From the desk of Willie Delwiche.
Key Takeaway:
- Global bond yields racing higher.
- Median CPI from Cleveland Fed is the key inflation report.
- April not living up to its ‘best month’ billing.
Expert technical analysis of financial markets by JC Parets
by Peter
From the desk of Willie Delwiche.
Key Takeaway:
by Peter
From the desk of Willie Delwiche.
The Fed was all over the news this week, going out of its way to telegraph to the market its intention to pursue an accelerated pace of rate hikes. Fed funds futures seem to be getting the message. A month ago, futures were priced for year-end fed funds rate of 1.50 – 1.75%. That is now up to between 2.50% – 3.00%. In past accelerated tightening cycles, both stocks and commodities were strong into the initial rate hike. Their paths, however, soon diverged. Commodities remained strong and on average didn’t peak until a year and a half after rate hikes began. Stocks have tended to struggle during these tightening cycles, working sideways to lower for an extended period of time. Every cycle has its own unique characteristics, but if history is any guide it makes sense to favor commodities over stocks when the Fed is rapidly tightening monetary policy.
by Peter
This is the video recording of the April 7th Weekly Town Hall w/ Willie Delwiche.
04/07/22 2:00 PM ET [Read more…]
by Peter
From the desk of Willie Delwiche.
I got a message last night that Ned Davis is retiring from the eponymous firm he launched more than four decades ago. Turns out, he’s not quite retiring – but he is stepping back. Either way, it’s a good time to reflect on his impact on the industry.
His data-driven, evidence-based approach to the market can seem obvious to those of us who are following the trail he blazed. But it would have been less obvious at a time when data access and computing power were more limited than they are now. It was revolutionary then, and is the gold-standard today.
More than ever, the industry is filled with those who want to tell stories about what should happen without making space for feedback about whether that is happening. Many want to sit still and find ways to have their priors confirmed, rather than having a disciplined and objective approach toward weighing the evidence. Being data-driven is more than just doing a little math and including a decimal place. Knowing what you want the answer to be before you even ask the question is not evidence-based, it’s narrative-driven.
by Peter
From the desk of Willie Delwiche.
Key Takeaway: The rally off of the mid-March stock market lows has equity investors feeling better. Without upside follow through (in terms of price and/or risk appetite), moods could quickly sour. So far, evidence of follow through has been lacking. Taking a longer-term perspective, the pessimism that was seen earlier this year seems more consistent with frustration that the stocks one owns aren’t going up rather than a deep-seated desire to reduce exposure and avoid equities altogether. Equity funds continue to see inflows, stocks are expensive relative to earnings and household exposure to equities has remained at historically high levels. Without these conditions unwinding, short-term mood swings may be even more sensitive to price changes than they normally are.
Sentiment Report Chart of the Week: Commodities Catching Attention
Commodities were the best performing asset class in 2021 and yet investors hardly noticed. Commodity-related ETF’s actually experienced net outflows last year. Commodities followed that by being the strongest asset class in Q1 2022 (posting their best quarterly gain in decades while both stocks and bonds were underwater). Now, however, investors are starting to take notice. In March, commodity ETF’s experienced their largest monthly inflows in nearly two years. Adjusted for total assets, year-to-date net flows to commodities (11% of AUM) have actually outpaced net flows to equities (3% of AUM).
by Peter
From the desk of Willie Delwiche.
This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.
by Peter
by Peter
From the desk of Willie Delwiche.
Key Takeaway: Q1 returns reflect a bifurcated market. Weekly data shows breadth struggling for traction. Inflation-fighting proposals are political palliatives, not economic solutions.