Oil prices surge to two-week winning streak as Iran supply fears grip markets
I’m not worried about the market reacting negatively at the open to all the news about President Trump wanting to buy Greenland because I own gold stocks, and gold is up sharply today because it’s an oasis. There are always places to invest, and there are assets that zig when the market zags, and gold is one of them. Some gold stocks I recommend are Kinross Gold (KGC), Agnico Eagle Mines (AEM), Alamos Gold (AGI), Coeur Mining (CDE), Caledonia Mining (CMCL), Eldorado Gold (EGO), Idaho Strategic Resources (IDR), New Gold (NGD), OR Royalties (OR), and SSR Mining (SSRM).
Additionally, I think any pullback in powerful tech stocks, especially the data center-related stocks and semis, are all good buys right now. I don’t want investors to worry about all the gyrations and distractions because the US is just asserting its leadership. Some semi and data center-related stocks I recommend are Bloom Energy (BE), Power Solutions International (PSIX), Comfort Systems (FIX), Vertiv Holdings (VRT), EMCOR Group (EME), GE Vernova (GEV), and Ubiquiti Inc. (UI).
In the meantime, the bond vigilantes have taken the diplomatic chaos as an excuse to cause global bond yields to rise. Japan, Britain and France remain the primary targets of the bond vigilantes, since their demographic decline (fewer households) is anticipated to impede their ability to pay the interest on their government debt. U.S. Treasury bond yields have also risen, but to (1) higher real interest rates, (2) strong GDP growth and (3) better demographics compared to the rest of the world, I am expecting that the U.S. dollar will strengthen and that the 10-year Treasury bond yield will decline to 3.5% (down from almost 4.3%) once the rest of the world realizes that President Trump is serious about his global ambitions.
The World Economic Forum commences in Davos, Switzerland, this week, and BlackRock’s Larry Fink is an interim co-chair. Since BlackRock has done an “about face” on ESG and other themes that were previously pushed at Davos, it will be interesting if Larry Fink receives any criticism from attendees. President Trump is scheduled to speak in Davos on Wednesday, and it is expected to be about his ambition to bring peace and prosperity to the world, but first, Trump is anticipated to say that the U.S. needs to rid the world of bad people (e.g., the Iranian regime). By contrast, California Governor Gavin Newsom is also expected to speak at Davos and explain why Trump’s economic agenda has been a failure, which will be a hard task in the wake of 5% GDP growth.
Due to the uproar about the U.S. asserting itself and demanding that it buy Greenland from Denmark, Davos has become an emergency summit where President Trump will meet with NATO members. Italian Prime Minister Giorgia Meloni has offered to mediate the Greenland negotiations. President Trump has belittled French President Emmanuel Macron and leaked his personal texts by trying to embarrass him about how France mismanaged Syria. Obviously, President Trump is a bull in a China shop, so it will be interesting to see how all the European allies react to Trump’s negotiating tactics.