9 Comments

Super clear post on a complex subject

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Quality.

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Fantastic write up! Thank you!!

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Comparison of total houses vs. population is a bit simplistic. For example part of the reason for high housing demand is inter-country migration. This creates shortages in areas of high demand like Florida, and leaves surplus inventory in cities / areas from which people are moving out. The inventory in undesirable places like California and NYC might become stranded.

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Didn’t oil top as materials top in 2008? Also how do you reconcile the fact that materials went up compounding every year in the 1970s.

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Copper fell -40% in 1974 which I find closest historical analogy to now. Agree oil and materials topped at same time in 2008. Believe different this time as durable goods clearly slowing while transport still strong with some reopen tailwinds. May be wrong

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There is an important distinction here. The capex in this cycle has not come online. The oil peak in 2008 was accompanied by over $200ml p.a. in US capex. That isnt happening now. We saw a massive amount of near-new gear scrapped post covid. We have the well-intended but wholly disconnected ESG crew starving the industry of capital.

Will not be surprised if we see oil an energy stocks act like defensives on down days and provide monster offense on up days with a free inflation hedge in there.

Look at the governments around the world. Despite everything they are shutting down gas fields, shutting down nuclear and still pushing for wind and solar. Meanwhile the global famine has begun.

Brutal. 40 years of ever-worse policy errors coming due and the bill is finally coming due.

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This is a very valid, very important point, totally agree

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K thanks. Interesting didn’t research copper in 1974

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