Strategy Note /
Global

Temperature Check

  • Returning to the NYC blast furnace from the cool Catskills air, my temperature gauge, much like investors', is messed up

  • One way to gauge the market temperature is to look at the technicals - all of our TPW 20 positions are above the 50dmav

  • Updating our two model portfolios after V strong returns we look to add to EM assets as US infl cools & the $ rolls over

Jay Pelosky
Jay Pelosky

TPW Founder & Global Strategist

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TPW Advisory
12 August 2022
Published byTPW Advisory

The temperature has been on my mind lately and I doubt I am alone. Returning from two weeks in the cool air of the Catskills to the 95 degree blast furnace that is NYC in August was quite an adjustment. When the temps fell to the mid 80s a few days later, it felt cold, like it was the mid 70s… my inner temperature gauge was all messed up.

 

It strikes me that investors’ temperature gauge is also all messed up. From the vicious June swoon to the sweet July bounce and on to the double barreled July jobs and inflation reports its been a wild ride of fear and panic, uncertainty and doubt.

 

Bloomberg stories about how the smartest guys in the room, the hedge fund community, have been turned around such that they massively underperformed in June and then failed to buy in July and underperformed again tells one it is indeed a challenge to get the temperature right. Long, short, hot, cold… I don’t know – you tell me.

 

Well, we at TPW Advisory believe in letting the market tell us and Mr. Market has been speaking loudly these past few weeks. We have noted how market bottoms are a process not a date & usually only known in hindsight. We are in the camp that says peak inflation = bottoms in stocks as markets discount future Fed action. Finally, we have also been big proponents of the “middle way” or “middle path” between towering inflation and crushing recession.