Sunday, July 22, 2018

Focus on the dislocations - these are the places of market opportunity this week

There are some recurring themes this week in our highlighted charts, debt and leverage will overhang any global economic discussion; however, we see some interesting dislocations that can offer global macro opportunities:

  • Short yields are now higher than dividend yields. 
  • Growth stocks continue to outperform value. 
  • The yield curve continues its slow flattening march. 
  • EM stocks are diverging from developed markets. 
  • Wealth as measured by equity market cap is falling. 
  • An increasing number of firms are losing money. 
  • Copper prices signal an economic slowdown. 
  • Global PMI, albeit still above 50 is moving lower.
Dislocations offer opportunities for exploiting trends or betting against the herd wisdom. This will not happen if markets are range-bound. Dislocations are attention focusers. These are the places I will be spending my research time.

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