Cap Chinese Indexes and ETFs higher. The Chinese Tech ETF $CQQQ and iShares Large-Cap China ETF $FXI tacked on an additional 24% and 12%, respectively in the time since.
This week on the podcast, Jonathan Krinsky joins me for a chat about Sector Rotation. While the Mega-cap names like Apple, Google, Facebook, Amazon and Microsoft grinded sideways, or even down, since August, the Small-caps, Mid-caps and Micro-cap names have been the leaders. What happens if the Mega-caps break out of these bases to new all-time highs? Does the sector rotation continue? Or do we then rotate into the more defensive areas like Staples, Utilities and REITs, which currently keep making new relative lows?
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.
As we discussed in last week's report, bears have a lot of work cut out for them.
With all this rotation into offensive groups and cyclical areas of the market, they are really running out of talking points. We literally can't find a meaningful group of stocks in the US or even abroad that we would want to short at this point.
This is excellent information as it's not something we can say very often... and it's bullish, just to be clear.
I'm getting trolled more than I have in a long time. It's almost like people are mad at me for being as bullish of equities as we've been, and continue to be...
What's everyone so angry about? I don't understand.
Anyway, yes there are stocks we want to buy. Can some stocks go down? Sure. Does that change the fact that there are stocks we want to buy or own? No.
As far as potential headwinds for stocks go, I've got 3 pretty simple ones today.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.
As we mentioned last week, the weight of the evidence overwhelmingly lies in favor of the bulls.
We're seeing rotation supporting this move higher in equities; a sustained bid for SMIDs and Micro-Caps while Large-Cap indexes slowly work higher is all very constructive for the early innings of bull markets.
This environment is also providing bulls with an increasingly wide selection of areas to allocate capital - from Industrials, Technology, and Cylicals, and now Financials.
I've been waiting for Europe to break out since I was in high school. That was over 20 years ago. And people have the audacity to tell me that stocks are in a bubble.
The first section dives deep into the US Stock Market and Market breadth, then we discuss the International Markets and specific Factors around the world. Next we go into U.S. Sectors and the best looking Industry Groups. In the second half of the report, we dive into the FICC space (Fixed Income, Commodities & Currencies) and their Intermarket Relationships. Finally we finish up with Cryptos, Options and overall Market Sentiment.
You can skip right to the trade ideas here if you'd like, or give the full report a read!
