The market has had a booming six weeks as we got a bear market rally off the bottom. The Dow Jones Industrial Average has now broken it’s downtrend and is on the verge of a new bull market. It is up 15% from the lows, which is an amazing run.
Plenty of doubt remains as to whether the bottom is really in.
Since I called the top of the market in December 2021, I’ve been telling my readers to lighten up, sell the tech stocks, gather cash, and buy oil. I still think you should buy oil, but you should also be building a list of stocks you want to own when we really hit bottom.
Oil has a lot of room to run. Yesterday, I don't know if you caught that Vikings-Bills football game, but it was certainly exciting, with the lead switching back and forth in the last few minutes. But besides the score, you might have also noticed that it was snowing in Buffalo.
When It Snows, Natty Gas Goes
If there's one thing I know, it's that when it gets cold in New York, those boys working at the New York Mercantile Exchange (NYMEX) wake up and buy natural gas futures. And sure enough, natural gas jumped 9% on the open.
It will happen in Europe as well. It has been warm in Europe this fall and the continent filled its LNG storage facilities, but history tells us it generally gets cold in the winter and Europe's storage only meets 20% of its needs. Prices for all forms of hydrocarbons have not peaked yet. Traditionally, they peak in February. That is when you should plan to sell.
Guyana Is Very Exciting Right Now
Last week, I talked about crack spreads and new oil found in Guyana. Yesterday, Bloomberg wrote the following headline: “Guyana Is the Most Exciting Story in the World Oil Market.”
You see, an ExxonMobil-led consortium has discovered at least 11 billion barrels of recoverable oil in Guyana, a small poor country that is now the fastest-growing economy on Earth with a GDP growth of 57%. And last week, Exxon announced another two finds in its 6.6 million-acre Stabroek Block offshore Guyana. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
And if that wasn’t great enough, the country has some of the lowest costs to recover oil in the world at around $25–$30 a barrel. Exxon’s Guyana projects will be extremely profitable, but so will some other smaller companies. I’ve written up a free research report about it, which you can access here.
Guyana is one place you should put your money and expect some sizable returns. The other is Mexico, and I’ll tell you why.
Way Down in Mexico
There are two big investment themes going on right now. The first is obviously energy. The second is deglobalization, revamped supply chains, and nearshoring.
The macro environment makes it very difficult to invest in China right now. The big trend, if you are a manufacturer, is to get out of China and somewhere closer to your customers before things get really bad. China is still in rolling lockdowns; its dictator Xi Jinping seems to have no understanding of the stock market or the economy, and anyone left who could tell him would rather keep their head.
Furthermore, the Biden administration started a new technological cold war with China with the CHIPS and Science Act. Everyone is underestimating the coming fallout. Companies can avoid tariffs if they produce in Mexico, which is part of the new United States-Mexico-Canada trade agreement negotiated by Trump.
They Are Coming
Recently, Mexico’s economy minister said that 400 companies are looking to relocate from Asia to Mexico. Mexican wages are on par with Chinese wages; the country is also a lot closer to end users, respects international norms on contract law, has trade partnerships with over 40 countries, saw its currency increase this year, is a producer of hydrocarbons, and has a stable democracy.
In addition, Mexico has a young, hardworking, educated workforce, as well as 32 universities ranked in the QS World University Rankings.
Mexico is the U.S.' largest trading partner, and the U.S. has the biggest economy on Earth. No matter how you slice it, Mexico will be the big winner of the 2020s. Heck, even Foxconn, which has been in Mexico since 2004, is looking to build more factories in the country.
I am currently working on a research report that details how you can profit from the great reshoring. Look for it in the coming weeks.
That’s all I have for today. Buy oil; buy Mexico.
All the best,
Christian DeHaemer Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
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