The full post can be found here.
Wednesday, June 28, 2023
A test of support at S&P 4320
Sunday, June 25, 2023
A focus on AI and technology stocks
The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
- Ultimate market timing model: Sell equities (Last changed from “buy” on 26-Mar-2023)*
- Trend Model signal: Neutral (Last changed from “bullish” on 17-Mar-2023)*
- Trading model: Neutral (Last changed from “bearish” on 15-Jun-2023)*
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
Saturday, June 24, 2023
Is the Fed deliberately engineering a recession?
Why is the Fed ignoring leading indicators of inflation, which are falling, while focusing on lagging conventional inflation metrics, which are stable? Is it deliberately trying to engineer a recession?
Wednesday, June 21, 2023
An overdue pullback?
The full post can be found here.
Sunday, June 18, 2023
How to trade a split personality market
The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
- Ultimate market timing model: Sell equities (Last changed from “buy” on 26-Mar-2023)*
- Trend Model signal: Neutral (Last changed from “bullish” on 17-Mar-2023)*
- Trading model: Bearish (Last changed from “neutral” on 02-Jun-2023)*
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
Indeed, the stock market has become bifurcated.
As the top panel of the chart shows, growth has outperformed value in 2023. Within the value universe (second panel), the high-quality factor is dominant. By contrast, low-quality is dominant within the growth universe (bottom panel).
The
Saturday, June 17, 2023
How economic myopia is leading investors astray
While headline inflation had been falling, core CPI hadn’t made any progress for several months, which is causing concern for the Fed.
This prompted a discussion of the level of unemployment needed to slow inflation to acceptable levels, which Furman estimated at 4.5–5.0% (which incidentally would trigger a Sahm Rule recession alert). The question arose, “Is such a level of unemployment politically palatable?”
Furman equivocated by saying that’s why you have a Fed that’s insulated from political pressure, but that was the wrong answer. Both the question and the reply demonstrated a level of economic myopia that’s sure to lead investors astray.
Wednesday, June 14, 2023
A very hawkish skip
The full post can be found here.
Sunday, June 11, 2023
How the Treasury refresh may not be catastrophic
The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
- Ultimate market timing model: Sell equities (Last changed from “buy” on 26-Mar-2023)*
- Trend Model signal: Neutral (Last changed from “bullish” on 17-Mar-2023)*
- Trading model: Bearish (Last changed from “neutral” on 02-Jun-2023)*
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
It was said that the U.S. Treasury market would see a flood of new issuance which would draw liquidity from the financial system. Such a loss of liquidity would create significant headwinds for the prices of risk assets. Since the conclusion of the debt ceiling deal, the warnings have become a cacophony. Estimates vary, but consensus market expectations call for the issuance of about $1 trillion in Treasury paper over the next three months.
I have warned before about the liquidity impact of new Treasury issuance and I am certainly cognizant of the risks. However, there is a narrow path for a benign resolution of the reset of the U.S. Treasury’s cash balances without significantly affecting the price of risk assets.
The full post can be found here.
Saturday, June 10, 2023
Can AI stocks lead the market to a new bull?
I have had a number of discussions with investors and the question keeps coming up. Can the AI frenzy, which appears to be in its early stages, carry the stock market to a new bull?
The full post can be found here.
Wednesday, June 7, 2023
The good news and bad news
The full post can be found here.
Monday, June 5, 2023
Why the Saudi output cut could be a bullish catalyst for energy stocks
Saudi Arabia is in “whatever it takes mode,” Helima Croft, head of global commodity strategy at RBC Global Markets, wrote in an investor note this morning. That the country is “willing to shoulder it alone adds to the credibility of the cut and signals real barrels coming off the market.”
Analysts calculate that Brent needs to stay above $80 in order for Saudi Arabia to keep its budget balanced and to finance the ambitious infrastructure program backed by the country’s crown prince, Mohammed bin Salman.
The full post can be found here.
Sunday, June 4, 2023
Global market review: Risks and opportunities
The Trend Asset Allocation Model is an asset allocation model that applies trend-following principles based on the inputs of global stock and commodity prices. This model has a shorter time horizon and tends to turn over about 4-6 times a year. The performance and full details of a model portfolio based on the out-of-sample signals of the Trend Model can be found here.
- Ultimate market timing model: Sell equities*
- Trend Model signal: Neutral*
- Trading model: Neutral*
Update schedule: I generally update model readings on my site on weekends. I am also on Twitter at @humblestudent and on Mastodon at @humblestudent@toot.community. Subscribers receive real-time alerts of trading model changes, and a hypothetical trading record of those email alerts is shown here.
Subscribers can access the latest signal in real time here.
The full post can be found here.