There’s no better contrarian signal than a mainstream magazine cover.
In 1979, Newsweek ran a cover story, “The Death of Equities,” right before stocks started their epic run of the 1980s and 1990s.
While that’s the most infamous example, magazines have also featured Sam Bankman-Fried and Elizabeth Holmes right before their grift peaked.
Why does this happen?
It’s because magazines sell when they can get a big dramatic story that captures eyeballs, just like the rest of the media. Given the time it takes to write a story and ship it off to a physical printer, magazines tend to hit a story long after it’s stale, and possibly right as the fear has peaked.
That brings us to last week, when the Economist ran a cover about a bond market blowup.
Following this trend of doing the opposite of what mainstream magazines suggest, it may be time for bond yields to take a breather. In fact, that’s what’s happening so far this week:
As Andrew and I noted in yesterday’s Grey Swan Trading Fraternity livestream, we don’t expect yields to completely collapse. And they may rise in the future. But yields have now moved too far, too fast.
Interest-rate-sensitive parts of the market have been hit hard in recent weeks. We continue to like bonds for their real returns after inflation, which currently is being heavily influenced by high energy prices.
With yields at 20-plus-year highs, there’s at least an argument to be made for a higher bond allocation than in the past. That logic also extends to interest-rate-sensitive stocks, as Andrew notes in today’s Pro.
~ Addison
P.S. Politicians have plenty to say about the future. But where they’re putting their money might be more revealing.
With the midterm elections creeping up, Washington is gearing up for a political showdown. The results could change more than who’s in charge. They could reshape the policies, markets and investment opportunities ahead.
That’s why joining us this afternoon on Grey Swan Live! is Andrew Zatlin of Moneyball Economics to explore what the economic data — and lawmakers’ own investments — could reveal about what’s coming next.
Andrew will walk us through what’s happening in the labor market, as well as his forecast on the upcoming midterms – and where he’s positioning himself now.
