Government spending cuts of 3% of GDP are expected, potentially causing austerity and downward pressure on equity markets.
Projections suggest 2 million job losses, including 400,000 federal employees and 1.6 million contractors.
A 3% GDP cut would normalize federal spending to 21.9%, still above the 18% average over the last 40 years.
Gold and Bitcoin are seen as attractive investments, with potential targets of $3,000 and $80,000 respectively by April 2025.
200 basis points of Fed rate cuts are anticipated in 2025, potentially benefiting homeowners but requiring political cover of lower inflation.
Wealthier consumers may reduce spending due to contracting 401ks and private bank accounts, creating a negative wealth effect.
Nvidia, despite a one-third price contraction in 9 months, is now considered a value stock with a 20x forward P/E.
India’s macro story remains strong with a growing middle class, equity culture, and tech base, potentially mitigating tariff risks.
Brazil offers dirt-cheap stocks under 10x earnings and 10-11% bond yields amid 4% inflation, presenting potential upside.
Tariff increases estimated at a quarter of a trillion dollars could be short-term inflationary but contractionary overall.
Central bank and individual buying of gold has been high in the last three years, especially in China, India, and Southeast Asia.
Emerging markets can have dramatically different performance across economic regimes, suggesting consideration of country-specific investments.
Summary
In market chaos, focus on quality assets like Exxon Mobile and Franco Neadas to minimize operational errors and provide good enough gains while reducing downside risk.
Tertiary assets like free revenue mineral exploration companies can be oversold during panics, offering extremely rewarding opportunities for investors willing to do thorough research.
When evaluating junior mining companies, prioritize management track record as the most crucial asset, following Pareto’s law that 20% of the population generates 80% of the utility.
Ask management teams to explain their company’s $20 million valuation with 20 million shares at $1, focusing on downside risks before discussing upside potential.
For exploration stage companies, request management to explain their thesis validity and identify the most important proximal unanswered question affecting asset value.
ExxonMobil, a truly integrated oil company, profits in both high and low oil price environments, with a strong capital allocation history and a 14% increase in shareholder distributions this year.
The current natural gas price of $35 per million BTU is unsustainably low, with significant arbitrage opportunities between US and international markets.
Devon Energy and Equitable are well-positioned US natural gas plays for the transition from oversupply to well-supplied markets.
Surge Energy, an undervalued Canadian energy producer, shows promise despite the country’s anti-energy political climate.
Meteoric Resources holds potentially the world’s largest rare earth deposit in Brazil, projected to be in the lowest cost quartile with the highest return on capital employed.
Sovereign Resources in Malawi boasts likely first or second largest rutile and graphite deposits globally, positioned in the best part of the cost curve with optimal capital returns.
Patriot Battery Metals’ discovery of 26% cesium oxide grades across 600x400m zones rivals Sinclair’s, representing a scale and concentration unseen since 2019.
The cesium, tantalum, and lithium corridor at Patriot’s Shagawa project boasts premier geology with 160ppm average grade, competing with top global tantalum resources.
Shagawa project is poised to become a key node in North America’s critical minerals supply chain, addressing US-China trade tensions and China’s market dominance.
The discovery positions Patriot at the center of Western supply chain shift for critical minerals, potentially diversifying the industry from Chinese concentration.
Cesium discovery adds significant value to Shagawa’s economics, complementing existing lithium exploration efforts and Volkswagen’s strategic partnership.
Shagawa’s multi-mineral corridor represents a strategic sweet spot in the global energy transition, serving Western markets’ critical mineral needs.
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