=== MARKET IMPLICATIONS === The observed sector rotation from high-growth software to value stocks suggests a potential shift in market leadership, possibly driven by changing interest rate expectations, inflation concerns, or a re-evaluation of fundamental valuations. This implies continued pressure on growth-oriented tech and potential outperformance for more traditional, value-oriented sectors. The heavy US macro data calendar, particularly retail sales and inflation, will be crucial in shaping demand outlooks and Federal Reserve policy expectations, likely leading to increased volatility. In Japan, the interplay of wage data and currency dynamics (post-intervention threats) could signal shifts in the Bank of Japan's monetary policy, impacting both the Japanese Yen and local equity markets. The author's "Easy Street ahead" positioning for "stocks vs US bonds" indicates a preference for risk assets, specifically US equities, over safe-haven bonds, suggesting a belief in continued economic resilience or a benign environment for equity returns.
| Ticker | Direction | Speaker | Thesis | Time |
|---|---|---|---|---|
| SHORT |
Bob Elliott
Substack author, Nonconsensus |
Bob Elliott observes that "momo favorite software stocks implode and old school value companies surge." This indicates a significant and ongoing market rotation away from high-growth, high-multiple software companies towards more fundamentally sound, potentially undervalued "old school value" companies. This trend, if sustained, offers a relative value opportunity. Initiate a pair trade: Short an ETF tracking software or growth stocks (e.g., IGV, ARKK) and Long an ETF tracking value stocks (e.g., RPV, VTV). The rotation could reverse quickly, driven by a renewed appetite for growth or a broader market downturn that impacts all equities. Value stocks could become overbought. | — | |
| LONG |
Bob Elliott
Substack author, Nonconsensus |
Bob Elliott states he has "positioned for Easy Street ahead" and simplified his thematic trade to "stocks vs US bonds." "Easy Street ahead" implies a positive outlook for risk assets, specifically US equities, relative to the more conservative US bond market. This suggests a belief in continued economic growth or a benign environment for equity performance where equities outperform fixed income. Overweight US equities and underweight US bonds in a portfolio, or consider a long equity / short bond pair trade using broad market ETFs (e.g., SPY/VOO vs. TLT/AGG). Unexpected economic downturn, significant rise in interest rates, or a flight to safety that boosts bond prices. | — | |
| WATCH |
Bob Elliott
Substack author, Nonconsensus |
Bob Elliott highlights upcoming Japanese wage data (released during Super Bowl) and a "fading currency rally after threats of intervention," noting he needs to "refresh my thinking here." Strong wage data could signal a shift in the Bank of Japan's ultra-loose monetary policy, potentially leading to JPY appreciation. However, the "fading currency rally" and intervention threats introduce significant uncertainty. The author's need to refresh thinking suggests a complex and potentially volatile situation. Monitor Japanese wage data, BoJ commentary, and JPY price action closely for a clearer directional signal. Avoid taking a strong directional stance until more clarity emerges, but be prepared for potential volatility in JPY (e.g., FXY) and Japanese equities (e.g., EWJ). BoJ maintains dovish stance, actual currency intervention, global risk-off sentiment driving safe-haven flows into JPY despite domestic factors. | — |