Sunday, July 4, 2021

Macro Update: June's Countertrend Market Action, Breadth, Valuation, and, Yes, Inflation (video)

This week's macro update runs longer than usual, so I thought I'd break it down for you, in case you'd like to skip the topics that we've more or less covered in earlier posts.

From 0:00 to 8:09 I share last week's result of our macro scoring along with graphs of 4 of our inputs.

From 8:10 to 20:18 I take you through equity market sectors, non-US equities and commodities in the context of last month's action, which was very countertrend and instructive.

From 20:19 to 24:50 I run through a 30-year history of US vs Non-US equities and discuss patterns of leadership change and consider mean-reversion. 

From 20:51 to 27.55 we look at 2 measures of US equity market valuation and explore what they portend for probabilities going forward. 

From 27:56 to 31:56 we look at market breadth from 2 angles and briefly discuss one of our models that says own stocks, although I caveat notably. Note that where I reference the SP500's breadth reading from last week, the anomaly includes the index itself reaching all time highs. I.e., the <50% of members above their 50-day moving averages is a thing because the index is at an all time high. 

From 31:57 to 39:16 I expand a bit on our general inflation thesis. Note that JD Research's take on China's waning global influence virtually has to be in reference to GDP growth rates for China, US and Europe of late, as opposed to their respective GDP itself.

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