Published on: August 16th, 2021

Delta-variant peak-fear may well have come and gone. If so, expect strong gains in employment and sticky inflation to be accompanied by higher consumption of services as the delayed “opening-up” dynamics exert themselves. Q4 data will be gangbusters. Once more unto the breach, dear friends.


  • KA
    Kelly A.
    16 August 2021 @ 19:25
    Thank you, Julian. I don't play the way you play with specific trades, but it is helpful for me to know about your anticipation of Q4 stocking numbers.
  • JE
    Jonathan E.
    16 August 2021 @ 20:35
    Thanks Julian. Seems like a keep hands in pockets time to me.
  • WM
    Wai M.
    17 August 2021 @ 02:35
    For the EDZ3 trade, what broker should I use? I'm using interactive brokers but seems like they can't trade EDZ3.
    • HM
      Harry M. | Real Vision
      18 August 2021 @ 13:35
      JL is right. I use IB too. GE and then search for the U3.
    • JL
      J L.
      17 August 2021 @ 07:51
      ticker GE
  • SR
    Steve R.
    17 August 2021 @ 22:43
    Based on the data I'm looking at I just cannot see why you think Q4 is going to be so positive. Other than the short housebuilders (already on that one, plus short retail sector), I'm happy to take the other side of the bullish narrative trades.
    • AW
      Agus W.
      19 August 2021 @ 01:21
      Harry, thanks for the reply, follow up on this point, is it correct to say JB is positive on both growth and inflation on Q4 and thus he expects trades like copper and oil to go bullish again after losing steam for past 2-3 months? Also that will include all the small and midcaps and even maybe SPACS?
    • HM
      Harry M. | Real Vision
      18 August 2021 @ 13:34
      JB thinks that Delta variant is responsible for much of the slowing you are seeing. Not so much in the housing market, but elsewhere in the real economy. If thats so, and we are right that Delta has already peaked in the South (two pretty big "ifs") then the weakness in the data will be a headfake and should be faded. There is absolutely no sign of weakness in the ISM surveys or any other business survey. The big hit was to confidence because people thought it Covid was done. It wasn't and thats a enormous blow. But even this will pass.
  • PA
    Paul A.
    18 August 2021 @ 14:29
    @Harry M. I understand the thesis behind the ITB trade but lack the confidence in putting the actual trade in action. Could you or someone explain the variables in this equation? Thanks. P
    • HM
      Harry M. | Real Vision
      20 August 2021 @ 11:06
      Yes of course. The key thing is with volumes of new homes constructed very low, margins are going to struggle to go up enough to justify the current multiples for homebuilders. One of the issues with this "thesis" is any "homebuilder ETF" contains a lot of stocks which are not just homebuilders like HomeDepot or Lowes. If anything, these stocks probably do well when houses are ridiculously expensive because more people will look to do DIY or make small additions to their home rather than move. Similarly I think one of the ETFs includes a manufactured housing company. That should actually be a beneficiary of a dysfunctional housing market! In a world in which house prices are so high it kills demand, but Chinese ports are closed so we continue to have supply chain bottlenecks, homebuilders will have low volumes AND falling margins. Nothing kills margins like being unable to complete a job cos you cant get PVC pipe or roofing trusses. You dont want workers stopping and starting on a job. The combination makes for a nasty combination for homebuilders. Of course, if the bull market in houses continues, they will make money eventually anyway cos of their landbanks.