Navigator: Checking the Engine Oil, Water and Tokens
This week we check the levels in the engine room: oil, water and tokens. Oil,
The Global crude oil supply deficit has jumped to 15mn bpd. At this rate of depletion oil inventories get tight in September and even the US gets stressed. That will up the TACO pressure on President Trump. Stay long Brent with a target of US$95 to US$105/bbl.
Grain. The closure of the Sea of Azov and the disruption of both Ukrainian and Russian grain shipments in the Black Sea will affect 16% of global grain exports. Stay long wheat and corn.
But beyond that Black Sea and Sea of Azov maritime war comes the threat to food supply from:
- A global lack of inorganic fertilisers as a result of the Gulf war.
- El Nino.
- The diversion of agricultural product into biofuels in many emerging markets.
Global Food Inflation is therefore an investment thesis with a lot of macro event backing.
AI: The data confirms long China AI and short US AI in equities. The performance of China AI models is impressive. Fundametals point to weakening Token prices as a threat to the US AI bubble.