Resumo do Relatório
Friday Musings: Down with Domination, Up with Innovation
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This past week may have marked both the end of US equity dominance and the beginning of a UST bear market.
Since last Fall, I have noted how the sell side consensus target for the 10 yr UST bond at YE 2021 was way off at 1.2%; my own target has been, and remains, between 1.75% and 2%.
At this point, a fixed income, duration related, growth equity correction seems pretty far advanced. As I have suggested for many months: vaccines + rising rates = “Kryptonite” for Big Tech.
Bond investors have now priced in 3 rate hikes by the end of 2023 vs one or none a month ago. The Nasdaq is in correction territory while the hi fliers like TSLA have had their worst losing streak in almost 2 years. The clean energy thematics have been caught up as well – more so than I expected. On the Crypto side, GBTC has switched from selling at a 30% premium to the underlying BTC price to now selling at between a 15-20% discount!
Could the next move be be a rally in the 10 yr? Its facing resistance at the 1.5% level which also offers attractive hedged yields for non US buyers while the Fed meets in a few weeks ( 3/17); the massive short positions in UST futures suggests profit taking will be appealing at some point.
Bottom line: a rate rally = a growth stock rally; a straight shot to a 2% 10 yr = broad S&P selloff that could include the Cyclical/Value sectors as well. Sizing and positioning among the long term secular themes amidst a significant equity rotation, the biggest economic boom in 50 years and a UST bear market will remain challenging. On that front I just updated my model portfolio delivery service – reach out to learn more.
Jay Pelosky
Estrategista Global - TPW Advisory
Nova York, EUA
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