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Wounded Merry Men!

Updated: Oct 31, 2023

Nutstuff holding well ahead of the Mkt, a tough tough week for anyone with

big bets in almost anything that was a “Covid-winner” in 2020. I suspect there are very few “Merry Men” left in Robin Hoods camp and in fact it must be full of dead and badly wounded!

Anyway, to the +ves, Nutstuff has been and remains super +ve UK for ’21, the MPC reads as consensus on 50bp’s of hikes by end ’23 as being too aggressive so the bullish consensus really is building now! Lloyds, ArcelorMittal, Glencore Travis Perkins are 4 I own at 12mth rel highs and going higher as I type.

Meanwhile inUS & UK Growth, FAANG, after a decade long run at the top of Investors wish list looks over. Names like Ocado I add in to this and AMZN, ZM and Peloton as have said repeatedly. Gold behaving better as is silver. Banks, which were Nutstuff big adds at start of the year are absolutely on a tear, despite the loan-to-deposit ratio of the four major US banks having fallen to 51% in 1Q21, down from 70% in 1Q20.

BAC 12mth rel highs as is WFC, own both. Hotels, Cruiselines, Builders, Airlines, Resources, are where it is. Freeport, Nucor, Vulcan in “tattoo-land”! I guess there is a good

alternative to Equities, Commodities and their proxies.

With 10 yr, right now is dull but is also all that matters, a Locked-in yield at 1.50%-1.75% range, short UST is a hard game to play.

Payrolls expectations are 1m jobs added. That’s a big number but the bar is high. Just as at start of the year it is too consensual to me that rates are going higher sooner rather than later and will crush stocks.

The Market is telling you the economic recovery will lead Value higher and that

rates will then follow. So, an S&P 500 at 4,400 by mid year.

Key Drivers:

Strong EPS recovery, supportive Fed, Credit remains strong, declining volatility, an undemanding valuation vs Bonds, generational tailwind from Millenials (inheriting $1bn per annum and buying stocks) “PE multiples expanding dramatically” having come through a Depression that we have not seen in 5 lifetimes.

Any company that has survived is arguably now “unkillable”. Focus remains Energy, Materials, Financials and own some Staples XLP ETF as a Long hedge. Energy and

Commodities a still in an early uptrend at a time when people don’t own the sector.

Demand surprise coming and capex could increase for the next 5yrs. OIH (Oil

Services ETF $207) could be $450-$600. Potentially $1000. Technology “looks terrible”. “FANG is tired and crowded. If falls another 2% could fall 20%”. Names like TTWO and NFLX on 12mth rel lows as was ATVI in vid-games land, these are world class businesses worth buying so TTWO and ATVI remain names to take the pain on! CDC will lift prohibition on Cruise lines and “stocks will explode”.

Biggest Market risk: More leverage than we realise.

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