War can be the scapegoat for a rate cut.

Apr 15, 2024

Be sure to check out last week’s piece Zero Rate Cuts & follow us @gmgresearch.
Just know, if there is true war escalations, the fed will use that scapegoat to make a cut this year into an election year. We still are at zero cuts.
Bitcoin reacted heavily on war news. But if we see war that means inflation higher.
This week will be more about LEARNING not spoon feeding.

THE IMPORTANCE OF MACRO: It is extremely important to learn and understand global macro. Majority of a stock’s movement can be explained by the “big-picture” story, while company-specific movements only account for a fraction of their move. Most dumb sheep investors on Wall Street are trained with a bottom-up mindset which can lead to a lot of confusion when macro forces take over markets.

FACTORS: In the current market environment, stock outperformance is guided by investors focusing on specific attributes that align with the economic outlook. The use of factors are the purest way to isolate these key attributes from general market noise. WE STILL PREFER THE QUALITY FACTOR.

Gold is telling us inflation is way higher (+6%).

Platinum looks good.

AMD: Try, try, try again. This is a gift.

Google continues to outperform even after the negative AI headlines

Coupang!

LEARN SOMETHING

Building a long volatility strategy without options: Looking at 59 indices across various asset classes from 2006 2021, studies have shown standout performances from German Bunds, the JPY/AUD currency pair, and US Treasuries during periods of heightened volatility (see below).

IMPORTANT: Correlations between asset classes are asymmetrical; they behave differently in good times versus bad. Essentially, diversification tends to work well when you don’t want it to (during rallies), but it fails to protect us during downturns. This challenges the traditional investment strategy of diversification, highlighting the need for a more nuanced approach to managing portfolio risk, especially in volatile markets.