Inflationary boom favors value, metals, and energy
The speaker argues that persistent fiscal deficits and capped oil prices make an inflationary boom the most likely macroeconomic quadrant, favoring value stocks, financials, metals, and energy over bonds.
The argument
With the US running a 7% budget deficit and oil capped between $65 and $100, the speaker advocates for a portfolio of 60% equities (value/financials), 20% energy, and 20% metals. Financials are expected to benefit from a steeper yield curve, while government bonds are excluded entirely.
The thesis, stress-tested
✓ What validates it
- ✓US budget deficits remain at or above 7% of GDP
- ✓Yield curve steepens as inflation remains above the Fed's 2% target
▸ Risks discussed
- ▸Oil prices breaking above $100/bbl
- ▸A sudden deflationary bust
- ▸A major correction in the AI sector dragging down broader equities
Hear it yourself
"Louis, how are you? I'm doing great. Thanks. How are you doing? I'm doing very well. Thanks so much for joining us while you're on the road. Pleasure. It's a great to be, again, great to be with you. Alright. Well, Louie, look, I always love talking to you because, you're one of the the relatively few people that I interview who whose focus is really primarily, markets outside of The US. But one of the things that I appreciate very much about you is that you spend most of your time outside of The US. So you really have a very, you know, on the ground view of a lot of these markets."
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE