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Bullish on Oil, Pipeline Stocks, Long-Term Bullish on Cannabis: Todd Sullivan (Szn 4, Ep 27)

Published October 5, 2022

This podcast episode brought to you by Covey — Covey is designed to find, reward, and train the next top investment managers —from any background—that anyone can copy, so everyone can win.

Todd Sullivan of ValuePlays.com rejoins the podcast to discuss oil markets and the investment case for cannabis.

Sullivan’s call for $100 oil last year turned out to be prescient. Oil prices have retreated from their peak, but that will be short-lived, he says…

(This episode was recorded Sept. 22, before the recent rebound in oil prices. Premium subscribers get an early actionable highlight clip of the podcast along with earlier release of the full episode — and a host of other benefits. More on our Substack or Supercast.)

Content Highlights

  • Fears of ‘demand destruction’ have led to the decline in oil prices, but risks are tilted toward prices moving higher again. Production is not coming back (3:48);
  • How much of a concern is a slowing Chinese economy when it comes to oil prices? (10:14);
  • What about stocks? Sullivan continues to like pipeline companies… (16:00);
  • The investment case for cannabis: Overview (27:03);
  • The only thing that will unleash capital on the cannabis industry is decriminalization (31:46);
  • What to look for if you are looking to buy and hold cannabis stocks and two of the guest’s favorites (34:30).

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Jordi Visser is Optimistic About Inflation, Stocks, Cryptos — And More (Szn 4, Ep 26)

Published September 28, 2022

Jordi Visser, president and chief investment officer at Weiss Multi-Strategy Advisers, joins the podcast to discuss his reasons for optimism during this trying time for global financial markets.

Content Highlights

  • The environment is constructive for risk assets (2:26);
  • Focus has moved from inflation. Investors are too negative (3:50);
  • The Fed is raising interest rates. Inflation is coming down — a lot faster than people think (4:41);
  • What sectors and why? (9:53);
  • No, you don’t need unemployment to increase for inflation to come down (13:22);
  • The bullish case for biotech (15:12);
  • The blockchain will have profound impact on labor markets (19:42);
  • Background on the guest (25:13);
  • Clean energy and how that fits in (29:14);
  • Oil should move higher, but watch out for global trade (36:47);
  • Web 3.0 and cryptocurrencies: here too there are reasons to be bullish (39:48);
  • Beta has started to outperform profitability. A final reason to be optimistic (51:45).

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Powell, European Energy Crisis Rattle Markets

Published August 29, 2022

The following is an amended version of the Aug. 29 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack.

Stocks sold off precipitously on Friday after comments from Fed Chair Jerome Powell at the Jackson Hole Symposium. Powell laid down the gauntlet on interest rates, saying the Fed was determined to keep raising them until inflation was under control. It turned into an ugly day, with the Nasdaq down almost 4%, S&P 500 declining 3.4%, and Dow Industrials by 3%.

Jerome Powell quote from Jackson Hole conference Aug. 26, 2022
Fed Chair Jerome Powell spoke these words at the 2022 Jackson Hole Symposium. Source: author via imgflip.com

European Energy Crisis

As you may know, energy prices have shot up throughout the continent. This is taking its toll on consumers, which will have an effect on corporations especially as the weather turns colder. Apparently 25% of the S&P 500 earnings come from Europe. There has been a lot of drama on Twitter about this, which leads one to believe it may turn out to be nothing.

The negative headlines are certainly coming fast and furious over this. No less an authority than Foreign Policy (hardly a click bait factory, at least not historically) informs us the crisis is worse than we think. Austria’s largest energy supplier has apparently become insolvent. You figure they won’t be the last. The crisis is apparently affecting glass production as well.

All the Sturm und Drang (German term loosely translated as ‘mad drama) aside, the situation in Europe absolutely bears watching.

The Bottom Line©

Remember that stocks and bonds very rarely sell off at the same time for very long. Eventually the cash that is generated needs to be put to work somewhere, even if it is in the relative safety of bonds. But with the Fed’s course (apparently) set “for some time” that is not very palatable right now. It will be interesting to see how these next couple of days play out in that regard.

Where Powell is concerned, it doesn’t look like we have any choice but to take him at his word for now. His comments on Friday clearly answered the question whether he was speaking for Fed interest rate policy at at the last FOMC meeting (he wasn’t) or just shooting off his mouth (he was). The market is playing along so far, at least judging by Friday.

The interest rate hikes have yet to be felt in much of the economy. In the U.S., malls, restaurants, shopping centers, and airports are crowded AF. Highways are clogged with traffic. The labor market is strong (we’ll find out on Friday how strong with the next round of non-farm payrolls). There are some indications that this is starting to turn, but you still have to go looking for these indications — they aren’t exactly jumping out at you.

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