Pinned
Historically, during soft landings, the S&P 500 rips in 6 months leading into a first Fed cut.
Would put the market at 5,200 by May...
First time speaking w/ the great @ScottWapnerCNBC was a blast!
02:32
Warren Pies
10K posts
Warren Pies
@WarrenPies
Founder @3F_Research | PM $RAA | $FCTE | Formerly with Ned Davis Research | Recovering Attorney (step 4) - Not investment advice
- OIL Hedge funds/CTAs are now massively net short gasoil futures. In last five years, Managed Money has been net short only three other times: -Late 2018, -COVID (3/20), -Late-2020 Big oil rally followed every case...
- GOLD The current gold secular bull market tracking higher than the early-2000s move and lower than the 1970s bull. As we have said to clients for years, these secular moves go higher, and last longer, than investors expect. @3F_Research
- 10y yield telling you that fed cutting here is not a policy mistake. Historic rule of thumb is that every 25 bp FFR cut lowers: -2y by 17 bps -10y by 10 bps -7 bp bull steepener Curve is normal now and this move is almost exactly what you would expect imo.
- NEGATIVE WEALTH SHOCK B/c households are massively OW stocks, the current 10% market decline has created a wealth shock equivalent to 12% of GDP. 10% corrections are typical (53 since 1950). But, wealth shocks are rare (13). The economy is more vulnerable to a stock decline
- The 2-Year Treasury is now well below the Fed Funds Rate (chart below). This is the market telling the Fed to stop hiking. Historically, a FFR-2YR inversion kicks off a chain reaction in fed policy and fixed income. Quick thread on what history says is next.
- 1Yr Yield is now higher than S&P 500 earnings yield. Hasn't been like this since late 2000...
- OIL Hedge funds have now built a record net short gasoil position. Looking at crude and refined products, we are now, basically, at max pessimistic speculative positioning.
- Here's a (overly) simple rule stock market rule that's worked for a few yrs: Long S&P 500 when oil is <$90 Cash when oil is >$90 Since 2021, this rule of thumb has kept all drawdowns contained and captured most upside. Oil drives inflation vibes/expectations cc @rev_cap
- For those who have been underinvested in equities, the pressure to chase the market from now to year end will be immense.
- For those hoping the lows will hold, it is extremely rare to see the S&P 500 down 3% on any day in the month following a bear market bottom (a few in 2020...one in 2009 and that's it).✍️
- Until this cycle, Treasury bonds had rallied at every Fed pause. Assuming July was the last hike (which I believe), bonds are not behaving anything like they have in previous cycles. @3F_Research
- Kaplan on CNBC saying we must "slow the implementation of the Inflation Reduction Act to slow inflation."
- CoreLogic Single-Family rent index came in at a 14-year low today. This is a much bigger deal than yesterday's NTRR collapse. Big shelter disinflation impulse ahead.
