Last Friday’s Non Farm Payrolls were seen by markets as ‘weak’ and supportive of a ‘no inflation scenario’ leading to a sell off in the US$.

While we continue to puzzle over official pronouncements on the pandemic, markets are nevertheless thinking about growth, inflation and asset allocation. One of the issues challenging asset allocators in particular at the moment is whether or not there has been a strategic rather than just a tactical shift in Value versus Momentum.

The following is the text of an article submitted to Australian Financial Review – albeit with a title added by us. We do this on a regular basis, but since it is behind a paywall many of our readers can not see it and so we reproduce it here. The AFR article will have been edited, so this is a ‘rougher’ version (as well as slightly longer)

We like to look for nominative determinism where we can find it, so to see that the over-leveraged US Hedge Fund that was forced to aggressively de-leverage on Friday was called ArchEgos was too good to miss.

We like to think of the market moving in a variety of ‘herds’, with the opportunities for the biggest herd, the long term investor, being presented by the behaviours of the other two, the Asset Allocators and the short term noise traders.