Probably the most important chart of the decade. This chart by STIFEL is the graphical manifestation of what we are trying to elucidate with our harping on the inflation schmeflation theme. In the end, the debate will be moot because markets are likely to trade rangebound for an extended period of time, decimating both bulls and bears if their views are too entrenched in any single camp. The winners will be companies with Strong Balance sheets, good Free-Cash-Flow and those at the start of a strong Capital Cycle (i.e. Offshore Drillers and Uranium).

High sentiment fragility. The market is frontrunning more than what the Fed is expected to do with rate cuts, as it should, as markets are effectively discounting mechanisms. The caveat is that this mechanism is rapidly adjusting to narratives at a time when information asymmetry (opacity) is at its highest and groupthink clarity at its lowest. Given the aforementioned state of affairs, if the market as a discounting mechanism price the consensus, then it’s a very fragile time to buy into it. When waters are this murky, it’s heuristics that will keep us alive, and the old adage reminds us that the crowd is usually wrong most of the time. Any hot inflation data will reprice soft-landing odds lower (USD, Rates up and Risk-Assets down substantially).