Process question: do you pull all of this data into Excel and manually assemble these tables? Or is there some template/software that you would recommend?
data is pulled into excel and tables assembled manually. i prefer to get my hands dirty with the data which allows me to see nuances and potential hidden value that might not otherwise be easily observed.
Couldn't agree more, and broadly agree with your view.
The one datapoint I worry we (all except you) overfit is ISM to PCE/CPI. I know most tightening cycles proceed from housing/durables volume downturn to unemployment in related industries & labor slack to falling CPI. Do you think it's possible to have sticky services-driven inflation in spite of falling goods demand? Or do you think that there's no reason to abandon the weight of the evidence of the tight tie b/w ISM & PCE/CPI?
sure maybe, but my approach is to “trust but verify”. in this case trust the weight of evidence and historical relationships hold but continuously verify that to be the case. of course market pricing and expectations matter and i’d say many expect sticky inflation. that may end up eventually being the case…but as inflation momentum fades it becomes harder to have confidence in that view and can/will shift market narrative…and pricing.
i’m not interested in the view/call on secular inflation (the destination) with disregard for cyclical inflation (the path)
Another 1st in class update Mr. Blonde. Indeed, the market repricing process has been painful &, a breather “dead cat” big bounce ( ?) is long overdue. You correctly point out, it’s not a one way journey to Heaven nor, is it to Hell either as much as the Bears would have it.😏 They, especially today, remind me a little of the BTC maximalists.
And, importantly the peak inflation thesis you’ve been working on makes lots of sense to me from most historically relevant periods. Also very specific parameters on 10-12% upside recovery remains realistic as well. Who knows?
What bothers me most about your update is not the clarity & logic you provide. Chappo ! It’s more the lack of “trust” I have in Lagarde, Powell, Yellen or even von der Leyen ( LPYL) that have exercised poor, if not grossly negligent judgment, in bringing forward peak valuations, liquidity & animal spirits to the point of greed & momentum they were late last year. There is no longer gas in their tank. The consumers are pumped out. Debt doesn’t go away as much as we’d like to close the chapter on this scourge. Anyway.
Today, each one of these still influential money ( for want of a better term) managers LPYL are openly admitting the complexities, the variability that has now led to instability. Pricing mechanisms on many asset classes are close to broken if not already there. Worse still, they are clearly laying the groundwork for more difficulties ahead.
WHO DO YOU TRUST?
Threading the needle?
Soft landing?
Hope is a 4 letter word.
I know, my age shows. Where’s my optimism of the traditional cycle recovery ad infinitum?
I have no solutions either. A healthy swath of cash as CHF based investor. The FO doesn’t trade things. It just sits on great companies ( a few of which I’ve mentioned in the past responses here) &, real estate &, private equity commitments.
Still I am very thankful for your great work & congratulate you for being one of the few ganz anständig well thought out Twitter voices. KEEP IT UP! I do trust your good work. It’s the other ones I don’t.
I agree with your thesis for favorable odds for a relief rally here, but imo, y/y inflation peaking is not what will modify the Fed’s hawkishness. They have been saying for months, they need the labor market to loosen up (doesn’t that tie into approx 75% of costs?) and inflation falling needs to be durable and broad based and persistent. That is different than peaking. But, peaking inflation may also be a potential catalyst for relief, as you suggest. Bridgewater is suggesting 6% YE with no china covid pivot and war effects stay intact. Fwiw, the medical people I spoke to in Asia think china pivot likely isn’t in the cards. So, more lockdowns likely in 4-6 months. As you are probably aware, there are others that also make a convincing case that a YE 6% outcome is to high. Regardless, it’ll be interesting how this plays out.
Why QQQ? My thinking is qqq will be under pressure until the market feels confident it knows the neutral date or the pivot date after neutral or the Fed’s is seeing what it wants for a pivot (stated above)
QQQ is the high beta play, so that makes perfectly sense to me. Imade a lot of backtests and what you can observe is that the largest upmoves are seen in bear markets, so let us have some fun :)
Very good missive, Mr. Blonde. Graphs and charts are persuasive. Commodity roc is decelerating but shelter and food continues to accelerate. Utilities are also raising rates.
Mr B, what software/program are you using for your z score and capitulation stats?
factset/excel
Fantastic work!
Process question: do you pull all of this data into Excel and manually assemble these tables? Or is there some template/software that you would recommend?
data is pulled into excel and tables assembled manually. i prefer to get my hands dirty with the data which allows me to see nuances and potential hidden value that might not otherwise be easily observed.
