Pinebrook

Maybe this will persist due to regime change.

Maybe they get more stretched and stay there.

But the money tree roulette table doesn’t always work in one direction unless the game has changed.

Maybe it has. But so far it’s just politicians talking.

/FIN

Now. Here is the crazy thing. These things are looking stretched.

China and Europe are at negative 2 standard deviations compared to short USA.

Japan over 1-sigma. And EMM is approaching 1-sigma.

This is how are those pairs are doing today on a price basis, not inclusive of borrow costs or dividends.

And then China.

This exercise was repeated a few days later with Europe and Japan (IEUR EWJ DXJ).

I think the key insight was in contextualizing the outperformance vs the foreign selloff of Q4 2024, using a 100d rolling average, with the following conclusion.

Market Commentary Mean Reversion: Part 1

Lots of folks very excited about the foreign vs USA trades, which has been a home run YTD.

This was explored in the newsletter back in Feb, and published on 2/19 the day SPX made its local peak.

www.pinebrookcap.com/p/market-com...

Surgery went very well yesterday, and I’m feeling good today (and it’s birthday 49 🎉). One more big step toward cancer free! ❤️

Date 1d % Chg 1m Later 7/24/2024 -12.33 -2.47 9/8/2020 -21.06 28.80 3/18/2020 -16.03 108.71 3/16/2020 -18.58 63.98 3/9/2020 -13.57 -10.29 2/27/2020 -12.81 -24.25 2/5/2020 -17.18 -4.25 7/25/2019 -13.61 -7.61 1/18/2019 -12.97 0.10 9/28/2018 -13.90 26.47 11/6/2013 -14.51 -9.13 7/16/2013 -14.31 27.80 1/13/2012 -19.33 45.55 12/27/2010 -15.09 -3.13 7/6/2010 -16.09 31.96 7/2/2010 -12.57 14.32

TSLA moving fast but as of a few minutes ago was down 12.25%. Here are worse performances in the history of the stock and where it was a month later.

did he fail to pay some bills on time

a man with long hair and a beard says breathe the free air again my friend . ALT: a man with long hair and a beard says breathe the free air again my friend .

Bluesky, to all the Xitter refugees.

Good reminder that I should spend more time here.

That other place has gotten so toxic and gross.

Is it me or is twitter malfunctioning?

😂

Weekly Signal & Noise Filter We’re Not Keepin It Real on Christmas

This and other goodies in here. Get after it.

www.pinebrookcap.com/p/weekly-sig...

Trash spreads inform us that the pricing of the lowest and riskiest credits within the investment grade and high yield universe has actually IMPROVED.

Now ask yourself why that would happen if growth and inflation were going to fall apart?

Credit markets don’t think growth or inflation will go off the rails.

Trash spreads in IG and HY have actually improved a smidgen since December 4th.

The good news is we can triangulate growth and inflation using other mkt instruments.

Other than inflation and growth, no one REALLY knows. It’s guess work and opinion, and mutual sharing of these views by participants.

Now we can attribute the rise in TPs to anything our imagination assigns value to. Tariffs. Trump. Deficits. And on and on.

Risk premiums have mooned. 🌕🌒

If we make reals term prem neutral, they haven’t moved much.

Inflation expectations in breakevens are basically unchanged.

If we deconstruct the nominal yield curve, we see a big spike in real yields since the December 4th local bottom in reals.

Lots of talk on the other place about the bond market. Won’t repeat here. Look up the usual suspects.

My take is nominals are a fear trade rn 🧵

Only in America could an immigrant like Jensen Huang—who started by cleaning bathrooms, washing dishes and attending a state school—meet Curtis and Chris at Denny's, get VC funding and cofound the world's most consequential company Nvidia.

Immigration is America's superpower.

“We become engineers so our kids can be artists”…..

As a first gen, college was the big hope.

Now I am telling my kids to be DJs in Tokyo or something. It’s their priv and they should exploit it.

Good rant 😂

So maybe the 2025 projection is a rotten egg.

But it won’t be bc of yea third year bull market returns.

/FIN

Now that said, drawdowns are a thing. 5-10% outta nowhere should always be part of anyone’s game plan.

Big corrections are due to adverse shocks or policy surprises.

Massive drawdowns are typically recession driven.

Understanding the economic causality and linkages, I think, can be an edge on what is most likely to happen.