Oh, the irony of it all

A couple of days after I posted my Bear-o-meter report indicating an increase in risk, the market began pulling back a bit. One or two days is not a down trend; but it pays to keep an eye on the current moves. Ultimately, whether this market pulls back now, or in a month, I feel that any pullback might see the SPX land near 4800, or 4600 in the worst case scenario. My last blog covered this potential.

S&P correction status

Here’s the SPX with my “Near-termed Timing Model” applied to it. Bollinger Bands (BB) on price, Stochastics/ RSI momentum bottom panes. If this is to be only a minor correction, we may have seen the entire move by today. Or–we may see prices decline over a period until stochastics and RSI near their oversold points (lower horizontal lines) and a lower BB band line test. A more major pullback (4800 or below) would see these indicators tank. Note the bearish engulfing candle on the daily chart.

Recent videos

  • Recent videos include some ideas for dealing with parabolic market moves, and examining some undervalued sectors. You can view all of the videos on this page.
  • I just recorded a video covering the small capped indices. I looked best Canadian ETF vs the best US US ETF technically to examine the potential in each market. That should be out next week.

“The problem with happiness is that it doesn’t buy you money” Anonymous

Oh, the irony of it all

People think they are being clean, green, woke-folk by driving EV’s and buying solar panels for their house. Not so fast, Poindexter…

“As a production powerhouse, China is by far the biggest polluter on the planet, and that (pollution) includes the manufacturing of clean energy technologies. It then sells those products, including to countries in the West, which have stricter emissions rules and hefty climate targets. According to Wood Mackenzie, a solar module made in China is 65% cheaper than the one made in America, and Beijing’s share of the market will remain above 80% until at least 2026. Seeking Alpha

Another irony.

63% of worldwide lithium battery production comes from China’s higher polluting production facilities.  Not to mention the pollution generated from rare earth materials mining, then the replacement and recycling of old batteries, etc.

Power needs growing exponentially

I maintain that nuclear is the answer to the coming energy crisis. Fossil fuels are vital to fill the power gap until we have adequate nuclear. Nuclear plant development is not an overnight thing. Population growth, data storage, cloud, AI computing power, crypto etc will cause huge demand in the meantime. See chart below.

 

Artificial Intelligence (AI) Energy Forecast

This need for fossil fuels is fact, despite Crazy-Steve and Tyrannical-Trudeau’s carbon bashing: No political party will stay solvent in an environment of rolling blackouts! Especially in colder climates like Canada.

Fossil fuel usage will grow, not shrink, over the coming years to fill the gap.

Bottom line:

  1. Forget windmills and solar panels answering the power grid needs. Nuclear is the long termed answer, fossil fuels will fill the gap until nuclear can fill the need.
  2. Drive an EV and install solar panels at home because you want to, not to save the planet.
  3. Hold some nuclear and fossil fuel exposure in your portfolio.

Couldn’t have said it better myself…

You may have heard me say this about 10,000 times over the past several months (OK, I “inflated” that claim). Stagflation, stagflation, stagflation. There. I said it 3 more times.

Here’s another voice….

“With $35T of debt and $1.3T of interest expense looking out 12 months, the only way out is to rate cut and monetize the debt with a new Fed 3% inflation target at some point soon. Bullish metals, miners, aluminum, copper…” Larry McDonald

 

Oh, Canada

David Rosenberg feels the loonie will fall in order to rescue our terrible productivity. Canada’s productivity, discussed in past videos and blogs, is amongst the worst in the world. Far right, on chart:

Here’s David’s comments:

We have been arguing aggressively for the Bank of Canada to lead the major
central banks in easing tight monetary policy. The effect this will have on the loonie is an
important transmission channel to the real economy. A weaker currency will come at the
cost of some upside pressure on consumer prices (hopefully offset by falling shelter
costs) and crimp retailer margins. But given the scale of the structural challenge faced
by Canada’s goods-producing industry, a weak dollar is not a thing to automatically fear.

Technically, the loonie could easily get back to $0.72.

That’s a couple of cents lower than today on this chart.

Note Rosenberg’s comment re inflation – if the loonie falls, inflation will rise in Canada.  Canadians are already facing increased inflation via the carbon tax -especially businesses, who don’t get a rebate, and will pass the increased cost on to consumers via their products and services. Stagflation!

