All Notes

It’s not just that all of the bullish AI capex stories are getting louder. It’s also that all the bearish narratives around AI capex and AI-related company valuations have gotten much quieter.

The narrative dogs that don't bark are as important as the ones that do.

In sharp contrast to every other country that we track, China is telling itself a powerful, self-confident story of economic strength across all macro narratives. China sees itself as the clear winner in its strategic competition with the US, and I don't think they're wrong.

I'm back to shorting the US consumer everywhere I can, because I think consumer-related stocks are helpless if (when!) we get some bad news from the higher-for-longer oil prices, as there is no one in government – not the Fed and not the Treasury Secretary – with any credibility to jawbone significant narrative support.

Middle-market companies are the engine of the US economy, and credit is the oxygen that keeps that engine firing. As the private credit securitization machine seizes up, I gotta ask: Is anyone still lending to middle market companies?

This latest TACO policy in the Iran War is a Bear Stearns Moment, where market narratives will proclaim that ‘systemic risk is off the table’ and will look through all of the inflation shocks and all of the growth shocks as ‘transitory’. I'm not fighting this.

Last year, "fiscal dominance" was a phrase you would hear all the time, referring to a downgrade in Fed policy independence and importance. Today, "energy dominance" is the phrase you need to know.

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.