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TME Daily: Consensus complacency turns into complicated confusion
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Can the squeeze be complete without “risky” rally?
Risky” factors (e.g. high vol, low profitability, small cap, high earnings variability, etc) stopped underperforming in mid-May, but have yet to see a recovery that has often followed similar drawdowns (even if it was just a bear market rally). Mega-cap growth: room to re-lever Macro mavens shorter equities now than at height of COVID
Chart shows global macro HF beta to MSCI world equities. The interpretation would be that macro HFs are shorter equities now than any time in the past 2.5 years. With this macro back-drop, what’s the big worry?
The very short summary from GS Macro on the US economic outlook make you wonder where all the fear comes from in the investment community. GS: “In the US, we expect Q4/Q4 growth to slow to 0.4% in 2022, driven by a large fiscal drag and a negative impulse from tighter financial conditions. We see a 30% probability of entering a recession over the next year and nearly even odds at a two-year horizon. We expect core PCE inflation to fall to 4.4% by end-2022, although further supply chain disruptions, stronger wage growth, or firmer shelter inflation could keep inflation somewhat higher for longer”
Cloud SaaS’ wild ride Bernstein: Sentiment signalling short-term pain followed by long-term gains for equities
Bernstein’s sentiment signals are currently giving mixed messages. Bernstein: “The short-term sentiment indicator is currently neutral, and has not yet seen capitulation in outflows from equity funds. In fact outflows, excluding Europe, have only just begun. Our longer-term equity sentiment indicator is at extreme pessimistic levels which suggests […]
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