Global macro trading perspective courtesy of Rareview Macro Nov 3 edition of Sight Beyond Sight. MarketsMuse Editor Note: Rareview Macro’s model portfolio has gained 16.5% YTD, during which time the majority of macro-style funds have returned less than 5% on average, illustrating why this newsletter is more than just a newsletter.
We start with the global benchmark for beta and risk – the S&P 500. The debate amongst professionals is focused on two big issues:
- An expectation that seasonality will override any negative factors.
- There is historical precedent for consolidation and/or weakness. If weakness were to become the overriding theme, then it could be longer and deeper than expected because a series of market studies that looked at the speed and degree of the recent gains show a poor risk/reward profile in the near term.
So which is it?
After speaking with 10 investors in our circle, all of whom we respect, the current score is that 7 would side with seasonality being the overriding factor and 3 are calling for a 5% pullback in the S&P 500 and expect the market to remain range bound for the remainder of the year.
Personally, we struggle with this debate and the 7-3 scorecard. We pride ourselves on not being dogmatic in our views, especially around bulls, bears, inflation, deflation or simplifying our model portfolio into two polar viewpoints. This is particularly true given this stock market is well-known for behaving in unprecedented ways.
What we would say instead is this: Continue reading