I'm Positioning For A Massive Boom

Introduction The market is very tricky. This is a statement I have often used in recent months (quarters, actually), as even before the war with Iran, we were dealing with a wide range of factors that all had a major impact on the market and were often even related to each other. Just think about inflation, the AI data center buildout, the Fed’s outlook, and tariffs. All of this is also made worse by the fact that a lot of (institutional) investors are talking about the same things. I haven't been in a corporate business meeting in a long time, but if you were to be part of a random corporate meeting at a high level, I guarantee you that it’s about how rising oil prices related to the Strait of Hormuz are causing the consumer to weaken, forcing the Fed to cut, and eventually triggering a recession. Or something along the lines of how the Fed may be trapped due to new inflation risks. It seems that we’re dealing with a playbook similar to the one in 2022. As most of you may remember, back then, the war in Ukraine caused oil prices to spike (and a bunch of other commodities). It’s one of the reasons why the consumer started to weaken, and we entered a cyclical downturn that lasted until the end of 2025 (using the ISM Manufacturing Index as a proxy). With all of this in mind, in this article today, I’ll combine my research of recent days, add a new layer, and tell you why all of this is so important. And, even more important, I’ll tell you why I’m so bullish and what this could mean for our portfolios. So, let’s get to it! It's An Unusual Economic Acceleration I believe that investing is a bit like playing with Lego bricks. I loved that as a kid, as it allows for endless creativity. The stock market is similar, as we can literally pick thousands of stocks for our strategies. The tough part, however, is dealing with the big picture. After all, if you expect a storm, you build something defensive. If you expect a boom, you do the opposite. Right now, one can make the case for both of these events. The tricky part is figuring out where this economy is going. If that were easy, building a portfolio would be like stealing candy from a kid. Right now, I am seeing two things: The consumer is weak. The physical economy (the “real” economy) is seeing improvements. To make things way more complex, I think this is a mix that includes a "forced boom" with new supply constraints, an unwinding private credit bubble (the one big fear factor before the Iran War), and ongoing disruption in software that erased a decade of software outperformance, as the chart below shows. And that’s still not everything. Source: Bloomberg This has led to consistent GDP growth outlook revisions (to the downside). Source: Federal Reserve Bank of Atlanta However, while all of these are risks to keep in mind when deploying capital (I won’t deny that!), it’s not my thesis to be bearish. And it’s also not what “my” data is telling me. One of my favorite leading indicators that I do not bring up often is the Logistics Managers' Index ("LMI"), which is somewhat of an ISM Manufacturing Index for the transportation industry, as it measures how logistics managers are feeling about the economy. As transportation companies are essential to every single supply chain, they are terrific sources for intel. As we can see below, in March, the LMI came in at 65.7, which is the fastest rate of growth since May 2022. Hence, the chart/data is truly a terrific confirmation of my growth acceleration thesis, as we see three consecutive months of expansion. Source: Logistics Managers' Index Even better, if we dig deeper, using the chart below, we find some terrific numbers that tell us a lot about inventories. For example, when the cyclical downturn started in 2022, companies had way too much inventory, mostly because they ordered too many goods during the pandemic, just before the consumer slowed down. That was a major issue and economic risk