Oct 14, 2021

A Tale of Two Cities: Narwhal's Third Quarter Macro Presentation

A Tale of Two Cities: Narwhal's Third Quarter Macro Presentation

You can read through the Macro Presentation in PDF format by following this link.

Over the past three months, we have observed increasing polarization in views, and not only politically. We have observed two separate realities that result in intellectual tension, where two seemingly opposed ideas might both be reality. This can result in stress and a desire for resolution.


Think about a song or a piece of music that lacks resolution. The music often leads to what would seem to be a logical conclusion but it pivots and proceeds to diverge from a satisfactory resolution. Or think of a lyric that seems obvious, fits the rhyme scheme but is absent from the song. It’s this dissonance that creates tension and makes the music interesting, if not satisfying. It is uncomfortable to listen to for extended periods because our brains long for order and resolution.


The same is true when we are talking about intellectual tension. We have had many conversations with people this past quarter who struggle to reconcile the elevated levels of the markets with headlines about a fiscal impasse, inflation, the US debt ceiling, conflict in the Middle East, China’s aggressive moves to regulate industry, and rising COVID cases. The common refrain is that “this just can’t end well.”

Rising inflation is difficult to reconcile to strong corporate profits. A flood of job openings is difficult to square with the Federal Reserve’s insistence that the economy is not yet at full employment. Rising savings in a pandemic? Coal shortages in 2021? Low interest rates in an economy that is supposedly so strong and with inflation at times above 5%? Nothing fits.


In this presentation, we look to bring some resolution to this intellectual tension, while fully knowing that any simple explanation is likely overly-simplistic and discounts the inherent complexity of macroeconomics.

Benjamin Nye, CFA, FRM

Chief Investment Officer, Portfolio Manager

Ben arrived at Narwhal from a small investment firm in Eugene, Oregon, where he cut his teeth investing in individual stocks, bonds and derivatives. He earned the right to use the CFA designation in 2016, holds his Series 65 license and is a certified Financial Risk Manager. Ben received a bachelor’s degree in finance from the University of Washington and a MBA from Emory University's Goizueta Business School. In his free time, he plays competitive tennis, mentors for Mentoring for Leadership and is a frequent contributor to The Investing Podcast.

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