John Roque: Gold - Awakening the Sleeping Giant

Tom welcomes John Roque back to the show. John is senior managing director and head of technical strategy for 22V Research.

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Gold is showing decent relative strength. We're in a commodity cycle since the Covid low of 2020. He is uncertain if gold will participate because of inflation or if it will outperform during periods of deflation. He wonders if gold is hindered because of a lack of investor interest. At an institutional level gold may not have the interest of fund managers. Those with good experiences in gold markets are few and far between in this era.

John discusses his experiences with those that invest in gold over his career. The Fed balance sheet is at unprecedented heights and we see speculation across all asset classes. Gold remains restricted with many investors tired of looking at it. For this reason, gold may be a good contrarian play.

Crypto is an easy asset to acquire in this era and many believe that it only goes up. He discusses some of the controversial players in the Bitcoin space including MicroStrategy and El Salvador. Gold might be starting to outperform and it carries a lot less risk.

He discusses how ESG mandates are pushing more investors toward technology and this has caused issues with capital in other sectors like energy and resources. The only way investors will embrace other sectors is when tech fails to participate. No one is prepared for tech to underperform.

He doesn't believe the Fed was evaluating the CPI number properly. They seem to have overlooked the data. Historically, CPI can get quite non-transitory for extended periods. The PPI shows that the S&P often has problems when inflation gets high. Inflation will likely be even higher by the end of the year.

John expects the Fed will closely watch the S&P and do their best to keep it propped up. If it comes under pressure their confidence to taper will falter.

The concentration occurring in the S&P is quite concerning and there is plenty of room for investors to get hurt.

Time Stamp References:
0:00 - Introduction
0:30 - Recent Article
2:00 - Gold Therapy
11:00 - Contrarian Views
12:25 - Crypto Vs. Gold
14:55 - P.E. Conditions
17:45 - Brobdingnagian
20:44 - Commodity ETFs
24:15 - Not Growth Ratio
27:30 - S&P & Energy
29:30 - Fed CPI Metrics
34:45 - S&P and the Fed
38:00 - Stock Concentration
42:15 - Scoring Equity Mkts
45:15 - Wrap Up

Talking Points From This Episode
- Gold's performance and the lack of institutional investor interest.
- Risks with crypto and the belief that numbers always go up.
- Fed's inflation targeting and its failure to recognize where inflation was heading.
- Why the Fed won't allow the S&P to falter.

Guest Links:
Website: https://22vresearch.com
Free Article: https://22vresearch.com/2022/01/19/sleeping-giant-awakens/

John Roque is Senior Managing Director, Head of Technical Strategy for 22V Research.

John’s worked on Wall Street since 1987 with his research background beginning in 1990. From 1990–1994, Mr. Roque worked at Safian Investment Research and then from 1994–1998 at Lehman Brothers, where he partnered with long-time technician Steve Shobin. He was at Arnhold & S. Bleichroeder (and its incarnations) from 1998–2009 and then a short stint at WJB Capital through 2011. From 2012 to 2015 Mr. Roque worked on the buy-side at Soros Fund Management and then from 2016–2018 at Key Square Capital Management. He returned to the sell-side in April 2019 at Wolfe Research before joining 22V.

Mr. Roque was a ranked Technical Analyst in the Institutional Investor Magazine’s Research Poll from 2009–2011.

He received both his BA with Honors in Economics and his MBA with Honors in Financial Statement Analysis, International Trade & Development, and International Economics from Fordham University.

Mr. Roque lives with his family in Mount Vernon, NY.

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