Liked by Craig Peterson and 6 others
In The Exchange you can ask and answer questions and share your experience with others!
Between this and your video with Weston I'm glad your part of RV and on the exchange can't wait to learn more from you
I have questions but it's been a long day of trucking time for bed
Really cool video man. Several thoughts:
Really interesting things you are touching on.
On growth and valuations:
Ever since we had the whole FED thing in the end of 2018, negative real rates have been correlating with equities and their valuations. We have seen an expansion of valuations multiples with the actual income remain generally flat or low growth. There are exceptions like some of the bigger tech stuff that benefited from COVID. but the correlation is key. most recently we might be seeing a divergence.
Obviously the whole interest rates deal moves the risk curve which is why we saw ARKK sell of during the rate spike. But negative real rates are also moving stuff as people search for real yields. Thats what it seems like to me. All of the money is so lose that its look for assets to attach to.
On banks, very interesting:
I always watch banks performance relative to SPX because underperformance usually leads risk off events: I cant find the chart or make it but if you look at financials as a % of overall market cap, it leads SPX really well.
I also watching IWC/SPY because small caps have much more sensitivity to the cycle and the flows generally lead moves in the indices:
with liquidity, m2, fed balance sheet and CPI all rolling over on a YoY basis, it could put a little pressure on things. That will likely be bad for banks either way, not sure for how long tho. Given the move we saw last week with a counter trend move in the dollar, it appears the marjority of the market and leverage is short dollars and bonds and then long commodities and cyclicals. Maybe short a bit of growth given that we saw a bunch of people covering their shorts in nasdaq as commodities and cyclicals dumped last week. Everyone is playing the rate of change game but it appears as if they have completely ignored the levels we are at. Liquidity rollings over on a rate of change basis doesnt look good for bank credit growth or margin debt.
We shall see though.
Would love any feedback or thoughts.
Hey @Jeremiah S these are some awesome charts and some good insight. Appreciate you taking the time to publish your thoughts here. I really like you called this a "rate of change" game. I'm really interested given how quick and fast we have recovered if we actually won't be able to keep up from a technical standpoint on a YoY basis. I could totally see a bunch of misses going into the future...
Totally. The rate of change game works until valuations matter right ? lol
But one of the other guys on the exchange posted this and it has a cool note regarding banks and liquidity that you will be interested in: https://www.bridgewater.com/_document/weighing-the-push-and-pull-of-stronger-growth-and-waning-liquidity-for-equity-markets?id=00000179-d2f2-dd08-abfb-daf3590e0000
I think the rate of change game appears to be connected with excess liquidity but then its all about valuations when the liquidity isnt there. I am not necessarily a value guy but the correlations seems interesting
glad we have you on the exchange!
Great stuff! I like the contrarian call short banks, especially following this stress test div payout story. Now, how about you teach me/those in the Exchange in my TA-slow rowing boat what these chart hieroglyphics are?
haha yeah hieroglyphics
but hey if it looks good and works :)
Anytime.... lets do that soon @Weston Nakamura !!!
what does 9 5 13 mean wrt to the citi-> c chart.
Fibonacci numbers? 😅😬
Big oil co observation:I used to be long RDSA (Shell), but grew up and are my losses. To me it seems like most of the western big oil has a lot more pressure from investors to put money into renewables and away from the upstream business (or not do more/ keep investing in these). Also, I am not quite sure a Biden admin cares as much as the trump admin to be worlds biggest oil producer.
Pay attention to the upstram oil n gas investment numbers below
But despite upstream investments not going up, debt has,
Also worth mentioning the significant number of defaults the sector had the last 2 years.
Im thinking even if the oil co's would want to invest in upstream the reality is that doing so is getting more expensive, technology-wise (no more easy oil) but also borrowing money for these projects will be expensive because their credit ratings took a hit last year (see: https://www.fool.com/investing/2020/05/15/credit-ratings-downgrades-in-the-energy-industry.aspx)
This makes me think an Aramco or a Rosneft have some advantage over the western big oil co's. Who knows china might buy up the upstream operations from the western oil'co's. For example, it would not surprise me for example if the project Total ended up not doing in Mozambique ends up being picked up by chinese interests. could also be interesting to look at China National Petroleum. That being Said XOM at a 5% div yield dev look interesting to people in need of yield as an income (they might not care about the stock price as long as the div is paid).
Yes, using some DeMark indicators here for timing purposes but are actually derivative of Fibonacci -- good observation. The exact rules can be found with some googling (I'm afraid to share stuff without permission but am a big fan of the TD team)
Exchange Week Ahead w/ Weston and Petr
Delta Hedging Tokyo 2020 Olympics Video: Opening Ceremony Eve w/ Ash Bennington