Mike what does mike wilson do when Everyone starts to sound like Mike wilson well thanks john it's Definitely nice of you but i mean look At the the bottom line is That the consensus is right 80 of the Time Right it's it's it's usually the trend Is your friend And we are in one of those trends and And there's good fundamental And uh you know policy reasons for that So we've arrived is the way i'd like to Say it so sometimes it's easier to Travel Than it is to arrive and now that we've Arrived at the station And everybody has the same view you do Need to look around and say okay where Could i be surprised here and we think There's a couple of areas number one We continue to think that you know rates Will move up at the back end that we're Not going to get maturity extensions Today The way that some people are expecting The good news is i think expectations Around that have come down recently Because financial conditions remain very Supportive it does look like we're going To get some fiscal support which is Something the fed has been looking at so There's really no need to do Maturity extensions at this time but
That could be Something that allows back end rates to Move up which will put pressure on Valuations early next year The other thing i would say is that you Know we are still looking at probably Some sort of an air pocket With respect to demand trends in the First quarter as we you know finish up The second wave with this virus the Vaccine gets distributed There'll be there'll be some Disappointments and so look the way We're trying to navigate this john is You know we're moving from kind of the Initial move off the lows in the new Bull market everything works We're seeing the rotations towards the Things that we've been favoring small Caps cyclicals we think that's a real Trend And that's a new trend by the way and Consensus is moving into that area but This is a new trend right john so We're trying to follow the new trends And that's that was that was the point Of our note this past couple weeks Don't fight the momentum not so much on The overall market but in these new Trends And i you know my sense is people are Still fighting the the new trends Uh in the cyclical small caps and the Things that are more economically
Sensitive Mike if you can flesh that out a little Bit more please do because the note was A little longer than the comment you Just made there and i want to give it a Little bit of time You wrote the momentum begets momentum And as i went through the note it was Exploring where that momentum was Heading to where it was building mike Can you build on that a little bit more Yeah it's uh you know it's pretty simple It's construct but there's a lot of work That went into it with respect to trying Here's the way it works so price Momentum is a very popular Strategy main reason why is because it Works right in other words people Uh you know want to follow the trends And price momentum is a good strategy And it's become very popular Not only with active managers but also With a lot of these passive strategies So it becomes kind of self-fulfilling And the And the momentum that seems to work the Best or what people follow the most Is trailing 12-month price momentum Meaning what's worked the best over the Last 12 months and what we did this past Couple weeks is we're saying okay here Are the things that are happening over The last 12 months what's changing and What's changed is small caps are moving
More into that price momentum bucket Signal goals are absolutely moving into That 12-month price momentum bucket but What has not moved in there yet is Things like low quality and value versus Growth that hasn't really happened yet But what has happened john Is on a six-month basis it has moved so We're trying to get in front of this get Ahead of the curve And say what's going to shift into the 12 and we think it's the value bucket And the low quality bucket has yet to Happen meaning Now it'll be a full shift and we think That that that pressure To keep up with price momentum will Really shift with the calendar year Right because on a trailing 12 month Basis year to date It's still growth it's still high Quality but that could revert quickly in The first quarter so hopefully that's Clear We think this trend is in place now we Have enough confirmation that it's Happening Particularly in the last six weeks and And we think that that investors need to Get in front of it and not Wait for it to be plainly obvious
