Gold/silver crash does not change the roadmap - Weekly Wrap

Chart of the Week

US tech stocks have already seen a significant de-rating, with forward PEG ratios now trading near 5-year lows. The "froth" has largely come out of the sector despite the long-term growth story remaining intact.

This shift is currently reflected in our Asset Allocation Engine, which is spitting out a Tech, Energy, and Financials barbell—pairing secular growth at a more reasonable price with cyclical value.

Maybe there will be a few more months of chop, but for medium-term and longer-term allocators, this does not look like the time to abandon tech.

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Research This Week

Gold/silver crash does not change the roadmap - Feb. Macro Snapshot | [Video Discussion]

Our Macro Risk Indicator remains “risk-on. We keep a buy-the-dip mentality on equities.

A useful rule of thumb for tactical liquidations is when risk-on and risk-off assets selloff together. Historically when the S&P sells off by 1.5% in a day, while either gold or US treasuries also sell-off by 1.5%, this has been a good indicator of a tradeable low

In January, we laid out how 2026 was an amalgamation of three macro analogs:

• ‘16 - manufacturing recovery after rolling recession,
• ‘03 - “Jobless” growth with rising productivity,
• ‘99 - High valuations and speculative mania with generational IPO. 

Recent data corroborates this roadmap, with a big jump in the ISM manufacturing, a drop in the personal savings rate and news of Elon Musk’s plans to merge xAI with SpaceX ahead of a summer IPO.

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Summary

• Cyclical Asset Allocation: Macro Risk Indicator still “risk-on”, no contagion yet from gold/silver crash
• Macro Analog Update: Manufacturing rebound, muted labor, moving towards Elon’s “X” IPO
• Gold/Silver Crash: Stylized post-crash patterns after initial low
• Gold: Stuctural tailwinds still intact
• Equity: Stronger earnings + sound macro => macro tailwinds remain for EM and value
• Equity Sector Allocation: Tech stocks already de-rated => tech, energy, financials “barbell”
• Fixed Income: US 10y fair value range 3.75% - 4%, SOFR curve still looks too flat
• FX: USD sideways, APAC vs EUR remains key divergence
• Commodities: Cyclical tailwinds strong, nat gas equities breakout, copper-silver switching

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Thoughts on Quality Investing

Our latest thinking on quality investing in equities, including the inputs we use in our VP Quality Score and backtests.

Like a classic recipe, quality combines core staples with many variations. Some of our favorite work includes Quality Investing: Owning the Best Companies for the Long Term and Quality Minus Junk.

Our updated VP Quality Score adds new inputs to our previous work (see Oct 2019). The resulting score offers a robust input for stock screening and a portfolio management tool for portfolio resilience.

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Global Macro Update: Shift to short EURKRW, add long USDMXN

Signs of exhaustion in the USD selloff and weak EUR breadth prompt us to adjust our FX trades and add some long USD exposure.

These include:

• Take profit on short EUR vs long NZD, shift to long KRW vs short EUR
• Add long USD vs short MXN
• Close long IDR vs short USD
• Retain EM equity exposure