Quick Update, Some Links/News

Quick Update: Market Madness

The US indexes were mostly rangebound in the past month after Trump euphoria faded, while value stocks had their longest losing streak.  My portfolio steadily lost ground.  Then Wednesday had a shock 3% fall on rates disappointment:

I think its a one off drop.  The VIX is back in the teens, and international markets didn't sell off. 

During the panic, I sold off:

• XOM before the big fall.  It should be working but wasn't.
• And Gold (GLD) after it.  Expecting higher growth in the future, gold fares badly.

Last night, replaced them with Argentina (ARGT), XLF and some crypto.   These are trades - they may get held a long time, but no convictions.

The blue items are trades, the black ones investments.  My portfolio is down about 8% from its all time highs after Trump.

Some Ideas:

For future investigation:

• Europe is cheap and hated.  Poland may recover if we get a Ukraine ceasefire.  I've not looked at any stocks there.  Maybe GPW.
• South America, as they follow Milei's path.  Probably ETFs, these markets are inaccessible to retail.
• Expect Trump to pressure countries with large bilateral trade surpluses ro revalue their currencies.  Especially those that rely on the US for defence.  Japanese consumer stocks ($).

Some Links/News:

• Several days lack-of-wind in Germany leads to sky-high power prices in Sweden.  Swedish minister says they are in a "shit situation" because Germany does not have reliable baseload energy.

• (Nov 29th) Saudi Arabia calls off major Defence Treaty with US, and can no longer normalise  Israel relations.  Makes it harder for Trump to bargain with them for lower oil prices.

• Goehring & Rozencwajg's 3Q Commentary mentions that shale gas production peaked in November 2023, "and has since slipped by 1%, or 1 billion cubic feet per day".   Need to watch this, its a long term threat to my gas pipeline stocks.

Sold my Bitcoin

I've been trading a small 1-2% bitcoin position, buying low and selling high.  I'm trying my hand at active trading.  By buying and selling based on Hedgeye's risk ranges I've made more and lowered my stress level.  I'm not a natural trader, so I'm quite happy with myself, even with only a few thousand dollars profit over two months.  If it was a lower volatility asset, or if it had just broken out of a multi year bear market, then I could buy and hold.  But for something with high volatility thats been going up so long that everybody is excited about it, active trading is safer.

Finally sold it tonight.  There's too many signs of exuberance:

• Youtuber beats the world record for the longest time sitting on the toilet.  He's sitting there till his shitcoin hits 50m.
• Meme coins like MOODENG coin.   At least she's cute.

• Hawk Tuah coin, rug pull.  She's cute too.  She can spit on my thang.

The crypto market might shoot higher for a few months, but this is fucking crazy.  I'm out.  We all know how this ends.

Bought an Argentina stock

Last night I bought an Argentina ADR.  Its a company thats part of an oligopoly in a cyclical industry.  Should do well as the economy recovers.

Reasons for buying:

• Hedgeye projects that Argentina's recession ended this quarter with two more quarters of increasing growth and decreasing inflation.
• Their past year GDP and inflation numbers are so bad that theirs plenty of room for improvement.  Going from triple digit inflation and 1 plus percent real growth, these numbers could improve for years.
• Argentina is rich in natural farming and energy resources, if they can just get their government policies right.  They need enough capitalism to encourage business, and enough protection for workers so income gap is kept down and they don't become socialists again.

Its a 1.5% position.  The reasons for the caution and small position size are:

• The stock has broken out, always overbought.  And it has bigger price moves than bitcoin.
• Company has high debt, normal for its industry.
• Inflation is expected to fall over the next 6 months: from triple digits to double digits!  This is unimaginable to me.  How the fuck to people live like that?  A time series measured in pesos is incomprensible.  I learned theres an IFRS standard for reporting in hyper-inflationary currencies.
• Argentina has failed for the last 100 years.  Betting that this time is different.
• No idea of politics in Argentina.

We'll see if Milei gets re-elected in Oct 2025.

This ideas is from John Polomny.

Sold Some Gold

Sold a little gold, around 4%.  It had run up for months before the election, but dropped afterwards, Now got an 6% position.

The reasons, from short term to long term:

• Hedgeye's trend is weakening, though still bullish.  And they are projecting a few months of increasing growth in the next six months, bad for gold.
• Gold ran up for months before the election.  Mostly no one noticed, but by the end mainstream media was reporting on it.
• I do not know if Trump wants a weaker dollar.  He needs it if manufacturing is to come back to America.  But he also says he wants the USD to be a reserve currency.  And growing oil production is positive for the USD.  Tariffs may also increase the value if the USD (lowering the currencies of the countries they are aimed at).  
• The new administration is looking to grow its way out of debt.  Rather than just inflate its way out.

My gut says we need a lower USD to fix the persistent trade deficit.  But I don't know.

I still think theres inflation.  Government debt is too big, and most of government spending is mandatory (required by law).  But we are looking at less inflation, more growth, with maybe a tiny bit of austerity.  The train wont stop, but it can slow down. Maybe 3% inflation, 3 percent real growth.

