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Leaving the Geopolitics and Inflation Focus Behind for H2 [VIDEO]

Jordi Visser

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In this latest installment of Real-Time with Jordi Visser, Jordi takes us through the current market focus and ways he thinks the picture is changing into the second half of the year. While market moves year to date have been centered around 1) uncertainty over the Federal Reserve rate hikes, 2) inflation pressures, 3) geopolitics in Eastern Europe, and 4) China’s Covid lockdowns, Jordi believes these are now priced in and the second half will be focused on peak inflation, slowing growth, no recession, and China reopening. He believes these will lead to a sustained rally in the second half of the year. This would likely be a change that many investors are not yet positioned for.

 

Key Takeaways:

  • The first half of 2022 brought bond uncertainty for the first time since the Lehman Brothers collapse of 2008. As the MOVE Index, a measure of bond volatility, ends its rise, Jordi evaluates the potential changes to other risk assets, including equities. 
  • Jordi also points to May valuation bottoms in risk assets with changes in credit spreads, LatAm carry trades, and Muni ETFs. As assets continue to improve, Jordi believes that market participants will increase invested balances. ­­­­­
  • Jordi points to signs that economic growth is slowing from the rate rise.  He shows indicators related to both the housing market and the labor market.
  • Finally, Jordi evaluates China's reopening and stimulus, and sees Chinese tech companies as a catalyst to lead other global asset prices higher.

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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