In movie plots there is often a ‘realisation scene’. A scene where the actors have a sudden realisation which reshapes their perception of the story arc. An ‘aha moment’. The villain is actually the hero and has been trying to help them all along. The idyllic hotel is actually haunted by zombies and they can’t escape, etc. The protagonist is already dead (Sixth Sense). Darth Vader is actually Luke’s father. In Interstellar, the calm sea is actually gigantic waves. A realisation which suddenly reframes everything.
That’s the theme of this month’s Killer Charts.
Investors are caught up in insignificant credit ripples, worried the economy is slowing, worried the market is expensive, worried maybe AI is a bubble, and missing the size of what’s unfolding.
The ‘aha moment’ will be that actually there is a multi-year growth wave underway. It’s global and it’s going to be bigger than you expect. It’s why we’re long everything (YWR Portfolios).
It’s what we’ve been writing about in S&P 6000 S&P 10,000 and Is this the Biggie?
As a reminder these are the key trends coming together:
Banks in the US, Europe (What do you do with EUR 250 billion?) and Japan (the Godzilla Trade) which haven’t been lending since the GFC now have record profits and capital are starting to find their animal spirits.
Central banks fighting the last war, worried about deflation, are cutting rates pre-emptively, setting up Act 2 of the inflation trade.
End of post GFC austerity.
World changing technology which ignites large scale capex across the world.
Massive bull market in China as they recover from their GFC.
Indian growth inflection point. Similar to China 2004.
Growth of the Middle East as a new financial capital.
Dollar weakness which triggers capital to flow back into EM spurring more global growth.
Commodity bull market.
Unipolar world order restored under US leadership (The New Empire, The New Empire Pt 2)
I’ve put together a full 50 slide deck at the bottom of the post. The slide deck includes the following sections.
IMF growth forecasts
BofA Fund Manager Survey highlights
S&P 500 Earnings Estimates
Flows and Positioning
Coatue Public Markets Presentation
But let’s go over some highlights.
#1 Global Growth is getting revised…. UP! The IMF has revised up their 2025 world growth forecast from 2.8% to 3.2% in just 6 months. The upgrades are in every region.
#2 Investors don’t see the BOOM is happening. The realisation scene is still to come.
#3 EPS growth is accelerating. On current estimates 2025 EPS growth is 10%, rising to 13% in 2026.
#4 The consumer is fine. Stop worrying! They have a job, are getting wage increases and have record gains in their stock portfolios and home equity.
#5 Is this what AI abundance looks like?
#6 Gold, the biggest bubble nobody owns.
Professional fund managers say gold is the most ‘crowded’ trade, yet nobody owns it. Gold goes higher.
#7 Gold => Silver => Platinum => Palladium => Copper/Aluminum?
Is the commodity rally broadening out?
Are copper and aluminium next? Fits the global boom view.
#8 Why is hedge fund gross so high? Can you think of a big sector they might be shorting in size? Hint: this sector is super hated and correlated to global growth.
#9 Multi-Year NGM Re-allocation.
You weren’t paying attention, but EM changed a lot over the last 10 years. ‘EM’ used to mean banks, telcos, cement companies, brewers and sweating in a taxi all day in Mumbai. Now it’s clean rooms, overhead handling systems, fintech, robotics, LLM’s and Apollo Go.
China, Taiwan, South Korea, India… think about it. Large funds own 0% of this. There could be a multi-year reallocation if pension funds finally get their money back from private equity and redeploy it to ‘EM’, or as well call it ‘NGM’s’. You know, ‘Next-Gen Markets’.
Below is a link to the full 50 slide deck for October.
Get your double shot latte, flick through the slides and tell me if you see a wave coming.