stocks – Page 13 – The Contrarian Investor Podcast

Recession Fears Ascendant as Trading Gets Underway in 2023

Published January 3, 2023

The following is an amended version of the Jan. 3 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack or Supercast.

Last year was ugly. Stocks got beat up, bonds were bludgeoned, and the way markets limped through the last few weeks of 2022 was particularly disconcerting.

So far 2023 is looking no better. Economic concerns are paramount. Two-thirds of sell-side economists are now predicting a recession in 2023. While one can be forgiven for wanting to treat this as a contrarian indicator, the issues they cite are real: Americans are spending down their pandemic savings, the housing market is slowly falling apart, and banks are tightening lending standards.

These would normally be the necessary ingredients for a recession, but the labor market remained strong through 2022 — and may be the one thing that has kept the economy from rolling over. How much longer? Our last podcast guest says this can continue for a while. He may be right seeing as he has primary data to support the argument — hiring practices of his firm’s clients.

This is little consolation as stocks continue to drop. The selling has been especially pronounced in tech, with the Nasdaq now down 1% on the day at the time of this writing.

Buying opportunity? Fortune favors the brave, but it’s extremely hard to make this case right now. Buyer beware, more like. Besides, stocks aren’t even particularly cheap yet.

Maybe the next couple of days will provide some clarity. We’ll get crucial readings on the labor market tomorrow (JOLTS) and Friday (non-farm payrolls). Not much in earnings this week.

Below the free audio:

Investors May Be Overreacting to the Fed

Published December 16, 2022

Stocks haven’t stopped dropping since the December FOMC meeting. But nothing about Fed policy has changed….

The following is an amended version of the Dec. 16 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack or Supercast.

Stocks sold off dramatically yesterday with the Nasdaq dropping more than 3% and S&P 500 down 2.5%. Today the selling appears to be continuing, and perhaps event intensifying a bit. That would make for three straight days of losses dating to Wednesday’s Federal Open Market Committee meeting.

One can’t help but think that all this risk-off is a bit of an overreaction. Nothing about official Fed policy changed, we just had Fed officials increase their expectations of interest rates for next year. That means nothing. These views are not binding. They are not tied to them in any way and can be expected to adjust them when and if the data changes. You know, exactly like they did this year.

If one is bullishly inclined, then one would probably want to take this opportunity to add to one’s positions or perhaps even take out more exposure to risk assets. There has not been any new data to undermine the ’soft landing’ thesis this week — in fact quite the opposite, with Tuesday’s CPI coming in softer than anticipated and showing that inflation is clearly on a downward trend.

Caution Advisory

Make no mistake: There are multiple reasons to be concerned about the economy and the Fed next year and what that would mean for risk assets. We have talked about those ad nauseum for months. If this narrative begins to win over the hearts and minds of investors, then the data won’t matter anyway. Markets are irrational beasts and once fear takes hold it tends to drown out anything else anyway. Plus, we all know markets can stay irrational longer than we can stay solvent.

But from the looks of it, this has the making of a classic overreaction for the simple reason that no underlying data has changed. If anything, the dot plots are contrarian indicators as Fed officials tend to change their views more frequently than they stick to them.

Our YouTube channel has a short clip from today’s podcast if you care to listen to it.

Nothing here is intended as investment advice. Do your own research. Make your own decisions.

Hard Assets the Place to Be in ’23: Kyrill Asatur, Centerfin (Szn 4, Ep. 34)

Published December 8, 2022

This podcast episode brought to you by Covey — Covey is designed to find, reward, and train the next top investment managers —from any background—that anyone can copy, so everyone can win.

Kyrill Asatur, co-founder and CEO of Centerfin, joins the podcast to discuss his view on asset allocation going into 2023: why he is bullish on hard assets like energy and bearish on fixed income — and why the inflationary environment is likely going to stick around.

Content Highlights

How Centerfin was set up coming into this year and what went into its contrarian decision to avoid fixed income (4:06);
Current views on the market after a tough year (5:25);
Centerfin’s take is to be long hard assets, including commodities and commodity-linked equities while continuing to avoid fixed income like bonds (7:44);
The environment is different now. There has been a regime change since 2017. Inflation can’t just be exported anymore (9:48);
There will likely be a recession. Once we emerge from it, leading industries will probably be different than they were in past recoveries (11:18);
Why Centerfin is bullish energy and how they are playing it (12:55);
Their chosen ETF to get exposure to clean energy (14:48);
There is no need to buy international (ex-US) energy stocks (16:36);
Short discussion on the concept of introducing different prices for different uses of energy (18:48);
Re-shoring from China with Apple (AAPL) moving all its production out of the country and how to potentially play that trend (20:46);
Background on the guest and what got him to start Centerfin (25:53);
Distressed investing remains out of reach for most investors but Centerfin is considering ways to change that… (30:52);
The bullish case for copper (39:13);
How best to gain exposure to uranium (40:00).

Tag: stocks