The Market Is Risk-On… But Growth Isn’t (Yet) w/ Market Radar

Quick Overview

Market Radar's systematic models indicate the market is currently in a risk-on regime, though the growth index is neutral and showing only promising signs of turning bullish, leading them to be most bullish on the NASDAQ for Q1 due to expected mean reversion and catch-up trade among American mega caps once capital expenditure fears subside.

Key Points: The market is in a bullish risk-on regime, but the growth index is neutral, suggesting markets are consolidating growth impulses, which holds back assets like Bitcoin. The recent ISM manufacturing PMI reading of 52.6 beat estimates of 48.5, marking the biggest beat in four years, but Market Radar emphasizes that such hard data is backward-looking and lacks forward-looking alpha. Bitcoin functions as a 'release valve for excess liquidity' beyond the stock market and requires strong momentum from a bullish growth index, which is currently lacking, causing its underperformance relative to equities. Market Radar believes the Fed will remain lax regarding inflation near the 2-3% range because policymakers will not sacrifice trillions in stock market cap to correct inflation by 30 or 50 basis points. The recent speculative surge in precious metals like gold and silver appears to be a thematic push that disconnected from macro drivers, evidenced by significant recent liquidation (gold dropped almost 21% from peak to trough in futures). The team's most bullish call with size for Q1 centers on long the NASDAQ, betting that once mega caps like Oracle and Microsoft find bottoms, a significant catch-up trade will propel the indexes much higher.

Context: Host John Gillan of Milk Road Macro interviews the team from Market Radar, a financial service platform providing data-driven insights and regime-based trading strategies. The discussion centers on interpreting current economic data, such as the recent strong ISM manufacturing PMI beat, within the context of their systematic macro regime models, specifically contrasting the current 'risk-on' environment with the performance of assets like Bitcoin and the recent volatility in commodities like gold and silver.