The View from 5th Avenue

The View from 5th Avenue – 3 August 2022

After yesterday’s Weibo stats showed exactly how much attention was on Pelosi’s visit to Taiwan, her actual meeting had far less exposure. The tensions lessened, and investors were free to trade with one less concern. Earnings, economics and the Fed’s end game continue to drive the current investment environment. Treasuries focus on a recessionary outcome has led to a rally in yields and future rate cut expectations, and that has fueled a return of interest into the Tech/ Growth area of the market. S&P Growth outperformed Value by 6.9% in July (2% last week alone), and that move continued today by another 153bps. While it is easy to point to the mega-tech team as the leaders, Semis (SOX +2.6%) and Software (+2.5%) also moved. The only sector to close in the red today was Energy (XLE -2.8%). OPEC+ at their ministerial meeting today decided to only increase production by 100k bbl/d in September. But EIA data showed a weekly decline in jet and motor oil (19% and 7.6% respectively), pushing Crude to close below $91 for the first time since the Russian Ukraine invasion.

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