Resumo do Relatório

TPW Advisory Monthly: Springing Forward

02/05/2021
Avaliar este relatório: 1 voto. média: 5,00 out of 51 voto. média: 5,00 out of 51 voto. média: 5,00 out of 51 voto. média: 5,00 out of 51 voto. média: 5,00 out of 5 (1 votes, average: 5,00 out of 5)
You need to be a registered member to rate this.
Loading...
Bolsas Internacionais Commodities Estados Unidos Estratégia Global Europa Macroeconomia

850 words – a 3 minute read.

SUMMARY

Spring weather brings a sense of excitement to the air. Cross Asset markets have been busy pricking bubbles but bubble talk and zombie company fears remain (overstated). Regime changes are unfolding across the political and policy spaces. The full global reopening is just ahead.

 My advice remains: ignore the inflation debate a while longer, don’t worry about the Fed, keep calm and carry on. Remain overweight Equity, especially non us DM equity, underweight Bonds, especially Sovereign & Overweight Commodities. Look to re-opening laggards to participate in the upcoming 2nd leg of the Rotation. Sell in May is tempting but too early – testing times will arrive in late Summer.

 HEALTH

 Follow the leader remains the mantra & the UK and US lead. Europe’s vaccination process is finally accelerating and the summer should be saved. Japan and EM have been subpar as reflected in their YTD equity performance.

 I may retire the Health component of the Global Risk Nexus (GRN) process as Covid ceases to drive everything. This is true even with the recognition that “herd immunity” and going back to pre-Covid days is less likely given the varying vaccination rates in and between countries. It will be a game of variant whack a mole – expect science to continue winning.

 ECONOMICS

 The global BOOM I wrote about almost six months ago is now common wisdom with global growth forecasts of over 6% this year and 4%+ next vs the 20 yr. average of 3.5%. The crazy numbers we see day by day are transitory and should be treated as such. The question is whether inflation will also prove transitory. 

 We will find out more in the summer as the mechanical inflation pick up rolls off, the Fed updates its forecasts and we get more clarity around supply shortages, demand surges and importantly the velocity of money which remains stuck in the mud. I struggle to see inflation surging when the “digitalization of everything” is the rally cry.

 POLITICS

 The Biden Admin’s Go Big, Go Fast approach suggests a transformational Presidency. Polling supports the plans more than the man who is betting that solving Covid and jumpstarting the economy will be winning political formulas in 2022 and 2024.

 

One of the questions I am pondering is whether an improving US political brand value will be offset by a decline in the relative valuation of US financial assets? As US exceptionalism fades and the twin deficits soar what happens to the USD, to rates and thus Big Tech? 

 From a Tri Polar World POV, its great to finally see the US moving ahead on Hemispheric issues – a cross border railroad M&A battle, shots to Mexico and Canada, a Marshall Plan proposal for Central America – all good stuff.

 Keep an eye on European politics as well – from Germany’s upcoming election which could herald a breath of fresh (Green) air to Mario Draghi’s efforts to remake Italy – North and South could both be moving in the right direction in the years ahead.

 POLICY

 The Biden onslaught has clearly set the global policy pace and it has the potential to reshape American economy & life for years and decades to come. Corporate tax hikes to pay for the Jobs Plan and taxes on the wealthy to pay for the Family Plan are both politically astute and a recognition that the trickle down economic theory may finally be put to rest.

 Climate policy & the US led commitment to further accelerate emission reductions reinforces the Covid speed paradigm shift I have been discussing and deepens the potential for thematic investment to generate alpha.

 Europe’s vaccination and growth policy mix has had a bad run but both are improving – the divergences between it and the US on these fronts are likely at their wides. The Joint Recovery Fund (JRF) should be approved by all in coming weeks and monies should start to be disbursed shortly – the silver lining might be that Europe’s 2022 growth turns out better than the US.

 

MARKETS

 Beyond the issues of faster discounting and the dichotomy between rising US political values and falling (relative) asset values there are a few other issues to consider. One is the potential for the global reopening trade to push rates higher across the DM markets and provide a 2nd leg for the Rotation. How this might impact the thematic sleeve of the model portfolio is a big question.

 

The other is the testing time for risk assets later on in the summer as investors get to analyze whether inflation is more sticky than transitory. Poor seasonality, thin trading could set the stage for the pullback so many are waiting for.

 

Today’s opportunity might lie in the re-opening laggards, especially in Japan and parts of EM – mainly the old style EM in Latin America. JPM notes for example that Japan and Brazil are among the cheapest markets in the world; activist investors are circling Japan while Brazil’s currency is rallying vs the USD.

 

I hope you enjoy the Monthly as well as this video clip from yesterday’s Negocios interview.

 

TGIF!

Jay Pelosky

Jay Pelosky
Estrategista Global - TPW Advisory
Nova York, EUA

Aviso legal

DISCLAIMER: This research report was prepared and distributed by the signatory Analyst for the original recipient only, pursuant to all the requirements defined in CVM Resolution N.20/21, with a view to providing information that may assist investors to make their own investment decisions, not representing any type of offer of or request for the purchase and/or sale of any product. Neither the Analysts nor OHMRESEARCH are responsible for the investment decisions and financial strategies, which should ultimately be made by the readers of the report. The products shown in this report may not be suitable for all types of investors. Before any investment decision, investors should perform a suitability process with a reliable broker-dealer and confirm that the products presented are suitable for their investor profile. The profitability of financial products may fluctuate, and their price or value may increase or decrease in a short period of time. Previous results do not necessarily indicate future results. The reported profitability is stated before taxes. The information contained in this material is based on simulations and actual results may be significantly different.
The signatory of this report states that the recommendations reflect only his/her personal opinions and analyses, which have been produced entirely independently, and that OHMRESEARCH does not manage this content in any way. The opinions expressed herein are subject to change without previous notice as a result of changes in market conditions. The Analyst responsible for the content of this report and for complying with CVM Resolution N. 20/21 is indicated above, and if more than one Analyst is indicated in the report, the analyst in charge will be the first accredited analyst to be mentioned in the report. The analysts registered with OHMRESEARCH must comply with all the rules defined in the Code of Conduct of the Association of Capital Markets Investment Analysts and Professionals (APIMEC) for Securities Analysts and the Policy of Conduct of Securities Analysts. Pursuant to article 21 of Resolution CVM N. 20/21, if an Analyst is in a situation that may affect the impartiality of the report or that may qualify as a conflict of interest, this should be reported in the “Conflicts of Interest” field herein.
The content of this report is the property of the signatory Analyst only, and may not be copied, reproduced or distributed, in whole or in part, for/to third parties, without a previous written authorization from the Analyst. All information used in this document was obtained in public information from sources believed to be reliable. While all reasonable measures have been taken to ensure that the information contained herein is not uncertain or misleading at the time of its posting, the Analyst is not accountable for the accuracy of the information shown in the report.
For further information, please refer to CVM Resolution nº 20 of 2021 and the APIMEC Code of Conduct for Securities Analysts. This report is intended only for the OHMRESEARCH subscriber that acquired it. Unauthorized reproduction or distribution of the report or of any part hereof, in any way, may result in civil and criminal penalties, including the obligation to redress any and all losses and damages, in accordance with Law No. 9610/98 and other applicable legislation.