Postcards: Don't Wear Your "Dad Shoes"

Returning to Florida will be nice, but we can buy great stocks from anywhere. Plus, I half-ruin a new pair of shoes out of a foolish commitment to fashion.                                                                                                                                                                                                                                                                                                                                                                                                                 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: Don't Wear Your "Dad Shoes"]( Returning to Florida will be nice, but we can buy great stocks from anywhere. Plus, I half-ruin a new pair of shoes out of a foolish commitment to fashion. [Garrett {NAME}]( Jan 24   [READ IN APP](   Market Update: Selling pressure increased as the market continued flirting with all-time highs. Selling pressure may lead us back into negative territory - and investors should remain hedged despite our positive signals. While markets have crowded into the FAANG stocks, the underlying selling is very noticeable, with just 66% of stocks trading above their 50-day moving average - down sharply since the start of the year. It’s an excellent time to keep following momentum where it’s working. Dear Fellow Expat: My wife warned me two hours before the flight. “There’s snow on the ground in Baltimore,” she said. “You need to change your shoes.” I didn’t… mainly because I like the comfort of my new “driving” loafer (even though I don’t drive that much.) Now, back in Stevenson, Maryland, for the day… My “dad” shoes are covered in salt from the thawing snow and ice. I’m lucky I brought warm clothes - but these shoes will need quite a shine when we return to the Florida Republic. Good news: We’re seeing enough movement in those shipping stocks that we can afford a new pair of shoes if necessary. Fear and Loathing in the Red Sea This morning, I received an email from a reader curious about how the shipping stoppage in the Suez Canal impacts U.S. produce. I think that’s a great question - and from a macro perspective, it may not be noticeable at first. The U.S. is the largest importer of fresh fruits and vegetables and imports them from nations like Guatemala, Chile, Peru, Costa Rica, and Brazil. So, we’re largely isolated if you’re worried about lettuce and tomatoes. But there are inflationary pressures that come indirectly. First, higher shipping costs in the oil and gas markets can impact diesel fuel costs as we head into the planting season. Second, you’ll likely notice that grape prices are heading up as we are the largest importer of fruit on earth - with 746 million metric tonnes. We import about half our grapes from Peru and Mexico. But it’s a global market - and Europe fills the gap in its imports from India, largely due to supply gaps created by North and South American planting seasons. We might have some competition. Grapes aren’t terribly important on the grand scale- unless you’re a wine drinker - but the Suez trend is a problem for the global economy. The delays are now 20 to 30 days for traditional routes, and shipping costs (and insurance) are spiking like we saw during the start of the Ukraine War. Tankers from Middle Eastern ports to Europe take just 17 days to travel through the Suez. It goes to 41 days when going around the Cape of Good Hope. [CNBC reported last week]( that shipping companies “have already diverted more than $200 billion in trade over the past several weeks away from the crucial Middle East trade route, which, along with the Suez Canal, connects the Mediterranean Sea to the Indian Ocean.” This situation has pushed shipping rates much higher, coincidentally at a time when most major shipping and tanker stocks were trading at very attractive valuations with strong cash flow. As I’ve noted, this is the year of shipping stocks. [Until 2025 becomes “the year,”… and then 2026]( - when shipping companies can raise rates even higher due to a decline in fleet sizes and a shortage in specialty tankers. We have a tanker shortage coming - so companies with relatively young fleets will be at an advantage while older fleets retire ships. This happens while global ship construction remains weak - especially in the United States. The U.S. is putting $653 million in stimulus into Ports to strengthen the supply chains, but this money probably won’t be adequately deployed to stop these pending bottlenecks in the future. Also, they probably won’t spend it on things we need, as I noted yesterday about the sheer amount of delays on everything we try to do. We’ve recommended to our readers various companies with a very narrow focus on chemical and oil shipping, like Ardmore (ASC) and Teekay (TK), which have been up 13.5% and 16.8%, respectively, since our recommendations on January 2. Meanwhile, Pangaea (PANL) headlined our portfolio in 2023, which has increased by 76% since last January. We envision a similar upside for our favorite shipping stocks in the coming years. [To get access to our Model Portfolio, click here](. [Upgrade to paid]( And wait for our next recommendation for the [Republic Risk Letter]( next Wednesday. Looking ahead, shipping stocks remain solid momentum candidates, but given the trend, a few are overbought. Dips are likely coming, giving investors new opportunities to get into these names at lower prices. But this trend of higher shipping rates looks like it will be strong… [and momentum is building across the sector](. Stay positive, Garrett {NAME} 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]()