Hartnett: Inflationary Inflection is Coming
Summary:
Authored by GoldFix ZH Edit
In their analysis of Michael Hartnett's latest Flow show report entitled: Hartnett: How To Trade The Coming End Of US "Exceptionalism" Zerohedge points out how to position for the coming cyclical stock rotation already starting
"This goes back to what Hartnett pointed out all cyclical assets are now trading at the inflection point in ISM; based on historical relationship to ISM and current valuations. As such the best trades for “long producer, short consumer” in '24 are commodities, mercantilist stock indices & EM ex-China,..."
With their analysis in mind we try to similarly translate Hartnett's lingo for investors in 3 sections
1- From Consuming to Making: Hartnett lays out why the US has done so well (American Exceptionalism) relative to global peers and then describes how the economy will change in the coming months from being consumer driven to being Producer driven.
2- What to Buy: He then gives the trade recommendations to capitalize on such an economic hand-off using his ISM implied valuations and expectations. Those include Commodities, EM stocks, and Industrial Metals like Copper
3- Biden vs. Trump: Finally, he touches on very broadly what he expects the priorities of Biden and Trump should either of them win the election in November.
Here is that analysis excerpted for YouTube subscribers
Timestamps:
- 0:00- Intro: Covid lows, Japan, Mag 7
- 4:30- Chart contextual walkthrough
- 7:55- 3 Things Drive US Exceptionalism:
- Continues here
- 11:55- Trades and rationale
- 16:00-What next?
- 17:10- Biden vs Trump In a Nutshell
Key Terms
ISM= Institute of Supply Management: outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices.
PMI = Purchasing Mgr Index: aims in providing information regarding the current and future conditions of a business to the decision-makers, analysts and investors of the company. It is boots on the ground info at the production level
Transcript attached
