Nick Hodge – Multiple Macro Factors Behind The Market Volatility – Utilities, Real Estate, Consumer Staples And Gold Are Good Safe Havens
Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us for an expanded conversation into the multiple macroeconomic factors behind the recent market volatility in US equities and commodities. He points to rate-sensitive sectors like gold, utilities, and real estate as sectors that benefit from upcoming Fed rate cuts, and then consumer staples companies as additional safe havens. We also discuss MineHub Technologies and the weakness in the uranium equities later in the discussion.
We start off discussing how there isn’t one convenient factor at play to explain it, even though the market likes simple narratives. While the Japanese Yen carry trade unwinding has been a factor for investors liquidating US assets where they had borrowed in the Yen, as that currency has been rising and investors get out of that trade, there are many other factors at play. Nick outlines that some earnings reports were an issue, there were share buyback blackouts, Warren Buffet was selling Apple stock, and there was disinflation in some asset classes. There has also been some weakening economic data, but Nick points out that we are not in a recession when the GDP just came in at 2.8% and real estate is picking up, and so there are mixed good and bad data points, leading into more of a stagflation backdrop at this point. Regardless, the Fed will begin rate cuts in September, and interest rate sensitive sectors will continue to benefit from these market expectations.
We shift gears and also get into how technology will be applied to the mining sector, and Nick highlights MineHub Technologies Inc. (TSXV: MHUB) (OTCQB: MHUBF) as a digital platform to harness big data, provide confirmation of where ore is sourced that plays into their investing needs and ESG preferences of many institutional investors. Nick believes that this kind of transparency in the mining industry may drive in more generalist funds into the sector.
Wrapping up we get Nick’s thoughts on the strong corrective move down in the uranium equities for the last couple of months. We discuss how the uranium price has stabilized, and that the fundamentals for nuclear power are still very robust, but that the weakness in the equities has caused many new funds to exit positions. Nick has reduced some individual company exposure to focus on the uranium mining ETFs, until there is more clarity on a rebound in the sector.
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