Alpha Trader Seeking Alpha

This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Gabriela Santos, global market strategist at JPMorgan Asset Management.


Among the topics covered:

There are lots of positives going into 2022, says Santos, expecting the pandemic to fade further, inflation to moderate, and growth to remain strong. For now, at least, inflation should prove to be a boon to corporate profits. The only thing holding the JPMorgan Asset Management team from being uber-bullish is the starting point for stocks - it’s been a big two years for equities, and valuations are perky as we end 2021.

JPMorgan’s just-completed Long-Term Capital Market Assumptions report looks out to the next 10-15 years, and Santos notes it’s somewhat easier to predict returns over this longer period than over the next 12 months. That report sees U.S. equities returning an average of just over 4%. The better opportunities, says Santos, can be found in more reasonably valued Europe and developing markets.

This is Alpha Trader’s final podcast. It’s been a great run over the past two+ years, and we’d like to thank all of our fantastic guests and our sponsor CME Group.

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This week’s Alpha Trader features host Stephen Alpher speaking with Scott Bauer, CEO of Prosper Trading Academy (co-host Aaron Task is off this week).

Among the topics discussed:

The recent market stumbles probably have a lot more to do with the Omicron variant, rather than the Fed speeding up its pace of policy tightening, suggests Bauer. For now, Omicron is more about cases, rather than serious illness, but it’s too early to have a handle on how this plays out.

Of that Fed tightening, Bauer isn’t too worked up about the central bank’s “plan” to maybe hike three times in 2022. That would still leave short rates near historic lows, and even a move in long rates to the 2.5% area shouldn’t pose much issue for the economy.

While leaning bullish on stocks right now, Bauer isn’t trying to hit any home runs thanks to the Omicron wild card. He’s been selling volatility on spikes, noting that seemingly every market downdraft of late has been quickly faded (and he’s using the subsequent rallies to buy back that vol).

Looking into 2022, he’s fan of the recently hit big banks, expecting players like Goldman Sachs and JPMorgan to do well alongside the continuing strong economy.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with Ryan Detrick, chief market strategist for LPL Financial.

Among the topics covered:

Speaking ahead of the results of this week’s FOMC meeting and after a couple of very speedy inflation prints, Detrick suggests a speedier taper has already been priced in by the markets. Betting on perhaps a more dovish Fed action tomorrow might be something to consider. Looking out to 2022, while markets have priced in three rate hikes, Detrick and team believe there will only be two, with the first move not coming until the second half.

Speaking of inflation, Detrick doesn’t believe we’re in a rerun of the 1970s. Yes, the numbers are ugly at the moment, but market-based signals like nominal bond yields, inflation-protection spreads, and the price of gold suggest there may be a speedy improvement in the inflation outlook.

Turning to the markets in 2022, Detrick continues to favor stocks over bonds. He notes that when the S&P 500 is up 20% for the year (which we’ll likely be in 2021), it’s been up the following year nine consecutive times. And in seven of those instances, the average was up double-digits. Since 1950, the average return following a 20%+ year is 11.5%.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher speaking with J.C. Parets, founder and chief strategist at All Star Charts.

Among the topics covered:

The technician’s take on last week’s swoon and this week’s major bounce in the stock market. The Cliff’s Notes: The S&P 500 (SP500) held above its September low of 4,500, setting the stage for the rally.

Swooning along with stocks, were cryptocurrencies, including a flash crash as we slept on Saturday morning, which took bitcoin (BTC-USD) down by about 20% in minutes. Not necessarily bearish on bitcoin, Parets prefers those cryptos showing relative strength, among them Terra (LUNA-USD), TerraCoin (TRC-USD), Decentraland (MANA-USD), Axie Infinity (AXS-USD), and Sandbox (SAND). He’s got a sizable portion of his trading assets invested in these, and at the moment is earning some whopping yields.

While crude oil fell from about $85 per barrel to $65 during November, the Energy Select SPDR (XLE) and the Oil & Gas Exploration SPDR (XOP) barely budged off their highs. That’s the sort of bullish divergence Parets loves to see. He prefers the producers (and thus XOP) to the services names, thanks to the producers’ relative strength. Two favorites are Chevron (CVX) - at a 52-week high despite the price retreat - and Cheniere Energy (LNG), which might have the strongest technicals of any oil & gas name.

Among other nuggets: Buying in hopes of mean reversion is like working in a coal mine, while buying strength is like going to a warm beach. Go to the beach.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking EVs with Pieter Taselaar, founding partner and portfolio manager of Lucerne Capital Management. He’s also the CEO of European Sustainable Growth Acquisition Corp. (EUSG), a SPAC which hopes to soon close on its acquisition of ADS-TEC Energy, a German-based company that manufactures EV charging stations that can charge batteries in minutes without putting strain on a city's electrical grids.

Among the topics covered:

Task and Alpher discuss Fed Chair Jay Powell’s surprising hawkishness on Tuesday morning, which helped send stocks sharply lower. They also dig into Jack Dorsey’s exit from Twitter (TWTR), and what it might mean for the future of that platform

Not an investor in the EV auto manufacturers, Taselaar instead looks for opportunities in companies providing the critical charging and battery infrastructure for the industry.

Key to his thesis is the need for fast charging, and - in addition to above-mentioned ADS-TEC Energy - Taselaar is a fan of Wolfspeed (WOLF), and ASML (ASML), who make the semiconductors necessary for the battery chargers. He’s also an owner of EVgo (EVGO), a pure EV play which could benefit from the subsidies in the Biden infrastructure bill.

Nothing goes in a straight line, of course, and WOLF and EVgo have had rough recent runs. The EV revolution, however, is going nowhere, and Taselaar suggests investors consider adding on dips.

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This week’s Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking with Jim Iurio, managing director at TJM Institutional Securities.

Among the topics discussed:

Speaking as crude oil prices (CL1:COM) were jumping despite a coordinated governmental effort to boost supplies, Iurio reminds that it’s another entry in the “buy the rumor, sell the fact” mantra. Oil, he notes, was down about $10 per barrel in the weeks leading up to Tuesday morning’s announcement of the SPR release.

Iurio is short the S&P 500 (SP500) for a trade, noting a recent rise in interest rates and significant deterioration in the average stock even as the market gauge remains close to or at an all-time high. This isn’t the “big one,” though, cautions Iurio. A continuation of easy monetary policy should assure that any correction will be a modest one.

The question going forward is whether the current fast inflation numbers have put us at an inflection point, i.e. is nearly 40 years of progressively easier monetary policy coming to an end? Iurio isn’t so sure we’re there yet, but he’s keeping a close eye on developments.

Iurio remains bullish on not just the price, but the disruptive nature of cryptocurrencies like Bitcoin (BTC-USD) and Ethereum (ETH-USD). Of news that some high-profile professional athletes are taking their salaries in bitcoin, he does get a bit worried, saying it reminds him of a supermodel who in 2007 demanded to be paid in euros shortly before that currency’s long, steep decline.

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