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Do NOT dally-a new oil supercycle looms

Dec 15, 2022

Good morning!

The markets are down in early going. According to the news, that’s because traders fear the Fed will tip things into a recession and disappointing retail sales.

Not true.

The markets simply don’t believe the Fed’s BS which have arguably caused the disappointing retail sales.

Here’s my playbook.

I hate to say I told you so, but I actually did

I hate to say I told you so, but I actually did.

Yesterday morning, in fact.

The Fed’s new range is 5.1%, which is substantially higher than the 4.5% widely perceived as the top end of the spectrum. (Read) And that’s got traders scrambling for cover. Retail sales figures are a byproduct of the Fed’s follies.

At the risk of sounding like a broken record, the Fed can raise rates till the cows come home yet not fix this mess. Unemployment will not rise like Powell thinks as long as the government continues to spend and people need to work. Case in point, weekly jobless claims actually fell. (Read)

One Bar Ahead® Action: Continue to hold the recommended hedges at fully funded levels. Upgrade to Paid

Jobs sold his stock too

People are scratching their heads because Musk has reportedly sold another $3.6 billion worth of Tesla stock to fund what is being billed as a “disaster” with Twitter.

They forget that Steve Jobs sold his stock too. In fact, Jobs unloaded 19.7% of his Apple stock in just two months during the summer of 1985 as he prepared to create NeXT, which was announced that fall. Then, he used that to springboard a triumphant return in 1997.

In fact, I’d be very surprised if Musk didn’t sell. The kitchen sink he brought into Twitter’s HQ was not just a casual joke but rather a message. Cleaning house can be an expensive proposition.

Twitter will ultimately crush it when Musk gets things sorted, which is why I’m keen to do a little shopping along the way.

Remember: Optimists make money over time by separating pessimists from theirs at moments in time.

Belfort to SBF: Shut up

You know it’s bad when Jordon Belfort, aka the Wolf of Wall Street, tells FTX’s SBF to “shut up.” Then in the same breath, he flambéed sophisticated US brokers who invested in his empire. (Read)

The vegan meals he’s reportedly asking for in Bahamian prison are the least of SBF’s worries. Reports are surfacing that Ryan Salame, an FTX insider and co-CEO, sent a letter to regulators prior to the collapse. He reportedly returned to the US immediately afterward. (Read)

Digital currency is inevitable, just not the way legions of magicians apparently thought. I, for one, am super glad to see the hype vanish.

A new supercycle looms for oil

Normally, I don’t trust anything Goldman Sachs strategists say because the firm has what many think is a long history of saying one thing and doing another.

This time I do. People are overly pessimistic about demand shrinkage while foolishly dismissive of China’s newfound charm offensive with the Saudis. This will be compounded by the Biden Administration’s determination to run energy security into the ground.

I think oil comes roaring back in late 2023 when insufficient investment, low inventories, and supply challenges cause prices to skyrocket (again).

Buying now makes all the sense in the world, especially when it comes to the world’s best oil producers. Upgrade to paid

This bank is down 30% but could be a great buy

The legendary Warren Buffett owns Bank of America, which is arguably on sale at some of the lowest prices we’ve seen all year. In fact, it’s trading within a hair of 52-week lows and could be a nice “add.”

I prefer a stronger blue-chip bank, but that’s neither here nor there. What you want to focus on is that rising rates generally expand banking margins. Then, buy the best and ignore the rest.