Heading 1

US equities resemble Wile E. Coyote

‍

Both the S&P500 and NASDAQ are around 1 sigma rich.Since the conflict in Iran began, Qi’s macro-warranted model value has fallen5.5% for the former, nearly 7% for the latter.

‍

The big driver pushing Qi model value lower is the movewider in credit spreads & the rise in interest rate volatility. Equitiesare lagging this tightening of financial conditions.

‍

‍

This bearish divergence shifts the risk-reward in US equities to the downside. Other forces (chart support?) may help explain equities relative resilience. But note macro explains 90% and 87% of the S&P500 and the NASDAQ respectively.

‍

Continue reading our analysis on the other headlines by downloading the PDF below

‍