Will Big Tech Be a Big Disappointment?

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1:24And now to the top analysis of today's markets.

1:34Will big tech be a big disappointment this earnings season? Hi, everyone. Welcome to the Real Vision Daily Briefing. With me today is Tony Greer, editor of the Morning Navigator newsletter. Hi, Tony.

1:46Sorry about that, Maggie. That's okay. I was like, we always know that Tony's glued to his terminal and all of his price action. This is always a tough time of day. It's right when things are closing. But as usual, we'll be taking questions. So you know what to do. Drop them in the chat and we'll get to as many as we can. So, Tony, let's start with equities, because we didn't see a whole lot of action today. But we do have, we are really going to get into the thick of earnings this week. And we've got some really big tech ones on the schedule that I know a lot of people are going to be watching.

2:26The Nasdaq down a third of a percent today, but year to date, it's really been outperforming. I mean, it's up almost double what S &P is. How are you feeling about tech right now? Well, this is like the pullback in technology since tech broke out off the lows and reversed with the rate reversal that we saw in March. So this month has been a little bit of a give back in that technology breakout. we've had in April, for example, we've had a slight tick higher in yields over the course of the month, which has set technology sort of back behind the S &P for, you know, performance wise in the last couple of days.

3:08You know, I think that it basically speaks to the fact of whether rates are going to continue lower and the dollar is going to continue lower from here. You know, Maggie, that's sort of I'm centered very much in macro land while I'm watching the stock market rotate around 4 ,100 in the S &P. But to me, the more important signals are going to come from watching the yield curve and from watching the dollar, quite honestly. The yield curve is still buried at minus 60 basis points. Again, we're talking about twos, tens. We're expecting the curve to start steepening with this rate reversal that we're expecting from the price action in March.

3:49And right now the yield curve is wedged between moving average support and moving average resistance. So until we break the range of sort of minus, call it 55 basis points at minus 70 basis points in two tens curve, we might do a lot of equity rotation around 4 ,100. So we'll see what happens. But I think my sense is, you know, that the path for yields, the path is lower, the path for the dollar is still lower. You know, we're in a situation now in the dollar index where it backed off to its lows of the year. Everyone is really max bearish with the de-dollarization theme that's going around. You know, today there was a fresh headline about, you know, 19 countries looking to join the BRICS, you know, and we've got Saudi Arabia in there now.

4:38And so it's getting, you know, the geopolitical complexion is certainly changing. You know, I don't know. Similarly, I don't expect the dollar to lose its reserve status anytime soon, but I do expect it to trade lower. So, you know, when we break that bottom of the range at one hundred and three quarters, I believe it is in the dollar index, you know, then it'll shake up the market a little bit. But until then, it seems like we're really, really range bound across a lot of asset classes right now. Yeah, and really searching for the catalyst to get over it. But we know we've got some econ data this week, including GDP and an important inflation gauge on Friday.

5:19But then we have the big jobs number next week. And of course, then we're looking for Fed early May. Are you just in a holding pattern to that? Are you trying to position ahead of it? How are you going to go into that meeting with so much up in the air? Yeah, there is. We're in the middle of a big economic battle between the big pending Western recession and China's reopening. And we know that their sort of airlines are back to about 70 percent of the pre-lockdown capacity. So that would be pretty optimistic going into the big golden week at the beginning of May when they go on vacation. So we'll see if jet fuel demand is there.

6:03But that's the battle that's going on right now. With the curve down here, we have to expect downside surprises and economic data and a lot of turbulence to ride through. And that's exactly what we're seeing. Two weeks ago, we got that totally, totally benign inflation data across CPI and PPI. Then last week, we got a mixed bag of data all over the place. And, you know, we got housing data, we got some inflation data, and it was totally mixed. So there's nothing that's, you know, like you said, there's no catalyst to shake us out of this range immediately. I think that the theme that persists in the stock market in the U.S.

6:43is that, yes, we're heading toward a recession, which I really don't argue much with or about. and that, yes, that that's necessarily going to be negative for the S &P, which I have no idea where anybody comes up with that argument, but it's fine. And so we need both two sides to the market here. Sentiment feels negative to me. And that's why we're stuck here rotating around S &P 4 ,100 and not dunked down below it. It's because everybody's so negative. And there are actually a couple of bull markets to be observed around the market. Yeah. Yeah, no, that's a great recap. but it's kind of what everyone's grappling with.

