I am posting here two charts from Bridgewater that explain how someone can allocate to equity sectors based on what you think the macro outlook is:

The chart above says the following:

1. If you believe that we will not have rising rates of economic growth with no rising rates of inflation and ample liquidity, you should invest in Hi-Tech especially software. This is Raoul Pal's thesis.
2. If you believe that we will have a rising rates of economic growth environment with inflation with no ample liquidity you should be investing in value stocks and the resource sector.

The charts above compares the performance of Tech in 2020 versus value and resource sector in 2021. In 2020 we had the first condition (point number 1) and in 2021 we had the second condition (point number 2).

As investors we need to determine which macro environment we will be in for the next few years. Is it point number 1 or point number 2? This gets tricky for two reasons: A) Government fiscal policy and B) The FED will never stop QE. Julian Brigden's thesis is centered on point number 2 due to fiscal policy and he also believes we will get yield curve control which is another way of saying shit loads of liquidity. In this environment you load your truck with commodities, gold and gold miners.

How this impacts Bitcoin I do not know. I am still trying to assess how the market is assessing bitcoin? If it is an... (More)

Just watched another good Peter Boockvar video on the inflation debate. Was basically a re-hash of his RVDB interview the other week with Ed Harrison, with some interesting caveats and additional thoughts. Link here:

We currently have a ton going on in the inflation versus deflation debate, and yesterday's meltdown in the value/commodity & PM (and tech strength) space could either be a watershed moment for the next few months/weeks -- or it just could have been a small bump in the road for the commodity supercycle. Or something in between (more likely)?

I follow a lot of people on RV, Twitter and just on YouTube. On the inflationista side of the equation (i.e. inflation is NOT transitory, at least for the next 2-3 quarters) we've got guys like Peter Boockvar, Jared Dillian, Tony Greer, Keith McCullough, Jeff Gundlach & Julian Brigden (among others). Raoul and guys like Scott Minerd from Guggenheim are currently still in the 'it's transitory, yields going back down' camp. They have been right the last few weeks, but whatever side you're on, all of them make pretty good cases either "for" or "against" continuing inflation.

For me at least, Boockvar's overview really spells out the battle clearly and concisely and I think he's right that we're ultimately going to see more service industry inflation for in the coming months for sure.

Reasons being:

1. Rent portion of services inflation poised to really break out in the coming months (PCE undercounts it though)
2. healthcare component also going... (More)