Cyclical volatility typically implies a couple of years of extreme pain followed by a couple of years of boom only to be followed by another couple of years of extreme pain. In other words, I am not going to reargue my macro case here but rather focus on how a select set of instruments might behave, assuming that my overall market outlook is correct-namely that equities are likely to be flat to negative for the remainder of the decade and that such a long-term bear market is likely to be cyclically volatile. In this article, however, I want to talk about four ETFs that are likely to appreciate over the coming selloff and how they might be expected to function over the coming months and quarters. How And Why I Am Breaking My Rules For Commodity TradingĪs I argued last week, long-term Treasuries are probably the best asset class to be in right now and for the next two years, if only because the outlook for equities and commodities is so depressing.

The main pillars of this argument can be found here:Ī Primer On Long-Term Sector Rotations And Where We Are NowĬonjunction & Disruption: Technology, War, And Asset Prices Inverted yield curves have also been signals within this context, and all of these conditions had been met by the beginning of this year. Some of the indicators that equity markets are preparing to transition (from a 'secular' bull market to a 'secular' bear market) include very high PE ratios, high earnings growth, highly dispersed long-term sectoral returns, high tech/low energy performance, the rising prospects of a violent global political realignment, the market saturation phase of a technological supercycle, and an energy shock. This thesis is rooted in the notion that markets do not behave in the way a bottom-up logic would suggest but that they instead behave in a way that implies a kind of systemic logic tied into specific valuation, inflation, geopolitical/ideological, and technological dynamics. Over the last twelve months, I have been arguing for both cyclical and 'secular' downturns across the entire equity space, with tech leading the way lower.

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