Seeking Alpha

Kantrowitz: Don't Position For A Cyclical Rebound Yet

|
Includes: DDM, DIA, DOG, DXD, EEH, EPS, EQL, FEX, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PSQ, QID, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWM, RYARX, RYRSX, SCAP, SCHX, SDOW, SDS, SH, SMLL, SPDN, SPLX, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, UWM, VFINX, VOO, VTWO, VV
by: Real Vision
Real Vision
Long/short equity, long-term horizon, short-term horizon, newsletter provider
Summary

The global economy looks poised to re-accelerate over the next three to six months, but Michael Kantrowitz, CFA and chief investment strategist at Cornerstone Macro, says it’s still too early to.

Kantrowitz is watching earnings, employment, the Fed, and PMIs for indications of a healing economy before buying cyclical stocks.

At this point in the cycle, Kantrowitz believes it’s right to be defensive. He remains bullish on utilities, real estate, staples, and healthcare.

A cyclical rebound is on the horizon, but you want to be cautious until you see leading indicators start to bottom out, Cornerstone Macro CFA and chief investment strategist Michael Kantrowitz told Real Vision’s Trade Ideas.

And because this slowdown began with a Fed tightening cycle, which tends to cause bigger and deeper slowdowns, Kantrowitz said you should be extra cautious.

“Markets aren’t that forward-looking,” he said. “When you look at relative performance of high-to-low beta, or industrials relative to the S&P, or financials relative to the S&P, they trade with leading indicators. Not three months ahead of it, not six months ahead of it.”

“So that means you don't want to be buying cyclical stocks today,” he said. “We're probably going to get a lot of volatility until we see things bottom out.”

The Trade

At this point in the cycle, Kantrowitz likes a lot of what investors would consider expensive or crowded. His overweight this year has been utilities, real estate, staples, and healthcare.

For now, he recommends treasuries, REITs, utilities, and precious metals.

“You want to remain ultimately defensive,” he said. “Whether or not this turns into a recession or it's just a slowdown, positioning is the same.”

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is pretty obvious, but we should probably say it anyway so that there is absolutely no confusion… The material in REAL VISION GROUP video programs and publications (collectively referred to as “RV RELEASES”) is provided for informational purposes only and is NOT investment advice. The information in RV RELEASES has been obtained from sources believed to be reliable, but Real Vision and its contributors, distributors and/or publishers, licensors, and their respective employees, contractors, agents, suppliers and vendors (collectively, “Affiliated Parties”) make no representation or warranty as to the accuracy, timeliness or completeness of the content in RV RELEASES. Any data included in RV RELEASES are illustrative only and not for investment purposes. Any opinion or recommendation expressed in RV RELEASES is subject to change without notice. RV Releases do not recommend, explicitly nor implicitly, nor suggest or recommend any investment strategy. Real Vision Group and its Affiliated Parties disclaim all liability for any loss that may arise (whether direct, indirect, consequential, incidental, punitive or otherwise) from any use of the information in RV RELEASES. Real Vision Group and its Affiliated Parties do not have regard to any individual’s, group of individuals’ or entity’s specific investment objectives, financial situation or circumstances. RV Releases do not express any opinion on the future value of any security, currency or other investment instrument. You should seek expert financial and other advice regarding the appropriateness of the material discussed or recommended in RV RELEASES and should note that investment values may fall, you may receive back less than originally invested and past performance is not necessarily reflective of future performance. Well, that was pretty intense! We hope you got all of that - now stop reading the small print and go and enjoy Real Vision.