Nutstuff is absolutely sure now that there is more to Nigel Farage standing down than meets the eye! ( more in full letter tomorrow).
On investable thematics:
Nutstuff contrarianism on China and Oil ( classic weekend Economist pontificational
negative Waffle) 3 key UK Energy Portfolio posns up like scalded cats!
Both these playing out well here from +ve calls whilst away still doing alot of LOTFW!
The now real China Tech “mean reversion” is long overdue with KWEB +3% / Bidu & AliBABA (+12% overnight) leading…
AliBABA Sept $120 calls looking + >2x already in a week! (🎩 Shrub)
On WARS; the word is sadly RE-escalation. Today’s headlines will be dominated by two wars. The first is the Middle East, where the ceasefire has effectively collapsed and the market is slowly waking up to the fact that energy is once again becoming an instrument of statecraft. The second is Ukraine, where several fascinating conversations over the last 24 hours leave me increasingly convinced that the Western media’s portrayal of what is happening on the ground is becoming detached from reality. I won’t go into detail until I’ve had time to verify more of what I’ve been told, but the common theme is escalation, not de-escalation. Markets have an extraordinary ability to ignore uncomfortable realities until they become impossible to ignore. Meanwhile, something far more constructive is quietly happening elsewhere. The long-overdue mean reversion in Chinese technology stocks finally appears to be underway. I’ve written repeatedly over the past few weeks that investors had become incapable of distinguishing between China the economy and China the equity market. They are not the same thing. China undoubtedly faces profound structural problems—property, demographics and debt among them—but valuations had already discounted an extraordinary amount of bad news while policy was becoming steadily more supportive. It is pleasing to see prices finally catching up with what always looked like common sense. As for the Middle East, don’t make the mistake of thinking this is simply another spike in the oil price. If the Strait of Hormuz becomes unreliable not only because of missiles but because sanctions, insurance costs and shipping finance make it prohibitively expensive to transit, every airline, refinery, utility and petrochemical company with long-term liabilities starts asking where it can secure dependable barrels. Increasingly, the answer is the United States. Not necessarily the cheapest oil, but the safest, the easiest to insure and the easiest to finance. Yes, China is reducing its dependence on imported fossil fuels through nuclear power, renewables and electrification, but let’s not deceive ourselves into believing the world has somehow stopped needing hydrocarbons. Aviation, shipping, heavy industry and petrochemicals still depend on them. The transition is real, but so is demand. Every new geopolitical shock increases the premium attached to reliability. Markets obsess over the daily oil price; I’d pay much closer attention to who is quietly signing the next 10- and 20-year supply contracts. Reality leaks physically before it leaks financially.
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