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Michael Santoli Profile picture
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4 Aug, 4 tweets, 2 min read
Off and unplugged this week but sharing a no-real-change #MysteryBroker update from Monday. He notes Delta surge has fed a Goldilocks trade (bond rally, growth stocks carry S&P) but could flip with a mid-Aug. US Delta peak, which would match the UK case-growth trajectory.
The #MysteryBroker says ongoing weak market breadth/seasonal headwinds keep him cautious on the broad market. Any relative-performance shift from growth back to his favored value/cyclicals could come in the context of a weaker tape. Remains firmly upbeat on the real economy.
Final note, #MysteryBroker takes a bit of a victory lap on one of his contrarian/pre-pandemic and then mid-pandemic stock picks, L Brands. With its split executed into Bath & Body Works and Victoria’s Secret, their combined share prices now about at his LB fair-value target.
There will be no Q&A session today.

But always remember….

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More from @michaelsantoli

Michael Santoli Profile picture
14 Jun
The #MysteryBroker says he's not changing his view, still sees very little further S&P upside and significant correction before long.

Continues to believe outperformance of cyclical/value over growth will resume and persist longer than most expect, if by a more moderate degree.
Since #MysteryBroker turned cautious two months ago, S&P 500 is +1.5% and had a 4-5% pullback. The growth-stock bounce has been unconvincing, he says. He sees Treasury yields resuming their climb by July as employment strengthens, thinks somewhat higher inflation will be sticky.
While #MysteryBroker says stocks may lift into the Fed meeting, as they often do, he sees a risk that the Fed decision could be the prompt for a selloff given how investor complacency has grown lately.
Read 4 tweets
Michael Santoli Profile picture
19 Apr
The #MysteryBroker went to a short-term Sell on stocks at Friday's close.

After a 90% surge in S&P 500 in 13 months, expects a tough correction lasting perhaps 3-6 months. Analogous to the deep 2010 correction, which was not previewed by serious divergences or other warnings.
The #MysteryBroker concedes he might be a week or two early with his call, but whatever further upside comes near term would likely be given back quickly.

He notes overall market breadth/small-caps peaked March 15, beta subsectors (spec-tech, EVs, meme stocks) have deflated.
The #MysteryBroker says recent isn't focused on on any particular catalysts, just sees sentiment, extended technicals and reduced risk/reward (Value Line Appreciation Potential was very high in March 2020, now at extreme lows, augurs poorly for small/mid-cap returns).
Read 6 tweets
Michael Santoli Profile picture
13 Apr
The discussion around Coinbase's public listing, and the reaction to its financials, remind be a bit of when LaBranche filed for its IPO in 1999, before becoming the first NYSE specialist firm ever to go public.

(Not a perfect analogy, but hear me out...)
Stock prices and volumes were, of course, surging in 1999 on swelling public excitement for the asset class.

Everyone knew NYSE specialists and market makers made good money. But LaBranche's results were better than most assumed, and more stable.
LaBranche was putting up 45% returns on equity. Once it came public, the CEO would go to investment conferences and talk about how the firm never had a down week trading. Investment conferences attended by the fund managers that sent all those orders to the floor.
Read 7 tweets
Michael Santoli Profile picture
12 Apr
A #MysteryBroker update arrived overnight. Most is a skeptical take on crypto.

But on stocks, he says the rally's reached the upper limit of his recent forecast, he sees excess bullishness as a problem. Isn't calling for an immediate correction yet, but "getting very close."
On crypto, #MysteryBroker is a non-believer, says Bitcoin is the one speculative part of the market that hasn't corrected dramatically (as solar, cannabis, pre-profit hypergrowth tech have).

Says the $COIN public listing will "likely mark the top" for cryptocurrencies.
The #MysteryBroker cites lack of intrinsic value in crypto (he also won't own gold, art, collectibles either).

Even if crypto displaces gold as investment asset, sees potential market much lower than total value of gold (~$10T) because half of gold demand is jewelry/industrial.
Read 4 tweets
Michael Santoli Profile picture
11 Apr
The bull market approaches an “all-in” phase. Why not, with the S&P compounding at a 44% annual pace in 2021? Bulls can no longer argue the market’s hated, the public under-invested. But tape action is sturdy, valuation stable. Weekend CNBCPro⁩ column. cnbc.com/2021/04/10/ris…
Brisk stock-fund inflows, collapse in shorting/hedging, rising equity exposures across the board...
Possibly building to a short-term overshoot again, though recent shake outs (one each in late Jan, Feb, March) have been localIzed, easily absorbed the market rotating pretty quickly away from peril...
Read 5 tweets
Michael Santoli Profile picture
8 Mar
Got a quick #MysteryBroker update.

But first, a reminder of what he was saying coming into 2021 about frothy hyper-growth tech and the cyclical/value rotation...
The #MysteryBroker says, "The speculative tech bubble of 2020-21 has officially burst. The recent crash in speculative tech stocks is not a garden variety correction." Yes, there will be good bounces but for blasted growth tech he sees no real bottom until at least early Fall.
The #MysteryBroker has preferred small-caps and value since last summer, and still does. "This trade is not over and may last a few years," he says.
Read 6 tweets

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