Razor's Edge- Sep 13th (preview)

Macro Commentary:

Somewhat softer economic data was the theme last week and looks to continue to be the case going forward as expiring stimulus and decelerating momentum in Covid boosted industries become their own headwind while the Delta variant keeps a lid on a total death of Covid rebalance. This continues to support a generally bullish liquidity environment in the US though with several central banks starting to tighten globally (S.Korea/ Brazil/ Norwa y/ Canada/ Russia) one would expect we are one Covid case crash (more on that later) away from the market starting to fret about a FED taper by year end again. Let’s be clear, Russia/Brazil are not the United States and the BOJ & ECB won’t be raising rates this year, but half the G20 is now in some sort of tapering/rate hiking cycle.  This makes for a bit of an odd macro environment as any sudden decline in Covid would likely increase pressure on the FED and ECB to taper which would in turn would suck liquidity out of risk assets. This is no bueno for high multiple stocks though with a much wider distribution range in performance lately not exactly the worst thing for the entire market. So many stocks have been essentially stuck in neutral for the year, so keeping with the theme of my last post if you own huge ytd outperformers whose multiples are in the stratosphere you should reduce and in some cases consider totally exiting names you love. This Covid market has been prone to violent bouts of rotation, and I think there is going to be another one as the delta outbreak subsides.

Other topics covered this week- Alibaba, Twitter's Goldman downgrade, Intel-value play?, Yalla quick update, Couchbase, and Covid Green Shoots. Paid subs can read full issue here.