The latest hot topic in Global Equities is LatAm, and for good reason. EWZ (Brazil) jumped +20% over the past 2 weeks, and ILF (LatAm40) is up over 25% YTD. Big moves, especially for an often overlooked part of the markets — but the follow-up question is this: did we miss it? is it already done? (…or is there room to run?) This week’s chart goes a long way towards answering that question. The chart shows the PE10 or price vs trailing 10 years average earnings (also referred to as the Shiller PE or CAPE: cyclically adjusted PE) —the point of the PE10 is to correct for the distorting effects of cyclical swings in earnings that you often get with the forward or trailing 12month PE ratios. But the key point is the average PE10 across LatAm (this case = Brazil, Chile, Colombia, Mexico, Peru) is

Tips and Takeaways from this week’s charts: The equal-weighted $S&P 500(.SPX)$ is following the seasonal script. Election cycle seasonality is very bullish for Q4 and 2027. (but a key question: have we already brought some of this forward?) Semis are slipping, and continue to trade at a significant premium. Macro headwinds loom in 2027, effective borrowing costs set to rise. See below for the full set of charts and details behind these points + the [new] market outlook section at the end for my latest assessment. 1. Technical Check:  After a sizeable selloff, the equal-weighted S&P500 is ticking up off the lows —breadth is also ticking up after a hefty reset. The headline cap-weighted S&P500 is also looking to be shaking-off its p

Investor allocations to cash and bonds are approaching levels that deserve attention. The risk is twofold: 1️⃣ Market risk Extremely low cash and bond allocations can be a late-cycle warning sign, when investors are heavily positioned and markets may be more vulnerable to a reversal. 2️⃣ Portfolio risk Investors may be underprepared for a drawdown, with too little defensive exposure if markets turn lower. But there’s a bigger question. Most investors are positioned for a repeat of the 1970s. Far fewer are prepared for a repeat of the 1920s. And fewer still are considering a third possibility. What if neither scenario plays out? What if yields simply gyrate within a new, higher range? Markets don’t have to repeat history exactly. The real risk may be assuming they will. Markets are always m

One of the things I keep track of closely is what the average individual investor portfolio looks like — i.e. how investors are positioned in the aggregate. This is useful because it helps inform what stage of the cycle we are in, what the mood is, what the average exposure is, and where potential energy is building up (because major shifts and extremes in positioning often portend future explosive moves). Here’s the perfect example. This chart shows US household aggregate weighting to stocks at a record high. $S&P 500(.SPX)$ And the interesting thing is, household allocations to equities are at a record high at a time when valuations are likewise tapping on the all-time highs. And then dig a little further and you realize that the average inv

This may be the most contrarian piece of information you’ll see this year. $Gold - main 2612(GCmain)$ $SPDR Gold ETF(GLD)$ looks expensive. Bonds look cheap. Interestingly, both have actually been a losing position this year, with gold down -4% YTD and long-term treasuries down -11%. The difference is one is nearing the end of a prolonged bear market, and the other is just beginning. The most contrarian trade right now would be short gold vs long bonds. But just because something is contrarian doesn’t mean it’s right. The rest of the elements need to fall into place. Coming from a starting point of valuation-extremes like that on display in the chart above certainly sets the scene, stimulates the imagi

Learnings and conclusions from this week’s charts: The $S&P 500(.SPX)$ remains in a healthy uptrend. (but the equal-weighted S&P500 has seen a major correction) The key driver of pain in the SPXEW is rising rates. The Equity Risk Premium has fallen to generational lows. Small Caps seeing heavily crowded shorts (short squeeze potential?) Overall, the overarching trend remains up for stocks, but rising rates have inflicted severe pain on rate sensitive sectors. Continue to monitor downside risks for stocks as the cycle progresses, but also upside risk in small caps + other sectors… 1. Happy New Month!  The S&P500 closed September down slightly (-0.5% m/m), but is still up +11.8% YTD (+12.8% including dividends). Zooming out, the ind

The big question for bonds is laid out plain and simple in this week’s chart. The question = is this 1920? or 1967? 1920: US 10-year treasury yields poked their head above the long-term average, peaked shortly after, and then declined. 1967: US 10-year treasury yields broke above the long-term average and just kept going, peaking in the mid-double-digits. Here’s why I think it’s worth probing: I see so many people arguing, with conviction, that this is the 1970’s all over again. The simplistic pattern recognition approach of: X happened back then, so it will happen again now. But if you’re going to argue for a repeat of history, why not 1920? (…also, what if the answer is neither?) What if yields just stay around this level, they don’t surge higher like the 1970’s, and they don’t peak at a

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $iShares Russell 2000 ETF(IWM)$ $Gold - main 2612(GCmain)$ Back at the start of the year I shared what I thought would be the 10 most important charts to watch for global multi-asset investors in the year ahead. In this note I have updated the charts +provided fresh comments. 1. From Tightening to Tailwinds: despite all the geopolitical events this year, global growth has proven remarkab

This week we’re looking at how the global capex boom is driving bond yields higher (+clues on the next steps for bonds). The chart below shows the 5-year annualized growth of Capital Expenditures by global listed companies vs the global average 10-year government bond yield. There is a strong link between the two, and I’ll explain why. But first, what’s up with that big disconnect in 2007-2011? (because sometimes the exception helps explain the rule…) That particular period saw a couple of things happen: first, capex during that period was heavily driven by the commodity sectors, and commodity prices were surging (e.g. crude oil prices going up 2-3x); which put the brakes on growth —just as central banks had aggressively tightened monetary policy… and then of course came the global financi

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $iShares Russell 2000 ETF(IWM)$ Learnings and conclusions from this week’s charts: Tech stock ETF flows recently reached record highs. Foreign flows into US stocks are surging (record highs). CEO confidence, ISM PMIs, and freight data are turning up. Margin debt indicators are sounding a clear risk warning signal. Much of the index are heading into a buyback blackout window. Overall, there is a lot of good news on the earnings and ec

Global ex-US Equities $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $Dow Jones(.DJI)$ $iShares Russell 2000 ETF(IWM)$ I wanted to share this topic from a recent Weekly Macro Themes report because it answers a few key questions, raises a couple more, and helps put into context today’s Fed rate hike decision. Firstly, on that note, in case you missed it, the US Federal Reserve just hiked rates +25bps to 4% — as I noted last week, this is exactly what they should be doing, and we probably will see m

I wanted to share this topic from a recent Weekly Macro Themes report because things are getting interesting in this overlooked corner of global markets. But also this issue (upside risk in agricultural commodities) is interesting both from a position taking standpoint — and from a macro standpoint. Because upside in agri commodity prices will directly and acutely affect consumer prices aka inflation …which is probably one of the biggest macro issues right now (particularly given the impact on policymaking and bond markets). So I hope you find this rare dive into agri commodities interesting. First up is the Main Page for this topic, all topics in my weekly report take this format: an overall assessment (summing up the outlook), risks against the view, catalysts to reinforce the view, a ke