YWR: Seven Setups
The move in Chinese stocks has been explosive.
Why? Because it was a great set up.
It’s such a great set up that it will be the story of 2025 as well.
Fortunately, there’s no need to chase. We were already positioned for it (Surprise market for 2024).
Same thing with gold back in March (The Epic Buy Opportunity for Gold and Gold Miners).
But where is the fresh meat? What’s next?
While the naysayers are still trying to fade the China move I think it’s actually the start of something much bigger where other asset classes also start waking up.
There are many, but here are 7 that stand out.
1. Oil
It’s Murphy’s Law that after you drain the SPR to record lows, a massive oil disruption will happen in the Middle East. It’s called the ‘Strategic-Petroleum-Reserve’ for a reason, and was set up after the last time this happened in 1974. The lack of SPR means the set-up for a squeezola is massive.
There is a pause right now while Israel prepares the US, UAE and Saudi for what happens next. ‘Get your affairs in order.’ Israel needs to turn off Iran’s cash register. Whether it’s this weekend, or weeks from now Kharg Island is a dead man walking.
Yes, it’s going to be a global mess, but put yourself in Israel’s shoes. We did the same thing after 9/11. Add it to the list of things we never thought would happen. It will seem unimaginable when it happens, but we will get through it, the Fed will cut rates, and the market will go higher (Bad is Good).
Every day oil is trading in the $70’s and you can buy energy stocks on the lows is a gift.
2. Brazil
Brazil has been the worst performing market in the world over the last 15 years (see table below).
You have stocks like Petrobras with some of the highest production growth trading at P/E’s of 5x. Vale also on 5x. Bradesco on 6x 2025.
Everyone hates Lula, but we’re 2 years out from the next general election (Oct 2026). Next year investors will start to look ahead to 2026 and the possibility things could change for the better. Could Brazil be the next Argentina? At least temporarily.
The chart looks like a coiled spring.
EM in general looks good (It’s Go time for EM).