Couldn't agree more, and broadly agree with your view.
The one datapoint I worry we (all except you) overfit is ISM to PCE/CPI. I know most tightening cycles proceed from housing/durables volume downturn to unemployment in related industries & labor slack to falling CPI. Do you think it's possible to have sticky services-driven inflation in spite of falling goods demand? Or do you think that there's no reason to abandon the weight of the evidence of the tight tie b/w ISM & PCE/CPI?
sure maybe, but my approach is to “trust but verify”. in this case trust the weight of evidence and historical relationships hold but continuously verify that to be the case. of course market pricing and expectations matter and i’d say many expect sticky inflation. that may end up eventually being the case…but as inflation momentum fades it becomes harder to have confidence in that view and can/will shift market narrative…and pricing.
i’m not interested in the view/call on secular inflation (the destination) with disregard for cyclical inflation (the path)
Well put. Thanks again for sharing your view, and wishing you a happy MDW
Great work!
thank you for the feedback!
Finally got around to my favorite update.
Another 1st in class update Mr. Blonde. Indeed, the market repricing process has been painful &, a breather “dead cat” big bounce ( ?) is long overdue. You correctly point out, it’s not a one way journey to Heaven nor, is it to Hell either as much as the Bears would have it.😏 They, especially today, remind me a little of the BTC maximalists.
And, importantly the peak inflation thesis you’ve been working on makes lots of sense to me from most historically relevant periods. Also very specific parameters on 10-12% upside recovery remains realistic as well. Who knows?
What bothers me most about your update is not the clarity & logic you provide. Chappo ! It’s more the lack of “trust” I have in Lagarde, Powell, Yellen or even von der Leyen ( LPYL) that have exercised poor, if not grossly negligent judgment, in bringing forward peak valuations, liquidity & animal spirits to the point of greed & momentum they were late last year. There is no longer gas in their tank. The consumers are pumped out. Debt doesn’t go away as much as we’d like to close the chapter on this scourge. Anyway.
Today, each one of these still influential money ( for want of a better term) managers LPYL are openly admitting the complexities, the variability that has now led to instability. Pricing mechanisms on many asset classes are close to broken if not already there. Worse still, they are clearly laying the groundwork for more difficulties ahead.
WHO DO YOU TRUST?
Threading the needle?
Soft landing?
Hope is a 4 letter word.
I know, my age shows. Where’s my optimism of the traditional cycle recovery ad infinitum?
I have no solutions either. A healthy swath of cash as CHF based investor. The FO doesn’t trade things. It just sits on great companies ( a few of which I’ve mentioned in the past responses here) &, real estate &, private equity commitments.
Still I am very thankful for your great work & congratulate you for being one of the few ganz anständig well thought out Twitter voices. KEEP IT UP! I do trust your good work. It’s the other ones I don’t.
Bob thank you very much for your thoughts/views and the feedback on content!!
If & when U make it to our little world 🇨🇭ZH let’s try getting together.
without a doubt
Just want to say as a new investor this information is incredibly valuable, thank you for sharing your thoughts, much appreciated.
thanks for the feedback humberto
I agree with your thesis for favorable odds for a relief rally here, but imo, y/y inflation peaking is not what will modify the Fed’s hawkishness. They have been saying for months, they need the labor market to loosen up (doesn’t that tie into approx 75% of costs?) and inflation falling needs to be durable and broad based and persistent. That is different than peaking. But, peaking inflation may also be a potential catalyst for relief, as you suggest. Bridgewater is suggesting 6% YE with no china covid pivot and war effects stay intact. Fwiw, the medical people I spoke to in Asia think china pivot likely isn’t in the cards. So, more lockdowns likely in 4-6 months. As you are probably aware, there are others that also make a convincing case that a YE 6% outcome is to high. Regardless, it’ll be interesting how this plays out.
Why QQQ? My thinking is qqq will be under pressure until the market feels confident it knows the neutral date or the pivot date after neutral or the Fed’s is seeing what it wants for a pivot (stated above)
QQQ is the high beta play, so that makes perfectly sense to me. Imade a lot of backtests and what you can observe is that the largest upmoves are seen in bear markets, so let us have some fun :)
this is right, thank you
Thank YOU for the great content..
Thank you!
Very good missive, Mr. Blonde. Graphs and charts are persuasive. Commodity roc is decelerating but shelter and food continues to accelerate. Utilities are also raising rates.