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.

Quick Update and thoughts on oil and gold.

My portfolio surged past SGD 1.2m last week, everything has been going right the past month.  The cherry on top was a the oil price shooting up due to fears of Israel attacking Iran's oil infrastructure.

I can't see any effect if Iran's oil export facilities are bombed.  Iran only produces 3.7m bpd, half of which is exported - say under 2m.  The Americans can release 1m bpd from their SPR for a month or two.  Last year Saudi Arabia voluntarily cut 1m bpd, and OPEC+ an additional 1m.  The world can make up for it.

Iran may retaliate against Saudi Arabia's oil facilities, that would cause a large oil increase.  And a long lasting one.  Don't think it'll happen, but its a small possibility.

I still expect oil to stay around $70-90 for a while, until reserves go down.  Politics can drive it higher (middle east war) or lower (Trump peace deal with Saudis).

My portfolio is now heavily weighted to oil.  Luke Gromen (33:52) suggests that gold will replace US bonds as a reserve store-of-value.  Gold is the 'release valve' in the world's search for a new reserve currency. Governments would prefer gold to go up instead of oil - as oil is inflationary, even though they don't control it....they could affect it to try to increase production and stop oil rising too much.

In this scenario, I think gold miners skyrocket, while oil producers do ok (as oil hovers in between $70-90).  Might be worthwhile buying more gold miners.  They will go up unless:

• there's a non-inflationary recession (interest rates and gold goes down), or
• oil surges (diesel is a large cost of mining).

So its a good hedge to oil producers, and will probably go up anyway.

Interesting Links

Commodities.  Supply/demand projections:

• Uranium (Sept 2024).  Justin Huhn shows an updated Uranium supply model (at 16:08).  From Cantor, he thinks demand here is a little optimistic.  Does not know if they include SMRs.  Probably derived from WNA's report, this looks like their upper demand scenario.  Theres a supply response from new greenfield mines in 2029.  Justin's own modelling shows at this point in time supply may meet demand, but only for 2 years.

• Anas Alhajii's views on LNG (Aug 2024): Contrary to the market, he is bullish, thinks producers will reign-in production (eg: rolling maintenance) if prices drop.

• Brendon Beylo's Tin Primer (Dec 2023).  The "Future Tin Projects" table is interesting.

ChinaTalk (Oct 2024) : JD Vance on the Economy: He's following Michael Pettis' ideas.  Why should the dollar be a reserve currency?  The Federal Reserve could impose a tax on any foreign purchase of US assets, with the rate adjustable to balance financial inflows and outflows.  Or they could buy foreign assets (like Singapore/Switzerland).  Reducing USD's reserve status (a falling USD) would help the re-industrialisation of the US, but the cant predict the first and second order global effects.

Quick Update

Most of my portfolio is up nicely:

• Hedgeye turned bullish on China after stocks rose on stimulus news.  They project Q4 has increasing yoy Chinese growth, but it may only last a quarter.  I'm not buying due to long-term Taiwan risk.  The majority of my portfolio is commeodities, which is another way of playing China anyway.
• Commodities have kept going up since Hedgeye pivoted to quad 3.  I bought 2% silver and 2% platinum on dips.  And 1% bitcoin, which has not had a real dip.  Plus a 1% fomo buy in copper (FCX) at the highs.  Look to buy a little more bitcoin before I'm finished.   Now 110% invested.
• Hartalega jumped limit-up 30% in a day a few days after I bought it on news of increased US tariffs on China gloves.  I had not realised just how fuk'n volatile this stock was, this is the second 30% day in this year.  If I had, I may have sized it a bit smaller.  I still think its undervalued as the glove market recovers over the next 3 years.  Biggest risk is rising Ringgit.
• Oil still bearish Hedgeye trend.  Which may help Harta above.
• My "Turnarounds and Lottery Tickets" - like Purecycle Tech (good production news), and the whole Singapore OSV/rig sector going up - have done well. Still plenty of room to run.
• Gold has been slowly floating up, unnoticed, week-by-week.
• Tin has moved up and down finishing off flat.  Maybe because semis are still down.
• Uranium flat, no reaction to supply cuts from Kazatomprom.  Spot is still below the incentive price of ~ $100.

Turning Bullish. Buying more.

Last night Hedgeye became bullish on a few remaining risk-on commodities: copper and bitcoin.  Pivoting to Quad 3 (decreasing yoy gdp growth rate, increasing yoy inflation growth rate).  Free release of their daily Macro Show from before the market open:

Key points, from short term to long term:

• Copper and bitcoin turned bullish trend, following silver and softs in the last few days.
• But they were overbought (before last night's open), so I may want to wait a bit before buying.  I bought 1% silver yesterday morning, after the FOMC's "sell-the-news" correction.
• Kospi and semis not yet bullish (14:01)
• Bullish on EMs (India, Indonesia, Malaysia).
• Oil still bearish (28:28), the last major commodity holding out.  WTI's trend level (right now) is 76, if it goes above that it becomes bullish.
• No recession (24:05 and 25:53).
• Bullish on 'the market' (10:42) due to vol dropping.  Quad 3 has historically been good for the S&P 500 because its dominated by big-tech.  They're not buying the index, theres better things to buy.
• Projected US quad 3 in Q4, followed by quad 2 then quad 3 (38:52 background chart)
• Inflation (21:47) rate project to drop to 2.X% this quarter, then to increase to over 3% in 2Q25. 

How do I use Hedgeye?

• Helping to decide when to buy things.  For example, I delayed loading up on oil stocks for the past 2 months after oil went bearish on 23rd July.
• Getting out.  I got out of my high volatility and non-cashflow producing assets (eg: silver, bitcoin, a high beta copper producer) in late July to early August, as one-by-one they entered bearish trend.  After which the market did its mini-crash.
• Short term, they trade in-and-out a lot, increasing positions when something corrects and selling when it overextended.  Over a few days.  I don't, cause I'm not a good trader.

In summary:

• I want to buy commodities again: copper, silver and bitcoin.  Except oil.  Turn around and sell if they go to bearish trend.  Look to buy on dips.
• If someone gives you a crystal ball which can time the markets, you should use it.  Even if the ball is a little cloudy and keeps changing.  Be a few steps in front of the herd.

Buy commodities, except oil...unless they change trend.