Mid-Week Macro

We have a perfect storm brewing on the inflationary side. While growth will continue to slow, I see inflation starting to increase again shortly.

The important update is that it will probably come down in the meantime. While this might seem like good news to some, it will likely make the Fed think they’ve succeeded in their mission before they have. 

If they choose to cut rates, thinking the cost is clear, the reacceleration in inflation will be even more significant.

We expect August and September to see inflation decelerate and proceed to reaccelerate in July, Oct, Nov, Dec, Jan, Feb, Mar, Apr, and May.”

For this reason, it would be smart to decrease commodity exposure while increasing allocation to Gold Utilities (XLU).

On the growth side, we continue to go down, making it a smart decision to decrease your allocation to QQQ and SPMO.

A lot of the market’s darlings are struggling. NVIDIA took a serious hit, while META might also struggle with the slower Ad Cycle overall as the US economy slows.

This change to what has been working creates it’s own worries with the VIX (volatility index) starting to hold at a higher level.

To sum it all up what should you do in the Portfolio?

Decrease:

· Oil

· Copper

· Inflationairy plays

Increase:

· Utilities

· Japan

· Poland

· Gold

· Consumer Staples

I hope you enjoyed this week’s edition of Mid-Week Macro.

Best of luck in the markets,
Philippe