OTW #37: Watch fertilizer stocks, foreign investment in the U.S. declining, and more
Important financial stories to check out over the weekend
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1. Look beyond the cows. Start researching fertilizer companies.
Cattle Futures once again closed at an all-time high.
Antagonist’s take
This will affect more than just cattle. There’s a good chance that nearly all agricultural prices will soar as well.
Last month, I explained why fertilizer companies are a strong play as a result.
Here’s a portion of the article:
Globally, it’s even more concerning. It’s not an exaggeration to say that the world is on the brink of an agricultural crisis, driven by a substantial increase in the demand for grain over the last 20 years.1
This surge is primarily due to the rise in disposable income and a shift in dietary preferences among emerging economies. As these economies grow, more people are transitioning from a starch-based diet to a protein-rich one, which in turn increases the demand for grain (animals gotta eat too!).
This trend is expected to persist throughout this decade, putting further pressure on the global food supply.
2. Asset allocation ideas: “Ride My Bike Portfolio”
Greg from
created this video explaining his “Ride My Bike Portfolio.” This portfolio is designed for people who want to invest but don’t want to spend much time researching individual stocks or constantly rebalancing their investments.Antagonist’s take
As Greg says in the video, portfolio construction and asset allocation are much more important than understanding individual stocks. I love this video because it explains this concept is a simple, concise way that even new investors can understand.
More importantly, the content is fantastic. Greg shares how and why he allocates his money and then explains how you can tweak his suggestions to fit your investment style, risk tolerance, and goals.
3. Energy Crisis
Erik Townsend, a former hedge fund manager and current host of Macrovoices, just released a new docuseries, “Energy Transition Crisis.”
Townsend presents actual data and facts WITHOUT the sensationalism and political agendas that typically plague discussions about fossil fuels and alternative energy sources.
Antagonist’s take
I’m thrilled that this docuseries is now live on YouTube. I have tremendous respect for Townsend’s research, and I want to see it reach a larger audience.
If you’re a regular reader of The Antagonist, you know that I write about energy quite a bit. From an investment standpoint, I’m extremely bullish on the sector and believe it will soar for years.
You may also be familiar with Townsend’s work if you’ve read my special report on energy. In it, I cited several of his data points and charts.
Premium members also have access to my energy stock recommendations in our Blend Portfolio.
4. Foreign investment in the U.S. dropping off?
For the last 20+ years, Saudi Arabia has invested excess profits from higher oil prices into US assets.
However, that trend has been completely broken this year.
Despite oil prices rising 30%+ this summer and trading near $90/barrel, Saudi Arabia’s investments in US assets are falling.
Most recently, their holdings of net foreign assets dropped below $400 billion for the first time since 2008.
Their US Treasury holdings are down a massive 41% since February 2020, to $108 billion.
(Source: The Kobeissi Letter)
Antagonist’s take
In our August monthly deep dive, I shared an interesting take from Tavi Costa, partner and macro strategist at Crescat Capital. Costa now sees gold as a superior alternative to treasuries for central banks outside of the U.S.
Saudi Arabia’s drop in U.S. Treasury holdings doesn’t necessarily mean that the country is investing in gold instead. Indeed, some of the decrease is almost certainly due to rising interest rates and the ensuing drop in Treasury prices.
Still, this is an enormous change that has significant impact on global markets. It also appears to support Costa’s hypothesis that non-U.S. central banks are seeking alternatives to U.S. treasuries.
5. Auto delinquency rates are catching up to anecdotal evidence.
Auto loan delinquency rates are now at their highest levels since 2008.
Since the Fed started raising rates in March 2022, auto loan delinquency rates have nearly doubled.
For Q2 2023, the auto loan delinquency rate in the US jumped to 7.3%.
This is up from 6.9% in Q1 2023 and above pre-pandemic levels.
Moody’s said that auto loan delinquencies will hit 10% in 2024.
(Source: The Kobeissi Letter)
Antagonist’s take
In the Aug. 26th edition of “Over the Weekend,” I linked to an interview with Kevin Malik, the CEO of a nationwide vehicle transportation marketplace. Malik said that his company, RunBuggy, is seeing a large increase in car repossessions.
I also mentioned that stories from the frontlines like this can provide you with valuable information before Wall St. learns about it.
With auto delinquency rates ticking up, it appears that the official reports are finally catching up to what has already been happening in the real world.
Last thing...
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Thank you for reading, and have a great weekend!
Jason Milton
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