“Fossil Fuels are a uniquely cost-effective source of energy.”
-Alex Epstein
Is that quote from Epstein in Fossil Future a fact? How about “cost-effective energy is essential to human-flourishing”… or “billions of people are suffering and dying for lack of cost-effective energy”? (pg 20)
Irrespective of what other people’s perceptions and/or answers are to those questions, I’m getting longer of Fossil Fuels and Global #Quad2 Inflation Accelerating for The Fam!
We’ll also have a MUCH more informed Independent Research view of the Global Energy Market as our new Global Energy Sector Head, Fernando Valle, launches research coverage with his big Black Book presentation next week!
Back to the Global Macro Grind…
As Epstein goes on to argue, cost-effective energy has 4-dimensions (pg 21):
- Affordability – how much does it cost relative to what people have?
- Reliability – to what extent can it be produced on demand and at scale?
- Versatility – how wide a variety of machines can power it?
- Scalability – how many people can it serve and in how many places?
Again, if you have some “green” gurus who can tell me all about the answers to these questions and/or why we should be long “Hydrogen” or Clean Energy, I’ll stay short HYDR and PBD (Invesco Clean Energy) until my signals says not to.
And, I’m going to keep buying the damn dips in Energy Signals that are breaking out alongside inflation.
More Questions (more for the Macro Tourist friends you’re constantly educating):
A) What’s the price of Oil Up in the last 3 months?
B) When did the Commodities and Fossil Fuel Cycle bottom?
C) When did the RECESSION in Global Industrial & Manufacturing Sectors bottom?
Alex, I’ll take #timestamped realities for The Fam:
A) Oil (WTI) has inflated +20% since December of 2023
B) The Bear Markets in Commodities and Fossil Fuels finally bottomed in December of 2023
C) The Global #Quad4 Recession bottomed between Q3 and Q4 of 2023
Most “retail” investors chasing Meme Stocks have absolutely no idea about the Commodities and/or Global Industrial Recession that actually happened between the Cycle High (2021) and Cycle Low (2023)…
But that’s ok.
Because we don’t get to save and then make money if we’re not playing against a 1-dimensional crowd that still thinks a 60/40 Asset Allocation is good for their families long-term financial health.
In addition to being long US Gasoline (UGA), here are all the INFLATION Asset Allocations in Portfolio Solutions:
- Insurance Stocks (IAK and KBWP)
- Housing (ITB)
- Shipping (BDRY)
- Energy/MLPs (AMLP)
- Copper (CPER)
- Saudi Arabia (KSA)
I know, I know. I should (and will) have moarrr Global #Quad2 Inflation Allocations. There’s a patient and disciplined process for that. Shipping (BDRY) is already +46% for my Fam Office since adding it to Portfolio Solutions in January.
What else is going on this morning? A: Lots.
Japan is the biggest headline that most Tourists will comment on throughout the day. The BOJ (Bank of Japan) RAISED RATES overnight, from -0.1% to a range of 0.0 to +0.1%.
I know, I know. Massive 10-20 basis point move that plenty of “Discretionary Macro” Managers thought would equate to Nikkei Down, JGBs (Japanese Gov Bonds) Down, and Yen Up.
In other news, the Nikkei ramped +0.7% higher, JGB 10yr Yield DROPPED -3 basis points to 0.73%, and then Yen broke @Hedgeye TREND Support vs. USD with a -1.0% decline.
That’s why I don’t do narratives or Clean Biases. I do what markets are doing.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.25-4.51% (bullish)
UST 10yr Yield 4.09-4.38% (bullish)
UST 2yr Yield 4.50-4.78% (bullish)
SPX 5090-5196 (bullish)
NASDAQ 15,908-16,336 (bullish)
RUT 2009-2066 (bearish)
Tech (XLK) 203-211 (bullish)
Insurance (IAK) 111.43-115.52 (bullish)
S&P Momentum (SPMO) 77.63-80.57 (bullish)
VIX 13.48-15.33 (neutral)
USD 102.68-104.31 (bullish)
USD/YEN 146.75-150.94 (bullish)
Oil (WTI) 78.32-82.98 (bullish)
Oil (Brent) 82.77-87.17 (bullish)
Gold 2139-2195 (bullish)
Copper 3.90-4.19 (bullish)
MSFT 408-429 (bullish)
AAPL 167-177 (bearish)
NVDA 845-938 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
