Lyn Alden on the 5-Decade 'Debasement Trade' and Future Economic Trends

The 'Debasement Trade' Explained

• 💡 The term 'debasement trade' has gained traction, but it represents a problem spanning over five decades.
• 📈 This is illustrated by the rising price of Campbell's soup, indicating a structural period of rising money supply and prices, only partially offset by productivity.
• 💰 Investors not holding scarcer assets see their savings debased, while wage earners struggle to keep pace with annual debasement.

Consumer Affordability and Sentiment

• ⚠️ The media is catching up to a consumer reality that has been evident for years, particularly the past five.
• 📉 Despite record-high stock markets, consumer sentiment remains low due to ongoing affordability issues and the average consumer feeling squeezed.
• 📊 This disconnect highlights that strong performance in concentrated mega-cap stocks doesn't translate to widespread consumer well-being.

Shifting Monetary Policy Landscape

• 📉 Expect less aggressive intervention from the Federal Reserve going forward.
• 📊 The 40-year trend of ever-lower interest rates is likely over, with rates now in a more sideways range.
• 🏦 While the Fed may support liquidity, it's unlikely to be the same level of stimulus as in the past; quantitative easing (QE) might be replaced by a more moderate, short-term focused approach.

Investment Opportunities Amidst Change

• 🚀 Bitcoin is seen as a buy on the dip, with structural drivers remaining strong and potential benefit from easier liquidity next year.
• 🛢️ Oil and gas names are also considered attractive investment opportunities.
• 💳 Visa is viewed as a moderately attractive stock, with its recent consolidation bringing its valuation back to a more reasonable level after becoming excessively valued.