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Kantro

Oct 22 • 3 tweets • 2 min read

There is no point in arguing about employment today; there is a lag between tightening and the #HOPE cycle. Claims and UR didn’t rise until 4Q of 2000 and 2007. Until then people thought “employment was strong” … just like today. #macro #employment

If claims and the UR aren’t rising by mid 2023 then you have an interesting discussion. #macro

Proof is in the charts (and pudding). #macro $SPY

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Kantro

@MichaelKantro

Oct 13

@AndreasSteno

Love your stuff @AndreasSteno but I have to emphatically disagree with your conclusion here. It wasn’t peak CPI that lifted stocks, it’s was Fed rate cuts followed by a HUGE eco recovery (PMIs 🆙, claims ⬇️), as CPI happen to peak, that did it IMO. Charts (2) speak for themselves

https://twitter.com/AndreasSteno/status/1580438181643780096

PMIs are only trending one direction for a while - same for housing. Same reasons we called BS on the market rally in August - wasn’t consistent with EVERY other market low

Just watch housing starts and ISM new orders. No new bull markets until they are rising (or about to do so). #macro $SPY

Read 4 tweets

Kantro

@MichaelKantro

Aug 16

Bear market rally #4 update. The inflation & interest rate bear market is likely behind us. What's next? The market needs fundamental support to continue higher - that's not coming for several more quarters. Another bear market is coming - earnings & employment. My 2c #macro $SPY

Respect the LAG of food and energy inflation ...

Respect the LAG of Fed rate hikes ...

Read 4 tweets

Kantro

@MichaelKantro

May 20

Why do markets bottom? It’s the economy.

Not sentiment, cash levels, valuation, drawdown %, or day of the week. A Fed pivot, on its own, only led to a rebound in ‘87 and ‘18. The other 19 material sell offs since 1950, it was leading indicators of the economy. #macro $SPY 1/2

Who is feeling lucky?

Why is the economy? Because that what drives earnings and risks (P/Es).

Read 4 tweets

Kantro

@MichaelKantro

May 9

1/3 … When will P/Es stop falling?

Answer: when risks stop rising.

Rising rates, inflation and oil have been the risks YTD in 2022. The next big risk will be declining EPS estimates and widening credit spreads. That risk won’t PEAK until PMIs bottom.

2/3 It’s a misconception that stocks are falling BECAUSE they are expensive.

Stocks are falling because rates and risks are rising.

Stocks P/Es began falling as interest rates began rising. Next, cyclicals’ PEs will decline as credit spreads rise and EPS fall.

3/3 stock valuations decline from ANY level, high or low, when risks rise. We’ve had plenty of bear markets that begin with below avg P/Es. 2008 was one of them. #macro $SPY

Read 4 tweets

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