Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us to review the key macroeconomic movers, Fed policy expectations, some select opportunities in US equities, the surge in uranium and uranium stocks, and how he is playing the copper stocks.
We start off reviewing the markets reactions in Q4 of last year to the Jerome Powel “pivot party” and then the easing of speculation rolling into the first month of 2024. One question Nick poses is whether the Fed has backed themselves into a “credibility corner” where they are trying to stay tough on fighting stickier inflation higher than their target goal, but conceding they’ll likely need to start cutting rates later in the year to deal with weakening economic conditions. We touch upon the government’s role in bankrolling and fueling the recent GDP growth, the continued inversion of the yield curve, and what could happen as it flattens out, and how rate sensitive areas of the markets like REITs and Utilities have started to move. Nick also points out that other sectors like consumer staples, insurance companies, and Asian markets like Japan, the Philippines, and South Korea have been robust.
Next we get Nick’s take on the surge in the uranium price and related uranium stocks, where he points out that actually looking at the equities by way of ETFs like URNM or URA compared to the moves in the spot pricing, that there is still a lot of potential revaluation higher to be seen as the equities play catchup. Nick sees this sector as right in the middle of a bull market, and had trimmed some positions like Skyharbor Resources (SYH.V) in early December, anticipating there would be pullbacks that could be bought. He pointed out how many newer retail investors in the uranium stocks, shifted from overzealous to overly bearish in a short period of time, instead of positioning during pullbacks for the inevitable move higher in the equities as the bull market has continued to unfold. In addition to some of the larger companies he mentioned like Energy Fuels (UUUU) , Uranium Energy Corp (UEC), and enCore Energy (EU), he also thinks some smaller companies putting out recent news look compelling: noting the recent news from Premier American Uranium (PUR.V), Nuclear Fuels (NF.CN), and IsoEnergy (ISO.V) combining with Consolidated Uranium (CUR.V).
Wrapping up, we get Nick’s outlook for how the copper sector will continue to evolve, balancing out the medium-term to longer-term fundamentals, with the divergence we’ve seen the last few years in the copper producers versus the stark underperformance of most copper junior developers and explorers. He discusses the different timeframes he has, in relation to the macroeconomic backdrop, for how he’ll be looking at the large-cap and micro-cap companies.
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