
26.04.2022
Demand destruction
For many investors, there will be a turning point when the market pivots from worrying about price inflation, to growth deflation.
In reality such pivots are a process rather than a single trading day, but yesterday’s China lockdown news felt like it had some of those characteristics.
In reality such pivots are a process rather than a single trading day, but yesterday’s China lockdown news felt like it had some of those characteristics.
Yesterday’s price action in government bonds, commodities, energy & material stocks would appear to support that potential pivot.
Perhaps the best illustration is Copper which is often perceived to be a barometer for the global economic cycle.
The chart below shows a sharp fall in copper that, in Qi’s z-score metrics, has now taken it back to trend growth. On this picture, the 2022 commodity super-cycle was unwound in very short order.
Perhaps the best illustration is Copper which is often perceived to be a barometer for the global economic cycle.
The chart below shows a sharp fall in copper that, in Qi’s z-score metrics, has now taken it back to trend growth. On this picture, the 2022 commodity super-cycle was unwound in very short order.

For bears, this is the start of the next phase & the onset of recession. For those thinking this is overdone, RETINA™ is flagging a series of bullish Relative Value signals on US Energy.
XLE is cheap versus Financials XLF, Industrials XLI, Health Care XLV, Consumer Discretionary XLY & the broader market SPY.
All show XLE around one sigma cheap, & all are posting pronounced divergence patterns. Energy’s recent underperformance is in sharp contrast to macro model value which points to further outperformance.
XLE is cheap versus Financials XLF, Industrials XLI, Health Care XLV, Consumer Discretionary XLY & the broader market SPY.
All show XLE around one sigma cheap, & all are posting pronounced divergence patterns. Energy’s recent underperformance is in sharp contrast to macro model value which points to further outperformance.