Tyler here with this week’s Macro Musings.
Just a reminder, we’re releasing the newest issue of our Macro Intelligence Report (MIR) early next week. In it we’re covering a basket of agricultural stocks that are ready to rip just like our IPI play (if you don’t know what I’m talking about, read our article below). Phase 3, the Overheat Phase, is a target rich environment. There’s a lot of profits to be made. If you’d like to come along for the ride, make sure you subscribe to the MIR by clicking here.
Our Recent Articles —
The Overheat Phase: We review the Investment Clock theory and discuss how we’ve already used it to score huge profits on various commodity plays.
Odey's Brook Absolute Return Fund was up 10.25% for the third quarter, smashing the MSCI World's total return of 2.47% in sterling. In his third-quarter letter to investors, which was reviewed by ValueWalk, James Hanbury said the quarter's macro environment was not ideal for Brook Asset Management. Despite that, they saw positive contributions and alpha Read More
Mid-Year Performance Reviews (Part 1 / Part 2): If you haven’t seen them already, we published the mid-year results of our two portfolios — Strat Ops and Spec Ops. As part of our 100% transparency promise, you see all our results… the winners… and more importantly… the losers as well.
Article I’m reading —
I go through bouts of extreme interest in AI followed by extreme disinterest of it. I agree that AI will only become a larger and larger force in finance, the field is perfectly suited for it. But at the same time it’s probably not going to make as big of a change in the industry as some are predicting.
This article gives a good update on how the technology is weaving its way through the industry including multi-billion dollar funds once scared of it.
Of course AI is only as good as the amount and quality of data you can feed it which is why we’re in the middle of a data renaissance.
The article says, “An estimated 90 percent of all the data in existence today were created in the past two years.”
Podcast I’m listening to —
This pod starts off exploring the backstory of Erik Townsend, the producer of the MacroVoices podcast.
Erik made millions during the tech bubble, cashed out, and bought a super-yacht only to discover that “ballin on a boat” gets incredibly old and unfulfilling after a while.
He ditched the Caribbean lifestyle and from there devoted his life to financial markets.
Erik has some interesting big picture theories on how he thinks the next 30 years will play out, as well as a grim prediction for the future of cryptocurrency.
Chart I’m looking at —
Information already known by the market is priced in so there is no profit opportunity. Instead of blindly looking at historical data we need to anticipate future scenarios that can surprise markets.
Surprise indices help us find what has been surprising markets right now so we can better understand the dominant narrative.
Global GDP has been consistently surprising higher which tells us that the market has still not gone all in on the “reflation” trade. There’s plenty of market strategists out there who can’t let go of their bearish bias.
Trade I’m looking at —
Bond volatility is currently at all time lows as seen in the chart below.
This is extremely counter-intuitive since we are about to enter one of the most uncertain periods for bond markets since the GFC. The Fed will begin Quantitative Tightening next month and I have a hard time believing that it won’t cause some degree of volatility.
No one knows what it’s like to trade bonds without the perpetual Fed bid. There’s going to be some volatility until people figure out how to cope without the punch bowl.
Quote I’m pondering —
“Whether you like it or not, radical transparency and algorithmic decision-making is coming at you fast, and it’s going to change your life.” – Ray Dalio
I think we’re going to see a huge shift in how companies organize and decide over the next decade. Ray Dalio has proven through his success that algorithmic data backed decision making is more effective than a boss or manager making all the decisions.
Companies won’t be able to compete at the margin if they rely on a single biased human with a tiny memory to make key decisions on how to best allocate time, energy, and money.
There’s two paths ahead I see for anyone wanting to win big from this transition rather than lose big.
- Learn to program the machines or
- Focus on relationship building
Obviously all these new algos will need to be serviced, improved upon and maintained. But if that’s not your thing, there will always be a need in business for putting a smile on someone else’s face and creating that client connection.
Thanks for reading.
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