Videos Of The Week & Some Weekend Reading
Quick Thoughts On Oil, A Couple Videos On Different Topics, Commentary On Commodities & A (Tiny) Trade Update
I hope everyone is enjoying their long weekend, and I have a couple videos and some weekend reading for anyone that wants to get a headstart on this week. Before I get into that, I wanted to share a couple things that caught my eye on oil. I have the bones of a longer post on oil sitting in my drafts folder, but I think we are laying the foundation for the next leg higher in oil right now. It might take six months or a year, but I’m pretty confident that we are closer to a trough than we are to a peak. You see it in sentiment, you see it in positioning, and you have Capex cuts across the Permian that are probably going to show up in US production numbers over the next three to six months.
In short, “drill, baby, drill” in the US is DOA at $60-65 a barrel. OPEC can bring production back online (or they can bring paper barrels back, like several sharp investors have pointed out). This ZeroHedge piece is worth a read, and despite their tendency to be hyperbolic at times, they make several good points on what is going on across the oil and gas sector right now.
also points out that investors interested in oil should be tracking Saudi exports, not just OPEC exports, and watching what is going on with US crude production. I think we are in the early innings of an important narrative change, and it will take some time to play out, but I really like the risk/reward at this stage. It’s no secret what my investment of choice is in the energy sector, but I think we are close to an important turning point for oil, and by extension, the entire energy sector.
Rogue News w/ Veles
This video features a past podcast guest, Veles. Rogue News is one of my favorite sources for news that won’t get any coverage from establishment media, but they also cover stuff that doesn’t get much attention even on places like Twitter. They talked about some of the recent interesting weather and solar activity, which is something they have talked about previously as well. They also touched on the nuclear power executive orders and the plan for SMRs, a shift that Veles has been predicting for months. My favorite piece of this video was the talk about the high speed rail project in California.
It has been plagued with problems, it’s way over budget, and it’s estimated to be complete in 2045. For reference, China completed a similar project in a year. Federal funding for the rail project is potentially drying up, and it will be interesting to see what happens. There are some parallels to what was going on decades ago with J. Paul Getty (who had connections to Governor Newsom’s father), and the oil industry as far as right of way for pipelines. According to Veles, the rail will follow the same right of way path of the pipelines from decades ago. They covered several other interesting topics, but one that might be top of mind for readers after recent events has to do with the conflict between India and Pakistan.
Veles called it an “armaments laboratory” as far as equipment and tactics. Some of the recent events are why Indonesia is thinking about cancelling a multibillion dollar order for the Dassault Rafale, France’s most advanced fighter jet. The last topic I’ll mention is the electric grid. They talked about how improving the survivability of the electric grid, and why it would be relatively cheap at a cost of $4-10 billion. Improvements would improve restoration of service and a variety of other things, but they also covered why we want the keep the electric grid fragmented instead of unifying it. Overall, it was a wide ranging and interesting conversation that I think is worth a listen.
Treasury Secretary Bessent on Bloomberg TV
It’s always interesting to see what Scott Bessent has to say about the Trump administration’s economic agenda. He talked about the three legged stool approach to economic policy, focused on trade, taxes, and deregulation. On trade, he talked about the problems negotiating with the EU on tariffs, non tariff trade barriers, and dealing with uncertainty around tariffs. They also covered currencies, yields, and what they are trying to do to cut spending and waste.
There are a couple things they talked about that might bring yields down, from changing the supplementary leverage ratio to digital assets and stablecoins increasing treasury demand. The most important part in my opinion was the plan to accelerate the economy to bring down the deficit and debt/GDP. To dumb it down, they’re telling you that they want to run it hot. We will see how that impacts a variety of asset classes, but I have a feeling that a ton of investors are not positioned for what I think is coming.