🎙️ NEW PODCAST WITH CHRIS MACINTOSH

Chris joined Danny on the CapitalCosm podcast. With a war reshaping global energy markets and Wall Street looking the other way, they had no trouble filling the time.

Here are just a few of the topics they covered:

• What the market is getting wrong (or refusing to admit) about the US/Israel vs. Iran war and its consequences.
• The first casualty of war is the truth… whether it’s discerning Trump’s actual position, what’s really happening in the Strait of Hormuz, or what the damage to Middle Eastern infrastructure actually looks like. Most people will choose the comfortable lie over the uncomfortable truth. Chris explains how to cut through the noise and focus on what the data is actually showing.
• Why a widespread famine is no longer just a tail risk, and why most people won’t see it coming until it hits their grocery carts. She’ll be right… until she isn’t!
• More crude is currently offline across the Middle East than at any point in the history of global oil markets. But the market is still pricing this as a one-month inconvenience.
• The global energy market today operates exactly like your average corner store — optimised to sell out every day and restock overnight, with no backroom inventory and no buffer. As the great Toilet Paper Crisis of 2020 showed us, that can bite you in the a** very quickly.
• How to accurately spot tops and bottoms in markets (no matter the asset class or sector).
• The playbook is energy, logistics, agriculture, hard assets. Not because they’re “inflation hedges,” but because when the system holding everything else together starts breaking, you want to own the things the system runs on.

If you’ve been trying to make sense of what’s actually happening out there, you can listen to the entire conversation on YouTube here.

🫣 NOWHERE TO HIDE?

The following headline caught our collective eye…

Nowhere to hide? Only if your entire universe begins and ends with the most popular names in the S&P 500 and the Nasdaq — a rather limited map of the world.

Just buying the most obvious energy stocks like Exxon or Chevron would have done the job rather nicely.

This reflects something we’ve been pointing out for a while now: the average investor has come to believe energy stocks are essentially uninvestable, which is precisely what makes them so attractive (and that was before the first missile landed on Iran).

Perhaps little wonder they still don’t appear in the average financial journalist’s universe of investable assets. Well, their loss…

🛢️ THE DOW SWITCHEROO

Staying with energy (and Exxon)…

We’ve covered a variety of contrarian indicators before. Magazine covers, ETF launches, index reshuffles, etc. They all point to the same thing: extreme sentiment… and more often than not, a major market turning point hiding in plain sight.

Case in point: Exxon got unceremoniously booted from the Dow Jones Industrial Average in August 2020 and replaced by the then-darling Salesforce. It was the whole “old economy out, shiny new economy in” paradigm that we remember too well from the dot-com days.

Well… since that fateful switcheroo, Exxon is up 325% while Salesforce is down 32%.

The irony practically writes itself…

The index that still has the word “Industrial” in its name kicked out one of the most important industrial companies on the planet… right at the bottom.

George Costanza was right.

When every instinct — and apparently the Dow Jones committee — tells you to dump the oil company and pile into the software darling, do the exact opposite. The chart above suggests it works.

💀 RIP THE METAVERSE

Every once in a while, we like to pause and marvel at the collective absurdity of markets. Remember the metaverse?

Not that long ago it was going to be the next big thing — a parallel digital universe where we (a whole billion of us) would all work, socialize, and apparently own real estate.

People were spending hundreds of thousands of dollars on virtual plots of land in a world that didn’t exist.

The suits at McKinsey — never ones to miss a bandwagon — were predicting a $5 trillion industry. Facebook liked the idea so much they renamed the entire company after it.

Well… as it turns out, it was just another braindead byproduct of the zero-rate era: a mania that could only survive in an environment where money was essentially free and nobody asked uncomfortable questions like “but what is it actually for?“

Once rates started creeping higher, the oxygen ran out. Funny how that works, heh?

The tendency of humans to get swept up in crazes truly knows no bounds. Which is precisely why we prefer boring businesses that actually make “stuff” in the real world… not peddling real estate plots made up of pixels.

🤣 NEVER HAD A CHANCE AT THAT PLOT

You can guess how sad we were back when we were banned from f-book…

(You can check out this and other merch in our shop HERE.)

Have a great weekend!