Happy New Year to everyone! After a busy 2018, I am back to writing frequently in 2019 but with a new twist. We will expound investment ideas based on cyclical, secular, and structural themes set against the current macroeconomic backdrop of decreasing global liquidity, higher equity volatility, movement of the US Dollar, a continued demand slowdown in China, as well as the Fed’s crystal ball and potential next move(s).

Some of these themes may change in 2019 2H, but as we did in 2018, but the narrative on some of these portfolio ideas will be generated from non-mainstream media, sourced primarily from our Partners – global macro and fundamental research firms listed on our Partners Webpage.  A recap of ideas that contributed or detracted will be mentioned in the next newsletter along with new themes.

AV’s five themes are for 2019 1H are:

Mind the gap is global pandemic income inequality from QE, causing a growing chasm between the poor and the rich while eroding the middle-class. This theme is expressed primarily via global consumer staples and discretionary names, as well as real estate plays via REITS.

Bouncers’ House refers to global central banks’ impact on the markets by QE, QT. They have become an exclusive club at the mercy of its countries’ citizens. This theme is expressed primarily via fixed income, currencies, and commodities.

After a pivotal yet controversial first term for Modi with demonization, Make in India Initiative, implementation of GST, Aadhaar, etc. there will be elections in India this April & May. With India being a net importer of oil and with Brent currently at $56/ barrel, there are some positive tailwinds for investment in Indian stocks in 2019.

The main issue for Indonesia if Jodo Wokowi (Jokowi) is reelected is continued infrastructure spend despite a widening current account deficit and weaker rupiah against the USD.

The X factor is total factor productivity, an unobservable component of GDP. Some of these global ideas will directly fall under AI, machine learning, deep learning, 3D printing, and EV companies etc., or companies that make strategic investments in these transformative yet deflationary sectors.

Big Red refers to the growing populist leadership witnessed in the US, Brazil, Italy, Hungary and the Philippines, and their government policies leaning more towards socialist norms. Big Red also refers to China’s growing influence through its OBOR project with strategic investments in both Brazil and Africa. These ideas will be expressed via currencies, or long -term investments.