Author: Konstantin Fominykh

Utilities are rate-sensitive and offer a lot of “trading opps”

Konstantin FominykhLeave a comment

Our Related Movers tool evaluated that Utilities lag Rates about 58% of the time by 8-10 days on average. But Utilities might lead to Rates, it happens only 16% of the time.

Below there is a lead/lag historical chart between Utilities (XLU) and Rates (10Y US).

Utilities are rate-sensitive and offer a lot of “trading opps”, which is why one of our clients asked us: “Could TenViz quantify this dependency? When it works and when it doesn’t work?”

The red areas show the periods of time when Utilities lag Rates.

The green areas show the periods of time when Utilities lead rates.

What dependencies want you check next?

Utilities are rate-sensitive and offer a lot of “trading opps”

China orders 34 internet firms to curb monopolistic behaviour

Konstantin FominykhLeave a comment

China orders 34 internet firms to curb monopolistic behaviour…

Read again with a smile!
How can 34 firms act like monopolies, even if they serve 10 different segments that is about 3-4 competitors per segment, which looks fairly competitive to me.
Must be something else behind that crackdown….

China orders 34 internet firms to curb monopolistic behaviour

Every 5th Grader knows Rates always lead Utilities. What could be other possibilities?

Konstantin FominykhLeave a comment

It’s a well-known truth that Utilities are a rate-sensitive group of stocks. Which is why one of our clients asked us: “Could TenViz quantify this dependency? When does it work and when doesn’t it work?”
It’s not simple, but we can do it using one of our tools – Related Movers. This tool allows you to track short-term lead/lag correlations between asset classes.
How would you answer this question?

Every 5th Grader knows Rates always lead Utilities. What could be other possibilities?

Inflation expectations keep going higher

Konstantin FominykhLeave a comment

Inflation expectations keep going higher, check out TIPS breakevens at 2.4% taking on a 5 year highs.

The Fed can’t be happier but pension funds are not (inflation is a hidden taxation)!
 
tenviz.com 

Inflation expectations keep going higher

Russell 2K is down about 9% while S&P500 is effectively flat and High Yield is holding up!

Konstantin FominykhLeave a comment

Market watchers rightfully focus on rates or earnings, but what puzzles me is why Small Caps have underperformed so much for the last 2 weeks.
Russell 2K is down about 9% while S&P500 is effectively flat and High Yield is holding up!
We definitely see funds outflows from Small Caps, but fundamentally it is not clear why…
Maybe you guys see a better fundamental explanation?

TenViz tools – PREDICTIVE ANALYTICS FOR INVESTING
https://lnkd.in/d_gcb6m

Russell 2K is down about 9% while S&P500 is effectively flat and High Yield is holding up!

Housing and construction stocks are slowing down after their massive runs.

Konstantin FominykhLeave a comment
That includes homebuilders, manufacturers of  appliances and construction materials…
Why?
1) higher rates are, obviously, a minor drag
2) these stocks had massive runs
3) also, the flight to suburbs on WFH theme might be finally over…
That is a healthy thing.
Have a look at the stock of Whirlpool – last 2 years were similar to Tech!
 

Housing and construction stocks are slowing down after their massive runs.

Mainstream

Konstantin FominykhLeave a comment

In a predictable stupidity of the mainstream financial media, they over-communicate the earnings news about the GameStop….

Yes, that, GameStop had a massive short squeeze which resulted in Congressional hearing…
But it was never about the fundamentals of the company, it was just a crazy crowd game taken to the extremes.
Why to overtalk about that on CNBC? Don’t we have more important fundamental news to digest?
For example, this week’s Canadian Pacific railroad buying Kansas City Southern railroad is far, far more fundamentally important for lives of Americans and our fellow Canadian friends than a stupid GameStop…

Media News concept

Mainstream

To achieve full employment

Konstantin FominykhLeave a comment

I was listening to the Fed’s Powell and Janet Jellen’s testimony to the Congress, and I still can’t understand why we need zero rates to achieve full employment…

The government rightfully mandated many client-facing businesses (restaurants, hotels, airlines) to basically shut down (to the massive benefit of WFH winners).
But how would zero interest rates help unemployed waitresses, flight attendants, and hotel managers regain their jobs faster?
Covid response should be proxied by the war-like measures: gainers from the WFH should pay temporary excess tax on their massive gains, because their windfall was mandated at the expense of vulnerable sectors.
Yes, Amazon and Zoom should currently subsidize unemployed waitresses and flight attendants…
It is a profit redistribution for higher social good…
Like Chrysler was producing Sherman tanks during the WWII but the government controlled pricing on weapons.

To achieve full employment

Make sure that your investments are on the right side of this inflation!

Konstantin FominykhLeave a comment

Inflation expectations as proxied by TIPS breakeven are making 5-year highs…

Make sure that your investments are on the right side of this inflation!
 

Make sure that your investments are on the right side of this inflation!

When investors bought good growth stocks they looked for reasons to buy

Konstantin FominykhLeave a comment

Traditionally, when investors bought good growth stocks they looked for reasons to buy, like:

“oh, Apple is a great company, new iPhones coming…” etc.
When investors want to invest into value stocks, they have to change the logic and look if the reasons that let other people to sell them ARE GOING AWAY!
That is right – you don’t look for good news, it is enough to reduce negative news, like:
“So, this small cap energy company is not going bankrupt? Great, BUY!”

When investors bought good growth stocks they looked for reasons to buy