Firstly China…wow. Whoever said Chinese data was too manufactured in a straight line?
Chinese GDP last week was bad. Really bad. With a rising USD and slumping China we’ll see more softening in the commodities space. About one third of demand for steel comes from the Chinese building sector so if that turns to cactus then iron ore gets sold off and everything attached to steel and building also gets sold off.
Wait…that’s already happened.
If David says it’s important then it’s important.
The Chinese property market is the biggest asset class of any kind in the entire world. Pay attention.
It’s also a part of the reason why oil is weakening despite there being such a massive supply issue. The disconnect in the market is phenomenal.
Fact is that China does start being China again at some stage. These things pass. Copper will hit points at which accumulation as the generational buying opportunity of the year becomes mandatory.
Wait for PMI’s to turn for that confirmation though. In my opinion oil can be slowly accumulated now in any way you see fit.
Make no mistake that the intentions of the sanctions against Russia were noble but massively misdirected. Sanctions have hurt the west far more than Russia. It’s the reason for much of the inflation we see and will drive us into recession. They’re not having any real impact on Russia at all.
In fact, Reuters have a little piece about Saudi Arabia doubling their oil imports from Russia (at a cheap price) so they can sell their own oil at top dollar.
I have a sneaky feeling, and this is a big call, that the narrative on Ukraine may start to change the Russian "sanctions" will start to be unwound. For German industry not to buckle.
I covered the restriction of gas into Germany with Jonathan Pain on the podcast last week about how calamitous a situation it is over there. If you’re keen on a very smart conversation with someone who knows please have a listen here.
There are two markets in energy now between actual supply and the spot price of the commodity. And they’re miles apart.
Now for the trade that paid…
I cannot stress enough how good a portfolio manager this woman is. Only problem is that she’s also Democratic Speaker of the House of Representatives. However the Pelosis acquire massive amounts of stock in the leadup to legislative changes and as long as she declares it she’s well within the rules.
You can go ahead and buy NVDA or buy the semis ETF SMH (listed in London or the US)
However the SMH ETF has its biggest holding in TSMC so any pro American chips bill may not be amazing for the Taiwan mob so going directly into Nvidia is probably the smartest way to gain from Congress actually working hard in the leadup to August 4.
We purchased NVDA on Monday night (18/7/22) and are sitting on a healthy little profit. I'm happy with the number of positives currently sitting on the side of this name.
All the best,
James
James Whelan | Investment Manager
Ground Floor, 5-9 Harbourview Crescent, Milsons Point NSW 2061