EP98: A New Era of Geopolitical Super Vol

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As we teased in last week’s video, we want to expand on the evolution of our Super Vol commodity macro framework to explicitly rebrand it Geopolitical Super Vol. Since Russia-Ukraine, we have resisted the super-cycle framing that we think implies a smoothness to an upcycle like seen during the 2000s China-BRICs expansion period. The current environment is more like the 1970s—arguably a super-cycle, but one with a lot more choppiness and stress along the way. The current decade is shaping up to be a modern version of that era, with some important differences.

Although we are calling it Geopolitical Super Vol, we want to be clear on a few conclusions:

* We believe structural profitability and opportunities for growth are significant for a broad range of companies involved in traditional energy, new energy technology, the power value chain, and a host of raw materials.

* We believe the corresponding S&P 500 weighting for these sectors will increase meaningfully in the decade ahead.

* It is the inevitable sharp economic downturns along the way that motivates us sticking with and evolving the Super Vol language. You can’t demand that which does not exist—and that means sharp commodity spikes will be met with similarly sharp pullbacks during this era.

0:00 Introduction

2:41 A Break from The 1980-2020 World View

6:22 Implications for Energy Sector

10:48 Investing in Energy, Power, and Materials

14:44 Obliterating Pre-Iran Views

16:36 Obliterating Pre-Pre-Iran Views

18:53 Be Wary of Perma Bulls and Perma Bears

20:36 Be Wary of Net Zero Rebranded

21:58 Energy’s Natural Hierarch of Needs Remains Our North Star

22:39 FAQ #1: How do we think about global recession risk?

24:38 FAQ #2: What are lessons learned from the Asia Financial Crisis of 1997-9?

27:15 FAQ #3: What does the traditional energy profitability cycle look like in Geopolitical Super Vol?

28:51-32:10 On A Personal Note: Feedback vs Pushback

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📜 Credits

* Intro & Outro music: Wolf Hoffman: Concerto for 2 Cellos in G Minor, Rv 531: I. Allegro Moderato.

* This episode of Super-Spiked Videopods was edited and produced by Veriten Productions.

⚖️Disclaimer

I certify that these are my personal, strongly held views at the time of this post. My views are my own and not attributable to any affiliation, past or present. This is not an investment newsletter and there is no financial advice explicitly or implicitly provided here. My views can and will change in the future as warranted by updated analyses and developments. Some of my comments are made in jest for entertainment purposes; I sincerely mean no offense to anyone that takes issue.

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