Mid-Week Macro

Earnings and Positioning.
We continue to be positioned for a slowing of growth AND inflation. This macro environment requires the most defensive positioning.

We were already selling our exposure to commodities and growth stocks while buying more rate sensitivity, such as gold and utilities.

It’s great to see how the utilities sector is recovering from the previous quarter's earnings, which were much better than the average S&P 500 earnings result.

Rate Cuts Coming?
Our analysis of leading indicators suggests that inflation is set to rise towards the end of the year. The timing is particularly noteworthy, with August marking the last easy comparison to the previous year. The August CPI,just before the September Fed Meeting, could potentially lead to a significant to be reported -50 basis points cut.

We can also see the UST 2yr Yield agrees with the dovish view.

The end of this year will be very interesting with a rate cut exactly when the leading indicators will flow through into the data like CPI rapports.

It will allow us to buy back many inflation plays, such as commodities. Before we get there, let’s talk about how to position yourself for what is going on right now.

Going Forward
The volatility index (VIX), which remains elevated, adds to this defensive period in the market. Volatility and returns tend to be inversely correlated, as many algorithms are programmed not to buy assets with high volatility.

This is also the case in Oil where volatility is up while Gold’s volatility is going down. For this, among many other reasons, Gold remains one of our best-performing longs! It’s even up more than QQQ YTD!

For some more global plays, India remains the best place to be. It is projected to have a +7.01% GDP number in Q3!

If you would like the full portfolio, make sure to contact on the provided email address.

Best of luck in the markets,
Philippe