"I Don't Believe the Stagflation Narrative": Sean Emory's Bullish Blueprint | Avory & Co
Why It Matters
Emory’s analysis suggests that fears of stagflation are overstated, encouraging investors to stay bullish on tech and undervalued small‑cap stocks, while monitoring AI’s impact on white‑collar income streams.
Key Takeaways
- •Emory says gas costs now 1‑2% of income, not stagflation.
- •Consumer spending remains robust, supported by record TSA throughput.
- •Housing remains consumer’s largest asset, with stable prices and lower rentals.
- •Avery builds data‑driven, high‑conviction tech portfolios blending value discipline.
- •AI viewed as early productivity tool, likely impacts white‑collar jobs.
Summary
In a candid OPM podcast, Sean Emory, founder and CIO of Avery & Co., dismissed the prevailing stagflation narrative, arguing that today’s gasoline costs represent only 1‑2% of household income—far below the double‑digit shares of past decades. He highlighted a suite of consumer‑centric indicators—record TSA throughput, full restaurant reservations, and steady spending—that suggest the U.S. consumer remains resilient despite higher oil prices. Emory outlined Avery’s investment philosophy: data‑driven, high‑conviction portfolios that blend traditional value discipline with a tech‑forward tilt. He noted a pronounced macro dislocation, with small‑ and mid‑cap stocks trading at significant valuation discounts relative to mega‑caps, a gap that tax refunds and lower‑than‑expected gas expenses have helped to cushion. Inflation expectations, he said, are a lagging metric, with five‑year break‑even rates trending downward. Specific examples reinforced his view. Clear Secure, an airport identity platform, benefits from soaring travel volumes, while First Watch, an upscale restaurant chain, continues to post positive comps despite broader consumer‑price concerns. Emory also stressed that AI, still in its infancy, is a productivity catalyst that may disproportionately affect white‑collar employment and, by extension, 401(k) inflows. For investors, the takeaway is clear: the macro backdrop does not warrant a defensive stance. Avery’s focus on high‑conviction, tech‑oriented names—particularly undervalued small‑cap opportunities—offers a pathway to capture growth while maintaining valuation discipline, even as the economy navigates post‑COVID normalization and evolving AI dynamics.
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