Food & Macro

Last week we published a Breakout by Philo issue focusing on the parabolic move in Semiconductor and Memory stocks. This week brought an across-the-board drop on both those AI plays.

As a point of reference, the KOSPI index dropped 6% for the week. As I prepare to publish this, it's down another 3% for the day – dragged down by memory with SK Hynic down ~5%.

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As a sequel to AI and the Token Maximalism cycle we are going through – we will touch on Agricultural and Energy commodities. This, while the rhetoric and the setup points to another round of war in the Persian Gulf.

For my thoughts on the UAE's exit from OPEC and what that means for Oil going forward read Opec Infighting: Trojan Horse.

We have previously talked about how the Iranians are using the Strait of Hormuz (SoH) as leverage against their adversaries. Consider the weight of the world concentrating 🔻 at that point – and the Iranians aren't letting go.

Meanwhile, spiking energy prices are putting pressure on those who are short energy – and Japan is one of them. The macro situation makes the setup even more complicated, as a crashing Yen and spiking JGB yields are cornering the recently appointed Prime Minister, Sannae Takaichi.

But Sannae isn't the only Western leader cornered. Donald's influence is being tested this week, at the Kentucky primary election.

If Massie manages to win the primary against his massively Trump-backed rival, that shows the Trump era is nearing its final stages.

That proves that Republicans can exercise politics without the backing of Donald, and that his grip is weakening... Maybe that's why there is so much US military movement around the Persian Gulf?

Could they be waiting for the elections to pass before striking?

Let's start with energy before moving on to precious metals, macro and finally foodstuffs.

P.S. I forgot that Starmer is also cornered – that's why are including UK Sovereign Bonds in this issue.

Energy

Notwithstanding the pathetic attempts both from the White House and media outlets such as AXIOS, to convince the market that a final solution to the conflict with Iran is imminent – WTI Crude is still above $100 and consolidating for a break higher.

Technically, the next resistance level is obvious from the chart. A hop up from that level should get us to test $150ish. Again, for my scenaria around the war and the price of crude, read the OPEC Infighting piece.

And this is where the inflation problem starts – a persistently high price of Crude means input prices for most goods are also up persistently.

RBOB Gasoline Futures are approaching Ukraine War levels, with major resistance between $4 and $4.5. The finished product, Gasoline, obviously depends on the price for RBOB Gasoline – and expensive Gasoline means cost-push inflation.

You remember this from economics, right? 🥲

Eurogas spiked when Round 2 of the war commenced, but has since pulled back massively finding support around the 40 EUR/MWh level.

Natural Gas (Henry Hub) didn't move much, as it concerns delivery in Oklahoma and is unbothered from turmoil around the Gulf – unless things get too crazy (?)

The spike indicated by the red arrow in early 2026 was due to extreme cold temperatures. For context, the mega rally starting in late 2020 was the post-Covid re-opening later met with "transitory inflation" and of course Ukraine.

Energy investors know well that spikes in European Gas prices don't benefit North American gas producers easily...

Precious Metals