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Markets, according to Howard Marks, have now priced in a “Goldilocks” scenario.

"I've seen Goldilocks thinking in play a few times over the course of my career, and it rarely holds for long. It creates high expectations among investors and thus room for potential disappointment (and losses)." https://t.co/afY8hUrnjb pic.twitter.com/byyjWbb6Uw

— Jesse Felder (@jessefelder) January 10, 2024

But inflation may prove stickier than the consensus currently expects.

'Core services ex-shelter (so-called "supercore") is hooking higher (this is partly because Health Insurance had been artificially depressing it and that effect is waning). Supercore is unlikely to really plunge either while wages remain robust.' https://t.co/W6lZ1SUt5b pic.twitter.com/7RsK0uLJbz

— Jesse Felder (@jessefelder) January 11, 2024

And this could prove problematic for stocks that have fully discounted a return to a disinflationary environment.

'Heavy concentration in tech has in the past signaled vulnerability to a market accident. With tech now such a globalized industry, such concentration also ensures that the market grows more exposed to geopolitics.' https://t.co/v3iC4OvRyx pic.twitter.com/lMPKDD29Qe

— Jesse Felder (@jessefelder) January 10, 2024

Meanwhile, the fundamentals for assets that perform well during inflationary environments (and also help to drive inflation) remain strong.

'Demand for raw materials is at record levels, inventories are low, and spare production capacity is largely "exhausted. This is just classic 'own commodities.'"' https://t.co/rCtvQPhcoS

— Jesse Felder (@jessefelder) January 8, 2024

The commodities sector is also deeply out of favor but nobody ever said successful investing was easy.

Investing quote of the day: pic.twitter.com/EJskkS2NQb

— Meb Faber (@MebFaber) January 12, 2024

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