As we discussed in our video, in broad terms, we aren’t bearish risk (“Policymakers are from Mars, Markets are from Venus” 1st April). Indeed, those of you who chose to receive our Macro Insider product will see that our portfolio of trade ideas is bullish overall. However, one thing has kept us awake at night, and that’s US stocks. In particular, the momentum/growth names that so dominate the US indexes. That these names utterly outperformed during CV-19 is understandable. But somewhat paradoxically, they have continued to perform in the reflationary recovery. Some of this reflected investors’ ability to deploy spare cash into value/cyclicals without needing to sell winners. Yet, in the last week, weakness in mega-caps such as MSFT and APPL has piqued our attention. Add in the sudden and somewhat inexplicable breakdown of meme names, and we are worried that a “nice” rotation could be turning “nasty”.
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