What We Do
We analyze trends in stock markets, sectors, industries, bond markets, interest rates, commodities, precious metals, and the global economy.
Our goal is to identify mega-trends which stand to benefit specific sectors, industries or commodities.
We also analyze shorter-term cycles in financial markets and use a variety of measures to gauge market risk.
Mega trends are generational trends — sometimes referred to as “structural” or “secular” trends — that span several decades; sometimes longer.
Our aim is to identify industries which stand to benefit from these trends (while avoiding those industries at a disadvantage).
An example of a mega-trend is the drive towards decarbonization, with the Paris Accord setting a target of Net Zero by 2050. Decarbonization is expected to spur massive growth in electric vehicles (EVs) and Lithium-ion batteries, a key component. The IEA projects strong growth in Lithium demand by 2030.
Lithium prices, however, were falling as production grew faster than initial demand. We tracked lithium prices and were able to identify when they bottomed in 2020 before reversing sharply upwards.
Source: Fastmarkets – Lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price CIF China, Japan & Korea, $/kg (midpoint).
Financial Market Cycles
We track financial market cycles using a variety of indicators. An inverted yield curve — when the 10-year Treasury Yield falls below the 3-month T-bill discount rate — has preceded every recession declared by the NBER since 1960. It enabled us to warn of the 2008 recession as early as January 2007 and has been flashing a warning sign since late last in 2022.
We also monitor market risk. At present, two of our most reliable indicators warn that stocks are over-priced.
First, Q2 stock market capitalization relative to GDP — Warren Buffett’s favorite valuation measure — is more than double its long-term average of 1.03.
Second, S&P 500 price-to-sales ratio has climbed to way above its long-term average of 1.68.
A monthly subscription offers weekly analysis and review of all major markets that we cover.
New subscribers — please take advantage of our $1 special for the first month.