Rob asked me what would make me change my view. Firstly it is not price. I think stops and other risk management methods including my method of risking exactly what I would be willing to lose. However, I am more than happy to change my view based on changes in the macro economy. So let’s start by reviewing my views
1. I think risk premiums on assets have expanded more than I believe is sustainable based on the priced in hiking and now the fully described quantitative tightening. I would be wrong if the Fed got more hawkish either through hiking and/or QT
2. I believe that March inflation will be mind-boggling high. Furthermore, I believe everyone is law believes that. However I notice the rapid fall in commodity prices across the board and the high but anchored so I think there is ample room for inflation expectations for to fall. If I am wrong that will take some time to become obvious to the Fed and as I mentioned could lead to an oh shit moment when a couple of 100 more bp need to be hiked and QT will need to be adjusted with asset sales. Watching this is by far the most important potential for my pivot
As for growth. As I am long bonds and stocks I don’t believe my positions are expressing a view on growth. However, my view is that recession likelihood is lower than consensus and earnings are going to be higher than expectations but again not really betting on it
So mostly my inflation outlook and the potential that it becomes uncontrolled and requires another round of substantial tightening is what I am counting on being right and would pivot as rapidly as I could if I saw evidence that I was wrong.