The Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy entered this month recommending a fully invested allocation. The NDR Catastrophic Stop model is based on the combination of two proprietary composites: 1) the Internal Composite (technical and price-related indicators) and 2) the External Composite (fundamental, economic, interest rate, and behavioral/sentiment indicators). Each composite is one-half of the overall score.

The sector model remained with a mix of cyclical and defensive leadership during the month. Entering September, the sector model is overweight Information Technology, Communication Services, and Utilities. Health Care, Industrials, and Financials moved to marketweight, while Consumer Discretionary, Consumer Staples, Materials, and Real Estate are underweight.

Click the link below to read more about the strategy’s positioning.

Full strategy commentary: NDRSASDH202309061

Visit the Day Hagan research page for access to additional commentary and webcasts.

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Thoughts From the Divide: Avoiding the Inverse

BY JON WEBB
Along with the release of the January Fed minutes this week, there was a deluge of Fed Speak, with Jefferson, Harker, Waller, and Cook all opining on the outlook for cuts. Most of the refrain was along the lines of Powell’s need for “confidence”, with Waller saying that he needed “to see at least another couple more months of inflation data” and Cook echoing the idea, saying that “as we gain greater confidence that disinflation is ongoing and sustainable, that changing outlook will warrant a change in the policy rate”. Harker pushed back on immediate cuts, asking for markets to “just give us a couple of meetings”, following up by saying, “I would caution anyone from looking for it right now and right away”. But while there may be some pushback on timing, that cuts are coming appears to be very much fait accompli in the mind of the Fed. Read more →

Thoughts From The Divide: Lack of Action

BY JON WEBB
It’s another week of heavy-hitting inflation data, with PPI coming in hotter than expected, CPI was in line with expectations on a year-on-year basis, and import prices “rose by the most in two years in April amid rising costs for energy products and other goods”. Under the hood, both CPI and import prices showed additional signs of running hot, with the latter featuring an upwardly revised 0.6% month-on-month change in March, and the CPI data, including hot readings in some of the niches and metrics followed by Powell et al., such as the  4.0% annualized reading in six-month Core CPI and a sobering 6.0% annualized reading in six-month Core Services. Read more →

MI2 Partners – Thoughts From The Divide: Spectacle

BY JON WEBB
Another week into Trump 2.0 and you’d be forgiven for starting to tune out some of the news around the administration. After all, nothing screams kabuki more than touting “yuge” concessions from the Canadian and Mexican governments that were already in the works… Admittedly it’s two birds with one stone (that was going to be thrown anyway) for the US’s neighbors, but it does make it hard to take the threat of tariffs seriously. That being said, while some of the spectacle is certainly theater, like a bullfight it does come with horns as markets and political actors react to the latest news. Read more →
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