2. WAR ROOM
Idea Generation
Macro Coaching
Scenario Updates
HiddenLevers runs on SCENARIOS like Instagram runs on PHOTOS
Fed Underwrites EconomyClimate DisastersReal Estate βPostβ CovidTrump Agenda
3. SCENARIO PULSE CHECK
BLACKSWAN
S+P 500
2900
-5%
S+P 500
3750
+23%
S+P 500
3300
+10%
BASELINE
GOOD
COVID 2.0 β EARLY VACCINE PRICED IN POST-ELECTION CHAOS β STIMULUS NOT PRICED IN
4. sources: MarketWatch, Mass,gov, HiddenLevers
VACCINE REBOUND BEST CASE
TRAVEL + HOSPITALITY
Look to Travel + Hospitality starting Q2 as indicators of post-COVID recovery
(-4.5% at 9/30)
(-62% at 9/30)
States Decide
Vaccine
Distribution
Mass. Plan
5. VACCINE REBOUND GOOD
Commercial RE
not sitting fallow
Companies hiring
In-person retail
comes back
Back to Work
S+P 500
4000
+8%
7. VACCINE REBOUND UGLY
Not enough
takers
Bungled
deployment
Vaccines not
effective
In-Person
Economy Dies
S+P 500
3000
-19%
US HOTEL OCCUPANCY
2020
2019
8. GOOD
S+P 500
3000
-19%
S+P 500
4000
+8%
S+P 500
3500
(-5%)
BAD
NEW WAVE OF
BANKRUPTCIES IF VACCINE
MIRACLE EVAPORATES
WFH ENABLERS TAKE A
BREATHER, ENERGY +
RECREATION COME BACK
PANDEMIC PSYCHE PERSISTS
EVEN IF VACCINE EFFECTIVE
VACCINE REBOUND MACRO RISK PARITY
NASDAQ
12.7K
FLAT
BASELINE
GDP
-1%
GDP
+5%
GDP
+3%
NASDAQ
13.3K
+5%
NASDAQ
11.4K
-10%
Back to Work
In-Person
Economy Dies
COVID Fears Linger
9. sources: St. Louis Fed, HiddenLevers
US REFLATION ASSET + PRICE INFLATION
Rising Asset Prices β CPI Inflation
Nasdaq
+40% YTD
Home Prices
+6.7% YTD
CPI YoY % Change
USA
+1.2%
China
0.54%
UK
+0.83%
EU19
-0.28%
Japan
-0.39%
Deflation = GlobalFed inflating risk assets, canβt drive demand
US CPI mostly below Fed target since 2008 GFC
10. US REFLATION GOOD
Making up for
lost 2020 output
Fed aiming for
2.5% inflation
Fed projects 4.2%
GDP in 2021
Goldilocks
S+P 500
4250
+15%
11. US REFLATION BASELINE
Election +
stimulus risk over
Fed not able to
trigger reflation
Europe lockdown
= ECB lowers
S+P 500
3600
FLAT
USD Rebound,
CPI No
$
12. US REFLATION UGLY
Pre-covid trend
accelerating
Demand craters
US population
aging
Japanification
S+P 500
2600
-30%
-%
13. GOOD
S+P 500
2600
-30%
S+P 500
4250
+15%
S+P 500
3600
FLAT
UGLY
VICIOUS CYCLE OF MONEY
PRINTING AND NO
SPENDING IN US A LA JAPAN
PENT UP DEMAND FROM
LOCKDOWNS DRIVES UP GDP
ELECTION AND STIMULUS
UNCERTAINTY NO LONGER
CAUSING USD FLIGHT
US REFLATION MACRO RISK PARITY
NASDAQ
12K
(-5%)
BASELINE
10Y
0.25%
(-65bps)
10Y
1.05%
(+15bps)
10Y
0.90%
(FLAT)
NASDAQ
13.9K
+10%
NASDAQ
8600
-32%
Goldilocks
USD Rebound
$
Japanification
-%
14. US REFLATION BLACKSWAN
sources: HiddenLevers
RUNAWAY INFLATION
INVERSE CORRELATION = HEDGE
US DOLLAR vs GOLD BITCOIN vs NASDAQ
DIRECT CORRELATION. βNUFF SAID
Bitcoin as alt currency uncertain, but surely an alt nasdaq strategy
15. Deflation bigger worry than Runaway Inflation
Vaccine success priced in. Vaccine failure is not.
Vaccine Success = 4.2% GDP projected for 2021
Fed aiming above 2%, likely drives markets higher
WHAT TO SAY