In this walk‑and‑talk vlog filmed in Seoul, trader James Helliwell walks viewers through his market‑analysis process while grabbing coffee. He starts with a top‑down macro view, highlighting US leading indicators such as the ISM PMI and the composite LEI, which signal expansion, and contrasting them with a slowing Chinese economy that is dampening luxury‑goods demand. He then reviews inflation metrics—CPI, core CPI, and the Fed’s preferred core PCE—explaining why the Fed’s 2% target keeps the environment risk‑on despite elevated rates. Helliwell argues that the market is currently driven by momentum rather than fundamentals, pointing to an 18‑month rally in semiconductor stocks like Nvidia and SK Hynix and the underperformance of quality‑oriented stocks. Using a four‑quadrant sector‑rotation chart, he identifies leading sectors (energy, industrials, healthcare) versus laggards (utilities) and demonstrates sector‑relative ETF ratios (XLE vs XLU, XLI vs the market). He highlights a reflation trade in precious metals, specifically Silver Wheaton, as an inflation hedge. Finally, he presents a simple, back‑tested ETF allocation model that translates the macro regime into a single iShares ETF recommendation, emphasizing its suitability for busy travelers. The video ends with a compliance‑aware disclaimer and a call‑to‑action for portfolio‑help services.
Chapters
Good morning, guys, from Seoul. Different kind of video for me this week. I'm gonna be doing a little walk and talk today and showing you a little bit of the city as I head down to get coffee and actually go through what the hell is happening in the markets. Because I've been away from the screen for a few days now soaking in the sights. It's actually my last day here, and probably like a lot of you, if you've got, you know, work, you've got other things on, maybe you're traveling as well, you might find it difficult to keep on top of what's happening. So I thought today we'll go and grab a coffee, sit down with the laptop, and I'll go through my process with you to try and understand, as I do it first person, what actually changed over the last couple of weeks, where we are in the world, and what we can do about in terms of our portfolio. So we're heading in the direction of the metro now, which to begin with was pretty overwhelming. I'll put a link to some of the other videos that I've made on my other channel if you want to go and check those out. As we make our way to, I think, the Forbidden Kingdom. Not that one. Starbucks. See you all in a minute. Okay, guys, coffee secured. We've got a really nice view up here over the square. But let's get into the analysis. And I need to begin by taking you through what the state of the world is, what the state of the business cycle is, where are we in the cycle. We need to begin with that top-level view before then we drill down into different sectors. We can start thinking about individual stocks. And how that might affect our portfolio overall. So let's get straight into it. I can already see the headlines on Bloomberg. There's been a bunch of stuff going on with the Fed this week, but of course, Trump, with Canada, with tariffs, with Germany, with certain political changes there. So let's dive into it. So if I pull up the ISM PMI survey, you've probably seen me look at this in my other videos, just very quickly. To frame what it is, it's essentially a survey of business leaders in America, biggest companies in America, and they're asked whether or not they're seeing conditions improve or deteriorate over the past month, as well as tracking their expectations, most importantly, for the coming months. So below 50, it's a bearish signal suggesting that the economy Could see slowing. Below 46, a recession historically. And above 50, which is where we're at currently, we're in expansion. And this tends to lead the market by about 6 to 12 months. And that's the reason why we're looking at it, right? We're not here to be economists or to have opinions and forecasts. We're here to figure out what we should be doing with our portfolio, how we're going to make money, and hopefully not lose it. So this is a good signal. So another indicator that I like to look at is the so-called LEI index. So the ISM is one of the inputs in this overall basket of indicators called a composite, right? That essentially takes the average of that plus the other 9 inputs. It's a basket of 10 leading indicators, and you can see that it has improved in the last month. So this again is confirming rather the growth signal that we see in the one indicator within this basket. So it seems to be reflected more broadly across the various leading indicators of the US cycle. So that for me is definitely bullish for the US economy and for much of the developed world. But we should also consider China. This essentially behaves in a In the same way as looking at the ISM. Now, the problem for China and the problem or a headwind for the rest of the world is that this has been slowing. It peaked a year ago. If you look at the earnings for Hermès, for LVMH, the group recently, and a bunch of other companies in the same sector, they're all reporting weakness and certainly headwinds in their outlook. As a result of a slowing of demand coming from Asia and specifically in China. So whilst this doesn't marry up with the strength that we're seeing in the US leading indicators, I still would view this favorably for the S&P 500 overall. So if we just pull up a chart of the S&P, you can see we're pretty much at an all-time high. And with the lead indicators pointing higher, there's no alarm bells ringing. You might get caught up in the headlines, looking at tariffs, looking at the Fed, looking at what Trump said, what's going on here, what's going on there. But the big picture, the 40,000-foot view, is ultimately reflected here in the price. Now, the other thing that we need to look at— that's growth— is also inflation. Now, you could begin by looking at CPI. You could look at core inflation, which strips out the more volatile energy prices, for example. Or you could look at the Fed's preferred measure of inflation, which is the so-called core PCE index. We don't need to get too geeky or technical with this. What we need to know is that the Fed targets a 2% level on this measure, not the headline CPI that most people look at. This is the reason why we're still basically In a world of materially higher rates and stubbornly higher inflation, it seems, for the time being. So we know that it's risk-on. The market should be heading higher. The economy should be growing, albeit with China slowing down a