Our institutional conversation is looking at phosphates, fertilizers, refining capacity because Iran attacked partners (Bahrain, UAE, Kuwait). Trust in supply chain lost for 60-90 days. Clients are getting long wheat and corn via DBA ETF, which is outperforming NASDAQ. Repositioning into hard assets: from gold/silver to gas/coal to agricultural names.

Tourists piled into gold miners. We reduced GDX/GDXJ to zero in January. Diesel cost is 20-30% of operating margin for gold miners, up 70% since December. Expecting a 20-30% drawdown in gold miners from highs, creating a buy opportunity at the 50/100-day moving average.

White House will try to calm things (like last April), but misjudged Iran's aggression. Expect 6-18 weeks of supply disruptions, creating a big bounce in inflation similar to 2022 Ukraine war. We'll go from 3 expected Fed cuts to zero, maybe hikes later in the year as inflation bounces.

White House is very nervous on housing inequality. Look at RKT (Rocket Mortgage), Fannie/Freddie. They'll be desperate in Q2 on housing affordability. Inflation will prevent rate cuts, but they can do other things. Clients are starting to buy wounded housing plays.

Biggest issue: a real private credit inferno is picking up steam. High yield at May 2025 levels (widest/highest yield). BKLN (bank loan index) in pain. Expect big default spike in high yield/loans, pressuring Fed to ease despite sticky inflation. That's the 1968-1981 portfolio: sticky inflation but recession risk from financial conditions. Wonderful backdrop for hard assets/commodity equities.

With $38T debt, the only way out is to monetize debt and push rates below inflation (financial repression). They can't admit it. Fed faces a 2008-like credit crisis developing with sticky inflation. Private credit vehicles promise quarterly liquidity; redemption requests are 2-3x the 5% quarterly gate.

US is the least dirty shirt (problems in UK, Japan, Germany). 13 aircraft carriers back the dollar. But we are in a weaker dollar regime? Fed may have to ease into sticky inflation, great for hard asset portfolio.

Coal names like CNR (Core Natural Resources) have beautiful free cash flow, bought back 10-15% of equity. Demand for electricity and Middle East LNG bottlenecks create more demand for coal.

Uranium (SRUF, NUKZ): institutional investors buying forward. Production/enrichment way behind curve. Uranium prices could double over next 2-3 years from data center demand.

Be careful with silver: had blow-off top, speculative froth, put/call ratio 8:1. Looking for bigger pullback to buy dips.

Credit crisis is picking up steam. High yield breaking out to widest yields since last May. Street was calling things idiosyncratic (Tricolor, First Brands) but were lying/misinformed. Insurance companies are ultimate bag holder of credit risk; clients are shorting them.

AI capex spending by Silicon Valley is lunacy. Side effect: faster disruption in credit markets. Software cash flows considered gold 18 months ago, now garbage. Job disruption coming: Jack Dorsey laid off 45% at Square. Hundreds of thousands of job losses possible by July-Sept from AI disruption.

Nvidia CEO is a pump master. Street price target was $95 a year ago, now $260. Everyone in same crowded stupid trade (semiconductors). Nobody looking at unintended consequences of AI capex. Nvidia likely down 50% a year from now.

Watch the refinancing wall. If securitization machine slows down due to tightening from private credit leaking to high yield, credit risk builds on bank balance sheets. Financials down 18-19% off highs this year signals real credit crisis brewing.

In a systemic credit crisis (2008-style), correlation goes to 1, gold gets smoked initially, then Fed eases aggressively, dollar weakens, and hard assets rally. In a contained rotation, better for commodity equities.

Natural gas trade (FCG ETF) risk/reward light years better than semiconductors. 820 US data centers to be built in next 5 years need more natural gas and coal.

Rotation: $3T has left NASDAQ 100 into hard asset companies. S&P 500 composition in oil/gas still only 3-4%. Doesn't take much rotation from tech to hard assets to create second/third/fourth leg. Weaker dollar and credit crisis forcing Fed to ease into sticky inflation supports move. In 1981, 49% of S&P was materials/industrials/energy; now ~14%, could go to 25-30%. Early stages.

Comparison to 1968-81 valid: wars inflationary for decade (rebuild Ukraine, Gaza, Iran, LA fires). Creates demand for copper, strategic metals. US behind China/Russia on critical minerals. First/second/third inning of bull market for hard assets.

Biggest mistake: tourists in gold miners, uranium, copper miners. They are not great long-term investors. These are high-beta sectors; be prepared for 30-40% drawdowns (like uranium last April, gold miners last year). Buy at 100-day moving average.

Next 30 days: Trump will try to calm things, but Middle East problems persist. Get long VIX, long volatility. Raise cash, get long volatility for portfolio protection.

Refi wall coming. Watch high yield issuance calendar. If securitization machine slows due to private credit leaking to high yield, credit risk builds on bank balance sheets. Financials down 18-19% YTD signals real credit crisis brewing.

2008 analogy: correlation goes to 1 with systemic banking risk - gold gets smoked, then Fed eases, dollar weakens, gold rallies. Contained rotation (not systemic) is better for commodity equities/hard assets.

All energy needed to support AI. Natural gas names (FCG ETF) underowned, breakout vs S&P. Range Resources, Antero done beautifully. Natural gas trade risk/reward light years better than semiconductors. 820 US data centers in 5 years need more gas/coal.

S&P 500 composition in oil/gas still only 3-4%. Doesn't take much rotation out of Nasdaq/tech to create multi-leg trade. Weaker dollar and credit crisis forcing Fed to ease into sticky inflation supports 1968-81 portfolio shift. Early stages of move into companies controlling hard assets (could go from 14% to 25-30% of S&P).

Similar to late-60s Great Society/Vietnam War. Wars inflationary for decade after due to rebuilds (Ukraine, Gaza, Iran, LA fires). Creates demand for copper/strategic metals. US behind China/Russia on critical minerals - must rebuild stocks. First innings of bull market for hard assets/commodities.

Moving diesel costs could knock gold miners down 30%. Tourists (not great investors) in high-beta sectors (uranium, gold, copper miners). Always buy 100-day moving average in new bull market. Be prepared for violent drawdowns.

Trump frustrated (like COVID unintended consequences). Miscalculated Iran response attacking partners. Creates 6-9 month sticky inflation period impacting midterms. Plus AI disruption/job losses. Midterm election years typically disruptive in Q2/Q3.