1. SPY - Risk / Reward Asymmetry Fading
2. IGV - Tech’s Most Unloved Trade
3. CHFNOK - efficient hedge for Iran escalation
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1.SPY - Risk / Reward Asymmetry Fading
The relief rally in risk has been even more intense than post Liberation Day – SPX +10% in 10 trading days and approaching ATHs.
Yet oil, rate vol, CDX HY spreads and real yields are still above pre–Iran Shock levels.
Rate vol and corporate credit are the top macro drivers for SPY on Qi’s valuation model.
Qi’s valuation model recognizes this with SPY trading 1 sigma above Qi’s model value, at the upper year end of its multi-year range. Indeed, SPY vs. GOVT (Treasury Bond ETF) is at +1.3 sigma – in other words fixed income may well have more cushion that equities if Iran peace talks conclude.
This is more notable as we are entering earnings season. Equities believe the macro path is clean and earnings will deliver. But the asymmetry is clearly poorer than 2 weeks ago.
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