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OCTOBER 13, 2024 OBSERVATIONS

  • The only economic data points to keep an eye on this week are initial and continuing jobless claims. We’ve seen a gradual, linear uptick in continuing claims since mid-2022. If the growth rate begins to curve northward, I will de-risk as this has preceded 6 out of 6 of the last recessions. Until then, the risk trade is on.
  • Israel has yet to respond to Iran’s attack on October 1st. If the response achieves anything less than taking out significant Irania oil capabilities, this will be seen as a de-escalation and therefore bullish for risk, bearish for oil, dollar, and likely rates.
  • Donald Trump winning the election now shows a 9% spread on prediction markets. As outlined in my October Monthly Take, a Trump victory alongside Republican victories in both chambers of congress is the most bullish scenario for risk markets. The tariffs will not come to fruition but deregulation will. Expect added pressure on the Fed to continue easing as well. 

I do expect the rotation trade into mid-caps and potentially small-caps to pick up as well. July 5th and onward saw renewed interest in these assets which are likely to be perpetuated if geopolitical tensions ease.

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NOVEMBER 3, 2024 OBSERVATIONS

As discussed in prior weeks, broad equity price action will remain choppy around the top until the election results are clear. The worst-case scenario would...