little bit. But if you don't get this next bit right and you just go ahead and buy the market, you could end up buying completely the wrong stocks. So what we need to do now is return to the desk with my coffee and figure out whether the market is currently being driven by Fundamentals or technicals. And this is where so many people get it wrong, including the pros like Terry Smith and some of the other big fund managers who have berated momentum as a reason for their stock picking underperforming of late. Let's get back to it. So the way to do this could first be to look at a chart of, say, beta, or beta, as you would say in America. If momentum is driving the market, fundamentals don't matter. You're wasting your time with that kind of research. The takeaway here is that broadly, since it bottomed just over 18 months ago, the market's been incredibly momentum-driven. And that's meant that fundamentals for the most part haven't really meant much. It's the reason why we've seen semiconductors, for example, Continue to lead the market higher. Individual names, Nvidia. As we're here in Korea, I guess we can look at some of those names that have led the so-called AI 11. SK Hynix. You can see that this corresponds to the same point around 18 months ago when these really ripped. And therefore, if we look at, say, quality as a factor, so quality companies usually indicative of Fundamentals, like solid fundamentals. Quality has underperformed over the same period. So this whole trade is about momentum versus fundamentals. And for the time being, whilst we did see a bit of a correction a couple of months ago, for the time being, the market has been led by momentum as the dominant driver. So what are we going to do with this? Stock pickers like me could sulk or ignore it and still dive into picking stocks and looking at fundamentals, taking a long-term view. That's fine if you take a long-term view, but right now fundamentals are just not relevant to the market. It's all about momentum. So in case you haven't seen this chart before, it's not as complicated as it looks. You've got 4 quadrants: leading, weakening, lagging, and improving. And the idea is that the sectors should cycle around a bit like a clock. So in the top right, energy, for example, you have a sector that's leading. And in the bottom left, you have utilities, a sector that's been lagging the market. So when things, which is kind of what we're seeing now, are momentum-driven, we want to be looking for drilling down sector momentum to try and get that outperformance over the market. So if we were to pull up a ratio of the energy sector ETF XLE compared to XLU, so we've got the leader versus the laggard, you can see it in the chart. Energy is outperforming. And there's more interesting ideas, I'm sure, that we could come up with in here. Let's have a quick look. Industrials have cycled round from outperformance. They were leading for a large part of this year. If I pull up XLI just compared to the market broadly, you'll see the outperformance coming into the new year. That first quarter was all about industrials, and look how that's faded with the ratio now Back down towards the lows, so they've really cycled round, which is exactly what we what this chart that Phil shows us. Healthcare had been leading for some time; it seemed to correct. Let's take a look there. So if we played healthcare against industrials, for example, I started looking at this one probably back in June July time. So that's held up pretty well, and at the top you can flip into different parts of the market. If you want to take a look at commodities, for example, whether you're trading them outright or whether then you invest in an ETF that tracks them. So we know that energy is outperforming. We've kind of already covered that in the equity sectors. So we don't necessarily need to be looking at crude. But the rotation around in silver is pretty interesting. So what that makes me think of immediately is silver Wheaton. Very nice. This is weekly. And I know from my analysis, just stuff I put out in earlier videos when I was actually back in Argentina around Easter time, I remember doing a video on the reflation trade. Go ahead and check that out because I think there was a lot of good stuff in there that's still relevant today. And I remember that Silver Wheaton was like one of the highest-ranking stocks from a fundamental perspective that has that inflation hedge. And of course, in this case, is a precious metal company. So that's how we generate ideas. We've gone from top-down, looking at the macro, determining the regime, to then understanding whether we should be focusing on fundamentals or technicals. And then within that, looking at sector— different sectors that are leading and lagging and focusing obviously on the leaders and then finding individual stock ideas or even just the general metals and mining. Although within this, you've got lots of base metals. For example, so we've seen what's working at the moment. We understand that we should be invested, it should be risk-on. Momentum is the current factor that's driving things. And drilling down into the sectors, we see things like energy, precious metals as reflation trades are still very much leading the market. What if you don't have time for all of this? What if you're traveling, you've got better things to be doing? Well, let's get back to the computer and the coffee for this final part where I show you How we can bring this all together with just a handful of ETFs. This tool takes all of that and the output is just one ETF. So these are all very common products that you'll find like iShares ETFs on any brokerage platform. And it determines based on growth and inflation whether we should be allocating to stocks or bonds. So risk or safety. And within that, Perhaps inflation-protected bonds or gold, for example. So all of this has been backtested based on how I manage money throughout my career. I'm not promoting this or making any kind of performance statements or performance guarantees for compliance reasons, to be absolutely clear. But you can see the historical simulated performance of this model for the most part, and then where I've tested it and run money with it out of sample. From sort of 2018 onwards. I hope you found that little update useful. It is baking hot here in Seoul. Some very impressive architecture which I'm going to go and check out now. So if you do want my help— not psychiatric help or whatever else— if you want my help with your portfolio, click the link in the description. From Seoul, I'll see you in the next video. Have a good one.
