And So After 12 Years, QE Is Now QT
Hey Subscriber,
I take the fact that Morgan Stanley Research has stolen my trademarked phrase "DeRussification" and using it in their latest reports is a good thing!
It's time to add some more logs (companies) on the Derussification 202202035 Commodity Super Cycle fire that is only getting more powerful.
LOL, I got a text today from a managed account client who said "Why is it every day my Goldman Sachs managed account is down, my Transformity Wealth Management account is up like today--5.15% TODAY (and not counting the $2.50 special dividend from $LPG that hits tomorrow morning!).
I told him that they just don't know how to identify, measure, and ride the multiple historic S-curves of macro and microeconomic transformational change that exploded starting with the pandemic in 2020 (where we went to cash in mid-February) and then accelerated with the start of Cold War 2.0 aka the $50 trillion de-Russification transformation and rerouting of global energy and commodity origination and transportation.
I told him that I know that because his GSAM account is down 12% so far this year and his TRWM account looks basically like this:
| Total Portfolio Returns 2022 To Date | |||
|---|---|---|---|
| Total Portfolio Cash Invested | $190,000.00 | ||
| Total Portfolio Gain/Loss to date ($$) | $158,349.77 | ||
| Total Percentage Gain 2022 | 87.34% | ||
| S&P 500 Return, Year to Date | -17.97% | ||
| SP 500 Outperformance 2022 (X) | 4.64X | ||
| Total Portfolio Returns 2020-2022 | $330,319.23 | ||
| Total Percentage Gain 2020-2022 | 173.85% | ||
| S&P 500 Return, 2020 to Date | 21.54% | ||
| SP 500 Outperformance 2020 to Date | 8.1X | ||
Key point: As we have shared ad nauseum -- WHEN the Fed told the equities markets and bond markets they ffffd up and admitted they have to smother US GDP by reversing $9 trillion of QE and raise rates to 12X in order to break the back of FIXED 10-20%+ higher non-cyclical household costs of mortgage/rent/food/utilities/gasoline which in turn is feeding a stagflation wage spiral (where higher wages and energy inputs raise product and service prices and which then raises business labor costs which then AGAIN raises prices for goods and services with slowing GDP growth in a vicious cycle),
The 12 year TINA growth stock market turned into the TARA stock market as in "There ARE REAL Alternatives to High P/E Growth Stocks."
And shock of shocks, it turned out to work in a QT 3-4% Fed Funds/$9 Trillion QT world is LOW p/e HIGH cash flow securities.
We were just fortunate to already own a ton of these plays BEFORE the European Shooting War 3.0 and Western/Russia Cold War 2.0 broke out.
UPDATES + New DeRussification Plays
Our Global DeRussification thesis stands stronger than ever.
A) The ENTIRE global hydrocarbon molecule production and distribution system has irreparably been BROKEN and transformed by Western DeRussification in real-time
B) This transformation has made seaborne transportation voyage trips for natural gas, crude oil, NGLs and refined petroleum products elongated by 20-40%
C) And hydrocarbon energy storage (especially natural gas) is SO GLOBALLY TIGHT that just one of the 4-6 major hurricanes predicted to hit Gulf of Mexico gas and oil production rigs
D) North America could easily see parity with European prices for nat gas ($15-$18 Mbtu and $150 Brent oil) this summer.
Action to Take: We have been impatiently but tactically waiting for a pullback to under 20-day MA and hopefully to the key 50-day support to add a good mix of UN-hedged low p/e Marcellus natural gas plays (our favorites are $FANG $CRK $PXD $CVX $DVN $SM $SWN and few smaller players like $ESTE)) and Permian/Marcellus low-cost EP players ($EQT $AR $SW $RR) plus a few low p/e major Canadian oil producers like ( $SU $OBE and $CNQ) to our Ultra Growth + INcome portfolio.
IN the seaborne energy transport world, we are looking to add product tankers $TRMD/ $ARD /$STNG/ $TNK, LPG pure-play $AVALF, FLNG pure-play $EE (who recently IPO'd), and another major container dominant player OROVY with a 20%+ dividend.
Key Point: ALL these moves are predicated on 1) the huge secular/non-cyclical demand vs. supply imbalance for energy tankers, LNG, LPG, and container shippers in the new DeRussified world of seaborne energy transportation and 2) the massive re-openings of Shanghai and key other regions of China.
The simplest way to play an energy stock pullback is to double your exposure to $XOP. Our XOP Energy Exploration and Production ETF is up 67% this year and over 150% since we added it in June 2021. We will double XOP on the next pullback.
For more conservative play just add Exxon, OXY, and Chevron on a 5% pullback in oil and nat gas prices on global growth fears.
Key Point: Tonight Saudi Arabia just announced they will make up any shortfall that comes to the world oil market from oil sanctions and shipping insurance boycotts--maybe that will give us a pullback this week!
Full write-ups on ALL the new Global DeRussification plays by end of the week.
Your faithful advisor,
Toby