Ever since the 2-year yield bottomed in Q1 of 2021 Technology stocks have struggled. Growth became the worst place to be.
It was NOT a coincidence that once those rates started to rise in early 2021, the Nasdaq New Highs list peaked, the Nasdaq Advance-Decline line peaked, all the ARK Funds peaked, Chinese internet peaked, Biotech peaked and everyone piled had into SPACs before they all came crashing down.
Because the 2-year yield was rising so fast, and the longer end of the curve couldn't keep up, we got the mother of all yield curve inversions.
The media loves to scare people with it because I think an inverted yield curve has predicted something like 50 of the last 8 recessions.
But now it's bon voyage yield curve inversion. Good riddance!
We're seeing the largest 5-day rate of change in the yield curve since the early 1980s:
They say to buy when there's blood in the streets.
Does this count?
Hardly.
Many indexes around the world are just a few basis points from new highs. Most stocks in America have been rallying for 9 months.
But sure, there's a little blood, with some of these small regional banks disappearing. But depositors are keeping their money, so the only cost is a few people lost their jobs.
Historically they’re all usually just making a big deal about things that are not a big deal.
It's their job to make noise. And in some cases, it's not even their job, humans just like to overreact and make a lot of noise.
As investors, it's our job to ignore.
We don't care about their fed policies. We're not interested in arguing about wars. I don't care who the president is. And a "bank crisis" is laughable these days, compared to what I had a front row seat to back in 2008.
They make noise. We ignore. It's that simple.
Late last week when people were panicking, I was right here telling you we wanted to buy stocks.
Why?
Because in bull markets, it pays well to own stocks.
Besides, the Dollar was falling apart. So if stocks were about to collapse and this was 1929 all over again (lol btw), then the Dollar would be ripping.
It was not.
That was the signal. It still is.
If the US Dollar index is below 105, we want to be buying stocks very aggressively.
The broadest measure of European equities just hit new 52-week highs last week.
As you can see here, Europe went nowhere for 20 years, mostly due to its lack of exposure to high growth stocks like the United States.
And now that those growth stocks have been out of favor, and it's the more Industrial and cyclical stocks leading the way this bull market, Europe is the global leader once again.
It's the U.S. that's the laggard.
Here's the Euro STOXX 600 hitting new 52-week highs and coming out of a multi-decade base: