Strategy Note /
Global

The News Doesn't Have To Get Better, Just Less Bad

  • A news flow thats less bad tends to occur before the news gets better - its part of the bottoming process.

  • Recent examples include China tech, European equity and the Innovation space - with less bad news & bottoming behavior

  • This is the opportunity set - we are adding back to these areas while exiting the Crypto space where bad news = bad perf

Jay Pelosky
Jay Pelosky

TPW Founder & Global Strategist

TPW Advisory
3 June 2022
Published by

Another short week that feels like an extra long one. Maybe because I attended my first in person conference in over two years this week, complete with cancelled flights, weather delays and an extra 12 hours of travel time on my return, getting me home last night just after midnight.

 

The good news is that I had plenty of time to think, catch up on my reading and muse about what is going on across assets and around the Tri Polar World. What I came up with is encapsulated in today’s title: sometimes the news doesn’t have to get better, just less bad.

 

It’s a throwback phrase from my Morgan Stanley days and comes from my old boss, the well respected MS strategist, Barton Biggs. Back in the 1990s, before Twitter, social media etc. the news came from fewer sources but still impacted markets. Barton’s point was a reminder that markets are forward looking and will take the advent of a trend and run with it. A corollary is the famed: “the bad news is in the price” market comment. Yesterday’s Nasdaq action sure suggested just that as it rallied hard in the face of Microsoft’s Q2 warning. The VIX under 30 and the UST MOVE Index back under 100 for the 1st time since mid March suggests the same.