October 6, 2022

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This strategist says: There is only one “perfect asset” to combat all the bad news that can come

This strategist says: There is only one “perfect asset” to combat all the bad news that can come

Before that, stock futures drop after Ford warned of rising supply costs, in the wake of FedEx’s FedEx,
Earnings warning last week.

The dollar and cash have been among the most popular havens for investors as they contend with the risks of higher rates of recession and higher inflation, along with a brutal war in Europe.

but we have Today’s call From Warren Pies, co-founder and strategist at 3Fourteen Researchsee energy The Hedge any bad news in the pipeline. As he notes, after years of moving in opposite directions, stocks and bonds are starting to slide together.

“I think you have a lot of potential outcomes in the future now that stocks and bonds correlate positively. There are very few assets that can hedge the risks that are out there,” Bayes said in The interview was published last Friday with Real Vision.

And while the Fed may try to raise its rates in order to bring down energy prices — a major cause of high inflation — they may not succeed because they “can’t influence the main driver of oil at the moment” — geopolitics, Bayes said.

“If we go ahead with full sanctions on Russian oil and really get out of this impasse that is happening now and is stopping, the world will suffer from a shortage of a lot of oil,” he said, and this would create a “single crisis of recession.” “Oil is going to do its own thing…which is why you need to be exposed to oil through the energy in your wallet.”

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For the types of oil companies, Bayes advises to keep it simple. “You don’t need to take any kind of company or beta risk here. Buying beleathers, big energy companies, liquid energy companies.

“If you want to be a little different or out of the standard, we still like the big Canadian producers because they have more or less cost to produce and maintain,” he said.

What he was suggesting to clients is a 10% to 20% position in energy, given that the segment is 5% of the S&P 500 SPX,
-1.02%And the
Then transfer the rest of the portfolio to the quality companies. “You’re just trying to avoid the unprofitable technical stuff,” Bayes said.

The strategist sees a setting similar to what happened after the last technical bubble between 2000 and 2005, when markets entered a new secular bull market for commodities, and quality as well as energy lagged in the market, especially the technology field. He sees this similar setup in operation over the next year.

Weighing whether the stock market is looking to the bottom, Bays said, if the S&P 500 hits 3,600 live, it will start buying. “We did it last time. On June 16, we reported back to our clients after it’s been bearish all year, saying to bring about 25% or 33% of your capital back into the market here. And if we get there again, we’ll do the same. “.

And at worst, the S&P 500 drops to 3200? “We could be another 10% lower, but if you can’t handle a 10% dip in that business, you’re in the wrong business,” Bayes said.

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Read: Stocks may head for more pain as second half of September historically ‘too bearish’


ES00 stock futures,


be moving downwith TMUBMUSD02Y bond yields,

Rising and CL.1 oil prices,
Fixed. DXY dollar,
+ 0.43%
top and bitcoin BTCUSD,
Hovering just above $19,000.

Hear from Ray Dalio in The best new ideas at the Money Festival On September 21 and 22 in New York. The hedge fund pioneer has strong views on the direction the economy is headed.


Ford F
Drops in premarket after warning Inflation has raised supply costs by $1 billionwith a shortage of parts leaving more cars unfinished, even though the automaker stuck to its annual forecast.

SPAC ‘King’ Chamath Palihapitiya is two-vehicle filter

After failing to find the target companies in time.

Peloton PTON home fitness bike maker,
+ 0.41%
presents Rowing Machine $3,195.

Apple AAPL,
+ 0.06%
he is Raising the price of apps and in-app purchases Across parts of Asia and any country that uses the Euro. Stocks are going down.

Swedish Krona SEKUSD,
It slips even after the Riksbank raised interest rates by 1% more than expected. Aside from the two-day Fed meeting starting on Tuesday, the Bank of England, the Swiss National Bank and Norges Bank will also meet this week.

Recent data showed housing construction It was strong in Augustbut the building permits were waived.

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“What would have been a major disaster a few months ago has turned out to be manageable so far,” he said. Note the strategists at DWSreferring to the rise in energy prices in Europe, specifically Germany, after Russia stopped all gas exports.

They say this is for two reasons: Germany is increasing gas storage faster than expected and consumption has fallen significantly, as the graph below shows. While there may be a harsh winter or even three to come, “we are now seeing how resilient Western industries are when they face extraordinary stresses,” says Martin Morrison, chief European economist.


Read: Germany’s economy. Minister said natural gas stocks will be “empty” after winter

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