John Davi, founder of Astoria Portfolio Advisors, discusses inflation, investing simplicity, market correction, sector rotation, and market predictions with the hosts. They also share their social media handles and talk about their sailing trip in Croatia.
Inflation may not be as concerning as believed, according to John Davi of Astoria Portfolio Advisors.
The equity market is experiencing volatility and sector rotation, with defensive sectors weakening.
Gold and yen are good trades, while crude oil is expected to reach new highs.
Deep dives
Market Overview
The equity markets have experienced a correction in August, with the Russell and S&P 500 equal weight underperforming the S&P and NASDAQ. The breadth of the market has deteriorated, with a significant decline in the percentage of stocks above their 50-day moving averages. The rotation of sector performance has also been observed, with defensive sectors like utilities and healthcare experiencing weakness. The bond market has seen a sell-off in the long bonds, while junk bonds have remained resilient. The 10-year note is testing major support, and it will be interesting to see if it base and turns higher. Overall, the market is in a volatile phase, and further sector rotation and market movement is expected.
Investment Insights
The Magnificent Seven stocks, including Apple, Microsoft, and Google, have shown mixed performance. While Google and Amazon have more bullish charts, Apple and Microsoft have displayed weakness. The performance of these stocks is driving the market, while other sectors such as the home builders and junk bonds have performed differently. The bond market has seen a sharp sell-off, especially in long bonds, creating a divergence between the bond and stock markets. The credit spread on junk bonds has remained relatively low, despite the sell-off in long bonds. There is a possibility of sector rotation, with defensive high dividend paying names attracting interest if the long bonds stabilize.
Bond Market
The Treasury bond market has experienced a sell-off, with the 10-year note retesting the October low. Although the market is currently in a downtrend, major support levels are being tested. The key question is whether the bonds will hold these lows or if they will break lower. The spread between 2-year and 10-year notes is in a downtrend, indicating a bearish sentiment. The bond market remains uncertain, and further chart analysis is needed to determine the next direction.
Commodities
Commodities such as gold and oil have experienced mixed performance. Gold has been stuck in a range, while oil has exhibited strength. The market sentiment towards gold is uncertain, and it is anticipated that further chart analysis is needed to determine its next move. Other commodities, such as silver and copper, have also shown mixed performance. Overall, commodities are influenced by various factors, and further market analysis is needed to evaluate their future trends.
Gold and Yen Bullish
The speaker suggests that owning gold and yen is a good trade, as gold and yen have been in a steady uptrend without many dips. The speaker admits to being wrong about being a yen bull, but still believes that gold will have its day. However, they also note that it might take until the fourth quarter for gold to wake up.
Crude Oil Bullish
The speaker mentions that crude oil has broken out of its trade range and is now bullish. They believe that there is a good chance for oil to reach its highs from 2022 and even go as high as the mid-nineties or even $100. The speaker states that the path of least resistance for oil is upwards and that it is one of the few things working well in the current market.
We’re back! This week John Davi, Founder of Astoria Portfolio Advisors, joins us for an in-depth discussion about his life, his past career at Merrill Lynch and takes us through some of his thoughts on inflation which, he believes, isn’t what it’s all cracked up to be.
