09Feb10:08 amEST

Now That Inflation is Within Everyone's Sight...

Back around last Halloween the very idea of being bullish oil and energy stocks was literally laughed off the air on financial news television and social media alike. We took a contrarian approach that the energy stocks were likely in the "apathy' phase on the back of the fear and crash the prior spring. 

With Brent crude currently at $60 per barrel and WTI not far behind, it has been quite the move for not just oil stocks but also global materials miners and other plays related to energy, such as uranium. This has all been happening as legitimate inflation fears have been growing and a rudimentary reflation trade is starting to feel a bit too simplistic.

Still, the larger point is that investor psychology has clearly shifted from the ZIRP/NIRP mega cap tech/growth software names benefitting from ultra low rates. At issue now is whether the newfound reflation/inflation trade is about to take a timeout.

I would surmise it is, when gauging multi-month monster winners like copping miner, FCX. Beyond that, rates have garnered much attention, with rates on the 10-Year Note hitting multi-quarter highs this week, for example.

As for Treasury prices themselves (inverse to rates), the TLT ETF is showing a bounce from oversold conditions which jives with the idea of rates coming down alongside the reflation/inflation plays to likely shake out the newfound inflation fears if only for a respite. 

So does the money just keep rotating, this time back into FAANG and growth software stocks like ZM? The answer to that question will dictate if we get a broad market correction or instead keep rolling through sectors like we have been. 

Either way, a TLT bounce into the mid-$150s here seems likely before another round of inflation calls. 

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