Season 5 – Page 10 – The Contrarian Investor Podcast

Content Highlights

China’s abrupt U-turn over ‘Zero Covid’ is unquestionably one of the biggest changes to take effect in the global economy over the last few months (2:23);

There have been reservations about this reopening, but it is happening with authoritative force and will have a major positive impact (5:08);

What about the US de-coupling from China and the embattled real estate sector? (11:00)

Where this will be felt most is in markets that have exposure to the Chinese consumer. It also points to Europe and emerging markets outperforming the US (17:54);

Chinese consumers were far more restrained than their US counterparts during Covid and have been slower to return — especially tourists. This is not just a one-off in terms of the resurgence of Chinese travel and services (24:20);

What to make of the latest economic developments in the US, especially with the consumer? (27:31);

Weiss’s house view is that the US will avoid recession this year (34:02);

Background on the guest (37:49);

China can re-emerge without the US as a major partner (51:36);

After some consolidation, the US economic and market cycle is marked by investors seeking to put money to work — slowly (57:18).

Barry Knapp of Ironsides Macroeconomics rejoins the podcast to discuss his surprisingly sanguine view of the economy in 2023: Why cyclical stocks should outperform the technology and defensive sectors, and why he’s expecting inflation to drop to 3.5% by the second half of the year.

Content Highlights

Inflationary recessions are different from deflationary ones. The last four were the latter. If there is a recession this year, it will be the former (02:18);
Earnings downside is limited in this scenario, by 5% based on what happened in similar situations in the past, and earnings should actually go up (5:56);
Tech margins should continue to be under pressure but economically-sensitive cyclical stocks should see margin expansion (10:50);
The US labor market has actually started to weaken considerably — and not due to Fed policy (12:18);
There have been some big adjustments in the labor market post-pandemic (16:47);
The ‘wealth destruction effect’ from tech stocks selling off is negligible (27:35);
One point of concern: the deficit. This is where the implosion in wealth could affect things (32:59);
The coming budget battle in Congress is worth paying attention to (34:41);
The ‘higher for longer’ Fed interest rate hike thesis has gained traction. What this means for stocks (43:27);
Inflation: Expect 3.5% CPI by mid-year (47:37).