Bad Sentiment, Good Opportunity [VIDEO]

Jordi Visser

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In the latest installment of Real-Time with Jordi Visser, Jordi highlights the major impact that gas prices have had on the broader market dynamics. Rising gas prices have helped drive higher CPI, faster Fed rate hikes, lower consumer and investor sentiment, and lower equity and credit markets. Now that gas is falling, will that change that feedback loop?

Key Takeaways:

  • Jordi shows that as of June 13th, we have seen gas prices declining, which could drive the year-over-year inflation down from its peak. Given the inverse relationship between gas prices and equities, a reversal could signal an equity turning point.
  • Through the measure of M2, Jordi distinguishes between the current period and the 1970s inflation regime. He also highlights demographics, exponential innovation, and the debt bubble are all different in the current period.
  • Jordi believes that small-cap equities will outperform large-cap equities during the second half of the year.
  • Finally, Jordi points to nominal GDP, which has stayed high despite slowing growth. With inflation coming down and top-line sales constant, earnings may hold in better than investors have feared into the end of the year.

About These Videos: Our market videos seek to provide a data-focused interpretation of the market's most critical developments. Real-Time with Jordi Visser is a recurring series produced by our President and CIO based on his macro views. The purpose of his series is to isolate macroeconomic indicators (“green marbles”) that are telling the true story of the market, rather than relying on the narratives or stories often portrayed as news. Jordi is a unique thinker and tends to publish these videos during market dislocations/regime shifts when he sees areas where his views differ from consensus sentiment.

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