Jeff Bezos got divorced from his wife Mackenzie Scott before the pandemic hit the world. But the COVID-19 lockdowns are responsible for a lot of marriage breakups. One of the celebrity couple who called it quits a few days back was Bill and Melinda Gates. It surely was a surprise and shock to many as they were such model couple to many who wanted to be rich and serve humanity. After spending so much time in close quarters, Bill and Melinda may have decided that they couldn’t stand each other anymore.
What must have happened? Maybe Bill pressed the tooth paste tube too many times in the middle despite Melinda’s warnings or he must have left the toilet seat up all the time. Difficult to figure out. They are still nice people. Both are very committed to improving the world. It’s sad they couldn’t get along.
Things didn’t work out. They split. As things happen in the West in most situations like this, Bill will now load a few of his favorite things like a few pictures, his tennis racket, a laptop (and he has many), his shaving cream, tooth brush and move to a rental unit or to one of his less expensive houses.
One of the few advantages of getting old is that one is already prepared for such failures or setbacks. Your experiences in businesses, investments, careers and life in general has conditioned you so much that you can absorb any other failures too. You can’t succeed in everything.
Let’s turn to markets. When the new US government took charge of the country, one of the easiest trade or investment to make was to get long of oil. We even wrote about it with a headline titled “the no-brainer trade.” And oil is still a buy. Another commodity to get long is copper. It has risen a lot since Biden took charge but copper also is still a buy. I will put out a special report on that in the next few days.
The energy sector has been the best performing sector for this year so far. The index is up about 34% . It can still continue to go higher as we will be using a lot more oil in the next many years. While the central planners and their climate action advisors will not allow further investments into fossil fuel industries and until a scalable enough alternative energy industry emerges, the existing companies should do extremely well.
In 2010, the energy sector represented 10% of the S&P 500, today it is only 2%. For the past five years it is still down 21%. Today we should expect to get a really hot jobs report. The Fed still tries to talk down inflation expectations. But it won’t be easy to talk down the price increases, everyday when price increases in everything are right in front of our eyes.
Beyond the supply/demand dynamics that are putting upward pressure on prices, perception leads to behavior and behaviors (in respect to inflation) can lead to a dangerous spiral. Talk alone won’t do the job. From the recent comments of the Dallas Fed President and Treasury Secretary Janet Yellen, it is clear the authorities are very worried about perception. Even reality distortion has its limits!
Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.