The Everything Rally?

January 23rd I wrote:

“Reminder, this could be 1995 or 1999.

I’ve been talking this 1999-esque feel since mid-November, but in truth, this could be the multi-year run up similar to 1995 when lots of IPOs were taken public in a speculative fever over the disruptive tech of the internet.

Same feel is emerging with this generative AI FOMO.

There is a lot of VC money to deploy.

I think this is more 1999-esque with a caveat:

It won’t really be anything like the one-and-only 1999 tech bubble –

where Nasdaq rose up 100% into the March 2000 top.

This rally will be broader.”

Growth-AND-Value Rotation?

I went on to ask,

When is the last time SPX made ATHs while Russell 2000 was still in a bear market?Never.

The next 3 closest instances were followed by a rally higher over the next yr with the RUT outperforming and joining the SPX at ATHs.

Chart H/t @Merlin_Capital

From my Feb 2024 Bloomberg & MarketWatch Interviews, I gave my 2024 Sector Laggards as a theme for higher: IWM. IPO, XRT, XBI

Hopefully I made the point in both interviews that, clearly, tech concentration – from a 54% advance in Nasdaq in 2023 to a melt-up in select AI stocks continuing in 2024 - has helped keep indices bid, and outperformed value, but now is when money could rotate into value as tech is extended.

Well, according to my growth-to-value ratio I show daily to clients in my live trading room, money has rotated!

And NYSE composite continues to show strength.

As I continue to say for a few months now:

"Markets are Overbought But Not Broken"

Sadly, Fiscal Dominance IS Bullish

As Geoffrey, MacroAdvisor Contributor for our CLUB/EDGE clients, has taught/advised:

"Equities are hedges against a falling currency during wars and currency plunges."

And as it happens, US is spending a lot on foreign wars AND as Geoffrey pitched Oct 3rd & I pitched Nov 9th:

 "USD Has Likely Peaked"

Make Hay While The Sun Shines:

1. Four botched US treasury auctions in 4 months.
2. Ramp in Gold off that Oct 2023 low & now up 6% from ATHs since Friday's breakout.
3. Biden to announce in SOTU speech he is sending US troops to Gaza border.
4. Sweden joining NATO - a Putin no-no
5. China buying gold like it knows something...

Big Questions quietly asked by UST holders:

• How many $ trillions of QRA issuance are expected to finance an ever-growing US fiscal deficit and how am I compensated for this risk?

• What happens to the confiscated assets of Russia & what does Putin do upon Ukraine's NATO acceptance?

• When recession?

As Geoffrey aptly put it:

"It's a bug looking for a windshield."