All Notes

Since the start of the year, I’ve been setting up a trade for our model portfolio to short what I believe is a waaay overdone narrative that consumer spending will strengthen significantly in Q1. Of the two conditions I laid out for launching the trade, I’m prepared to say that condition a) is mostly triggered and condition b) is definitely triggered. Yes, I’m impatient. Yes, I’m initiating the trade.

This is a model portfolio that we are publishing to Professional subscribers. It’s not intended for any particular circumstances, and it’s not financial advice for whatever your circumstances might be.

It’s rare to come across one narrative shift of this magnitude in a week, much less two, much less two that are as uncorrelated as these are. Brace yourself.

A compelling trade across asset classes is developing in narrative-world, as the market gets bulled-up on expectant hopes of consumer spending strength in 2026.

Updates on three Best Ideas trades:

1) Long China and China growth proxies

2) Long gold

3) Short financials and alternative asset managers

I still want gold in my portfolio. I still don’t have a better insurance policy to put into a portfolio in size. But once a security is infected by degen/momo/speculation, it’s never cured.

It’s time for an update on the Shadow Banking / Private Credit / Insurance thesis, so I’d like to invite all Perscient Pro members for a Zoom call where we can talk this through next Thursday, October 9 at 1p ET.

So what brings attention to the United States as a special case of feckless monetary and fiscal and everything else policy? What snaps us out of (what seems to me, anyway) this period of wild complacency? When does <<waves hands wildly>> all this actually matter?

Why are wages +3.9% in the latest employment report even as job growth flattens out to nothing?

Because labor supply is tightening more than labor demand is declining.

If people start to believe that GPT-5 marks the end of the current AI cycle …

Two big aspects of last Friday's jobs debacle to cover in this note:

1) what’s going on with the jobs data? is it rigged? is it broken? can it be fixed? and
2) where are we in the economy? what’s next?

I figure Jay Powell never dreamed that he would be the Sudetenland in our latest historical reenactment, but if you serve long enough you're pretty much destined to be a cautionary tale.

1. US election spurs fiscal deficit.
2. Phony War between Israel and Iran gets real.
3. Preventive war between US and China over tech embargo.
4. New GFC stemming from shadow banking sector.