🧠 I'm gonna trust the banks. You in too?

🧠 The Big Brain
Banks Say Buy Stocks - Do You Agree?

Repeat after me: “The stock market is not the economy… The Stock Market is NOT the economy.”

Despite all of the well-known ‘reasons’ NOT to buy stocks, banks are saying it’s the right time to get involved.

Bond volatility’s dying down, the Fed’s basically said that the recent rise in bond yields is as good as another hike (so they don’t need to do anything), while US earnings season could be a positive driver once again.

Add in some positioning data including the “largest short position EVER recorded” in one cohort, and they reckon it’s a potent mix to see stocks higher for a while…

Buying Dips: More often than not, it makes sense to be long stock indices.

They’re set up to rise over time, to capture all of the outliers (such as NVIDIA’s run), without the need to be a stock-picking genius & they benefit from continued passive investment flows.

Even better, they’re Darwinist. The weakest companies are periodically taken out back and executed removed from the index and replaced by companies on the up.

However, they don’t always go up, and there’s one big risk factor we’re monitoring especially closely in coming weeks… ‘

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⚡ The Spark
Listen all y'all, it's a sabotage

An undersea gas pipeline between Finland & Estonia has been ‘mysteriously’ damaged.

It could take months to repair, and European gas prices jumped on the news.

What they’re saying: "It is likely that damage to both the gas pipeline and the communication cable is the result of outside activity. The cause of the damage is not yet clear, the investigation continues in cooperation between Finland and Estonia," ~ Finland President Sauli Niinisto

Hmmmm. ‘Outside activity’ sounds kinda sabotagey.

The pipeline opened in 2019 as an interconnector between Finland, Estonia, Lithuania & Latvia.

These sorts of projects are designed to give connected countries better flexibility and control of supply.

However, they ARE structural weak links that can be targeted, leaving supplies of gas and electricity stranded where they’re not needed. Which pushes up prices in the destination country.

Who’s Vulnerable:

Interconnectors are a key part of the energy infrastructure for the UK & Ireland.

Lock it in: Both countries have limited gas storage facilities. If news drops of more attacks on the interconnecting infrastructure, it could be a good time to call your supplier and fix energy prices for the winter.

💡 The Lightbulb
Tesco is a super supermarket

Tesco, the UK retailer, is… a giant.

Kantar released their grocery inflation report today which showed food inflation in the UK had slowed to the lowest pace since July 2022.

Absolutely massive: in the report, it was found that Tesco has a market share of almost TWICE the next largest retailer, Sainsbury’s.

The firm now operates in 12 countries and employs…

326,000 people, with 237,000 in Britain, making it the UK’s largest private employer.

Leader: The nation’s biggest supermarket saw sales rise by 9.2% - and their market share tick up by 0.4%.

Consumer not dead?: Kantor said…

The consumer increasing their choice of the more expensive option just shows how rich Brits are currently!

Or perhaps more likely, just that the constant pessimism over British poverty is a little too much…

PS. watch me rile people on TikTok up by saying food has gotten cheaper (and then completely walk it back, but they can’t help but comment, thus leading to more engagement).

@fink.tok

UK #foodprices falling at a RAPID rate. #foodinflation is still high but the rate of change in prices is going in the right way!