Nick Hodge – Macroeconomic Themes To Consider When Investing In The New Year
Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us for a wide-ranging discussion where we review how the macroeconomic environment has played out from 2022 and now heading into 2023.
This is a wide-ranging discussion touching on the continued bear market in general US equities, bonds and interest rates, the US dollar, oil, gold, silver, platinum, battery metals, and much more. Nick breaks down how he is managing his portfolio allocations in cash, in the precious metals sector, and also mentions some specific royalty, gold, platinum, and copper stocks that he has allocations to. He wraps up restating the bullish developments in both the lithium and uranium sectors as energy metals to watch.
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1st toe in the water, AUIAF ( Aurania) had a stink bid on this baby since last May’s presentation that finally hit Dec 30, 1700 @ $.294 US
Guess it was 16-18 years ago I did the same thing ( $300 @ $.55 ) with Keith Barron when he was a regular guest on Financialsense.com with Aurelian. It was a 140 bagger eventually for Dr.Barron, I think an 11 bagger for me. All my success back then was through subscribing to David Morgan’s newsletters for a handful of years starting in 1999 @ $49/year or so later on. My 1st 5 purchases in 2000-2001 were SSRI, HL PAAS, CDE and CEF, LATER ON MY BIGGEST WINNERS, thanks to David and some perseverance, Silver Standard, Western Silver and Mindfinders, all 30+ baggers. The best part, all of these were in OUR ROTH IRA’s , EXCEPT CEF and a local northern Va. CMT and his monthly evening 3 hour classes at a reasonable price.
Looks like the silver miner lovers shot the CRIMEX – THE BIRD- today !
+1
My best Silver was Defiance (over 20%). Only appropriate.
Yes indeed Lakedweller2, same here…
Defiance Silver was my biggest portfolio standout today with (DEF) up 25.7% on the day.
Mako Mining (MKO) was a big mover too up 16.7%
Gotta love it!
Ouch! One of the best in class, FSM, GOT WACK-a-moled today
Yeah, I hold some FSM and it has been trekking higher for a few months, but got hit today on this news:
Fortuna challenges decision to re-assess extension of San Jose Mine Environmental Impact Authorization
5 Jan 2023
https://ceo.ca/@globenewswire/fortuna-challenges-decision-to-re-assess-extension
Central Bank Gold: https://postimg.cc/gnntfRSX
(Posted by Larry Pesavento)
It was great to get the update from Nick Hodge in the interview up above, and as we discussed the many data points stacking up for a continued economic contraction in the first half of this year, we discussed that the last bookend needed for full-blown stagflationary recession is more weakness in the jobs market. We’ve seen plenty of tech companies laying off large swaths of workers, hiring freezes, and sectors like retail and food companies trying to work with less people through technology automation.
Nick mentioned the big layoffs the company Salesforce just announced (as yet another example of the trend in motion), and here is that news:
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Salesforce Cuts 10% Of Its Workforce: ‘We hired too many people’
Brian Sozzi · Yahoo Finance Anchor, Editor-at-Large – Wed, January 4, 2023
“On Wednesday, Salesforce said it would slash 10% of its workforce and execute select real estate exits and office space reductions.”
We’ve continually heard about the “strength of the consumer” over the last year, in spite of higher energy prices, food prices, and far higher and stickier inflation than the Fed messaging from Feb/Mar 2021 that inflation would simply be “transitory” for a few months.
People made a big-to-do about the stimulus checks of late 2020 and early 2021, but kept assuming that a few checks (long since spent) were still fueling the stock markets and consumer spending in late 2021 and all through 2022. That money is gone folks… and has been for some time.
What has been developing and what we’ve been reporting on for the last 2 years is that credit card debt has increased substantially up double-digits, which shows the sickness behind the surface and that many have been living off plastic.
Another stop-gap measure for funds in many households and even in supposed savings, were that many home equity lines of credit (HELOCs) were taken out the last 2-3 years and those funds are being whittled down, and most of that dry powder has been blown. Some of those are at variable interest rates, and the rising rates environment is not doing those folks any favors and is just making it that much harder to pay down their ballooning debt.
Additionally, in mid 2021, after the pent up buying demand from the “reopening” of the economy coming out of the pandemic lockdowns subsided, it has fizzled out since then. There isn’t going to be the same kind of buying orgy that we’ve seen the last 2 years, as many have overindulged and blown out their remaining dry powder because they felt they deserved it.
