Right now, the Western world is going through what we call a blow off top of socialism, whereby the pillars of Western civilization completely blow their credibility. The media, the legal system, the healthcare system and officials, the financial institutions, and of course, the government.
As you can imagine, this blow off top of socialism has massive geopolitical and macroeconomic implications. Chris just discussed it with Mark Moss on the Mark Moss Show.
You can listen to the whole conversation here, but be warned — it’s a long one.
Chris explained exactly what Western nations are going through right now, where the BRICs (Brazil, Russia, India, China… and increasingly others) fit into all this, what it means for different asset classes (especially food and energy), and much more.
Once again, click here to listen to the entire discussion.
IS THE ENERGY BOOM OVER?
While on the topic of energy, the current volatility in energy markets is making crypto (and we’ll touch on this in a moment) look absolutely pedestrian.
After rising 75% since the start of the year, shares of oil and gas producers tanked (pun intended) over the last month. As of right now, they’re up “just” 17% YTD.
Still better than the overall market (S&P 500 and Nasdaq are both down 18% and 27% respectively), but it begs the question: why the selloff? And is this pullback something to be concerned about?
We’re not too concerned about this and remain bullish energy in our portfolios.
This relentless selling of commodities and energy would make sense if suddenly there were gobs of new supply coming into the market. If there are, it’s one of the best kept secrets on the planet. We sure don’t see it.
In fact, it’s quite the opposite. The market is tightening, and there isn’t any spare capacity, as the below chart from Bloomberg shows.
You could make the same case for coal or natural gas — you know, the pillars of global energy consumption, as the below chart indicates (h/t @MenthorQpro).
From a market behavioral perspective, bull markets begin in pessimism, grow in skepticism, mature in optimism and die in euphoria.
And looking across energy markets, we’re struggling to find even a hint of euphoria (certainly not the likes of what we saw in “growth” stocks and crypto not that long ago). At best (being conservative), you could say they sit in skepticism right now, although we think we’re still firmly in the pessimism phase (good luck on getting mutual funds to consider investing in coal).
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”.
Insider member Andreas shared some inflationary boots-on-the ground intel from Germany:
In my hometown in Germany, Hannover, the local energy provider warned the people that he will increase
- gas prices by up to 70% !!
- electricity prices by up to 40%
And I am quite sure this is NOT the last increase coming winter.
Skiing underwear, warm pullovers, wool blankets, camping stoves and corresponding gas canisters should be in high demand now.
And member Dave enlightened a local newspaper about the true cause for soaring energy costs (and no, it’s not the war in Ukraine):
₿ BITCOIN: IS THE BOTTOM IN?
Over the last couple of weeks we’ve seen a handful of large crypto firms blow up (we touched on Celsius in the last missive). But you know what’s curious?
While Celsius, 3AC, Voyager, etc. were — one after another — going tits up, Bitcoin has held remarkably steady.
A textbook sign of a market bottoming is the failure to fall further when hit with more bad news.
That little bit at the end of the chart is Bitcoin shrugging off this deluge of bad news. It’s still too early to tell, but this is one sign that maybe, just maybe Bitcoin may be bottoming out here.
We have no position in Bitcoin at the moment, but if only for amusement value, we’ll keep watching this space over the coming months.
Have a great weekend!