Nick Hodge – Macroeconomic Data Continues To Weaken Yet Opportunities Remain In The Resource Sector
Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us to review the macroeconomic data continuing to weaken, but also where he sees both near-term and longer-term opportunities in the commodities and resource stocks.
We start off looking at the market reactions to higher interest rates and a strong US dollar, but also noting the trend of GDP and job growth revisions downward, stickier inflation, rising wages, and potential challenges moving forward for the consumer. It’s an odd environment where the general markets have also rolled over the last few months, but where investors are not seeking the normal defensive areas of bonds, utilities, or gold, but instead have preferred to plow into cash and fixed income money markets waiting for more market certainty. There has also been an increase in hedging through options and volatility showing up in the VIX numbers.
With regards to gold, Nick reiterated that he continues to sell the rips and buy the dips, taking advantage of the volatility and range bound trading. With oil and uranium stocks, he remains bullish on both in the medium to longer term, but notes that they were do for a healthy corrective move lower, which we’ve been seeing play out the last few weeks, presenting potential opportunities. With regards to copper, he has not seen a reason to be overly exposed to the copper stocks, aside from a few speculative positions, and mentioned several times over the course of the year his expectation that copper prices would stay closer to $3.50 than $4.50, which has been a great call. He points out that longer-term, the value drivers are there to take copper to much higher price levels, but not in the short to medium-term, with a recession still very much on the horizon.