Right now, we are in the worst possible environment for oil and energy stocks—Quad 4, where U.S. growth and inflation both slow.
But if we are correct about rate cuts and rising inflation towards the end of 2019, that would make the first truly favorable environment for oil and energy stocks in a long time.
“For two full years, energy sucked, relative and absolute,” McCullough explains.
“It worked for a bit from January to April, then it’s going to get Quad 4’d again. Then we go back to Quad 3 [growth slowing, inflation accelerating]. Oil and energy will be the place we look for longs again, but from a very different price.”
Watch the full clip above for Al and Keith’s comments on the subject and more.