Why the Saudi output cut could be a bullish catalyst for energy stocks

The Saudis made a surprise unilateral cut of 1 mbpd at the OPEC+ meeting on the weekend. The NY Times reported that the Kingdom was forced to make the move as a matter of fiscal necessity: Saudi Arabia is in “whatever it takes mode,” Helima Croft, head of global commodity strategy at RBC Global Markets,...

Will Europe drag us into a global recession?

It's finally happened, the euro fell below par against the US Dollar. The weakness can be attributable to a combination of Fed hawkishness and European economic weakness.     Europe is almost certainly in a recession. Consumer confidence has skidded to levels last seen during the Eurozone Crisis of 2011-2012. The questions are whether the...

Will the energy price surge cause a recession?

As energy prices surged around the world, I had an extensive discussion with a reader about whether the latest price spike could cause a recession. This is an important consideration for investors as recessions are equity bull market killers.   The evidence isn't clear. On one hand, every recession in the post-War period (shaded grey...

Another chance to buy the panic

Preface: Explaining our market timing models  We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.   The Trend...

Commodity supercycle: Bull and bear debate

Is it too late to buy into the commodity supercycle thesis? The latest BoA Global Fund Manager survey shows that respondents have moved to a crowded long position in commodities. Many analysts have also hopped on the commodity supercycle train, myself included (see How value investors can play the commodity supercycle).     As a cautionary...

How value investors can play the new commodity supercycle

The investment seasons are changing. Two major factors are emerging in altering the risk and return profiles of multi-asset portfolios in the coming years, rising commodity prices and value investing.   There is a strong case to be made that we are on the cusp of a new commodity supercycle. The last time the CRB...

A focus on gold and oil

I received considerable feedback from last week's publication (see How to outperform by 50-250% over 2-3 years), mostly related to gold and energy stocks.     In last week's analysis, I had lumped these groups in with other cyclicals. Examining them further, I conclude that both gold and energy stocks have bright futures over the next...

Growth stock wobbles

Mid-week market update: One of the defining characteristics of the current bull run is the dominance of US large cap growth stocks. Joe Wiesenthal wrote about the problem of the effect of the "superstar companies" on the economy in a Twitter thread and in a Bloomberg commentary. The "superstar companies" have few employees, and therefore high labor...

Pockets of opportunity in an uncertain market

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...

ESG challenges to energy investing

I received a ton of comments from my post three weeks ago on the energy sector (see Energy: Value opportunity, or value trap?). I engaged in multiple long email discussions with several readers on different aspects of that post. This is a follow-up to the publication address two main issues that were raised: The impact...

Energy: Value opportunity, or value trap?

Callum Thomas recently highlighted an observation from BAML that the market cap of Apple (AAPL) is now larger than the entire energy sector. AAPL is now the largest stock in the index, but its weight at 4.5% is not especially extreme in the context of the historical experience. The fact that AAPL's market cap has eclipsed...

Imminent war with Iran?

The headlines look ominous. The US has dispatched a carrier task force to the Persian Gulf, and a second one is due to arrive soon. The State Department ordered the evacuation of all non-essential personnel from Iraq: The U.S. State Department has ordered the departure of non-essential U.S. Government employees from Iraq, both at the...

More evidence of an emerging reflationary rebound

Mid-week market update: Further to my last post (see Nearing the terminal phase of this equity bull), There are numerous signs that the market's animal spirits are getting set for a reflationary stock market rally. First of all, the BAML Fund Manager Survey shows that a predominant majority of institutional managers believe that we are in...

Nearing the terminal phase of this equity bull

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...

Updates on the Brexit, energy and SPX trades

Mid-week market update: Rather than the usual mid-week market technical comment, I thought that I would present updates on a number of trades that I had suggested in the past: How to play the Brexit referendum (published February 29, 2016): Setting up for a trade? A possible generational low in oil and energy stocks (published January 20, 2016):...

A possible generational low in oil and energy stocks

The bad news just doesn't stop coming for oil. It all began when Saudi Arabia had turned on the production spigots to counter growing production from American frackers, and now it has to contend with the geopolitical dimensions of the growing power of Russia and Iran in the Middle East. The calls are growing for...