Bottom line:  There is a high likelihood that we are within 5-10bps for the low in 10-yr Treasury yields for now and the peak in the U.S. dollar, which should help propel the S&P 500 higher and provide tailwinds for my ongoing preferred positioning themes as stated below: 

  • My work remains medium-term bullish.
  • Buy the recent weakness in Financials and Value/Cyclical/Recovery/Reflation trades.
  • Sell relative strength in defensive areas — Utilities, Staples, and Health Care (except in HC equip and select single stock names).
  • Growth/FAANG remains as tilt above benchmark — have less exposure than pre-4Q20 but note they were never suggested to be abandoned — do not chase the recent tactical outperformance.

It has been my view that the relative weakness that has occurred in the Value/Cyclical/Recovery/Reflation trades that really began in earnest post the June FOMC meeting, which has been interpreted as a hawkish reversal by the Fed, should be bought. This is fully confirmed not only by my macro views, but also from my earnings revisions work.

I have stated several times over the last month that the market likely misinterpreted the June post-meeting comments and that it is my expectation that the central bank would eventually clear things up, but I was ...

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