Shifting to a New Regime [VIDEO]

Jordi Visser

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Following the November 2nd FOMC Meeting, Jordi shares his interpretation and projections for a shifting equity regime. In the latest installment of Real-Time with Jordi Visser, Jordi analyzes the market under the Fed's assertion that we are moving into new territory with a slower rate hike cycle and higher terminal rates. Jordi then outlines the macro indicators most relevant to understanding his new regime and projects his beliefs on the emerging opportunity set for 2023.

 

If you'd like to review the Bloomberg slides that Jordi refers to in this video, you may download them by clicking here

Key Takeaways:

  • Jordi outlines the relationship between real 2yr yields and assets.
  • Jordi points to data that shows, despite market volatility, the SPX has remained relatively unchanged since the start of the summer. Although several sectors are in the green, technology has been the largest detractor to the SPX's performance. Moreover, he believes that we will likely stay in this "Meat Grinder Range" until the MOVE Index, a measure of rate volatility, moves off the currently elevated levels.
  • Using the relationship between PPI and CPI, Jordi makes the case that we are unlikely to see earning degradation. He believes PPI will continue to move significantly lower relative to CPI. Despite PPI being above CPI, corporate profits have remained elevated. These resilient earnings are a possible positive for 2023.
  • Jordi evaluates the market based on his view that we are entering an environment where inflation and rates will remain structurally higher. In this regime, he believes that Energy, Healthcare, Industrials, and Financials will continue to outperform Technology as investors rotate their portfolios.

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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