MacroPass: Ted Oakley On His Latest Market Outlook

"We don’t recall a time when the average investor was more befuddled and confused"

This week’s installment of our popular MacroPass service for premium members of this Substack comes from investment advisor Ted Oakley.

It’s the quarterly market update that Ted sends to his private clients. In it, he shares his current market outlook as well as which assets his firm is holding and what recent trades he and his team have made.

And below that is a video Ted just released adding additional context to the main points in his quarterly letter.

As a reminder, MacroPass is a weekly rotating selection of premium analysis from many of the big thinkers interviewed on Thoughtful Money.

To-date that list of contributors includes experts like Stephanie Pomboy (Macro Mavens), Danielle DiMartino Booth (QI Research), Tom McClellan, Michael Howell (Capital Wars), Darius Dale (42 Macro), Doomberg, Ted Oakley (Oxbow Advisors), Kevin Muir (The Macro Tourist), Alf Peccatiello (The Macro Compass), Lance Lambert (ResiClub), Ed Yardini (Yardini Research), David Hay (Haymaker), Melody Wright (M3_Melody), David Stockman (Contra Corner), David Brady (FIPEST Report), John Rubino, Adam Kobeissi (The Kobeissi Letter), Sven Henrich (Northman Trader), Jeff Clark (The Gold Advisor) and Chris Whalen (The Institutional Risk Analyst).

The reports issued so far in this MacroPass series include

• Lance Lambert on rising housing inventory

• Doomberg on the future of nuclear energy

• Jeff Clark on Outcrop Silver

• Ed Yardeni on the labor market, fed rate cuts & more

• David Stockman on stolen economic growth

• Michael Howell on global liquidity

• Melody Wright on mortgage default risk

• Edwin Dorsey on the short argument for Primerica

• Danielle DiMartino Booth on the debt-default reckoning lying ahead

• David Hay on the wild action in the Japanese yen

• Kevin Muir on the emerging opportunities in Chinese stocks

• Alf Peccatiello on the growing fragility in credit markets

• Tom McClellan’s excellent April Market Report

If you’re already a premium subscriber to this Substack, just continue below to read this week’s report from Ted.

And if you’re not (yet), read the start of it below. If you like what you see, just upgrade to premium and access the full report, as well as all past and future MacroPass content.

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What You See Is Not What You Get

As we enter the mid-year point of 2024, we don’t recall a time when the average investor was more befuddled and confused. The idea that everyone can own the same thing (five stocks), and all will be happy in the long run is not a very good business plan. In this letter we’ll give examples of why this is not realistic, plus discuss the current state of the stock and bond markets. Exhibit 1 shows the investment returns of various popular market measurements for the first six months of 2024.

Does anything look odd to you in the exhibit above? Notice how the returns of the 10-Year U.S. Treasury Bond, the Dow Jones Industrial Average, and the Russell 2000 Index compare to the S&P 500 Composite. Obviously, there is a huge difference because of the very few names in the S&P 500 Composite that are responsible for 60% of that measurement’s move.

They are Nvidia, Microsoft, Meta, Google and Amazon. Later in the letter we will explore this in more detail, but first let’s look at the present economic signs.