Greer: Rotation Trade Sustained on Vision of a Vaccinated World

Your Real Vision Daily Briefing for December 8, 2020

Ash Bennington welcomes Tony Greer to delve into the day s trading and explore where markets are currently at.

  • With Biden becoming President-Elect and the race for a vaccine ending, markets have changed their tune and the rotation trade is being sustained due to their vision of a vaccinated world.
  • The Airbnb IPO fits with the market scenario right now; it will likely be welcomed with open arms due to the amount of capital looking for a safe place to go.
  • The read from the Fed is that 2021 will be a very constructive year for risk assets and the harsh reality is that if you don’t own assets, you’ll be left out of the recovery.

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It’s been a different type of rotation since “Miracle Monday” on November 9, when the markets started taking on a different shape following the presidential race being called for Biden and positive news about vaccines, Tony Greer, editor of the Morning Navigator, told Real Vision during today’s Daily Briefing.

Greer said the rotation is changing, and it’s proving to be capable of advancing the stock market and continuing the ascent toward S&P 4K. The rally in the S&P has not been driven by FAANG stocks but rather by natural resources, which is a dramatically different dynamic from the lockdown rally. He said that this rally seems to be able to sustain itself upon the market’s ability to look through to a post-vaccine world.

Greer also shared his thoughts about the Airbnb IPO during the Daily Briefing. He believes it fits with the market scenario right now, and said he likes the company and thinks it has a future in the U.S. financial economy. While Greer said he’s going to reserve judgement on the IPO, he did say he imagines it will be welcomed with open arms given the amount of capital looking for a safe place to go, or at least a place with good returns.

Turning to the Fed and its continuing MO of addressing the recovery through asset price inflation, Greer said that it is clear that if you have assets, you’re going to be ok, and if you don’t, you’ll be left out of the recovery.

All of the pain happening in the real economy will add up to a bigger response from the Federal Reserve and a bigger balance sheet, which contributes more to the natural resource trade and probably blasts Bitcoin through the roof, he said. Greer is basing his investments in the natural resources silo because he said this is a serious natural resource move in response to Fed actions and there are glaring sirens sounding in the markets.

For the rest of the week, Greer said he’s looking for new highs in stocks. “We’ve got enough momentum now that the writing is on the wall that the S&P is going to wind up at a higher number,” he said.

While he did acknowledge risks—sentiment getting hot, the put-call ratio is down to low extremes, and there could be a snapback rally in the dollar that could deflate commodities for a period of time—Greer said the focus is on upgrading risk assets overall and the read from the Fed of “a constructive year ahead for risk assets.”

That’s what has got animal spirits roaring and that’s what he’s expecting more of for the rest of the week, he said.

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