Should investors playing the recovery/inflation trade by buying Materials stocks index (XLB)?

March 11, 2021March 11, 2021 Konstantin FominykhLeave a comment

Should investors playing the recovery/inflation trade by buying Materials stocks index (XLB)?
Yes, and no…
The issues with XLB is its composition became fairly defensive
1. first, it has many gold companies, – Gold is not the place to be in this recovery
2. second, it has many packaging companies – defensive names that are effectively a-cyclical
3. third, it has many housing & construction suppliers which had an enormous run on the WFH and the flight to suburbs trend
So, in short, XLB is a fairly diluted way to play this recovery…

Markers correctly predicted the broadening reopening.

March 10, 2021March 10, 2021 Konstantin FominykhLeave a comment

So far, markers correctly predicted the broadening reopening.

Major commodities run ahead in anticipation of wider recovery, AHEAD of recent announcement from a slew of states (TX, CT) that were lifting all restrictions on businesses…

Markets have a way of seeing turns before fundamental news confirm them…

Texas is the first major state that has eliminated any mandatory restrictions on business…

March 4, 2021March 4, 2021 Konstantin FominykhLeave a comment

Is this the beginning of the reopening?

The markets are certainly signalling that with the WFT stocks being down 5-20% and Energy sector being up +36% for the year!

Nice….

FILE – In this April 17, 2020 file photo, the sun sets behind an array of pump jacks outside Midland, Texas. The near shutdown of the economy in response to COVID-19 has reduced demand for oil, lumber and other commodities, sending their prices sharply lower. Energy has borne the brunt of the selling, with the price of U.S. oil for May delivery plunging last week below zero for the first time. (Eli Hartman/Odessa American via AP)

Q2 of 2021 would be a really interesting

March 3, 2021March 3, 2021 Konstantin FominykhLeave a comment

Q2 of 2021 would be a really interesting Quarter for earnings, that would be reported only in July though…

With the WFT trend firmly in place, it would be fascinating to observe how all these companies that have benefitted from Covid would cycle through their really tough comparisons…

The reopening trade would be still so sloooooooooooooooooooooooow.

Only a handful of states are fully open for business (like, Texas joined their ranks today).

And, the Western Europe and Canada remain largely shut down, while Emerging Markets are largely open…

On the fallacy of investor surveys…

March 2, 2021March 2, 2021 Konstantin FominykhLeave a comment

I know we all want to know what other competitors think, and feeding that crave, many researches run endless surveys – what the market, rates, commodities, stocks will do at some point.

But, let’s review this logical trap:

1. no survey will cover all market players

2. even the most open survey participants might unintentionally distort their views and intentions

3. almost all participants views would be constrained by geography, style, or an asset class reflecting their mandate, or a functional expertise…

Therefore, to reflect on market intentions – you need to read the market…

Hmmm..

That is what an objective Cross-Asset flow methodology does.

Strategists associate the fall of Tesla with their distraction with Bitcoin…

March 1, 2021March 1, 2021 Konstantin FominykhLeave a comment

Sure, these are topical, sexy subjects.

But in reality, TSLA is just a super expensive stock which is supposed to go down when interest rates jump.

Don’t overthink it….

If humanity would be thinking of designing a new currency

February 26, 2021February 26, 2021 Konstantin FominykhLeave a comment

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)