I also want to deleverage a bit, because we don't know what can happen.  They new administration may:

• Make a security deal with Saudi Arabia, for cheaper oil
• Get allies to pay for US troops, narrowing the budget deficit.  Or make them buy long term bonds to pay for it.
• Tie tariffs to foreign policy - you get to sell more into the US market if you support the US politically and militarily, and if you put tariffs against other countries that don't.
• Do a shock 10% devaluation of the USD.  Either unilaterally, or another plaza accord.

The rules have changed.  Someone may be about to kick over the chess board we've all been playing on since the 1940's.

Update 25-Now: I sold 6% my gold, 3 or 4% remaining

Quick Update

My portfolio was up a couple of percent for the Trump win.  Not bigly.  Gas pipelines made 5-year highs, but gold and energy were down.

Trades

Hedgeye's trend for Industrial metals have broke down: Platinum (last week), copper (last night), and silver (weak but still holding).  Sold the first two, reduced the third.  I don't know why - I expected industrial metals would react positively to a Trump win.  But they were trading positions so no need to think about it.

Still got a small 1/2 percent bitcoin position remaining after selling some last night (doh!).  Its broken out, bullish, but overbought.  My gut feeling is to wait for 100K then sell the news.

Investments

Still keeping my tin (MSC:KLSE), as its an investment position - too illiquid to trade in and out.  Think I need to wait for the semiconductor market to improve, half of tin is used for solder.  No sign of this now.

Sandstorm Gold was down 9% on disappointing earnings plus a falling gold price.  I bought another 2%.  This might be a risk, since Hedgeye trends recently broke down for some gold related sectors.  We *may* be entering a period of accelerating growth, which is bad for gold.  And gold's uptrend was getting long in the tooth.

Hartalega (Malaysian glove manufacturer) was also up after the US election, probably because of USD strength.  And tariffs.  I expect the USD to fall longer term, but its not happening now.

Palm oil up a lot since I bought, need to see if theres any supply response.  Hard to get data.  Maybe March next year.

I sold Woodside, small loss (including dividends).  US natural gas export capacity will no longer be hindered by "green policies".

Question's I'm Thinking

*If* we are entering a period of accelerating growth, do I sell my gold (miners/royalties)?  I'm still bullish gold long term.

And in that time, if industrial metals are not working (for whatever reason), what do I buy?  With rising growth, shit flies.  Do I want to trade shit?

US daylight savings makes it harder for me to trade.

The Trump Effect

What effect does Tump have on investments?

This is a sea change.  With an overwhelming majority of presidential votes, a Senate majority, and a probable House majority (to be confirmed), they can make any changes.  They've got two years to do so before the 2026 Senate elections.  This time Trump has assembled a team of competent people, unlike the last time when he didn't expect to win.

What Does Trump Believe?

America has been on the wrong path for the past 40 years and needs to reverse:

• The US paid for the defence of its allies (Japan, Nato), who took advantage by selling into US markets.  From 1987: "The world is laughing at America's politicians as we protect ships we don't own, carrying oil we don't need, destined for allies who won't help....End our huge deficits, reduce our taxes, and let America's economy grow unencumbered by the cost of defending those who can easily afford to pay us for the defense of their freedom."
• "The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive." (tweet)

• China is the biggest threat to the US.  And I think this means right now - we need to prepare for a Taiwan war by 2027.  Ukraine and the Middle East are distractions.
• Doesn't want war with China.  Peace through strength.  Unlikely to see publicity stunts like Nancy Pelosi's Taiwan visit again, while both sides quietly build up military capabilities and alliances.
• The US needs to manufacture things again.  US industry is hollowed out by unfair trade practices, damaging workers, families and the social fabric.

• Inflation was a big reason he won.  Gotta either cut inflation or increase real wages.
• USD.  He criticised Biden over the weak Yen and Yuan hurting manufacturing.  OTOH, he is a "numbers go up" guy and may want a strong dollar to fight inflation.  On balance, I guess weaker USD long term.

What Policies do I Expect?

• Increasing domestic oil and gas production to grow America's industrial base.  Bad for O&G producers, good for O&G service companies and pipelines.
• Grow your way out of the debt crisis.  Growth, not stagflation.
• Maybe a Saudi security deal to increase oil, help inflation and pressure Iran/Russia.
• Tariffs.  10-20% for all imported goods.  Which countries have carve outs?  60% to infinity tariffs for China.
• Let Israel finish its war properly.  Leading to lasting peace in the ME.
• Freeze the current borders of the Ukraine war.  Not sure of this can be done - Putin may not agree, and who will enforce the peace?
• Still expect high government spending.  Expect it to be hard to decrease government expenditure.  Elon Musk cannot just fire Government workers like he did at Twitter - they are protected by law.
• Big changes in Healthcare with RFK, thought I don't follow this.  I'd worry if I was holding any Big Pharma or Health Insurance stocks.
• Deport some illegals (possibly only violent ones).  Cut welfare for them.  Fine companies that employ them.  Rising costs in US agriculture.

