Videos Of The Week

A Rant On Supply Chains And Current Events, Two Interesting Videos & A Quick News Updates On A Couple Holdings

We are a month from the election and I think we are starting to see signs that 2024 is in fact going to play a big part in setting the stage for the rest of the decade. We had the Vice Presidential debate last Tuesday, and I think it was a perfect visualization of what this election represents. Walz had some memorable quotes, and while it’s too early to start picking favorites for 2028, Vance is at the top of that shortlist in my opinion. We also had Trump returning to Butler, Pennsylvania for another rally yesterday, three months after the first assassination attempt took place there. He’s taunting whoever is behind the attempts (if you think it was lone shooters both times I have a bridge to sell you), but I wouldn’t be surprised if someone takes another run at him over the next month. If he wins, another attempt could come in between Election Day and January, but I think that’s less likely. However all this stuff shakes out, I think the next couple months will be very interesting to watch on several fronts.

In the Middle East, things are heating up as Israel escalates things with Lebanon, and I don’t think we are going to see things calm down anytime soon. Ukraine is becoming an afterthought, which isn’t that surprising given the influence Israel has here in the US, but I think that the war effort in Ukraine is on life support at this point. I won’t belabor the point here because my podcast guest this week will be able to break down what’s going on in detail, but I think we could see some more fireworks between now and the election. It will be interesting to see how financial markets react in coming months, but I think we might look back at the first Fed rate cut and the Chinese stimmy bazooka as a turning point for financial markets in a couple years.

When Oil Bears Are Short At $70/barrel, With A Backwardated Curve, With The Permian About To Roll Over, While Netanyahu & Israel Are Determined To Drag The US Into A War With Iran Before The Election.

Hurricanes & Semiconductor Supply Chains

I talked briefly about the potential for a longshoremen strike a while back, and it looks like that has been resolved, at least until January. The bigger focus now is going to be on the damage caused by Hurricane Helene. Before I get into the videos of the week, I wanted to rant a little bit on what is going on with supply chains and the incompetent government response. If you’re pissed off about the lack of government response, and in some cases hindering the efforts of Americans willing to lend a hand, you’re not alone. If that’s the case, you might find this video more timely than the investing videos below.

FEMA has spent hundreds of millions of dollars on the “migrant crisis” this year, but rumor has it that our generous government is able to give $750 for disaster relief from Hurricane Helene. We also have Hurricane Milton, which looks like it might strengthen and hit Florida in the middle of this week. There are obvious ways this will be felt in supply chains along the East Coast of the US, but we might see recent events in North Carolina be felt by the semiconductor industry. The North Carolina town of Spruce Pine produces “virtually all of the world’s supply of high purity quartz” that is critical to global semiconductor production, and they were hit hard by the recent hurricane.

Mines in Spruce Pine produce the world’s purest form of quartz, which plays a central role in chip manufacturing. Now, the town’s exceedingly valuable supply of high-purity quartz is at risk, threatening to cripple the $600 billion global semiconductor industry.

That CNBC article is worth a read, but with the damage in the area, it could be some time before operations return to normal, especially with the severe damage to roads and electrical infrastructure in some areas around Spruce Pine. We will see how it plays out, but I don’t think it’s something that resolves itself in a matter of days. If it takes months rather than weeks, it will definitely be something worth keeping an eye on.

The Market Huddle w/ Warren Pies

This was an interesting look at several different asset classes and will definitely provide food for thought for readers. They talked about the short position in oil being at extremes in recent weeks. Oil ripped last week on what has been going on in the Middle East, but I’m curious to see where things go from here. I have said before that geopolitical risk doesn’t make a bull case for oil, but I think things are lining up to be very interesting over the next couple years for oil and the companies that produce it. They also covered bonds, equities, including the relatively young 3Fourteen ETF FCTE 0.00%↑, inflation, and more. Warren talked about why he’s in the soft landing camp, why he doesn’t see a recession coming, and why long bonds might struggle from here.

With inflation, he also shared his thoughts on why you can’t model inflation (specifically the timing), and why we are in a new secular regime for inflation. It’s something I have talked about in previous posts on market cycles, but I think we are probably going to see inflation start to tick back up in the next year or two. He also talked about why everyone should own some gold, but the most interesting quote came from why he follows the residential construction market as a leading indicator for the economy.

“A recession is defined by job losses. If you’re going to get job losses, you have to have the cyclical areas of the economy roll over. Construction jobs make up 5% of total jobs in the economy, but if you go back through all of the historic recessions, they make up 30% of jobs lost. So you need these construction jobs to start rolling over in order to really kick start a recession.”

Thoughtful Money w/ Louis Gave

This was another interesting video, especially in light of the recent China stimulus news. I’m not invested in Chinese assets, but I can understand the fundamental case that Chinese are stocks are cheap, even after the recent rip higher. Louis talked about how China had gone from uninvestable to a market that has outperformed US indices YTD. The narrative has started to change a bit, and if you need any evidence, you can go look up David Tepper pounding the table on China on CNBC recently. One of the things I have started to pay more attention to is how narrative (specifically narrative changes) impact certain assets and the direction of investment flows, but I think we might be seeing that right now in several different asset classes.

He thinks the flow of capital from West to East will probably be a durable trend in coming years and he lays out some things he finds attractive. He also lays out why he is expecting something closer to an inflationary boom than a deflationary bust in coming years. Depending on your view, your portfolio is going to look different, but he explains why he views the energy sector as an attractive pond to fish in, and why he prefers energy stocks to owning the commodity itself. They do discuss the complicated geopolitical environment we are in right now with multiple conflicts and the upcoming US election, but Louis views the odds of a Chinese invasion of Taiwan as extremely low for a variety of reasons.

Odds & Ends On Calumet & Sable