Hold the Corona

Happy Friday,

It's all Coronavirus all the time…bad for those affected (though usually not life-threatening) but great for bonds and arguably good for stocks that needed a pullback. One could almost call it healthy for markets.

It's also looking like a buying opportunity, especially in commodities which have been massively oversold. China’s financial markets open Monday (closed since Jan 23rd) including commodity markets… might be a nice entry point. As well as a chance to sell bonds and reload on the ex-US, Value and Cyclical trades which lagged recently as rally latecomers bought the old favs: US, Growth, and Tech - big OPers all this month.

While virus fears filled the air, global econ data flow has been broad based & best in over a year, which should support the rotation noted above. Raise, Hold em or Fold em… we are looking to raise.

We don't expect the virus’s economic impact to derail the growth recovery but the data might be a little choppy in the months ahead which coupled with US political risk (Feel the Bern) could lead to some consolidation.

Note that Q4 EPS are coming in better than expected in US & EU; the last of our Big Four Signposts: an EPS bottom, is indeed upon us.

In other, Tri Polar World related news, the USMCA was signed into law by Pres. Trump and Great Britain has left the EU as Brexit finally happens - with a yawn.

Inside ETFs Conf down in FL was anything but a yawn as ESG/Climate chatter filled the halls as did the intricacies of transparent, semi-transparent, active ETFs.

Maybe it was because 2019 was a winner for all invested but market views seemed consensus driven and less about how to use ETFs to build portfolios and OP & more about what might sell at a few bps above zero.

Direct Indexing is still a topic that the ETF industry is trying to wrap their heads after last year’s bomb claiming that DI was going to cause “great ETF unwrapping”. We believe this is a great space for ESG since it can be individualized as well as the tax optimization for clients.

Great seeing everyone down there and glad to see the industry continue to grow!

Have a great weekend & enjoy the big game!

TPW Investment Management Team