Now comes the financial pinch. Retail sales came in weaker the last 2 months, manufacturing demand has been down 10 months in a row, and the real estate market has been rolling over the last 6-8 months in many large areas. The “wealth effect” is being destroyed, like the Fed wanted, so good job banksters… mission accomplished.
With many people having lost 1 or both household incomes in the last 2 years, with costs staying far higher than they were for everything compared to 2 years ago, and now the layoffs and hiring freezes gaining traction, the “strong consumers” are going to be a smaller and smaller sub-group within a broader economic contraction. Welcome to 2023.
Hi Ex, I believe that the best life is a simple one, my neighbors have excellent access to public transit which they never use and still they own two cars, and they only use one at a time, to go to the grocery store. They never use their off- road vehicles for anything other than city traffic. When I go out walking, I hardly ever see them unless they are beeping their horns so that you will acknowledge them. I just can’t understand that vacuous existence.
I like this line, “as many have overindulged and blown out their dry powder as they felt they have deserved it.” LOL! It’s my money and I want it now. What are they thinking! I don’t think they ever think. DT.
Solid points on the simpler life DT, and the lack of utilizing what is around and readily available.
Many citizens of developed nations are living either beyond their needs and/or beyond their means, and do have a certain entitlement attitude that they deserve it all now.
I used to insure small 3-4 person families living in 6,000-8,000 square foot homes with 5-6 vehicles, and boats and other luxuries, that whined about tiny premium increases, or the price of gas going up a few pennies per gallon. I’d want to suggest that maybe they’ve over-extended themselves or could sell one of the vehicles or many other glaring issues of excess, but would just bite my tongue and let them complain about how tough life was.
I’d do holistic retirement planning with families and go through everything they were spending money on monthly, and they’d have no sense of how much money they were just blowing each month and year. What was sad is that they were unwilling to part with any of their excessive spending and consider putting just a fraction of that into savings or investing for their futures. They wanted all the joy now and had no concept of delayed gratifucation or prudent planning. That entitlement mindset has only become more pronounced and pervasive as time has gone on.
Mr. Market May Be In Denial Over The Shift In Interest Rates
Jesse Felder – The Felder Report – January 4, 2023
“They say there are five stages of grief; the same might be said about bear markets as investors typically go through a similar process beginning with denial. In this regard, the biggest development seen in the markets during 2022 was the breakout higher in interest rates driven by the return of inflation. The 10-year treasury yield broke out of its multi-decade downtrend channel and above the key 3% level which has marked overhead resistance since the Great Financial Crisis ended over a decade ago. It’s hard to overstate the significance of this as it marks a dramatic change in the environment investors had become inured to in recent years…”
https://thefelderreport.com/2023/01/04/mr-market-may-be-in-denial-over-the-shift-in-interest-rates/
Great interview guys! Very interesting and helpful discussion. I just started dipping my toe into Uranium stocks. I’m like 60% gold/gold stocks; 30% silver/silver stocks/ 5% cash /5% base metal and uranium stocks. I’d like to add copper and copper producers this year too. Probably energy too if oil gets down I the mid 60s and below.
Ryan – Thanks for that feedback on this interview with Nick Hodge. He’s a sharp guy with a solid grasp on macroeconomic trends, and we are happy to have had him sharing his insights with investors here at the KE Report the last few months, since we met up at the New Orleans investment conference.
As for Uranium, I’ve got about a 13% overall trading portfolio allocation to 7 U-stocks, and about 7% in base metals and battery metals, and the remaining 80% is in gold, silver, and PM royalty stocks. I spent 2021 and 2022 divesting many of my lithium, copper, nickel, platinum/palladium stocks as they had their respective rallies, and increasing my exposure to the precious metals stocks as they corrected harder than other commodities.
With Uranium I divested 85% of my prior position sizes in the big run higher to end 2021 after holding them a few years, but then scaled back into 7 positions during dips in 2022, in which 6 out of 7 are in the green in 2023 and 1 of the 7 has a bit more work to the upside to break parity.
I still believe many are underestimating where the Uranium sector is heading in the next 2 years, and that the moves are far from over, however, in the medium-term, I’m far more animated by the potential for gold and silver miners. My thesis is to trim profits in these sectors over the next 2 years to then rotate some of those funds into more concentrated positions in the base metals and battery metals over time.
Cheers!
Sold 50% position – MUX – @ $7.16