Summary: Markets are rushing higher on the Trump "TACO" on tariffs against European countries and on calling off any military option for the US taking Greenland. We continue to look at massive divergences in market internals. Elsewhere, natural gas has mounted a stunning rally as the US is headed for a natural disaster on a possibly unprecedented geographical scale as an ice storm could cut power to whole regions of the US for extended periods and spike utility bills. Today's pod features Saxo Head of Commodity Strategy Ole Hansen and is hosted by Saxo Global Head of Macro Strategy John J. Hardy.
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Let’s hope this guy is exaggerating
A weather observer is concerned that this winter storm set to slam much of the midwest, south, southeast and mid-Atlantic US will create utter havoc. I hope he is wrong, though natural gas markets fear he is note. But hopefully everyone will overprepare and the storm metrics will end up being far milder than feared.
Can the US pull off a “reverse perestroika”?
Today’s must read is Michael Every’s latest strategy piece on the US’ attempt to end the old global system it built, as its final stages risked weakening it precipitously via the Triffin dilemma. A new “reverse perestroika” system to take its place is at root a command war economy or even Soviet-style central planning, aimed at building up key economic capacities to ensure comprehensive national security. It’s not just rebuilding militarily, but also economically, logistically and financially. It’s a massive gambit - will it succeed or fail?
Poland is building a navy for security.
This is serious business for Poland to counter hybrid warfare threats in the Baltic. The surface ships will be British, while the Sweden’s Saab will provide the subs - don’t laugh, these are world class, even defeating a US carrier in live war games.
Sandisk is the first S&P 500 index member to return more than 100% YTD. The company makes NAND flash memory-based storage solutions. After observing the persistent directionality, both positive and negative, among many out-performing and stocks of late, I am wondering it the kind of performance we are seeing in a name like Sandisk is indicative of the momentum phenomenon noted by Carson Block in his interview with Thoughtful Money that I linked to in my most recent Substack post. Micron and the hard disk makers have been on similar tears over recent months at times. The company is a hardware maker selling at 9.4 times trailing sales. The valuation looks less crazy if profit margins quadruple as expected in coming years (current market cap less than 20 x earnings estimates for financial year ending mid-2027). It’s a remarkable performance, but these hardware cycles are notoriously cyclical.
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