Resumo do Relatório
TPW Advisory Friday Musings: Welcome Mr. Bunny
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Which Mr. Bunny you ask… well it could be Bad Bunny, the Puerto Rican rapper or Monty Python’s classic killer bunny or perhaps a cameo from our own bunny, Mr. Wallace. But I am referring to the Year of the Rabbit, which begins with the Lunar New Year, Sunday Jan 22nd. The Year of the Rabbit calls for a year of longevity, peace & prosperity. After 2022, the third worst year ever for a 60-40 portfolio, all we can say is welcome Mr. Bunny – you are right on time!
It has been a pretty good start to the year for risk assets and it could be setting up to be quite a prosperous year, notwithstanding the Wall St strategist consensus for a down S&P or worse yet, all those stale bears calling for 3000 on the S&P. The Carson Group reports that after a down year, the trifecta of a Santa Claus rally (check), the 1st five trading days of January being up (check) and January itself finishing up the full year results would make Mr. Bunny proud: up 100% of the time, up double digits 100% of the time with an average gain of 27%.
While historical analogues fell flat last year, overwhelmed by Fed action, we do expect less Fed & more stability ahead. This should allow these historical relationships to regain some validity. Note we are not calling for a 27% return type of year for the S&P. Rather, we expect a flattish year which coupled with a weak USD should stimulate further outperformance by non US equity.
Our 2023 view is quite simple & straightforward. As US inflation declines the Fed will have less work to do. 2022 headwinds turn to 2023’s tail winds; NDR reports that its global recession indicator has begun to roll over and notes that the best returns tend to coincide with high and falling recession risks – which makes sense. We expect reduced volatility (VIX now under 20, MOVE index under 120) to lead to improved risk appetites. Fundstrat came out last week with some interesting work suggesting the VIX is much more important for how equity will perform than earnings, noting that following a down year, a declining VIX leads to positive equity returns regardless of earnings.
Jay Pelosky
Estrategista Global - TPW Advisory
Nova York, EUA
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