Quick trip

Both the weekend away and the dive into the markets are quick this week

This weekend was a chance to get away for a quick golf weekend in Florida. It was great to catch up with friend of the show Jerry McNulty while we navigated our way around some of the gold courses on the Gulf side of Florida.

When I travel, I like to observe what activity is like - in the airport, at the restaurants, on the golf course, just around town. This was my instant observation from Friday morning at O’Hare Airport, the busiest in the US:

Chart of the Day - travel

Today is a day to leave the missus behind and see what sort of golf game I still have

Early on a Friday, I am always interested in how O'Hare 'feels' versus the last few times

More vacationers - Boomers as well as young families - and less business travel for sure

Otherwise, I'd say solid but not spectacular

So I looked it up as I wait to board and that is how the TSA screenings look too - solid not spectacular

In my classes this week, the student teams building models for growth and inflation found the same for growth outlooks this year - solid but not spectacular

Lots of things pointing the same way, all with implications for investing

Now I just have to figure out that golf swing

In fact, on the way home I noticed it was even busier, in both Tampa and Chicago. Lots of Boomers on golf trips, families with school-age kids (seemed a little early for Spring Break), and groups of millennials that all seemed to be on some sort of weekend away.

That said, among the many people I spoke with at all of these events - my kids compare me to the guys on the Progressive commercials - I found that while people were out and about, when you dug in even a little bit, they were quick to complain about something, typically in relation to the government, taxes, prices, Epstein files etc. People were enjoying the sun and fun on the one hand, but pretty downbeat on the other. Not so downbeat they weren’t spending, but sentiment was more negative than positive. This surprised me because if I was that downbeat, I am not sure I would get on a plane, as it isn’t as if plane tickets aren’t really expensive right now.

I decided to plot those TSA numbers vs. consumer sentiment, and we see a clear break after about Q1 of 2025. People seem to be acting as if things are okay, but when asked in surveys, they are downright miserable.

One thing Jerry and I discussed was oil and the performance of energy stocks. There are some that think that oil has some geopolitical risk premium from Iran priced into it. Perhaps that is true, but I think the price of oil is acting pretty well given the news and reality. This chart shows the supply/demand imbalance in white. The world has been over-supplied since the middle of last year. I say over-supplied because you can see the separate global supply and demand numbers and they are both near 10-year highs. Again, if people are so downbeat, why are they consuming oil at a 10-year peak? If we weren’t so over-supplied to the tune of 3.7mm barrels a day, where would oil be? Typically, when we break outside the 1.5mm bbls band one way or the other, prices respond. Can we continue to try and hold prices down like this?

In the face of that, oil prices look good on the chart. They have broken out and are trending higher. This is not the price action of a spike from Iran and trying to hold onto that gain. It is a steady progression higher with a new trend developing.

Which is why oil stocks look so good on a relative basis. This is one sector that Jerry and I both agreed on. As money rotates out of expensive tech, given some uncertainty, energy looks appealing. There are a number of possible catalysts. You pick up a yield to hold it. In the ETF alone you get 2.7% and in majors like Chevron, the dividend is over 3.8%. Add on some incremental yield from buy-writing the names and you get paid a fair bit to hold onto them. The multiples have expanded from the depth of the Biden/ESG hate-selling lows in 2022, but they are far from onerous. Might be worth a look.

Finally, one of the podcasts I listened to on the flight was the MacroVoices podcast with Michael Every from Rabo Bank. He also did an excellent pod with Grant Williams recently. He has some very unique and interesting views of the changing geopolitical landscape, which certainly impacts oil, and this podcast tied it into how stablecoins will be used as a tool of economic statecraft. In light of the post last week about Ethereum, I thought you might like it: MacroVoices - stablecoin

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Going to keep it short this week as travel weekends get me behind on some work.

I just want to leave with a quick poll on what you think about the consumer right now. Thanks for taking the time to answer: