The Compound and Friends

No Top in Sight, Chinese Stocks Explode, Nick Colas and Jessica Rabe on the Fed Cut

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Sep 24, 2024
Nick Colas and Jessica Rabe, co-founders of DataTrek Research, offer deep insights into current market trends. They dive into the implications of recent Fed rate cuts and the surprising surge in Chinese stocks due to new monetary policies. The duo examines technology sector dynamics and the impact of corporate buybacks on stock valuations. They also discuss recession indicators and how changing gasoline prices might affect economic stability, providing a comprehensive overview of the financial landscape.
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INSIGHT

Low Volatility and Market Cycles

  • Current low volatility levels align with historical patterns observed in mid-cycle markets.
  • The VIX has consistently been below average during periods of economic expansion and market rallies.
INSIGHT

Recession Indicators

  • Recessions typically start with three consecutive months of job losses, including one significant loss.
  • Oil price spikes, especially doubling within a year, historically precede recessions.
ADVICE

Tech Exposure and Low-Volatility ETFs

  • Consider if you have enough tech exposure, as the S&P 500 may offer sufficient weighting.
  • Be cautious of low-volatility ETFs, as their tech exposure can vary significantly.
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