To The Moon

The latest hot topic in Global Equities is LatAm, and for good reason. EWZ (Brazil) jumped +20% over the past 2 weeks, and ILF (LatAm40) is up over 25% YTD. Big moves, especially for an often overlooked part of the markets — but the follow-up question is this: did we miss it? is it already done? (…or is there room to run?) This week’s chart goes a long way towards answering that question. The chart shows the PE10 or price vs trailing 10 years average earnings (also referred to as the Shiller PE or CAPE: cyclically adjusted PE) —the point of the PE10 is to correct for the distorting effects of cyclical swings in earnings that you often get with the forward or trailing 12month PE ratios. But the key point is the average PE10 across LatAm (this case = Brazil, Chile, Colombia, Mexico, Peru) is

Tips and Takeaways from this week’s charts: The equal-weighted $S&P 500(.SPX)$ is following the seasonal script. Election cycle seasonality is very bullish for Q4 and 2027. (but a key question: have we already brought some of this forward?) Semis are slipping, and continue to trade at a significant premium. Macro headwinds loom in 2027, effective borrowing costs set to rise. See below for the full set of charts and details behind these points + the [new] market outlook section at the end for my latest assessment. 1. Technical Check:  After a sizeable selloff, the equal-weighted S&P500 is ticking up off the lows —breadth is also ticking up after a hefty reset. The headline cap-weighted S&P500 is also looking to be shaking-off its p

Investor allocations to cash and bonds are approaching levels that deserve attention. The risk is twofold: 1️⃣ Market risk Extremely low cash and bond allocations can be a late-cycle warning sign, when investors are heavily positioned and markets may be more vulnerable to a reversal. 2️⃣ Portfolio risk Investors may be underprepared for a drawdown, with too little defensive exposure if markets turn lower. But there’s a bigger question. Most investors are positioned for a repeat of the 1970s. Far fewer are prepared for a repeat of the 1920s. And fewer still are considering a third possibility. What if neither scenario plays out? What if yields simply gyrate within a new, higher range? Markets don’t have to repeat history exactly. The real risk may be assuming they will. Markets are always m

The defining theme of the 2020s may be capital expenditure. 🤖 AI & datacenters ⚡ EVs & electrification 🚀 Robotics, space & warfare 🔋 Energy transition & resources 🏭 Onshoring & next-gen manufacturing For years, markets were dominated by software, the internet and consumer tech. Now the world is shifting toward hardware, physical infrastructure and deep tech. And we may still be underestimating how big this capex cycle could become. AI needs datacenters. Electrification needs power. Robotics needs factories. Onshoring needs new manufacturing capacity. Energy transition needs massive infrastructure investment. The next decade may be less about building apps and more about rebuilding the physical world. Maybe we’re not bullish enough on capex. 📈 Markets are always moving -

After a parabolic run, gold $Gold - main 2612(GCmain)$ is starting to roll over relative to bonds. Both are losing right now. But that could change soon. A deeply contrarian idea is starting to emerge: What if the next major rotation trade is from gold into bonds? That sounds almost unthinkable to most investors. Gold has been the obvious winner. Bonds have been the laggard. But markets can change quickly when positioning, yields and expectations shift. 🧐 So what could trigger a major rotation from gold to bonds? Here’s how it could happen: Markets are always moving - and sometimes, the best move is knowing what works for you. With Treasury yields, oil prices and rate expectations keeping markets on edge this week, investors are once again th

One of the things I keep track of closely is what the average individual investor portfolio looks like — i.e. how investors are positioned in the aggregate. This is useful because it helps inform what stage of the cycle we are in, what the mood is, what the average exposure is, and where potential energy is building up (because major shifts and extremes in positioning often portend future explosive moves). Here’s the perfect example. This chart shows US household aggregate weighting to stocks at a record high. $S&P 500(.SPX)$ And the interesting thing is, household allocations to equities are at a record high at a time when valuations are likewise tapping on the all-time highs. And then dig a little further and you realize that the average inv

This may be the most contrarian piece of information you’ll see this year. $Gold - main 2612(GCmain)$ $SPDR Gold ETF(GLD)$ looks expensive. Bonds look cheap. Interestingly, both have actually been a losing position this year, with gold down -4% YTD and long-term treasuries down -11%. The difference is one is nearing the end of a prolonged bear market, and the other is just beginning. The most contrarian trade right now would be short gold vs long bonds. But just because something is contrarian doesn’t mean it’s right. The rest of the elements need to fall into place. Coming from a starting point of valuation-extremes like that on display in the chart above certainly sets the scene, stimulates the imagi

Learnings and conclusions from this week’s charts: The $S&P 500(.SPX)$ remains in a healthy uptrend. (but the equal-weighted S&P500 has seen a major correction) The key driver of pain in the SPXEW is rising rates. The Equity Risk Premium has fallen to generational lows. Small Caps seeing heavily crowded shorts (short squeeze potential?) Overall, the overarching trend remains up for stocks, but rising rates have inflicted severe pain on rate sensitive sectors. Continue to monitor downside risks for stocks as the cycle progresses, but also upside risk in small caps + other sectors… 1. Happy New Month!  The S&P500 closed September down slightly (-0.5% m/m), but is still up +11.8% YTD (+12.8% including dividends). Zooming out, the ind

The market setup is getting more nuanced. It’s no longer just about whether risk assets are bullish or bearish. Rates, the dollar, positioning and valuation are starting to matter more. 💵 1. US Dollar I’m watching for upside risk in the dollar. Technical momentum, sentiment, positioning, macro conditions and Treasury yields are becoming more supportive, while policy shifts and geopolitical risks could add another layer of volatility. 🇺🇸 2. US Treasuries The contrarian bullish case remains compelling: • Cheap valuations • Extremely bearish sentiment • Crowded positioning But for now, it stays on watch as macro headwinds remain and the technical picture becomes increasingly fragile. 🌎 3. EM Fixed Income Still neutral. Higher inflation and rates create downside risk for EM sovereign bonds, wh

The big question for bonds is laid out plain and simple in this week’s chart. The question = is this 1920? or 1967? 1920: US 10-year treasury yields poked their head above the long-term average, peaked shortly after, and then declined. 1967: US 10-year treasury yields broke above the long-term average and just kept going, peaking in the mid-double-digits. Here’s why I think it’s worth probing: I see so many people arguing, with conviction, that this is the 1970’s all over again. The simplistic pattern recognition approach of: X happened back then, so it will happen again now. But if you’re going to argue for a repeat of history, why not 1920? (…also, what if the answer is neither?) What if yields just stay around this level, they don’t surge higher like the 1970’s, and they don’t peak at a