Good Monday evening MacroEdge Readers & Community,
I hope you had a fabulous long holiday weekend. This was a fantastic weekend for me as I continue to ‘chart the future’ - and it is going to be a very robust & exciting rest of the year. Labor Day marks a nice turn point in the year where I feel like many of the people I get to work with on a weekly basis really lock in and get focused until the holiday season. While this year seems to be flying by like no other - I am very much looking forward to the remainder of the year and all of the changes ahead.
We’ll keep this report brief as we spool up the busy week ahead - and we’ll review the report schedule for the week as well as the macro week ahead. While there is a general obsession over the next FOMC meeting - I am much more focused on energy price movements and yields with fiscal dominance continuing to pour gasoline on the fire. Whether or not the Fed moves 25 basis points or not will have very little effect on the end outcome (which will either be yields moving higher immediately if they don’t hike, or yields stay in a range if they hike and process the next few months of market data). Given how low quality and compromised macro data is, I think it’s also mattering less than ever - and we have to rely on alternative signals and metrics to get the full picture of what’s going on in the economy. This is going to be a critical 4th quarter ahead for energy and commodity prices, and there are a lot of signals looking like late 2021 and late 2007 in the space - especially from a technical perspective. I know that some think that Ken Griffin and Peter Thiel entering the oil and gas space from an investment standpoint is a red flag, but I happen to think the opposite given where we’re at in the cycle. While the inevitable outcome of any major parabolic move in oil prices tends to be demand destruction - this cycle will be unique in the fact that there’s not some magical production source that we find that can just come online. Middle East flows are still impacted to the tune of about 5-7mmbpd (very large) and now the conflict between Ansarallah and Saudi is also heating up.
The theme that we’re living in right now is the illusion of abundance… and I happen to think things will change pretty substantially on the commodity-front over the next year - particularly in oil and gas where I think opportunities remain robust.
This evening we’ll first cover the report schedule for the week, dive into the macro week ahead, talk about ‘going around the globe’, highlight the fact that we’re at yet another day with more inflation, and we’ll lastly take a look at an oil and gas preview - talking about lies ahead in the most important trade of the 4th quarter (yes, more important than AI and semiconductors).
I could continue to beat a dead horse talking about the semiconductor & AI trade - but I don’t think it serves much of a purpose…
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Report Schedule for the Week
War Note (Tuesday)
Oil and Gas Strategy Note - Public & Private Opportunities (Wednesday)
Midweek Macro Note (Thursday)
Redeye Macro Note & Don’s Notebook (Friday Evening or Saturday)
Oil and Gas Macro Note (Saturday)
A New Frontier in Oil and Gas (Sunday)
Macro Week Ahead
It’s a relatively light week ahead from a macro data standpoint. With a mostly noisy - and largely useless employment data release out of the way - we’ll pivot to our next favorite batch of chop with the PPI and CPI reports. While these lag, I expect that we start to see things entrench even further as commodities and food prices continue to rise… Gauges like copper provide a useful look at where things are at - and the inflation picture is not a pretty one right now… The Fed continues to be between a rock and a hard place and the next wave up in commodity inflation could be one on par with the 70s and late 07 into 08 - and we know the outcome of that. While some may bury their heads to deny the reality of the Hormuz situation, it’s pretty apparent that inflation is the risk that the Fed continues to ignore.
Producer Price Index - United States (Thursday)
Consumer Price Index - United States (Friday)
University of Michigan Consumer Sentiment (Prelim)
*Earnings with market caps >$300bn - Oracle
Around the Globe We Go
I am resuming an intensive travel schedule given the change mentioned in the future section - and this will coincide with many different timezones, and locations - but the focus is almost solely on the oil and gas sector, and the many opportunities that have appeared in the last 6 or so months. Some of these locations include Midland (next), Phoenix, Williston, & more, and I look forward to sharing the journey with many of you - and meeting some of you on the road as I plot a new vivid pathway forward…
Some Change on the Horizon
As they say - ‘nothing lasts forever’ - and that will be the case as change approaches on the horizon. Over the next three changes there will be changes occurring to our organization, though these will result in minimal impact to our report schedule, deliveries, and social media activity. Stay tuned over the course of September to get a full understanding of these changes. One of those will include a major relocation to Scottsdale, AZ - which will serve as my new homebase when I am not on the road - given our intensive focus of late on the oil and gas sector - I am able to easily able to reach Midland, Williston, Houston, Tulsa, et al. and (yes I know there are many readers from Texas), Texas-living itself is not conducive to the environment that I am trying to craft. As part of the entire shifting operational landscape, we will have new locations and service areas - and these will also be announced sometime this month.
The changes and the transition for me were the only & best choice for the future, and decisiveness has long put me in a great position to grow organizations from, from the ground up, and from the sky to the stars. Change never comes with certainty, but these particular changes and what’s to come are the foundation of my vision on a much larger scale…
Another Day, More Inflation
We are on the brink of a major commodity-driven inflation impulse wave - and that’s ex-energy… I know the correlation is tight, but I like to separate the two from an analysis standpoint.
The copper melt-up continues:
Wheat and other softs have risen sharply in the last 3 months:
