What a November to remember—it sure makes the case against market timing, states Jay Pelosky of TPW Advisory.

Thus this month’s title—on track—as in on track for YE rally and on track for our four for 24 macro and market surprises first laid out a month ago in our 2024 Outlook.

While seasonality and technicals remain, supportive folks have flipped from bearish to bullish while positioning is not as favorable as it was four to six weeks ago. Thus, a pullback here would not be a surprise—what should one do? Buy it.

Our number one macro surprise for 2024—lower-than-expected inflation sooner than expected—is already unfolding on both sides of the Atlantic. We expect more to come and see the explosion in US multifamily buildings as assuring lower rents & continued disinflation ahead.

Our 2024 investment formula remains lower inflation> lower rates > weaker USD > ROW/Commodity OP.

We are developing more comfort in macro surprise number three—the return to macro stability and see record low VIX and collapsing MOVE indices as signaling what lies ahead. With US equities flat over the past two years. (SPY flat to the decimal point 11/30/23 vs 11/30/21 at 4567) we have digested much: Covid-19, inflation spike, rate spike, conflict, climate, etc. 

Thus, we are set up for a period of relative macro stability which provides the $1T reward unlock we first wrote about three months ago as all that money that has moved into US and global MMF (totaling roughly $6T and $8T respectively) can start to flow out.

The question is to flow where? We think of EM assets as both debt and equity. We are the most bullish on EM we have been in years and given my role as founding EM strategist at MS back in the day we know the space.

EM is dirt cheap relative to the US, and is at a record low on a relative performance basis (charts galore in full monthly) is a big winner from the Fed on hold and from the resultant EM-led rate cut cycle. It is also the big winner from supply chain regionalization and as such we now have EM equity exposure in each of the Tri-Polar World’s three main regions: Asia, Europe, and the Americas.


Much of what we wrote in these pages a month ago regarding the disconnect between soaring renewable energy adoption and collapsing clean energy stocks has been picked up by various publications. 

The good news is the various issues—lack of inflation protection, soaring input prices, overcrowding in Chinese solar, etc. are now well understood and pretty well priced in. Lower rates and macro stability should provide a more favorable backdrop.

We don’t expect much from COP28 with its focus on generating funds for low-income countries to mitigate climate effects. The real game is on the fossil fuel side and growing pressure for it to step up to climate imperatives rather than just provide lip service.


2024’s global economic story is one of declining inflation (except in Japan) leading to some market-driven rate relief supporting fully employed populaces in their consumption habits. Is Thanksgiving shopping everyone?

The evergreen recession call has gone quiet for the moment, but few are embracing our fourth macro surprise, namely the resolution of the early cycle vs late cycle debate. As good news stacks on good news, we expect that to change. We remain firmly in the early cycle global economic recovery camp.

Our US focus is on rents and their impact on inflation; in Europe the focus is on the sick man, Germany, bottoming while the periphery benefits from continued EU aid disbursement via Next Gen and Fit for 55 programs. 

We continue to track Chinese policy as it seeks to gain traction, boosting consumer and private business confidence and sustaining 5% growth. We see growing signs of Govt intensity—especially around housing and local Govt debt relief.

Japan’s inflation remains in focus; we wait for the Spring wage round to see if real wages can start to catch up, boosting consumption and helping the BOJ gain conviction in out-year inflation.


Geopolitics are very rarely a reason to sell stocks and that truism has been renewed with ACWI rebounding strongly even as ME conflict rages.

US politics remain in a very strange place; it's too soon to place much weight on polling.

European politics have switched bogeymen from the populists of old (remember Salvini) to the far right of today as Dutchman Geert Wilder’s Freedom Party gains the top spot. Coalition building is tough, and we expect the far right to find it difficult to govern just as the populists did.

Taiwan’s upcoming election will be fought by multiple contenders as the unity ticket fell apart almost as soon as it was announced. We expect little to change as China has more than enough on its plate to contemplate any major saber rattling.


Global policy is shifting from being monetary to fiscal policy-led. This is true even if there is little legislation to that effect this year or next as the money has been budgeted in both the US and Europe. Japan continues to provide fiscal stimulus while China tip-toes.

We are transitioning from the most aggressive rate hike cycle in modern times to a rate-cutting cycle led by EM (globally, there have been more rate cuts than hikes over the past month).

We are much more focused on the WHY of US rate cuts than the WHEN and expect the way to be because inflation has fallen such that real rates allow for insurance cuts not bc recession is imminent. We expect the Fed and ECB to become “frenemies” of the markets in the year ahead.


A post-record November pullback would be normal and even healthy – we would be buyers on weakness. Technicals remain supportive with 90% of ACWI markets above 50 dmav and all major regions back above their 200dmav including EEM. We remain fully invested & in OW global stocks.

In 2022 we were constructive on European equity and especially EU banks; in 2023 we highlighted Japanese equity which OPed SPY on a local currency basis. For 2024 we are heavily OW EM assets both debt and equity.

Our four for 24 market surprises include non-US OP as surprise number one, while surprise number two is a weaker USD driven by lower rates, eroding rate differentials, better growth in Europe, etc. The dollar remains vastly OVed vs both DM and EM FX.

Surprise number three calls for industrial metals to benefit from this global backdrop of declining rates, weaker $, growing macro stability, etc. We are long uranium, copper, and gold miners. As real rates fall and the USD weakens, gold should sustain its recent breakout. We remain OW Commodities.

Our 4th and final surprise spoke to the appealing risk-reward setup we see in Chinese equity, a setup that remains appealing to us but not to anyone else as foreigners continue a record-selling spree. Selling has left Chinese equity at very attractive relative and absolute valuations. GS, for example, has a PT on BABA that calls for 70% + upside.

We remain UW FI but have dipped our toe back into the UST market for the first time in several years with a position in two years. UST should benefit from the setup described above. We don’t see much room for capital appreciation in the ten-year at 4.3%.

We continue to like credit and note that both the US HY space and Asian credit are shrinking asset classes with JPM suggesting roughly 12% of its Asian credit index will be returned to investors next year. We like shrinking asset classes.

Learn more about Jay Pelosky here.