Key insights
- The article suggests a potential shift in market dynamics, with the TA-35 (Israel) showing a negative beta to the US market for the first time since Trump's election, coinciding with Middle East tensions. This, coupled with rising inflation and reduced probability of rate cuts due to oil reserve concerns, could lead to a pullback in TA-35 performance and a surge in QQQ towards all-time highs, indicating a bullish outlook for US tech equities.
Since Trump got elected, TA-35 outperformed QQQ by 47% which is an outlier considering that on average QQQ largely outperforms TA-35 every year. The outbreaks in perf really coincide with every Trump escalation in the Middle East. (Which goes to say how MAGA is a complete farce - but that's just my opinion.)
It does seem that it's reached the limits of what the US economy is willing to handle though. The probability of no rates cuts went from 6% before the Iran war to 75% now. The WSJ was reporting that the strategic US oil reserves neared their operational limit, under which the US would no longer be self sufficient. Inflation blew past 4.2%.
It's the first time since Trump election that we see a negative beta of the TA-35 to the US market, and if this holds, in my opinion, it's probable the TA-35 perf pulls back from its high, and the QQQ blows past ATH.