In the year that was not short of dramatic surprises, be amuzed by one more revelation:
The Retail index (XRT) is up +50% for the year, while seemingly, defensive CVS and Walgreens (drugstores) are down!
Author: Konstantin Fominykh
Has the emergence of a new Covid strain in the UK undone the recovery trade?
Has the emergence of a new Covid strain in the UK undone the recovery trade?
No, not at all if you trust the breadth and the immense size of the bond markets!
Have a look at the US Treasury 30Y rates heading actually slightly higher (!) last 5 days, plotted vs. the Energy Equities, which is probably the most sensitive Sector.
Bonds signal a continuation of a the RECOVERY (yes!) trade
If a Martian landed on Earth…
If a Martian landed on Earth and would have focused on financial markets as a proxy for the Earthly society, he would have concluded that things are going par course from 2019:
1) US Equities are +12% (well, stock market owes us! 🙂
2) Technology leads (certainly!! 🙂
3) Bitcoin is up +90% (totally logical 🙂
4) Gold is expensive but Oil is cheap – the Earth us good place to refuel compared to Jupiter!
5) US Rates are too low though. Should they be used to fund investments into the Martian Bonds in Marsocoins?
Delta Airlines and Southwest Airlines at the absolute bottom in March-April 2020.
As we forecasted, now it looks that Warren Buffett (nothing personal) made another blunder,
By selling Delta Airlines and Southwest Airlines at the absolute bottom in March-April 2020.
Both stocks are up +80-100% since then.
We understand that he was scared (respectfully), well…
US Dollar weakness is a good guide to the further strength of Crude Oil.
The continuing US Dollar weakness is a good guide to the further strength of Crude Oil.
Better not use the DXY but the Trade Weighted US Dollar index which includes other important countries including China, Brazil, Russia, India, etc.
See the chart of Brent Oil vs. Trade Weighted US Dollar…
Yes, the chart argues for at least 10-15% more upside to the price of Crude Oil.
The list of attractive stocks with recovery potential.
This is the list of attractive stocks with recovery potential, with 5% dividend
Where you are getting paid to wait..
Not only Mega Tech and Growth stocks are doing ok..
The encouraging thing about the stock market, is the growing breadth of this market.
Not only Mega Tech and Growth stocks are doing ok, but also cheap and smaller companies started outperforming.
Look at the chart of S&P500 vs. RSP (Equal Weighted S&P500 Index)
RSP is +5.5% last 30D vs. S&P500 is up “only” 3.1%
Not too bad!
Technology weight in the S&P500 is about 28%…
Because Technology weight in the S&P500 is about 28% and Energy is mere 2.8%.
Even a 15% outflow from Tech into Energy would still keep the Tech weight at the dominant 25%,
while Energy stocks would more than double!
That is how polarized valuations are nowadays!
Airlines and Jet Fuel move together…
Check out how fundamentally connected Airlines and Jet Fuel move together,
signalling likely economic and travel recovery.
We all crave return to normalcy…
Keep investing in RECOVERY: Value, Energy, Banks, Small Caps…
TIPS Breakevens yields at 2 year high signal higher inflation, and the broadening recovery. Bonds rarely lie…Keep investing in RECOVERY: Value, Energy, Banks, Small Caps…
