“You Don’t Sell Blow-offs” | Andrew Perry on Bullish Technicals of U.S. Stock Market, “Dangerous” Period for Global Equities, and Bull Case for Agricultural Commodities

Episode Summary

Executive Summary: Macro investor Andrew Perry argues the current market is being driven more by liquidity, Treasury operations, and sector-specific shocks than by broad fundamentals. He remains bullish U.S. stocks relative to energy-dependent foreign markets, but prefers pair trades, especially long agriculture against short Europe/Australia, while watching QRA dates, the MOVE index, and signs of a recessionary shift in rates and commodities.

Main Topics: Liquidity-driven market framework (Priority: 5/5): Perry explains his five-pillar approach centered on the story, liquidity, monetary policy, yield curve behavior, and dated policy events. He emphasizes rate-of-change in fiscal and monetary liquidity, plus volatility conditions, as the main driver of asset prices. U.S. equities versus foreign markets (Priority: 5/5): He is strongly constructive on U.S. stocks, especially tech and semiconductors, but prefers expressing the view relative to weaker, energy-exposed markets like Australia, Europe, and India rather than outright long exposure. Treasury/QRA and policy liquidity (Priority: 5/5): A major theme is the quarterly refunding announcement (QRA), Treasury bill/coupon mix, buybacks, and Fed reserve management operations as hidden liquidity impulses that can materially affect markets. Agricultural commodities as a geopolitical/energy trade (Priority: 4/5): Perry is long corn, wheat, and soybeans because fertilizer, diesel, and energy shocks from the Iran conflict and supply constraints threaten food inputs, while China demand could also support ags. Bonds, yield curves, and recession signals (Priority: 4/5): He watches for a shift from bear steepening to bull steepening/flattener as the sign that higher energy and food prices are beginning to choke demand and justify short equities/long bonds. Gold, crypto, and dislocations (Priority: 3/5): Perry discusses how gold and crypto have not behaved uniformly with the broader inflation/liquidity narrative, arguing that traders should not blindly buy inflation hedges without respecting price action and liquidity.

Key Arguments: The market is not best traded with a broad outright long or short; relative-value pair trades are safer because liquidity is not abundant and asset behavior is highly sector-specific. U.S. stocks remain the strongest major equity market technically, and he would not short them on a nominal basis while the trend and liquidity remain supportive. Australia and Europe are vulnerable because of energy dependence, weaker policy settings, and in Australia’s case a proposed tax increase that may pressure equities. The Treasury’s QRA decisions and buyback operations can create large, underappreciated liquidity impulses; these dates have been highly instructive since late 2023. The MOVE index matters more than the VIX for macro traders because bond volatility drives collateral, leverage, and forced deleveraging across the system. Agricultural commodities are supported because fertilizer, diesel, and transport inputs are sensitive to the same geopolitical/energy shock that is stressing Europe and Australia. A genuine recessionary signal would be oil and food rising while yields fall; that would be the point to get aggressive on short equities and long bonds. Gold and crypto should not be treated as automatic “buy and forget” debasement trades; traders need to see confirmation in price and liquidity conditions.

Data Points: U.S. stock upside target: Russell 3,000; S&P 7,770 or 7,800 - Perry cited measured-move technical targets for U.S. equities. NASDAQ rally comparison: About 60% to 65% - He compared the current rally to the 1999-2000 NASDAQ melt-up. 1999 NASDAQ rally: 150% from August 1999 to March 2000 - Historical example used to caution against fighting momentum. 2020 fiscal balance sheet expansion: From $2 trillion to $9 trillion - Used to show how liquidity exploded during COVID. Fiscal impulse during COVID: From negative 3 to negative 17 - He referenced the U.S. fiscal swing as part of the liquidity surge. 2021-22 model output: +240% to +250%+ - His liquidity models were extremely bullish during the 2020-21 liquidity boom. MOVE index stress: From 60 to 115 - He said bond volatility spiked sharply during the selloff, forcing de-risking. Fed reserve management operations: About $38B to $40B per month - He described Fed operations as a meaningful liquidity injection. Treasury buybacks in April: $50 billion - Combined with Fed operations, he said these supported the market. Fed + Treasury combined liquidity support: About $70 billion - He cited $50B Treasury buybacks plus $20B Fed activity in April. Estimated added liquidity: $500 billion to $600 billion - His rough estimate of liquidity support from Treasury/Fed actions including reserve management purchases. Australian tax change: Capital gains tax on shares from 23% to 40% - He cited this as a negative for Australian equities. Australian fuel reserves: Less than 30 days - Used to illustrate Australia's energy vulnerability. Japan preparation: About 250 days of stockpiles - Contrasted with Australia’s weaker energy preparation. Volatility in oil: Around 100% - He said oil volatility became too high to trade casually. Agriculture pair-trade view: Potential 20% to 30% further upside - He thinks long ags/short Europe trade may still have room. QRA date focus: Since November 2023 - He said his models measure Treasury QRA effects from this point onward.

Pivotal Quotes: "You do not sell off. I mean, everyone tried that in 1999." — Andrew Perry: On why he refuses to short a strong momentum market like U.S. equities. "We remain the main positions I'm trading at the moment is long ags, short Australia, short Europe." — Andrew Perry: Summarizing his current preferred relative-value trades. "If I start to see rates come down on higher energy prices or food prices, then I'm now going, okay, the economy's had enough." — Andrew Perry: His recession trigger for shifting from risk-on to defensive positioning.

Implications: Investors should focus on liquidity, policy dates, and relative-value trades rather than broad narratives. In Perry’s view, U.S. equities can keep running, but the biggest opportunity is in long ags vs. short energy-exposed foreign markets until macro price action turns recessionary.