Stocks Rebound… With “Big Tech” UpgradedAre the lows in before Christmas That's hard to know. Stocks have rallied strongly to start the week after last week's ~5.2% pullback. It's been 'higher-risk' names leading the rebound... with the Russell 2000 and tech surging.
Turbulent Times AheadCPI is expected to jump above the annual pace of 6.2%... the hottest in 30 years. Makes sense to me - the Fed has expanding its balance sheet to $9T and real rates remain negative - why wouldn't we see inflation? It's going higher.
Powell’s Pivot… As Market Frets over OmicronHow quickly things can change. From the Fed pivoting on its dovish sentiment... to the 'Omicron' variant arriving in California. This has seen the market turn on a dime.
Ready to Buy the Dip?Of late, investors focused on risks surrounding unwanted inflation, central bank tightening and supply-chain snarls. The VIX lingered below 15 - a sign of complacency and what I felt was over-confidence. Overnight that changed...
Is this 40-Year Inflation Trend Over? When it comes to inflation, I continue to pay attention to the 5-Year, 5-Year Forward expectations... which trade at a very modest 2.33%. And whilst inflationary pressure will not ease a great deal over the coming 12+ months (maybe longer) - beyond that the market sees mean reversion.
Bond Yields and Dollar Surge on Powell Re-electionPersonally, I don't think there's been a more dovish Fed Chair in history than Powell. And whilst some say he is arguably more 'hawkish' than Brainard... he's a dove. Here's $4.24 Trillion reasons...
Big Tech Breaks Out… Two More Quality Stocks to WatchTwo recent additions to my portfolio are up 16.2% and 14.5% respectively... but I think there's a lot more to go. My largest portfolio position - Google - is up over 65% this year. Google has probably been the stand-out performer of the 5 for 2021...
Buyable Dip Followed by Another RallyMy most recent post concluded with the thesis that stocks are headed higher. Two good reasons: (1) Interest rates likely to remain at negative in real terms (which is inflationary); and (2) cash is likely to lose 5%+ over the next year...
No Recession Risk. But there’s a $4T Elephant in the Room. How to Play ItMarkets continue to climb the so-called 'wall of worry'. The S&P 500 put in its first negative week since the week ending Sept 17th. From mine, I think the market finds technical resistance around this zone (e.g. 4700 to 4800).
6.2% YoY CPI… Nice Work Fed!Inflation is easy to explain: it's excess money chasing too few goods. Milton Friedman put it like this: "it has always been (and always will be) a monetary problem". To that end, look no further than the Fed with money creation.
What Gold Needs to RallyThe precious metal caught a bid the past few weeks... most notably after 10-year bond yields pulled back. This move has some asking whether gold is about to rally - especially given the Fed's easy money policies and hotter-than-expected inflation for longer?
Expect a Strong Close to 2021Despite the crash in March last year - 2020 finished the year with 16% gains. Therefore, it's remarkable to think the subsequent year is more than likely to deliver an incremental 20%+ return. It makes you question what 2022 will return?
