IT'S ALWAYS SOMETHING
Hello and welcome to this week’s No Straight Lines Investments blog, I am thankful for your attention and presence.
2024 ended much the way it began, with a few stocks accounting for the bulk of the performance in the SPX and the QQQ.
It was heartening to see the equal-weight RSP outperform the SPX by 99 bps this week and the QQQ by 103 bps. There is a well established period of underperformance (lower chart), but you can see the beginnings of perhaps a countertrend rally.
It is no coincidence that this broadening action transpired as yields declined, with the 10-year US treasury yield down 13 bps, principally due to better inflation news in the CPI/PPI (more on that below).
One week does not a trend make, needless to say.
There is clearly a short term reaction function to yields that is encouraging investors to “hide” in the mega cap stocks when yields move up. Currently, the trigger point seems to be >4.5% on the 10-year treasury.
Chart from Rich Ross, EvercoreISI
Beyond technical analysis, Bespoke Investments shared a really interesting data point with regards to increasing treasury yields and what it portends over the near term.
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Here’s what’s in store:
Portfolio Stocks - I focus on my 2 financial holdings which both reported excellent Q4 results, with one of the names now officially a 2x since purchase. I also highlight opportunities on pullbacks in 2 of my technology names. The average, unweighted return of my names is 46.7% as of January 17, 2025.
Flows/Positioning - Is there a retail bid to make up for the buyback blackout? How are CTA’s positioned and what does that mean over the next month?
Charts of the Week - more takeovers (this will be a big theme in 2025), the return of cyclicals and more.
Macro that Matters - in a busy week, the releases that were truly market moving and why.
If this is it for you, I appreciate you reading my missive, and best of luck with your investments this week!
You can follow me on X (@NSLInvestments), LinkedIn: Jonathan Lansky or using the Chat feature on the Substack app.