Biggest Change for Investors

The nature of inflation will change.  Growth instead of stagflation.  Oil and (US) natural gas should stay low in the next few years.

The US is gonna have large labour cost increases.  So inflation comes from there, instead of energy.  Good for workers.  I'm wondering how investors can benefit from it.

No chance of a recession next year.

In Asia, countries should benefit from manufacturing moving out of China.  Counterbalancing this is that countries with large US bilateral deficits may be targeted.  After China, then Vietnam, Japan & Taiwan follow:

Data Source: USTR

How do Asian countries adapt?  After 2-3 generations of trade surpluses, they need to start consuming.  Look to buy Asian importer or consumer stocks? Except for China, which is stuck.

How does this affect my investments?

One by one:

• North American Gas Pipelines: Should do well with increased natty production supporting a larger industrial base.  Just hold them and sell if they reach overvalued territory (eg: 30 times FCF).  They're fairly priced now so I probably wouldn't buy them.
• Oil Producers.  Expect stable or low oil prices in the next few years.  I'm willing to hold my oil producers, since they should be increasing production in coming years, and are profitable and pay dividends at WTI $70.  If I was buying, I probably wouldn't buy now, wait for Hedgeye's trend to change.  I think there'll be an oil shortage after a few years.
• Gas (LNG).  My gas play is Australia's Woodside.  Its a stodgy blue-chip company that pays out 80% of its profits as dividends.  Not a great capital allocator.  I think US deregulation and increased gas production may lead to more US gas exports.  Since Woodside isn't a great company anyway, I'm considering selling.
• Gold.  Questionable.  Gold won't do well with increasing economic growth - its a stagflation (or recession) play.  Not a growth play.  And gold is also a bit overexposed now, even CNN was writing about it.  But we still need to move away from the USD as a reserve currency, and gold is the only contender.  Its also the only thing in my portfolio that could go up if theres a Taiwan war.  So I'll hold.  May convert some of it to physical.
• Gold Miners and Royalty companies: Levered gold.  Miners may do better as energy costs fall.  My mid-sized miners/royalty companies should increase production in the next few quarters, so I'll hold them.
• Industrial Metals: should do well in a growth+inflation environment.  I'll hold my tin producer - I think tin has underperformed following semiconductors, it should get a boost with economic growth.  I'll trade silver and my copper producers with the Hedgeye Trend signals.  I just solf my Platinun due to this.
• Palm oil: No Tump effect.  Moves in long price cycles - 3 years before new trees start producing.  Starting to get too high?  I need to investigate the supply response in the past few years.
• Emerging Markets: Philippines stock exchange: this country should benefit from manufacturing capacity moving out of China, and their US trade defecit is not too big.  Hold it: I'm paid a 5% dividend (100% payout ratio) while waiting for a bull market.  Delfi (Indonesian chocolate producer): has been hit by rising cocoa prices - they are now unsustainably high - I'm holding, but it may take a few years for the company to grow.  Hartalega: Probably benefits from Trump, but its a cyclical, so I'm waiting for the cycle to play out to sell.  Poland Stock Exchange: may benefit from an end to the war in Ukraine.  Holding all of these stocks for now.
• Uranium (SPUT): Should benefit in the long term, but in the short term the spot U3O8 price just depends on a few buyers and sellers.

Quick Update: Gold and Gold Royalty companies

Gold Royalty Companies: Early in October I stumbled across Mining Stock Monkey looking for gold miners.  I ended up taking a 4% position in a medium sized gold royalty company.  They're a better alternative to miners, as they're not affected by rising costs, like Newmont was last month.  But the big Gold Royalty companies are at nosebleed valuations.  And the small ones are bleeding cash or reliant on one or two revenue streams.  The medium sized ones that are just turning cashflow positive may be better bets.  Mining Stock Monkey also has a youtube channel where he discusses details on some smaller companies.

Gold is finally starting to get attention, even from mainstream media like CNN.  Worries me a bit as its getting too visible.  But I'll hold my 10% (paper) gold and 8% mining and royalty companies (at buy price) for the long term, not try to trade around them.  Theres a good chance gold stays rangebound for a long time, like oil in the past two years or Uranium in the past 12 months.

Physical Gold.  Luke Gromen did an interview on gold, he mentioned paper gold, while he thinks the ETFs' units are backed by gold reserves, but the risk is with the LME ("where historically a lot of the GLD gold was").  Unallocated gold in LME.  By "paper gold" he means "unallocated gold derivatives centred in London".  Still trying to figure out what he means.  But I'm thinking of converting my gold ETFs to physical.  For most of the black swans I can think of:

• Taiwan war
• US civil war
• US govt devalues USD 10% in a day

...gold is an insurance, and the only insurance.  If this shit actually happens, I'd be spending some uncomfortable nights wondering if my gold ETF positions were actually worth anything.