NEW PODCAST WITH CHRIS MACINTOSH

Chris sat down with George Gammon on his Rebel Capitalist podcast to discuss all things macro, including topics such as:

They discussed how the recent central bank rate hikes exacerbated a global credit contraction and the implications this precarious shift has for investors, such as:

• Debt reset — why will the governments likely choose to engineer a debt “reset” rather than try to inflate it away (and how do CBDCs fit into all this)
• How China is gearing up to take Taiwan without firing a single bullet
• One “dirty” corner of the stock market (not coal) that currently spells one of the biggest asymmetric opportunities Chris has ever seen
• Chris’ recommendations for building a robust portfolio today (what sectors, geographies, and asset classes to focus on)
• How any investor can (and should) use the cyclical nature of commodities to their advantage right now
• Risk vs. volatility… and how that pertains to today’s macro environment
• Why the US regional banking crisis is far from over and what to expect in the coming weeks and months
• And more…

You can listen to the entire conversation between Chris MacIntosh and George Gammon here.

  COMMODITIES: IS THE PARTY OVER?

With the recent weakness in many of the commodities sectors (and tech stocks rallying like it’s 2000), you might be wondering if the party’s over?

We think that not only is the party not over — the party has only just begun. In essence, prolonged excess/outperformance will give way to prolonged underperformance.

We believe we have at least 10 years where value will outperform growth. At best, we are just one year into that. That is an easy prediction to make. The hard part is holding that view through the inevitable volatility we are going to encounter (like now).

For another perspective, here’s a chart we shared with readers of the Insider Newsletter — it shows the performance of Exxon against Microsoft.

Now, wouldn’t it be nice if the uptrend was as linear as the downtrend?

   ALL THINGS TRANSITORY…

Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory”.

We bet you had no idea about one of the biggest victims of this inflationary wave — star anise. Here’s from Insider member Vitalie:

Went grocery shopping to a Metro C&C store today and was looking to buy a 180-gram jar of star anise that normally cost about 180 MDL. Had to pick up my jaw off the floor after seeing the 599 MDL price tag (over €30!), and a staff member confirmed the price was right (and I’ve just checked it online to make sure it’s not a misprint on the price tag). Thankfully, a local shop has it for 95 MDL per 100 grams, but damn that was a shocker. Now I’m not sure if the price will catch up at the local store.

And this gem from member Mike in New Zealand:

This works out to about US$8 per cauliflower head. As if one needed an excuse to skip cauliflower…

  ESG INSANITY CONTINUES…

The pointy shoes in Brussels came up with a new scheme. And is just as “brilliant” as you might expect.

From the article:

An estimated 35 million homes across Europe will affected, with owners of older homes particularly at risk.

In Germany alone, this “climate-neutral conversion” of buildings could cost 254 billion euros in Germany alone, state bank kfW has estimated. Haus & Grund, the Central Association of German House, Apartment and Land Owners, points out that this will lead to a dramatic loss in value, especially in the case of older buildings. Corriere della Serra, one of Italy’s leading newspapers, described the EPBD on 10 January as a law “that penalises Italy”, writing: “Our country has an old building stock and a great diffusion of property ownership … the cost of the green deal could be high and fall heavily on citizens.”

If you own real estate in any EU country (with the exception of perhaps Hungary), the probability is you’re in the firing line now.

And here’s another thing to remember — as Chris commented in a recent Insider Newsletter issue:

Real estate (when leveraged) is typically synthetic to the bond market. As rates rise, so the bond value falls. As rates rise on real estate, so the ability to finance it falls and hence the price corrects. This is especially true where leverage ratios are high.

On the other hand, where leverage is low, it has the opposite effect as people seek to preserve their wealth by moving it from cash into hard assets (think Turkiye, for example).

  WEEK’S HUMOUR

Some “inflationary” humour today, courtesy of Insider member Aras…

A good reminder that markets (much like life) are all about perspective.

Have a great start to the new week!