If humanity would be thinking of designing a new currency, the following attributes would be certainly put on the table:
- this new currency should be scarce (finite in quantity)
- this new currency should be hard to make
- this currency would be digital
- this currency would encounter natural resistance from governments and established institutions, naturally fearing their loss of privileged seigniorage power (printing money)
Does this look very much like Bitcoin?
When rates rise, High-Growth/High Multiple stocks go down, it is a statistical inevitability…
Again, this is not an opinion – it is a hard core financial math….
When r in this formula goes up, stocks with a long growth forecast suffer…
The power of pro-cyclical rotation is most visible in Energy vs. Big Tech trade.
TenViz tools continue to believe that the upside in Energy is extraordinary attractive, especially in small-cap value Energy names.
Given how tight supply is, and how much other commodities ripped,
it is totally possible for Crude Oil to rip above $110 in 12 months on a cyclical upswing.
Benchmark vs. other soft commodities making multi-year highs.
Based on TenViz proprietary data we tracked 4 distinct sources of inflows:
- US Equities – retail investors
- US & Canadian Treasuries – family offices?
- Japanese & S. Korean, Thailand sovereigns – Asian investors always loved Crypto and are now increasing allocation to BTC
- European Quality and Safe equities – i.e. investors are really stepping up the risk
The last 1 Month Residential real estate REITs are roaring higher, being up +5-9% on average, while Office REITs are down almost symmetrically 4-6%.
That signals the end of depopulation of big cities (like SF, Boston, NYC) yet the trend of WFH is here to stay…
See the chart from TenViz tools, – purple circle in a purple oval
Any alternative takes please?
Our Tools view this is transitory phenomenon.
The chart below plots 30YUS Rates vs. Homebuilders with the correlation underneath – historically, the relationship was NOT clear.
In the Industrials, money-losing companies – airlines and aerospace contractors are ripping!
See these two broad areas circled in ovals in the image below.
That is a classic market sign of the upcoming recovery and the reopening!
Would anyone (except, bankruptcy lawyers) object to the expedited reopening of economies?
Bill Gates is ditching his investments in Energy – that sounds noble in spirit, but …
Is forcing investors to dump energy investments the best way to fight the global warming?
Like, in other ugly illegal markets (weapons, drugs, etc.) demand will unfortunately find its supply.
Most economists would argue that instead, heavy taxes on carbohydrates at the well, would reduce overconsumption of Energy and overpackaging.
Curiously, Europe had heavy gasoline taxes for decades, and European environmental footprint was always low…
Why Value style of investing should outperform in 2021?
Value style has underperformed for almost 10 years, and Value Equities are cheap…
Given that Value works when interest rates go higher.
Inflation is picking up, including through commodities.
As Rates head higher, Value gains an upper hand over Momentum…