At the risk of sounding like a record, let’s remind people of one of the biggest bubbles of all time, which we’ve been positioning: an unfolding in the value of financial assets relative to strong assets. It’s so easy to see the bubble. But waiting for the bubble to disconnect takes years, and waiting is the hardest part.
One thing we do know is that we really, really want to say that you really don’t want to be on the wrong side of this trade when it unfolds.
One of the biggest risks in this trade (long commodities and commodity-sensitive products) is coming out too soon. If the chart above is to move forward, we are probably about ten years ahead, where commodities outperform major equity indices.
💪 AFGHANISTAN: WITH THE OLD, WITH THE NEW
If you have been with us for some time, you have probably heard us discuss the changes that are taking place in the global geopolitical arena. Old alliances are under tension (or in many cases are collapsing) and new alliances are being forged. These changes usually have one thing in common: the long-term trend of capital movement from West to East.
The Afghan classic is a perfect example. Dramatically, the Biden administration overnight (literally) created a massive power vacuum. There are no prizes for guessing who is too happy to fill this power vacuum.
From the article:
A Chinese consortium awarded the contract to develop the world’s second largest copper mine in Afghanistan plans to return after years of delay as Beijing seeks closer ties with the Taliban.
From West to East, friends. From West to East.
🚬 COAL: THE NEW TOBACCO?
As the saying goes, history never repeats itself, but it often rhymes. The hypocritical holiness we see in the West today when it comes to fossil fuels is not too different from tobacco in the late 1990s.
Cigarette stocks were (and still are, really) feared, hated, and dishonored. Still, they have been one of the best investments of the last 30 years. Here are British American Tobacco (in purple) and Altria (in orange).
While we’re aware that it’s not a popular thing and won’t make us many friends, we’ve been excited about buyers of coal stocks. Only the demand for coal from emerging economies is on track to surpass supply in the coming years. In addition, they are economic products that pay healthy dividends.
🤖 USA vs. CHINA TECH
While CNBC’s dolly birds are debating whether or not to buy shares of Chinese technology, in our view, a better question is: if you can’t trust Chinese technology (and of course you can’t), if you please tell me why do you trust US technology?
Do you pursue American technology (like everyone else), get out of Chinese technology (like everyone else), or start looking at it as the opposite?
We’re still a long way from buying technology from China here, as we don’t like to put out fires with our face, which is what we think you would do here. But buying American technology also feels very determined.
👕 NEW MARKET: TALKING ABOUT CHINESE TECHNOLOGY
This WeCheck t-shirt is a fun piece of WeChat logo and sums up what the PCC does to anyone who installs the app on their phone.
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