7:17And timing is the really tough part, right? So as you say, everyone expecting a recession, a lot of people looking at China's reopening. Andreas talked a lot about that, for those of you who haven't got a chance, in the latest Steno signals, not the one that's coming out this week, but the one that was out last week and what that might mean. But again, you've got this short term and then longer term, when does this all happen and how much they offset each other? It's kind of a tough call, especially in the shorter term, because I know you usually focus pretty short term. Yeah, that's why I want to, you know, I'm never, you know, terminally bearish about activity because there are breakouts to be had on this tape.

7:57You know, we just rotated into home builders, into ITB, into that ETF as it started breaking out. You know, gold miners have broken out and are pulling back a little bit, but they're very much in play. You know, you've got to trade the trades that the market's giving you now. And it feels like the market's giving you those rate trades that happen when yields back off. And hopefully the curve steepens, but we don't know yet. But if we are going to go into an easing cycle rather than in a tightening cycle, then you would expect to see some strength in gold. And you'd expect to see strength in home builders with lower mortgage rates, et cetera, et cetera.

8:34So I'm just trying to pragmatically and very tactically and carefully approach the trades that the market's giving us, Maggie. I think that's about the only thing I could do in this table. Yeah. I saw oil up today. We've talked about this because this is where you're also the timing issue. You know, you are structurally, I think it's fair to say, bullish commodities in the sort of long term, that narrative. But short term, you've been also just letting the market show you where to go. So it looks like the oil market is paying a lot of attention to that China story. Yeah, yeah. It's easy to remain sort of structurally bullish but flat in oil right now.

9:12No matter what, even with the OPEC plus output cuts a couple of weeks ago, we're still in a range, right? We're still in a sort of 75, 85 range. The oil market's hovering right below$80 now. So regardless of the output cuts, we haven't done anything technically to break the consolidation range. So until we do that, once again, it's 75-85 until further notice. So what's gone on more materially in the energy markets is that the crack spread is backed off from about$40 to around$30, which has been significant. The refiners are all sort of off of their highs now and testing their uptrends. So that's another one of the trades that the market's giving you, Maggie, if you believe in, you know, the gasoline demand story globally, which has been, you know, the story that's kept the energy market propped up.

10:05Then you can buy refiners on this dip. You know, they've all backed off the highs. The crack spread has gone from 40 to 30 for the fourth time this year. So if it stays in a range and trades back up, you'll see the refiners come back and make new highs. And we know that their margins have been dramatically expanded. And that is filtering into earnings. So there's some upside to look for there, too. There's opportunity. It's just kind of hidden in a lack of volatility right now, if that's fair to say, Maggie. Yeah, no. And a lot of people talking about that lack of volatility. In fact, I think we had the VIX down again, right?

10:39I think it was I think it is below. Did it get below 17 again? Does that are you watching that or is is it is there other stuff going on? And I know a lot of people are talking about those one-day options, expirations and stuff. I mean, what do you think when you see the VIX like this? Yeah, well, the VIX, you know, our mode to approach the VIX, sorry, I'm just trying to get the chart in front of me so I can speak intelligently about the levels that we're trading. But, you know, our approach at TG Macro to the VIX is, you know, we want to be buying during the panic when the VIX is up above 30, and we want to be letting those purchases out when the VIX melts into the teens.

11:16Right. So that's the general strategy. And, you know, sometimes the VIX melting into the teens is just enough to cause the market to sort of sell off because it doesn't have much downside from there. You know, it reaches the price of realized volatility and it's not going any lower. So what happens then is that you just see a reprieve in the VIX off the lows. And that just generally puts a little bit of pressure on stock market as they sort of back off the highs. So I think it's important to understand that down here, the downside in VIX is probably limited. If anything, you want to watch it for consolidation and signs that it might pop sometime soon and maybe hunt down that trade where there's a waterfall coming with the curve at minus 60 basis points, the VIX at 15.

12:05between you say, well, man, if there's an opportunity for me to put some equity hedges on, it's probably right now with the VIX super cheap and a thought process like that. So I don't think that there's anything wrong with that thought process. I think it's very, very important to understand not as much to trade the VIX, but more importantly, know where the VIX is and why it's there so you can make educated decisions about the rest of your portfolio and really, really tactically decide how long you want to be, you know, in the stock market. And so, yeah, it's a really intricate part of the tactical trading process without a doubt.

12:43Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

12:55Yeah, which you're always so great about sharing with us. Trillion next asking, Tony, would you buy the dip in tech? You know, I'm still of the mindset that this rate reversal in March was real, right? That was a 12 sigma rate reversal. It's something as a trader that you think about and he wakes you up in the middle of the night and reminds you like that's what the market is still working off of, right? It's still working off of the fact that yields reversed with the Silicon Valley blow up, yields reversed with inflation dramatically backing off the highs. And while I do think that we are still living in a world where we've got politically structural inflation, central banks are in fact doing a good job at battling that, as we can see from the headline data, where there's absolutely no inflation scare in the number.

13:45Now, we pulled back from, say, 9 % to call it 5.5%, 6 % inflation or something like that. And, you know, once again, Maggie, I sound like a broken record, but if the administration is going to continue to push this move toward net zero as hard as they are, to me, that's politically structural inflation that at some point is going to creep back into the data and probably keep it from descending back all the way to 2 % CPI, for example. You know, we probably find a level before that level off. And then I'm sure we'll see periods, you know, over the next 12 months where we'll see upside pressure on inflation again and maybe upside pressure and yields.

14:24But, you know, that's the battle going on in the markets. And we're just trying to surf it here with the securities that we're trading. Yeah. Michael Z asked a question. I'm going to shorten it, Michael, and I hope I paraphrase you well. But sort of asking, what happens if the Fed just pauses and holds on rates until something else breaks again and brings up the fact that we're approaching that whole debt limit fiasco, dog and pony show in D.C.? we do seem to always think that they're either going to hike again or they're going to start cutting. What about that just extended period on pause? Is that priced in the market at all?

15:07You know, Maggie, that's a great point. I can't say whether or not that's priced in. I would say that that's something that's probably difficult to price in. But I could see a scenario where CPI has backed off the highs dramatically, right? I could see a scenario where CPI or PPI data gets persistently sticky up here and doesn't want to back off. But the Fed is in a position where they say, well, we don't really want to raise rates right now with the state that the economy is in or the state that the global economy is in. It might be a little bit precarious post-bank blow up to be raising rates right now.

15:46And so that could be a situation where inflation creeps back into the picture and turns the rates markets around, right? Turns the bond market into a bit of a sell-off if the Fed doesn't do anything. So we'll see. I'm a believer that the short end of the curve is what's going to keep the Fed's hand to the fire in terms of inflation coming back into the picture. And we'll see if the bat signal, otherwise known as two-year yield, starts taking off towards the highs again, we'll know that the commodity markets are going to hold the Fed's hand to the fire and try to get another rate hike out of them.

16:18But that's not the way the interest rate markets are looking right now. So we'll see what happens in the next couple of weeks. Yeah. Yeah, it's really tricky. And this is why we're going to just be hawking on that inflation data and just trying to tear it apart, because I think it is going to really hold the key. It's interesting that we're talking about sort of strategy in this environment, because it is important. It's been choppy. A lot of people have been asking about getting stuck in the chop, what to do. We have people asking, should I buy the dip? I had the chance to sit down with Andrew Rosner for my podcast on My Life in Four Trades, and he shared some of the lessons that he's learned over the years.

16:56Let's listen to a clip of that, and then we'll talk on the other side. And simply losing less is easier than winning more. Losing less is easier than winning more. In the exact same way that cutting the fastest way to increase profits is not to grow revenue. It's to cut costs, right? It's the exact same thing. It's just applying the same principle, the two different things. Just winning, losing less is easier than winning more. And so just if you can take money off the table, I do like the mantra of, you know, never sell everything, keep a little bit, you know, Jason Calacanis has a saying, he calls it schmuck insurance, you know, always keep 10 % as schmuck insurance.

17:49You know, you just never know. Right. And I like that. I think that's an important mantra too, but really just always, if you're winning, if you look at your P &L and you go, I am up more than I ever expected. If you are looking at your P &L with a big old smile on your face, that is the leading indicator that it's time to take some money off the table. Like, sure. Let your winners ride, but take your initial principle off the table. The video version of that conversation is available on our website. Andrew has an amazing life story, including how he got started. Really sort of wild how he came to be an entrepreneur and a VC investor now.

18:34And we also talk about a billion dollar missed opportunity. Basically, he left a billion dollars on a table from a deal. And he talks about having to live with that, which is insane. If you're not already a member, scan the QR code, or you can listen to the podcast wherever you get your podcasts. But, Tony, I know that's something that you talk about a lot, too, about trying to have the discipline to, you know, make sure that you are taking your profits when you need to, you know, looking at your portfolio, being honest, listening to the market signals like you were just talking about. Yeah, you know, I mean, I kind of wrote about it this morning.

