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."
Look like cut off?