Don’t Focus On What’s Out Of Your Control
· S&P retested March 13th low of 5,500 this morning – it's an important level to hold.
· Growth scare is priced – recession risk is not.
· Friday’s jobs report will set the tone for recession watch.
Relief Rally, And Then What?
· A subtle walk back on tariff talk ignites a relief rally.
· Incoming data and policy moves will determine the extent and duration of this bounce.
· Diversification is no longer a dirty fifteen-letter word.
Respect The Global Shifts In Fiscal Policy
· The stock market is not the measuring stick for this administration.
· Trade feud with Canada sheds light on U.S. ambitions/strategy.
· Fiscal policy matters and the baton is being passed.
Don’t Count On A Trump ‘Put’…
Short-term pain for long-term gain – easier said than done.
Capital flows to where it's treated best.
Equities are likely close to short-term bottom, but unlikely to be ‘the bottom’.
Market Price Action Acknowledging Growth Scare
· Growth scare getting priced by markets.
· Atlanta Fed Q1 GDP forecast craters.
· Not the time to be a hero, it’s a time to carry less risk.
Rising Confusion And Uncertainty Starting To Bite
· Gold, the anti-uncertainty asset.
· Buffett’s cash pile and a chart that explains why.
· Market internals indicate a character change is underway.
Thinking Through Structural Change
· Stocks treading water at all-time highs, gold glitters, and bonds take a hot CPI in stride.
· Rumors of a potential Mar-a-Lago accord deserve some thought.
· Implications will be profound.
Push and Pull
· Equities awaiting a catalyst to push them out of a choppy trading range.
· Deficit math a threat to an ambitious Trump agenda.
· All that glitters is gold.
Tariff Man Is Back
· Asset markets are at risk of being disrupted by tariffs.
· Investors are better served by forgetting about the politics and thinking about outcomes.
· Would you have signed up for a 7 – 10% return entering 2025?
Disruption Comes To The A.I. Narrative
· China’s A.I. model DeepSeek threatens the A.I. narrative.
· Disruption is at the root of technological innovation.
· Big week for earnings and the latest read on the Fed.
Time To Brush Up On Your Bond Math
· Better-than-expected inflation prints took the sting out of yields, which ignited a rally in equities.
· This week is all about earnings and Trump’s policy agenda.
· Bonds make sense at current interest rate levels.
Everything Is Trading Off Yields And The Dollar
· Equities off to a rocky start to the year but starting to trigger some oversold readings.
· Not until yields and the U.S. dollar stop going up will equities find some relief.
· Time to brush up on the fiscal dominance playbook.
A Look At The Consensus View
Strategists are optimistic about 2025.
Where they missed in 2024 was the extent to which investors were willing to pay up for stocks.
Interest rates and the U.S. dollar at levels that threaten upside outcomes
Quick Thoughts
Fed has cut the fed funds rate by 100 basis points, yet borrowing rates continue to increase.
U.S. dollar is a problem up here.
Happy Holidays and good tidings to all.
All Aboard
· We’re back to a market regime where the Mag7 is holding up the rest of the market
· Who isn’t aware of or positioned for the “American Exceptionalism” trade to continue?
· Russell Napier's interview gives investors something to consider: ‘What if they take their money home?’
Sentiment and Positioning Reaching Extremes
· Outside of the ten largest market cap companies, stocks had a tough week last week.
· Sentiment is at historic extremes – who’s left to buy besides the relentless bid from passive flows.
· The new Department of Government Efficiency (DOGE) has their work cut out for them.
Don’t Fight The Tape, But Know Where The Off-Ramps Are
Stocks and bonds applaud the Bessant pick for Treasury Secretary. Sentiment and positioning show a bull camp that is very crowded. Now is not the time to reach for return.
Assessing Investment Risk Has Become Taboo
· The election honeymoon period in the equity market is over, with stocks down on the week and for the third time in the last four weeks.
· Policy over campaign promises coming into focus.
· Two podcasts well worth a listen.
Looking Beyond The 2016 Playbook
· Markets pricing in a GOP sweep
· The set up for the Trump trade part II is less constructive than part I
· A strong dollar and rising rates if sustained will be problematic for equities
“Time In The Market” Vs. “Timing The Market”
· Market’s awaiting the outcome of Tuesday's election.
· This week’s Fed meeting should be a non-event with a 25-basis point cut expected.
· The math around ‘market timing’ shows why investors try.