Fairness

Quebec consumers & business get a special deal from our beloved PM. They don’t pay the same levels of carbon tax over the coming years. Full details here.

Why’s that? Surely, nothing to do with the Bloc’s  supporting every controversial new bill including the recent draconian “Hate Speech” bills, while voting against the never ending Liberal scandal investigations. Nah. Nothing like that.

Investment implication: Perhaps this will give an edge to PQ industry stocks vs those companies located in less-entitled provinces?

16 Comments

  • Immigration is right for Canada. We need to keep the numbers high. But we are executing it like crap. We need immigrants to start working to their full potential as soon as they arrive in Canada. We MUST HAVE THEIR OUTPUT!!! Adding people while not increasing output is what is causing decline in productivity. Immigration is smart! The way we are doing it is stupid

    Reply
  • I’ve seen several comments like this one:
    “63% of worldwide lithium battery production comes from China’s higher polluting production facilities. Not to mention the pollution generated from rare earth materials mining, then the replacement and recycling of old batteries, etc.”
    What I also notice is that they don’t mention pollution from mining for metals used in ICE engines, pollution from fossil fuel discovery, pumping, refining, transportation or use, recycling used oil etc

    Reply
    • I think the point is that people think that EV’s are green. They are no more so – given China and other factors – than ICE engines.

      Reply
      • Agreed that the production process for either an EV or an ICE vehicle is polluting. But the difference is that the ICE vehicle continues to pollute the environment for every mile driven. While the EV purrs along quietly and does not further pollute our atmosphere.

        Reply
  • Hi, I wonder about your comment on the supposedly special arrangement that Quebec has regarding the carbon tax. Does your calculation take into consideration that Quebec taxpayers do not receive any checks back from the government like other provinces ?

    Reply
    • I think its a bottom line thing. I am less concerned with the consumer end –aka consumers, if in a low income, get it back in non PQ provinces. But its business outside of PQ who will feel the brunt of the carbon tax (PQ still gets taxed, but less). Out of necessity they will pass costs on through the production to consumer chain.

      Reply
  • Hi Keith,
    Can you please do a blog about the VIX chart and the current status of the chart and what it is telling us?

    Reply
    • VIX is one of the 11 components of my Bear-o-meter. It went into “sell” territory a while ago (complacency) when it hit 12. It has moved back into neutral at 16. The VIX is now moving up, indicating that volatility is increasing. This, although not officially in a bearish complacency position, tells me that something is brewing…as the VIX trends up, the potential for larger swings increases. We’ve had a large swing up this year….my view is for a swing down in the coming month or two.

      Reply
  • Well said Keith!
    For anyone interested in reading more about our exponentially growing power needs and the effect it may have on the future economy, energy demand and environment – I would recommend The Crash Course by Chris Martenson. Our PM’s carbon tax and restrictions on Cdn energy certainly won’t help the world meet future demands. As the kids these days like to say, the math isn’t mathing.

    Reply
    • Thankyou Nathan–I will look up the Crash Course
      BTW–new book by Larry McDonald “How to listen when markets speak” is amazing, and covers the reality, not the fantasy, behind continued upside for commodities including fossil fuel – aka energy demand growth

      Reply
      • Thanks for the book recommendation. I will add it to my list. Would enjoy hearing more of your recommendations (have read all of yours already). As Warren says – time spent reading is time not wasted.

        Reply
        • If you like audio books, you can get Howard Marks “The most important thing” –its a book, but I like the audio as the narrator is excellent on the Audible version, and there are no charts so its easy to absorb while driving or taking a walk. Its from that book that I acquired the philosophy of “Don’t predict, do prepare”. Many gems. Also–Market Wizards books are good.

          Reply
  • Recently read the following At the UN’s Climate Change Conference Dec. 2023, two dozen countries—including America—committed to tripling nuclear energy by 2050. To meet these goals, the world must build roughly 50 large nuclear reactors per year over the next 25 years. Even if partially true, apart from Cameco how can one invest in this?

    Reply
    • There are several uranium producers..BHP, NexGen (disclosure: we hold a position in our Aggressive Strategy in this), Uranium Energy come to mind.
      You can also look at uranium ETF’s that play the commodity like Sprott’s.

      Reply

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