19:10You know, I was kind of struggling to think about what to write to my subscribers. And I, you know, got back into my, basically into my routine when I started thinking about it. I was like, the reality is, is that I wake up Monday morning and I'm doing what I always do. I'm looking at my pad and then I'm looking at the market and I'm seeing what could kill me this week, you know, and just trying to figure out like, you know, what could possibly go wrong with what I've got on the books. And that, you know, that lends itself. you have to be a little creative, right? You have to think of things that haven't happened yet.

19:44You have to create scenarios in your mind that, you know, go against what you think, you know, to figure out what might blindside you. But at least that makes you prepared for sort of attack on your portfolio. And if you're prepared for an attack on your portfolio, then you have an escape plan and, you know, an emergency plan. And you have that plan for when you get punched in the mouth, like Mike Tyson says, and then you can just react with no emotion. You know, and so that's kind of how I like to handle things at a certain level myself and being as successful an entrepreneur as that gentleman has been.

20:19I'm not fading a thing that he has to say. No, yeah, exactly. But I do. I think it's fantastic advice, just, you know, making that part of your routine. So we've got all kinds of questions coming in, but a lot of chat about the debt ceiling issue. So I just want to revisit that again. So, you know, there's debate about the timing. There's also, you know, everyone sort of knows they do it at the last minute, but there's always that concern about what if they get it wrong and, you know, what if they blow past it? How are you thinking about the risk around that? I don't, Maggie. You know, I really don't.

20:51Now, I understand that it has moved one month paper dramatically, right? You know, it's important to see what the debt ceiling conversation is doing to the markets. If it's doing anything into the markets. But I have a very broad noise cancellation policy on that whole discussion. In fact, I mute the words debt ceiling on Twitter because I do not want to hear the noise that they talk about going back and forth. As long as I have one eyeball on one month yields and I understand that they've been thrown for a loop due to this discussion. And I know that that kink in the one month curve is not affecting anything that I have on my pad immediately.

21:30I'm going to tell you that in a couple of weeks, we're not going to be talking about any debt ceiling. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

21:45Yeah, that is usually the answer we always get from traders, because you've got to you've got to concentrate on what really matters. So we have a question. I'm laughing. We have a question from Eric H. is there a level on MSOS that you cannot resist buying? And is that level$5? I like that very specific ending of that. He's leading the witness. He's leading the witness. I tell you, the cannabis market is just unbelievable right now, right? I mean, the baby is being thrown out with the bathwater. I don't know what to say. I reached out to my friend, Jason Wild, who is one of the biggest operators in the industry.

22:27And I just tell him, I hope you're doing okay through all this. And it seems like he still has a smile on his face and it's business as usual for the physical, the actual multi-state operators in the stores themselves because they're busy with building inventory and building a business. But the industry is just bidless on Wall Street right now. So, you know, I wouldn't bid$5 if I've got a chance to bid$2 because that's the way it looks like the direction is going. And believe me, I understand at some level, the prices will get stupid. They'll consolidate forever. The industry will lull everybody to sleep.

23:03And then all of a sudden, safe banking will pass and the world will change. But I'm kind of resigned, having gotten the scars trying to play it from the long side. I only give myself a couple of swings at that trade and then I'm out like any other baseball player. And right now I am sitting in the third row of the cannabis stand spectating because I have no business trading the sector from alongside until I've got catalyst, proof of price action, proof of performance. I can draw a picture of the breakout on the chart that looks like all the other breakouts that I've seen in my life. And until I get all of that lined up, I'm sitting here watching cannabis go down, man.

23:44I don't know how else to do this. Yeah, it's funny. We haven't talked about in a while because you sort of basically said you took yourself out of it. But we got a couple of questions on it today. So So obviously things are getting to the point where people are interested. And if you're not familiar with MSOS, it's Advisor Shares Pure U.S. Cannabis ETF. We have another specific, somebody also said, wait a minute, it's not Tuesday, but that's okay. Can the market, Nico's asking, can the market rally as small caps are still on the floor? Ooh, Nico's, good question, man. And, you know, they were the epicenter of the post-Silicon Valley bank blow up, right?

24:22So I would imagine that the stocks that are down due to that can stay down for a while. Man, you know, it's hard for me. It's hard for me to have a view on the Russell when I'm so focused on this NASDAQ trade. You know, I'm kind of focused on another trade at the moment, not the sort of Silicon Valley bank cleanup trade. but rather, I suppose, rather the lower interest rates spurring the home builders and technology sector trade. So I guess since I'm chasing down that angle, I don't have as strong a view on the small cap stocks. But I do think that the market can still work its way out of here and have the Russell be a sort of drag behind, you know, with all the small cap stuff that's still damaged and all the banks that may not rally out of the hole.