4th Turning Its Impact on Investing – David Hay, Gareth Soloway, Steve Hanke

1. EQUITIES: David Hay, co-CIO of Evergreen Gavekal

Believe we are currently experiencing The Fourth Turning, a period marked by economic volatility and social upheaval occurring every 80 years. He advises investing in established stocks and hard assets to prepare for potential inflation and political instability. David Hay attributes the recent NASDAQ drop to:

• Concerns about economic deceleration.
• Speculation about potential interest rate cuts by the Federal Reserve.

He highlights the possibility of a sector rotation favoring small-cap companies due to:

• A perceived economic slowdown.

Caution about significant rate cuts:

• Hay remains skeptical about the likelihood of large rate cuts in the near future.

Investment outlook:

• He sees opportunities in small caps but is cautious about a sustained tech rally.
• Warns against overvalued stocks.

Preferred investments: Cites Ryanair as an example of a reasonably valued stock. Recommends mid-cap stocks and reliable dividend-paying companies.

2. EQUITIES: Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com

Believes that the correction in tech stocks is not over and points to high P/E ratios and slowing economic growth as indicators. He anticipates further downside, particularly after potential rate cuts by the Federal Reserve. Gareth Soloway’s stance on Bitcoin:

• Soloway has turned bullish on Bitcoin.
• He notes a consolidation pattern in Bitcoin’s price.
• Expects an upward move in the next few months.
• Sets a price target for Bitcoin to retest its all-time highs.

Ethereum outlook:

• Cautions that altcoins, including Ethereum, are closely tied to the performance of risk assets like tech stocks.
• Explains the recent decline in Ethereum despite the launch of the Ethereum ETF.
• Attributes Ethereum’s drop to broader market sell-offs, especially in tech stocks.

3. EQUITIES: Steve Hanke, Professor of Applied Economics at Johns Hopkins University

Discusses inflation, Federal Reserve policy, and U.S. debt. He emphasizes the role of the M2 money supply in determining inflation rates and predicts a decrease in Consumer Price Index (CPI) inflation by the end of the year.

• Suggests solutions: reining in government spending or raising taxes.

Criticism of the Federal Reserve:

• Steve Hanke criticizes the Fed’s interest rate target, arguing their lack of focus on the money supply results in poor policymaking.
• Notes that the Fed’s 2023 losses from underwater securities will have a greater fiscal impact than a monetary one.

Inflation and money supply:

• Dismisses the idea of a uniform global inflation rate.
• Claims that individual countries’ money supply growth determines inflation rates.
• Countries with significant M2 growth (e.g., the U.S. and Eurozone) experienced inflation volatility.
• Countries with stable money supply (e.g., China and Japan) maintained stable inflation rates.

Agreement with Elon Musk:

• Agrees with Musk’s view that America’s fiscal path is unsustainable.

Summarize of main source: The David Lin Report