Pro Macro: In Focus – Top 5 Revisited

Published on: April 21st, 2023

In August of last year, we released our first Top 5 chart pack. We thought it would prove useful to revisit some of the charts we looked at back then…


  • PD
    Patrick D.
    21 April 2023 @ 17:58
    I guess we will see. ISM heading lower, unemployment rising, and credit contracting (not shown here) but liquidity is rising (mainly in China) so therefore we are bullish(??) even though a recession has likely started (+/- 30 days). What exactly is the timeframe? If the S&P 500 hits 3000 by December but then fully retraces by next December were you right or wrong? If the market crashes by December I told you ISM of 35-40 was coming. If the market rallies by Dec 2024 I told you liquidity was everything.
    • CG
      Cristian G.
      22 April 2023 @ 06:18
      The charts show a 2024 - 2025 timeframe. The foundation for the next bull market is already building up between slowing economy > falling CPI > increased unemployment > liquidity. Notwithstanding the long term trends, over the short term we may still experience panics due to: 1. potential credit event(s) (no way this stops with SVB), 2. US debt ceiling debacle, 3. geopolitics. These may act as catalysts to Fed's easing sooner. I think Raoul did mention in other talks that he expects max pain around this Fall... which will eventually lead to Fed cuts. Sounds about right, but I am a bit surprised that GMI does not expect a new low in the S&P. I think this is a risky call, but it does have a strong tactical support in the extreme bearish positioning currently in place. It would be interesting to know what is GMI's view on how long (equities) should a long term investor be at this point?
    • RP
      Raoul P. | Founder
      21 April 2023 @ 22:37
      Partick - Always GMI, RV doesnt have a view.
    • PD
      Patrick D.
      21 April 2023 @ 19:39
      When you reference "we" are you referring to you, RV, or GMI? Steno is calling for a recession. Julian is calling for a hard landing. ALF is calling for a hard landing. Like you I am the learning tribe. And I look back through all US recessions and cannot identify one where the S&P didn't set a new cycle low after the recession start date. 1980 was rather mild, perhaps that's the analog. If not, are we really saying this time is different and a new paradigm exists where recessions do not create market pain as long as we have positive liquidity from China? With respect of course. The reason I press is because I do believe we will face a massive turning point in the near future but for money managers the difference between six months and sixteen months can be quite meaningful. Cheers!
    • RP
      Raoul P. | Founder
      21 April 2023 @ 18:03
      We do not expect new lows in the market.
  • PA
    Paul A.
    21 April 2023 @ 18:07
    As always, fantastic, Raoul. Thanks! :)
  • AS
    Alejandro S.
    22 April 2023 @ 15:48
    Great stuff as always. I guess the key question is timeframe. On an 18-24 months timeframe I’m with you. The real question is whether we do get a credit cycle along with the recession we all agree is starting/started, and therefore crypto, and equities at a minimum retest their lows. My bet is that’s more likely than not. Curious why you never seem to look at credit in your reports. To me, it’s really key because it has a hard catalyst unlike equities and crypto; defaults and chapter 11s can’t be avoided through more cowbell. You need fiscal to avert defaults/bankruptcies from companies whose fundamentals can’t service debt due to a recession. QE does work it’s magic with rates and P/Es but no one will lend to a distressed borrower at super cheap rates; not even the Fed (they didn’t cross that rubicon the last time and I find it hard seeing them doing so without a lot of pain beforehand).
  • AA
    Alberto A.
    23 April 2023 @ 04:36
    Growth and inflation slowing down. The bond trade seems to be a safe bet. Not sure about equities not going down. There will be panic at one point. Testing new lows? I don't think so. But everything is about your entry points. For now there is more potential to the downside than the upside. Beyond the set up what is important is if the trades are right and timely to make money. Your suggested trades for the last 2 years have been cold...
    • AA
      Alberto A.
      2 May 2023 @ 01:24
      That’s fair Russell. It is not really about the trades although it came out like that. The narratives and timeframes have been changing which is understandable in this new paradigm shift. Cheers!
    • RM
      Russell M.
      26 April 2023 @ 19:27
      That's cold, Beto. Think of it less like a subscription to the Motley Fool and more of an idea with a way of expressing the idea. Don't just follow trades blindly let someone else well thought out view challenge your own then make a decision how your want to express your own conclusion whether it is with, slightly different, or against. It's incredible access to provide this level of information. Cheers chap!
  • MW
    Matthew W.
    10 May 2023 @ 19:29
    New member, just joined, loving the differing points of view in the comments, all backed by logic. But on the emotional level, the logic seems to be justifying fear and concern, which feeds into the classic wall of worry/ disbelief, where this isn't anything more than a bear market rally. All bullish signs. We're all aware of the debt ceiling, bank failures, wars, inflation, etc. Wouldn't the market be too?