Postcards: Hurricane Amelia (and the Week Ahead)

My wife and Amelia have returned - and the frantic storm of a six-year-old returns to the Florida Republic. Plus, let's look at the market events unfolding this week. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Hurricane Amelia (and the Week Ahead)]( My wife and Amelia have returned - and the frantic storm of a six-year-old returns to the Florida Republic. Plus, let's look at the market events unfolding this week. [Garrett {NAME}]( Mar 24   [READ IN APP](   Dear Fellow Expat: It’s always best to know that the storm is approaching. Five hours ago, I called my wife, who was returning with my daughter from Orlando. The wind whipping past the car as she talked on “speaker“ was the first clue. The second clue was the child in the back seat yelling across the vehicle. She had the voice of a tornado… zero… and I mean zero… awareness of the sounds she made as she yelled about Epcot rides. Now that she’s home, there’s been no shortage of loud noises… the best kind. She’s heading to Maryland tomorrow with her mother to see other family while I’m still here in the Republic, preparing for the week ahead. Let’s discuss the market and the week ahead before we all watch the Northwestern game this evening. Chart of the Week This chart tells you everything you need to know about Bidenomics. This is the comparison of personal interest payments compared to the average earnings of American workers. As you can see, interest payments are swelling and surpassing hourly earnings on an Indexed basis. This is a sign of Americans going broke. I will not say that this chart shows that the blue line came close to the red line (the blue line is interesting, and the red line is hourly earnings) in 2000 and 2008. We saw STEEP recessions as a result. Well - this is the storm that is coming. This is a Hurricane on the horizon. I’m telling you… I expect it to come in late 2025 or early 2026. And it’s going to be very ugly. As always, we have MANY different ways to protect ourselves against this. And we might see the Mother of All Buying Opportunities (MABO) coming in the next two years when the levee finally breaks. I expect that will happen when global liquidity starts to sink. And I can’t help but think that the Fed’s signal to cut rates in June (as the market expects) signals something else is on the horizon. They cut too late before the Great Financial Crisis. I expect they’ll take action now - because of the interest cost and just let inflation run as needed. As I’ve said, Real estate, energy, gold, and the stuff that matters. Also, follow the insiders, who’ll tell you if and when a bottom has arrived. Sector of the Week With the ugly stories coming out of Russia (terrorist attacks, refinery drone strikes), we’re watching oil prices. WTI crude is about to experience a Golden Cross, and the last time this happened, oil prices rallied on this technical event. When these technical events happen, there are plenty of ways to invest or trade oi. I like to [sell credit spreads on companies like Occidental (OXY)]( rebalance and increase my exposure to the midstream and refineries. We’re still long PBF Energy (PBF), which has added 26.7% to our Model Portfolio. Our next pick comes out next week, and I’m pretty confident it will be in the oil-and-gas space, given the potential in April should [Russia accelerate its response from last week.]( Monday, March 25, 2024 Event: We watch the Nevada Gaming Control Board on a quiet day. They’ll tell us the amount of money bet in February, which included the Super Bowl week in Las Vegas. : Republic Speak: I don’t care how much money was gambled away on the Chiefs. But I do have a question…. How long will it take to see “Bet Now, Pay Later” models out of casinos? Seriously… If you win the bet, you’ll get a smaller win (say 95 cents on a $1.05 bet instead of $1.00 on $1.05.) But if you lose the bet, you pay off your bets over installment payments through Affirm. This feels inevitable. Either that or gambling debts land on consumer credit reports (don’t put it past the lobbyists to make these demands one day). A decade ago, the Buy-Now-Pay-Later model was a third-world solution to selling high-end products. Now, it’s entrenched in the American system. Congrats to us, I guess? Tuesday, March 26, 2024 Event: McCormick ([MKC]( earnings Republic Speak: I was just visiting Baltimore. During my father’s retirement party from McCormick (in… checks notes… 1996?), they gave him a box of spice bottles with his face on them. The name of the spice was “Hot Shot!” I always watch McCormick’s earnings report because of 1) nostalgia and 2) this company buys for a pound and sells by the ounce. It’s a global company in the agricultural sector - facing many challenges. I’ll be watching shipping and freight costs and how it’s handling the never-ending challenge of managing FOREX in an environment where everyone wants the dollar. McCormick is trading at 27 times earnings, which is insane. At best, it’s an 18 to 19x earnings stock - but this isn’t a rational market. Consider that the chicken wing place where they spice the chicken with McCormick spices (Wingstop - WING) is trading at 150x earnings. This makes no sense. Wednesday, March 27, 2024 Event: The FTC Finishes Its Review of Walmart’s (WMT) deal for Vizio (VZIO). Republic Speak: A friend was arrested for “Biking Under the Influence” in Ocean City, Maryland. His crime? While leaving the bar (where he worked), he asked ten officers who had pulled over a car on Coastal Highway if they “Bought enough guys?” They asked him to come over and chat for a minute… The FTC reviewing Walmart’s takeover deal of Vizio is a “do you have enough guys” moment in regulation. Amazon, Walmart’s primary online competitor, has the entire home technology sector on lockdown, and Vizio isn’t a massive competitive advantage. The cost of televisions has come down 99% since 1978. This isn’t a place where consumers won’t benefit. You can buy a TV for $200 this year, and it will be worth $15 on the secondary market in 18 months. The FTC needs to focus on “things that matter” - and I mean the things that are outpacing inflation each year. So, insurance, food, energy, housing, etc. Those are where consumers need real help. Thursday, March 28, 2024 Event: Fed Board Governor Christopher Waller talks at the Economic Club of New York Republic Speak: I love Waller because he doesn’t shut up. He nearly gave the game away a few weeks ago, signaling that the Fed will likely need to dump mortgage-backed securities off the balance sheet and load up on short-term debt to engage in Fiscal Repression. We’ll see if this is brought up again, but the signal is that short-term debt will come down while they’ll let long-term debt yields rise. And that should PUNISH the iShares 20+ Year Treasury Bond ETF (TLT). Friday, March 29, 2024 Event: Markets are Closed for Good Friday Republic Speak: Let’s move onto Odds and Ends. Odds and Ends I want to throw a few charts that popped up in Syz Group’s weekly report that caught my attention. Copper Signalling More Inflation Ahead How do we have a soft landing… when we’re still in the air? Copper prices may signal more inflation ahead - and I am stressing monetary inflation. The Reckoning How much is the U.S. economy financialized and leveraged? This chart shows that we’ve been at the most financialized level compared to real assets since 1925. Seriously, buy anything and everything that isn’t nailed down. You have eight years to get this right… When debt levels get to the point that it’s practically impossible to pay off without Argentina-style printing… you’ll be happy you own energy/food/land. As I said, I just bought more physical gold today. You don’t need much. Just enough to ride out the end of this miserable fiat system. Just a Reminder: You Can’t Eat Tech Thanks to passive investments and crowding among global investors, money has poured out of the unprofitable tech names into the Top megacap names. This trend will continue until it breaks, and we are following the technicals of the FNGU to determine selloffs. Equity Exposure Surging This isn’t a bad thing… yet… as Global Liquidity continues to climb. But we saw what happened a year after the 2017 and 2021 tops. We had liquidity crises. As I’ve explained, this goes until it breaks. Follow our Equity Strength Signals. Follow the Money Just a reminder… this also goes until it breaks… Stay positive, Garrett {NAME} Secretary of Defense Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()