BOA-The Flow Show_ Trading the ISM Inflection-240223

AccessibleversionTheFlowShowTradingtheISMInflectionScoresontheDoors:crypto18.6%,oil9.7%,stocks4.8%,commodities3.7%,US$22February20242.6%,cash0.7%,HYbonds0.3%,IGbonds-1.9%,gold-2.5%,govbonds-3.8%YTD.InvestmentStrategyTaleoftheTape:justafewweeksawayfrom4-yearanniversaryofCOVIDlockdown,Global10-yearyieldsof0.3%,SPXof2200,unemploymentrateof15%…andjustlookatusnow!ThePriceisRightI:itonlytook34yearsbut…JapanNikkei@newall-timehigh;JGByieldsbackinDec'89werebubble-peaking5.7%vs0.7%today;butbothNikkeihighsaided&abettedbycurrencydepreciation…JPY144backthenvs150today.ThePriceisRightII:our“MonopolisticBull”…contributiontoSPX+25%gainpast12monthsof"Magnificent7"=>60%,contributionoftop10stocks(addWMT+COST+ELI)=>70%,contributionoftop20stocks=>80%.TheBiggestPicture:allcyclicalassetsnowtradinginflectionpointinISM;basedonMichaelHartnetthistoricalrelationshiptoISMandcurrentvaluations,besttradesfor“longproducer,InvestmentStrategistshortconsumer”in'24arecommodities,mercantiliststockindices(KOSPI/OMX/DAX)&BofASEMex-China,cyclicalassetsnotyetdiscountinganISMjumpto55-60(Table1).+16468551508michael.hartnett@bofa.comTable1:TradingtheISMInflectionPointCyclicalswiththeirimplieddiscountoffutureISM(currently49)ElyasGalou>>InvestmentStrategistCyclicalassetImpliedISMImpliedISMrangeBofASE(France)+33187700087Japan(NKY)6260-65elyas.galou@...