Eoin Treacy's view

Here is a link to the full report and here is a setion from it: 

What does all this mean for one’s portfolio and the price of various instruments:

1. 60/40 won’t cut it anymore and should be 20/40/20/20 instead, with the weights representing cash, stocks, bonds, and commodities.
2. Cash, while the curve remains inverted, is “king”. It provides a nice yield, has no duration risk, and, as Warren Buffet said, it has an option value.
3. Commodities should include three types of gold: yellow, black, and white. Yellow gold is gold bars. Black gold is oil. White gold is lithium for EVs.
4. Commodities should also include a range of other stuff like copper, cobalt, et cetera, and the general theme driving commodities is that…
5. …after years of underinvestment, supply became extraordinarily tight, just as we re-arm, re-shore, re-stock, and re-wire the grid (see here ).
6. The U.S. dollar won’t be de -throned overnight …
7. …but on the margin, de -dollarization and digitization (CBDCs) by BRICS+ central banks will reduce dollar dominance and demand for Treasuries.
8. The dollar’s strength or weakness should be though t of in the context of the four prices of money (that is, par, interest, FX, and the price level).
9. The U.S. dollar will remain “FX” strong versus other DM currencies…
10. …but will be become “price level” weak (that is, outright devalue) versus commodities and “FX” weak versus most BRICs currencies …
…which will guarantee plenty of volatility in all four prices of money this decade. Good luck in 2023 and beyond…

There are big themes at play as great power politics makes a come back. The one thing which is certain is none of what is in front of us is cheap. Re-arming, Reshoring, re-stocking and re-wiring all imply higher costs, holding more inventory and less efficient supply chains. That’s a recipe for inflation to remain persistent.

At present bond yields are compressing because we are on the tighter side of quantitative tightening and yields have gone up enough to be appetising. The big question is not how long yields will go. My guess is around 2% for what it’s worth. The biggest question is how quickly they rebound.

Meanwhile, the chances are that infrastructure and national security (arms and factories) will be dominant themes in the stock market for the next decade.