Gathering headwinds: concentration, inflation, and tightening expectations (with Romaine Bostick, Katie Greifeld)

Nir Kaissar views the selloff as a typical volatility event in a concentrated tech sector, but notes gathering headwinds: concentration in tech, inflation not looking great, and the two-year treasury pricing in 2-3 rate hikes. He suggests safety on the short end of the curve and warns that if the 10-2 spread approaches zero, it signals economic discomfort.

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Gathering headwinds: concentration, inflation, and tightening expectations (with Romaine Bostick, Katie Greifeld)

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The interviewee notes the two-year treasury is pricing in 2-3 rate hikes, implying an expectation of higher yields in the short term.

Asks if the 4.8% drop in the NASDAQ 100 is indicative of a longer correction or just a slight adjustment.

Romaine Bostick
Nir Kaissar

Volatility works in two directions. Tech is particularly volatile and we'll get days like this occasionally. I don't know that I'd read any more into it than that yet.

However, there are gathering headwinds: concentration in the tech sector, inflation not looking great, and the two-year treasury pricing in 2-3 rate hikes, which is not great for the business environment.
Asks where the safety is in this market, given that gold, bonds, and bitcoin are all down.

Katie Greifeld
Nir Kaissar

If you want safety, stay on the short end of the curve. You can get short-term corporates and Treasuries and collect additional yield relatively safely.

The key is to watch the 10-2 spread. Once it gets closer to zero, you get less comfortable with how the economy is doing.

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