Summary

At a Macro level Michael still sees long US & European equities as the play, we are into the 7th inning with this signal, it is not fresh but still has a way to go – perhaps a couple of months. The model forecast for US economic indicators, monthly points down, intensity strong, and early in the signal. The model has a peak in long-term interest rates in the US. In bonds asset managers are long and large hedge fund speculators are massively short and there’s potential for a massive short covering rally in bond futures.

With the Fed raising interest rates etc, the sentiment is too negative for the most part except for retail investors. Retail investors are putting $1.5 billion into the market every day, piling into FAANG stocks mostly. Strangely, they are right at this particular junction. The market has an innate tendency to head a little bit higher for a little bit longer and led by large cap tech in the US, it's a bit of a torture chamber for stock pickers who are looking at valuations and saying: “how could I buy?”

With a US view the Belkin Model sees tech, consumer, discretionary and communication services as risk on sectors while healthcare, consumer staples and utilities are underperformers. FANG, Tesla, Apple, Amazon all buys as well as Cybersecurity, Semiconductors, AMD, internet, Uber, Airbnb. Michael emphasised he’s not a bubble person and were the model’s shorts last year. Pharmaceuticals, biotech, healthcare, household products, personal products, specialty retailers, oil and gas, energy services are sells in the US.

In Europe the ideas are not quite the same as the US. Best idea being Telecom, a big underperformer, Orange, Vodafone, BT, Telephonica, Telenor are big buys in the model with huge alpha to be made. Technology, autos, banks and construction all also longs. Here's an example of model says buy low: Autos, which have really been in the gutter but are turning the corner and the model has a big buy signal. Best ideas include Porsche, Volkswagen, Stellantis - which is up big this week - BMW, Ferrari, RENO, even Mercedes.

In terms of sells in Europe, Oil and gas leads the way TotalEnergies, Repsol, the big oil companies. Insurance stocks, retail stocks - a brand new sell signal - then utilities and healthcare. Energy is controversial, most people want to buy.

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