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The Good, The Bad, And The Middle - Possible Macro Paths Forward

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Macro Ops

Let me share one of my favorite trading quotes with you, it's from Market Wizard Bruce Kovner. He said (emphasis mine):

One of the jobs of a good trader is to imagine alternative scenarios. I try to form many different mental pictures of what the world should be like and wait for one of them to be confirmed. You keep trying them on one at a time. Inevitably, most of these pictures will turn out to be wrong - that is, only a few elements of the picture may prove correct. But then, all of a sudden, you will find that in one picture, nine out of ten elements click. That scenario then becomes your image of the world reality.

This is an important concept to always keep front of mind… even more so now.

Looking out at the macro environment I see a ton of moving, diverging, opposing variables. All of which can whip markets in a multitude of directions and speeds going forward. Dominant market narratives are coming and going faster than Trump staff members. It's making for an interesting macro game, for sure. And the way to play this environment successfully is to imagine alternative scenarios and wait for one of them to be confirmed.

So let's do that.

Let's explore a few potential macro scenarios. Try them on and see how they fit. And hopefully, we'll come away with a better understanding of how to make money in the evolving landscape and also how to protect the money we have - both of which will be equally important in the month's ahead.

Reflation Scenario - The "Overheat Phase" of our Investment Clock framework

This is the scenario we latched onto in the summer of last year. It was appealing and had a lot of things going for

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Macro Ops is a global macro research and education firm.

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Comments (2)

Interesting theory on the 2020 ramp up to China centennial. Good article
Cash and/or gold?
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