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Our Take on the “Contrarian” Take

Since we started our financial publication, we have been blessed to meet many other great newsletter writers across the last five years.

One of our favorites is Nathaniel Baker, who has had a long career in financial journalism including Bloomberg, Forbes, and Seeking Alpha.

For the last couple of years, Nat has run the Contrarian Investor Podcast. He welcomes guests with a distinct perspective on the financial markets each week.

They don’t always have to be contrarian, but they ARE always interesting.

Recently, we joined him on his podcast to discuss some exciting topics including why the current trend is clearly long-term bullish for stocks but to expect a pull-back in the short-term, the “AI-beneficiary” stock we recommend and more.

Click here to listen to our episode and read our co-written note, or watch on YouTube below.

In this issue of HX Daily, we will review several of the most interesting "contrarian" viewpoints that Nat has heard in 2024.

Here they are…

Contrarian View #1

 “The stock market highs for the year are already in. ‘Magnificent 7’ names like NVDA, MSFT, etc. are especially vulnerable to a pullback.”

This was the view of podcast guest Ted Oxley of Oxbow Advisors on the February 21 episode.

Enrique’s take…

We made the same call a few days after this episode on NVDA, but the stock went on to new highs just a month later.

Regarding the potential for a pullback, we strongly agreed. Starting in mid-March, we were very vocal about our concerns that we would see a correction and that it would not be fun.

We also felt (and feel) that we likely were to see the near-term highs for many of these stocks and the stock market overall. So short term, we are very much in agreement.

However, we don't think so through the end of the year. The combination of technical signals and the economic setup leads us to believe that the stock market will be higher than current levels - above February levels. 

We also believe there is a greater chance of a "melt-up" than a "meltdown" in the next twelve months.

 Contrarian View #2

“The Fed is not likely to cut rates this year due to inflation concerns.”

This was the view of podcast guest Mark Higgins, the author of "Investing in Financial History," on the March 13 episode.

Enrique’s take…

We think this is much more likely than most out there realize.

We recently read some interesting data from Bespoke Investment Group that looked back on moves by the Federal Reserve during election years.

They noted a material difference in the level of action by the Fed during these years. They were much more likely to do…nothing.

We also recently went back and compared this current period to the most well-known "soft landing" back in 1995. You can read that note here.

Back then, the move the Fed did the most was…nothing.

We think that zero to two rate cuts for the rest of 2024 is the most likely outcome.

Contrarian View #3

 “The Fed may not cut rates, but it won't matter for the US economy, which will continue to grow."

This was the view of podcast guest Scott Colbert, the Chief Economist of Commerce Trust Company, back on the February 1 episode.

Enrique’s take…

We don't know if this makes us a contrarian by nature or if these aren't contrarian views, but we also agree!

We wrote an entire note about this subject back on March 14. You can read it here.

Our point in the note is that inflation may move higher. It also might be higher than the extremely low levels we have seen in the last few decades and the Fed's arbitrary "2%" target.

Both of these facts might be true, but that doesn't mean inflation is HIGH.

We think that higher numbers will contribute to decisions by the Fed. Still, the numbers we are likely to see on inflation are not enough to alter the economy's course. Or the stock market…

We hope you enjoyed this issue of HX Daily, and we look forward to collaborating more like this in the future! 

Let us know your favorite newsletter writer, and we will connect with them…

Have a great weekend, and be sure to check out our newest episode on the HX Podcast!

For the 10th episode of the HX Podcast we caught up with our former colleague Ram from Octahedron Capital. He is probably the best connected investor we know in the technology world and our conversation BLEW US AWAY! It is a MUST WATCH. His advice on investing is powerful!

(The 11th episode is now live on our YouTube after having uploading issues yesterday - 4/18/24)

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