Cross-Asset Strategist & Quantitative Analyst, Pennock Idea Hub

Cam Hui

Cross-Asset Strategist & Quantitative Analyst

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

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Cross-Asset & Quantitative Research

Cross Asset Strategy

<ul>
<li>The stock market recently underwent a Great Rotation. Leadership violently rotated from growth to value, and from NASDAQ stocks to small-cap stocks. </li>
<li>The reversal was accompanied by a sudden downdraft in the S&amp;P 500. Is this the start of a correction?</li>
<li>Even though breadth indicators are improving, which is bullish, we would not be so quick to buy any dip that appears.</li>
</ul>


The stock market recently underwent a Great Rotation. Leadership violently rotated from growth to value, and from NASDAQ stocks to small-cap stocks. 
The reversal was accompanied by a sudden downdraft in the S&amp;P 500. Is this the start of a correction?
Even though breadth indicators are improving, which is bullish, we would not be so quick to buy any dip that appears.


The One Burning Question of the Great Rotation

<ul>
<li>The betting odds on a Trump victory in November have risen substantially, but the markets haven’t fully discounted such an outcome.</li>
<li>Investors who want to position for Trump 2.0 should seek long inflation exposure (long gold/short bonds) and short globalization (long domestic producers/short transportation and logistics).</li>
<li>Notwithstanding the growth outlook, equity returns may be more challenging as Trump 2.0 will see the S&amp;P 500 at more lofty multiples than the P/E ratio of Trump 1.0.</li>
</ul>


The betting odds on a Trump victory in November have risen substantially, but the markets haven’t fully discounted such an outcome.
Investors who want to position for Trump 2.0 should seek long inflation exposure (long gold/short bonds) and short globalization (long domestic producers/short transportation and logistics).
Notwithstanding the growth outlook, equity returns may be more challenging as Trump 2.0 will see the S&amp;P 500 at more lofty multiples than the P/E ratio of Trump 1.0.


<ul>
<li>Our base-case scenario is based on an analysis of current market conditions and seasonal patterns of a near-term top in July and sideways consolidation for the remainder of the month.</li>
<li>Expect a rally in August, which could be consistent with an anticipation of a September rate cut in the wake of the July 31 FOMC meeting and Jackson Hole speeches.</li>
<li>Volatility and risk should rise into the November election, followed by a post-electoral rally into year-end.</li>
</ul>


Our base-case scenario is based on an analysis of current market conditions and seasonal patterns of a near-term top in July and sideways consolidation for the remainder of the month.
Expect a rally in August, which could be consistent with an anticipation of a September rate cut in the wake of the July 31 FOMC meeting and Jackson Hole speeches.
Volatility and risk should rise into the November election, followed by a post-electoral rally into year-end.


<ul>
<li>Valuation and breadth indicators are flashing concerning signs of excesses. We believe this market bull has more room to run.</li>
<li>If this is a market bubble, valuations are stretched but not bubbly.</li>
<li>Price and fundamental momentum are strong, and we are not seeing signs of distribution.</li>
</ul>


Valuation and breadth indicators are flashing concerning signs of excesses. We believe this market bull has more room to run.
If this is a market bubble, valuations are stretched but not bubbly.
Price and fundamental momentum are strong, and we are not seeing signs of distribution.


<ul>
<li>Numerous warnings about a toppy market have been appearing , but they tend to be “this will not end well” warnings with no obvious bearish trigger.</li>
<li>Long-Term risks to equity prices are rising, but short-term price momentum is strong.</li>
<li>We believe that your decision to be bullish or bearish will depend on your time horizon.</li>
</ul>


Numerous warnings about a toppy market have been appearing , but they tend to be “this will not end well” warnings with no obvious bearish trigger.
Long-Term risks to equity prices are rising, but short-term price momentum is strong.
We believe that your decision to be bullish or bearish will depend on your time horizon.


Cam Hui has been professionally involved in the financial markets since 1985 in a variety of roles, both as a quantitative equity portfolio manager and as a sell-side analyst. He graduated with a degree in Computer Science from the University of British Columbia in 1980 and obtained his CFA Charter in 1989.