“The interesting part is, it takes about six weeks for the tankers to get to where they're going. This week or next is when the oil shock really actually hits. We're still going to have six weeks of this. For a lot of countries, and a lot of countries have actually struggled. ... The global economy has already started to absorb the hit. The oil shock, it has not fully reversed. It is still elevated. It is still volatile. The markets have moved on, but energy still hasn't.”
“The growth rate of inflation-just consumer spending slowed somewhat in recent months, nothing catastrophic, coming in at an average of 1.2% annualized over the next six months ending in February. By comparison, though, we had seen that it was growing at an average rate of 3.6%. So that is less than half per month in 2023 and 2024 So that's slowed down in spending. Again, we're talking about profits. That has a direct impact on that.”
“The pattern suggests that while tight monetary policy and soft aggregate demand are putting downward pressure on inflation, sector-specific factors, things like tariffs, strong demand for semi-conductors have kept overall inflation from declining on net. ... Right now, they're projecting that inflation will reach the Federal Reserve's 2% goal by mid-2028. Although, there's considerable upside risk to this. The projected inflation path, given the high uncertainty around the duration of the conflict.”
“This is exciting, but the markets are really overstretched. So when the market bottomed recently, a few weeks ago, it was overstretched to the downside. Now it's overstretched to the upside. And it doesn't mean it can't keep going up, but it does mean you should use caution. Don't just necessarily jump in willy-nilly and put it all in black and say, let it ride. Certainly sentiments out of Washington could change anytime.”
Geopolitical relief is currently driving market record highs
“Effectively, what we saw this week is that, a week ago when we were talking, the markets were still pricing fear. Today, they're pricing relief. What was interesting is that when we first went into this conflict, we saw the markets pull back, but you and I talked about this, they didn't really pull back that much. But now, instead of just going back to where the markets were prior to this conflict, they've jumped ahead and once again, S&P is at all time high.”
Reaction to earnings matters more than headline results
“The thing to watch for earnings season, it's not the earnings themselves, it's how the market reacts to the earnings. What we've seen, if you're looking at the markets, let's say a company comes out with really bad results, and the market goes up. That's actually a good sign. That means most of the bad results are already priced in and it was better than people expected. But if they come out with great earnings, the market sells off, that's a bad sign.”
Correlations between asset classes are currently tightening
“Now, if you look at after the shock, so like March 1st and to present, a lot of things correlated. You looked at equities, you looked at treasuries, you looked at investment grade credit, really high correlation to each other. ... Basically what it is is everybody's selling indiscriminately and they're trying to raise cash and there's a lot of leverage and so they're deleveraging and the deleveraging causes everything to go down, not just money rotating from one place to the next.”
Nuclear and biomass offer the most consistent energy
“Nuclear shouldn't be a surprise to anybody, neither should geothermal. ... Biomass comes in at third, the most consistent source of energy out there. And even before we get down to coal, you can add wood and natural gas above that. So I think it bodes the question, and I know we're starting to see some things come back around using nuclear, but it bodes the question, are we putting our folks in the right places if we're really, truly concerned about being efficient on where we get our energy?”
