Strategy Note /
Global

Don't Miss The Forest For The Trees

  • In a media saturated world its easy to miss the forest from the trees - focus on US inflation, EU energy & China growth

  • Fed will end front loaded 75 bp hikes next month which will lead to USD rollover & support AA shifts to non US, EM, Comm

  • EU energy prices dont make sense - crash is coming which will spur EU asset gain; China has drawn a line under property

Don't Miss The Forest For The Trees
Jay Pelosky
Jay Pelosky

TPW Founder & Global Strategist

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TPW Advisory
26 August 2022
Published byTPW Advisory

As the entire investing world awaits Jay Powell’s Jackson Hole speech (Bloomberg reports Asian traders will pause Friday night revelry for the speech while I will be opining on Spanish TV) it strikes me that the old adage – don’t miss the forest (the real important stuff) for the trees (the details, distractions like Powell’s JH speech) is really applicable to today’s investing world.

 

I am a big believer in clichés and adages because they have stood the test of time; this one has stood for almost 500 years with its first English language usage dated as of 1546.

 

I think its particularly relevant for today’s investor given how much media there is and how relentless and omni focused it can be, just 24/7, all encompassing until it moves on. This makes it very difficult for one to see beyond the glare, to stand in against a media dominant POV and to in essence be a long term investor.

 

Its part of the “Market Speed” construct  I wrote about several months ago. The markets, long known as forward discounting machines, have sped that discounting process up considerably, driven by advances in technology across trading algos and execution capabilities and exacerbated by a growing absence of institutional, two way liquidity. 

 

As I discussed with Mexico’s leading pensions (Afores) last week this suggests that one should not try and trade these markets but rather ride through them in all but the most extreme circumstances, taking advantage of being a LT investor which only becomes more valuable IMO as time goes on.

 

Today, there are several specific places where I think the title adage really stands out. All relate to the Big 3 questions for the 2nd H we outlined in our latest Monthly. Set up in a Tri Polar World fashion, the first question was the pace of the US inflation decline; the 2nd, the path of EU energy prices and the 3rd, the pace at which China grows post Covid Lockdowns.