Failing Rallies…

As you know, we’ve turned bearish. We’re not raging bears, because of “Project Zimbabwe” and all of that stuff. In fact, we think equity markets are dramatically higher, looking out a few years. That said, we think there’s a stumble first, and while everyone is getting excited about 25 or maybe even 50bps of Fed cuts, we are old enough to remember our share of Fed cut rallies, followed by a deluge in the equity markets. In fact, most bear markets happen AFTER the Fed starts cutting. We’ve almost completed our ‘harvesting phase’ and we’re entering a new phase…

We spent a month in Europe, got back just in time for the JPY mini-puke and are headed back to Europe for another month (WNA Uranium in London, Pareto Energy in Oslo, Some friends in Zurich and Geneva, etc…) We remember buying too soon in each real puke over our careers—we’re not making that mistake again. Sometimes, you just need to sit on your hands. We think the sectors that win (or lose less in this smash-up), are hard assets without GDP exposure. So, what are those?? Gold, land, uranium, the usual stuff we’ve been talking about—especially as JPOW begins to re-inject liquidity. We think we’re positioned if markets take a stumble, and have plenty of exposure if they don’t. Yeah, deal with it. We’re talking out of both sides of our mouths here. But we’ve been pretty clear that we’re shedding GDP assets, cause those are the ones at risk in a market dump—especially as it seems obvious that the economy is slowing.

With that in mind, we took a certain interest in two transactions that happened last week. Some people, are just really good at this investing game, some of them are in shipping. We pay close attention to what they’re doing, because they are so good. When we see that the GOATs are selling, en-bloc, we really pay attention. Last week, Fredriksen dumped his VLGC fleet on BW group. Then Marinakis dumped his VLCCs to the Saudis. Two trades don’t make a market, and those 2 are pretty damn long tonnage in other verticals, but it’s interesting all the same. The GOATs are also cutting back…

Leaving the world of shipping behind, we’re of the view that we’ve just experienced a failing rally in QQQ/SPY/IWM/NVDA and basically every other CUSIP. If Jackson Hole really is the top of this rally (or the grind into NVDA earnings is), then we’ll fail around here and turn lower. In retrospect, it will seem almost obvious…

We aren’t really making a bold call here, cause markets can go higher, but we remain of the view that things are lofty, and the overall economy is indeed rolling over. Wouldn’t the timing be auspicious to have the Fed admit they’re on a cutting path, right as NVDA blows away earnings, but gives a softer guide?? You sort of complete the cycle on the only two themes that have mattered all year.