Show notes
In this episode, Ted Oakley, founder and managing partner of Oxbow Advisors with 49 years in the business, returns to discuss the stark disconnect between Wall Street momentum and the collapsing consumer, revealing credit card and auto loan delinquencies are now at Great Financial Crisis levels while the economy has shifted from K-shaped to "i-shaped" with only a tiny dot at the top. He explains his letter "The Gambler" addresses how younger investors have abandoned real investing for a betting culture of sports gambling, one-day options, and Bitcoin, while most advisors no longer know when to "hold 'em or fold 'em." Ted maintains 50% cash in short-term treasuries, predicts inflation will hit 4.25% in May rising to 4.75% by fall with financial repression as the only way out of the debt trap, and reveals energy is his largest position up 35% year-to-date despite being only 3% of the S&P (it was 33% in 1980). He expects energy to rip like gold and silver did last year since nobody owns it yet, outlines his "well to the end" strategy covering producers to pipelines to rigs, confirms we're in early innings of a commodity super cycle, and warns speculation will continue pushing until a recession breaks the momentum. Ted draws parallels to 1999 when shorts got killed for nine more months, sees no recession on the horizon yet to break the fever, and cautions that baby boomers age 65+ hold more stock than ever in history making them the worst positioned he's ever seen for the eventual wealth transfer.
Links:
Oxbow Advisors: https://oxbowadvisors.com/
YouTube: https://www.youtube.com/@OxbowAdvisors
X: https://x.com/Oxbow_Advisors
Book: https://www.amazon.com/Second-Generation-Wealth-What-Want/dp/1966629168
Timestamps:
0:00 Introduction - Ted Oakley returns, founder of Oxbow Advisors
0:56 Two different things - Wall Street vs. the economy
1:42 Consumer keeps falling apart - Credit card delinquencies at GFC levels
2:24 K-shaped economy becoming more like an "i-shaped" economy
3:32 "The Gambler" letter - Younger investors just betting, not investing
4:02 Betting culture - Sports betting, one-day options, Bitcoin
5:21 Know when to hold them, know when to fold them
5:39 Cash position at 50% in short-term treasuries
6:41 Long bond move - Topped 5.19% on 30-year
6:57 Late 70s/early 80s parallel - Inflation went from 5% to 18%
7:49 Are bond vigilantes coming back?
7:54 Bond market eventually rules everything
8:21 Expectation of more inflation ahead
8:27 May CPI could come in at 4.25% or higher, 4.5-4.75% by fall
9:30 Financial repression is the only way out
10:36 Can't see how Fed cuts rates at all
11:09 Asset holders benefited from inflation but that changes in linear inflation
12:18 Energy is largest position - Up 35% vs. S&P's 20%
13:11 Big tech stocks barely up from November/December levels
13:41 Semiconductors probably at high for next 5 years
14:34 Energy dramatically underweight in portfolios - Only 3% of S&P
15:03 1980: Energy was 33% of S&P
15:54 Energy names - Well to the end strategy
16:53 Producers, midstream, rigs - The whole package
17:34 Where we are in commodity cycle - Early innings
18:38 Commodity positions - Rio Tinto, Vale, uranium, antimony, critical minerals
19:18 Oil price and energy thesis
20:16 AutoZone warning on motor oil shortages coming
20:54 Precious metals positioning today
21:54 Gold could go to $4,000 or $3,800 - Shake out momentum players
23:12 1999 parallel - Momentum could continue 9 more months
24:19 No recession on horizon - Need that to break momentum
25:14 Speculative nature pushes until recession breaks it
25:51 Second Generation Wealth - Massive wealth transfer concerns
26:31 Baby boomers 65+ have most stock in assets ever in history
27:22 Closing thoughts
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