Louis Gave

China has the cheapest cost of capital, labor, and electricity, with very low investor positioning. Louis notes China is less vulnerable to the oil shock due to Russian pipelines and EV saturation. While the rest of Asia (Japan/Korea) suffers from the energy shock, China's relative resilience and rock-bottom valuations create a massive divergence opportunity. Investors fleeing expensive US/Asian markets may rotate into the unloved Chinese market. Long China as a contrarian value play. Global recession drags down Chinese exports despite internal resilience.

Louis advocates for a portfolio allocation of "20% precious metals." He argues gold is a hedge against "wrong monetary policy" and 0% interest rates, not just inflation. If the oil shock causes a recession/instability, the Fed will cut rates (prioritizing stability over inflation). Lower short-term rates combined with higher long-term inflation expectations (steepener) is the perfect environment for gold, especially as Western investors haven't fully participated in the rally yet. Long Gold to replace the "40" (Bonds) in the traditional portfolio. The Fed stays hawkish and keeps rates high to fight energy-induced inflation.

"We now live in a structurally inflationary world... What you need to do is you move to a portfolio that's still 60% equities, but you forget the 40% bonds. You buy 20% precious metals and 20% energy because the risk is always that you get an energy price spike." In a structurally inflationary environment, bonds fail to protect portfolios during geopolitical or supply-driven shocks. Broad energy exposure acts as the only reliable shock absorber when inflation spikes and growth stalls (stagflation). LONG. Energy commodities and equities are mandatory portfolio hedges against the primary risk of the current macro regime: exogenous energy shocks. A severe global recession that causes massive demand destruction for oil, dragging prices down despite supply constraints.

China has the cheapest cost of capital, labor, and electricity, with very low investor positioning. Louis notes China is less vulnerable to the oil shock due to Russian pipelines and EV saturation. While the rest of Asia (Japan/Korea) suffers from the energy shock, China's relative resilience and rock-bottom valuations create a massive divergence opportunity. Investors fleeing expensive US/Asian markets may rotate into the unloved Chinese market. Long China as a contrarian value play. Global recession drags down Chinese exports despite internal resilience.

Gave identifies Brazil as his #1 pick for the next 5-10 years, noting that Latin American interest rates are set to fall 150-200 basis points, and the US has implicitly guaranteed the region's solvency (e.g., bailing out Argentina) to keep China out. Falling interest rates in Brazil (from high levels) historically lead to massive equity rallies (consumers buy cars/homes). Combined with a "Monroe Doctrine" put option from the US, the risk premium for LatAm assets is collapsing. LONG Brazil and Latin America for rate-cut sensitivity and geopolitical safety. Fiscal indiscipline in Brazil; commodity price collapse.

Gave predicts the Japanese Yen (and Korean Won) will appreciate as the "deflationary black hole" of weak Asian currencies closes. As capital repatriates to Asia and the US dollar weakens due to deficits, the Yen is the primary beneficiary of the unwinding "carry trade" and valuation mean reversion. LONG Yen as a currency play against the USD. Bank of Japan refuses to tighten policy; US rates remain higher for longer.

Gave identifies Brazil as his #1 pick for the next 5-10 years, noting that Latin American interest rates are set to fall 150-200 basis points, and the US has implicitly guaranteed the region's solvency (e.g., bailing out Argentina) to keep China out. Falling interest rates in Brazil (from high levels) historically lead to massive equity rallies (consumers buy cars/homes). Combined with a "Monroe Doctrine" put option from the US, the risk premium for LatAm assets is collapsing. LONG Brazil and Latin America for rate-cut sensitivity and geopolitical safety. Fiscal indiscipline in Brazil; commodity price collapse.