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Crowded consensus= opportunity!

Updated: Oct 31, 2023

The more I do this the more opportunity I see from blinkered bias and excessive crowding in

certain camps. For Nutstuff exploiting misunderstanding and crowded consensus= opportunity! I constantly remind myself that

1. Bad news and misery sells in the media better than good news

2. Fear is temporary and Greed permanent!

On Consensual Equity market negativity (albeit a lot of expensive ex.growth garbage has rallied too hard on early year mean reversion). Ask yourself: “If rates and inflation are peaking and the upside risk on a rise in rates has gone from 50%+ to 10% what does that do to the upside risk on Equity markets?!

The caveat to this is waiting for Feb 14th CPI: if the recent move in commodities (ex energy) feeds through with recent moves in Jet Fuel +75%, lumber +40%, gasoline +30% and Copper +15%, maybe another scare and another buyable leg down beckons. Anyone any wisdom?

MM my Macro-Man has had a 5000 SPX tgt into 2023, he had it in October (with big focus on

China and the % “i’s”. He articulates the thesis again today as follows:

“If the upside risk on a rise in rates has gone from50%+ to 10% what does that do to the upside risk on Equity markets?! “ @7% /yr you double your money in 10yrs! Am adamant Global GDP is $200 trillion (+100%) + in 10yrs. At the same time, no judgement just fact, that 90% of market players in markets are simply not risk takers and are essentially passive indexers.

Think about Global Equities current value of $103 trillion. Watch what GPIF ($2 trillion) the Japanese Govt Pension fund do in terms of asset allocation. Think about who might be

buying this market in greater size here: Japan, has $25 trillion of liquid savings vs a $5 trillion economy!

If Japan grows 2-3% in next 13mths after “0” growth for 20 years. “We are bullish global GDP and global stocks. The PEAK in “everything” is a thematic in play for over four months,

centered on a phase of sharp dis-inflation. Note Jay Powell’s hawkish presser on December 14th never mentioned the word DIS-inflation whereas the FED pivot on February 1st saw Powell use the phrase in thirteen occasions.

Economic deceleration in the U.S. is BULLISH as it adds to the dis-inflation trend. A corporate sector led recession is BULLISH because its duration is short at 1-2 quarters while the expansion phase will be a multi-year event. We are bullish growth during 2023 in non-US regions especially EM, China, India, Japan and the Middle East.

This is a key differential to prior decades as multiple regions during the 2020s decade will deliver substantially to global growth. The FED has begun embracing the PEAK thematic as it starts the process of pivoting. Pension funds will support global bond markets; leading

to lower long-term rates, tighter spreads and lower volatility.

The power of this re-pricing combined with an increasing global monetary policy pivot will deliver powerful tailwinds to global risk assets especially stock markets. Tighter Japan monetary policy in play. The timing is centered around the new BOJ leadership team’s first policy meeting on April 28th.

This event will prove BULLISH for the NKY225 as future growth will exceed future inflation. Pro-growth government policies will feed into higher wage structure at the March Shunto, ahead of the local elections in late April and the all important G7 leaders summit it Hiroshima on May 21st.

Along with the FED, markets have pivoted. Large index swings are likely to back the market moves on allocations in late March; very different than the meltdowns seen during multiple quarters in 2022. Following three years of continuous crises; political leaders and policy makers will pivot to pro-growth strategies across many economic sectors.

We expect to see an accelerated array of economic upgrades following these moves; becoming more obvious as we shift into Q2 and H2. Investment strategies aligned with above will further support global stocks in 2023.”

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To Nutstuff again this is a giant and very serious game of WHACK-A-MOLE, as the UK continues to take action against economic threats: First against Global; Mountain 1: commodity price inflation and n

More Bullish Than Consensus!

Yes, it is very clear how concentrated alpha in markets is. It’s the best excuse for underperformance I guess. If stock picking ever mattered it is now...Without FAANGMAT, “AI” Luxury and half a dozen

Duck hunting without a saxophone!

What we are seeing clearly now is the US trying hard to goad China in Taiwan, a diversionary tactic or a new game to play from the Washington bunkers. I suspect Xi plays the calm and longer game here.


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