🗞 International Deals Are Best

WHILE YOU POUR THE JOE… ☕️
School’s Out

What a week it has been, if you trade on global macro and order flow that is. ✅ 

Over 250 point swings given in the S&P 500 futures, not to mention the signals to trade oil and gold too.

You’re welcome.

We should all be saying that to Trump though, as our tax dollars won’t be going to fund the useless education system we have today, one that has failed millions of Americans by pushing propaganda rather than actionable knowledge.

Kids in China are coming out of high school 10x as prepared as kids here, and that needs to change.

Speaking of change, let’s get on with today’s email 📧…

ROTATION ROYALE
Across The World

You see that chart up there?

That’s the stock market to GDP ratio for China’s economy, what some might call the “Buffett Indicator.”

That one stands at roughly 67%, but let me tell you what it means. ⬇️ 

Any reading below 100% might be considered cheap, while anything above 100% starts to become potentially overvalued.

This is important because the United States and its S&P 500 has a 200% reading, making today’s stock market the most expensive in history, and that creates a massive tail risk for investors to consider today. 📉 

When volatility pops up in the S&P 500 (as it is today), institutional capital and even retail traders might start to look for safer areas with relatively better valuations in the global financial markets.

This is exactly why you see the China ETF $MCHI outperform the S&P 500 over the past quarter by this much. 📈 

Considering how expensive the US looks compared to the rest of the world, any volatility that comes into the market might trigger a flight to safety here.

And it’s not just going to $TLT bonds.

Relatively cheaper countries like China start to look attractive on these trends, and here’s where Brazil also comes into play: 👀 

This country’s Buffett indicator is even lower at 43.2% today.

No wonder stocks like Vale, one of Brazil’s best names, also left the S&P 500 in the dust in terms of performance this quarter. 🔥 

Now here’s what I think:

• The $DXY selloff has yet to really materialize

• A recession is starting to become more obvious for those who watch the US

• Institutions are going to start floating into these emerging markets soon

So on that note, stay tuned because we’re going to give you a list of the stocks we like in China and Brazil as well.

That’s also the beauty of trading on a global macro strategy, you just find the best themes, all the time. If this is your first time dealing with such a strategy, we have a Global Macro primer newsletter for you to break the ice.

Enjoy it. 🫰 

TRADE OF THE WEEK
Builders Be Building

If you’re at all exposed to our Sovereign Trader Program, then you 100% understand this snippet above. 🔼 

It’s the Services PMI trends, which point to a clear expansion on the construction side of things, but as you know from previous posts, not all construction is made equal.

In fact residential construction has kind of been out the picture for a bit now, leaving us to assume that all of the activity that’s left will be going to the defensive or infrastructure construction space.

This is where the following stocks come into play:

Notice that there are three that we’re really interested in watching for this trend, Vulcan Materials, Martin Marietta, and Ternium.

Now this YouTube video here will walk you through our entire thesis on the construction sector, and how we landed at a long in Ternium (which is already up over 10% since). 🎯 

But today, I want to talk about Martin Marietta.

This is the volume/market profile for the stock, and as you can see we are now reaching the lower end of the current distribution, where a reaction back to the volume point of control (VPOC) has been triggered.

What this means is that the stock just hit a liquidity area where institutions might either start buying more of the stock, or sell it as a last chance to get out.

We think it will be the former. ⬇️ 

• Even though the stock’s forward PE and EPS forecasts aren’t the greatest in the peer group, we like the P/B premium.

• $2.7 billion of institutional capital was reported as buying over the past quarter, a sign of bullish reaction to the VPOC.

• We expect that new infrastructure spending could send the stock to the upper range of the distribution for 2024.

That would be around the $600 ish mark on the stock’s chart, and as always, our friends on Wall Street seem to agree with this view as well:

GO AND MAKE IT HAPPEN
Only the Best

I would never tell you to do something I wouldn’t do myself.

And I would never do anything if it didn’t make money or made sense. Which is why I am so big on order flow and global macro as a strategy to help you survive the financial markets.

In fact, I made a whole 24 minute YouTube video to break down one of our best performing newsletters covering the strategy.

The bonus? You get the editor’s cut version, with added information and examples to go along.

Make it a part of your weekend “reading”, as today’s book recommendation 📖 comes in video form, and let me know what you think.

To your success,

G. 🥃