Finishing up my quarterly letter, but a couple off thoughts off the top:

Move in rates and equites (tech) largely played out nicely as we outlined in our last quarterly below.



1/x

Unfortunately for the Fed, their focus on the unemployment rate was an analytical error, which is forcing them to play catch up at a time that economic growth is likely to slow. Note our leads below.

2/x

Russia invasion adds material upside pressure to medium- and LT inflation assuming sanctions prohibit Russian oil cos to flip rubles for dollars. Opex in rubles. Lack of crude capex/assets already an upside factor. Puts the Fed in a corner to address inflation. Cc Mike T.

3/x

Fed is now forced to correct course in an extremely quick fashion, which leads to tighter fin conditions and lower multiples. Assuming Fed maintains hawkish tone, lower multiples lead to a slowdown in growth given 80% correlation between household net worth and 6 mo fwd GDP.

4/x

While our leads are lower, still have not seen it in our real time PMI model. Higher highs and higher lows; however, note breadth of index has fallen to 34%. Historically this has preceded economic slowdowns.

5/x

Looking forward, ROW much more attractive than the US; however, only after the Fed blinks. Note countries with large manufacturing bases have higher expected growth in 2022 than 2021. Covid has created a lot of un-synchronicity on the growth front.

6/x

China likely to improve in 2022 as well based on leads. KWEB is left for dead, but what if it lives?

7/x

Not going to get into trades, but will leave you with this. If growth slows and inflation remains at a higher level, precious metals are likely not going lower. PMs as a % of ETF assets at 2.5% vs. 14.5% in 2011. That’s a lot of paper to the upside Doc.

8/x

Call me

9/9