Interesting interview with Francois Trahan and Nancy Lazar. I’ve long been a fan of Trahan and his ‘Inflation is the new fed funds rate’ thesis, and now that he’s moved to a new firm to focus only on macro strategy I’m watching Cornerstone Macro LP very closely. Check out the interview below in which they discuss the outlook for the US:
Some of the takeaways:
• Macroeconomic influences have an outsized impact on equity market returns
• Dividends will contribute less to equity returns over the next few years. Markets driven mostly by PE expansion
• US has a low cost of energy because of natural gas
• Structural story of inflation being contained in US
• Emerging market bond sell-off and inflation problem: Indonesia yields from 5% to 9%, much worse than change in US yields
• Retail/Consumer stocks will have structural and cyclical outperformance vs materials/energy
• Buy US based industrial companies
I also recently came across this presentation by Trahan to the CFA society which has some great charts. In particular here are two slides that highlight the shift from a fed dominated market cycle to inflation dominated.
I’ve also mentioned Trahan’s LEI framwork from his book in a previous post.