Rotation or Systemic? [VIDEO]

Jordi Visser

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In the latest installment of Real-Time with Jordi Visser, Jordi discusses the volatile start to 2022 in the U.S. and how investors are readjusting their positions due to this volatility. Unlike bearish sentiment in the news, Jordi attributes the market conditions to a reversion to pre-pandemic conditions and sees opportunity in the dislocation. Throughout the webinar, Jordi tackles the question: are the current conditions systemic or just a repositioning rotation?


 

A major theme to start the year has been the shift out of growth and into pure value, which Jordi notes is similar to Q1 2001. According to Jordi’s analysis, active managers are struggling in the current shift due to the speed of the market changes. The influx of cash into the system throughout the pandemic has resulted in the most expensive names correcting the most sharply. Jordi’s insight for allocators is to exit expensive names before the bubble bursts. 

Since November, when the Fed took the word “transitory” out of its inflation narrative, the market has been correcting. Jordi advises that allocators can view this as merely rotation due to the repositioning of the Fed. Had the Fed changed the narrative earlier, the market would have seen this rotation earlier. To reflect this, the New York Stock Exchange Composite Index relative to the S&P had its best month since ’08, highlighting this is not a broad-based decline in the economy. Global stocks are also outperforming, furthering Jordi’s assertion that this market volatility is a rotation.

Jordi completes the webinar by highlighting that this dislocation can be viewed as an opportunity. Jordi believes stocks will finish the year up and that the value vs. growth trade will continue to rotate toward value. Additionally, tech will be impacted the most due to: 1) a move higher in rates and inflation, and 2) the blockchain disrupting companies that have elevated multiples.