This Week's Focus
The Oil Clock Is Ticking
One of the more vexing issues right now is the outlook for oil. Broadly, we think it is reasonable to expect oil prices to rise over the long term, although in the short term they may fall given the actions of the US and China in helping to stabilise the market.
But oil inventories are falling, and at some point we arrive at a position which sees a severe shortage of oil. That is expected to be around July or August. From there, we will most likely see demand destruction, in which case oil prices may not rise at all, because demand falls to meet supply. That would also give rise to recession, as demand for many products falls and unemployment starts rising.
Then what? We think governments act, and the model is COVID. People will be given one-off payments to keep markets stable, and while a recession might be avoided, there comes a time when we have to deal with the considerable debt burden, mainly in mortgages. Stock markets too will be impacted as earnings projections are reassessed. The timeline Steve is watching runs …
… from the JP Morgan global oil inventories chart now showing 2026 observable stocks plunging below every year since 2017, through the July/August crunch window, into the government response phase. Steve has mapped the full sequence including the demand destruction trigger points, the COVID-model payment response, and the mortgage debt reckoning that follows …
Plus this week: consumer sentiment collapsing to 81 (Westpac-MI), Westpac reporting a 20% fall in housing investor loan applications in three weeks, Albo warning things will get "worse rather than better", the rare earth price explosion (yttrium up 14,000% since April 2025), the AI bill coming due, and the Cash-Rich Giants chart showing what happens when Google raises $84.7 billion in its first equity issuance in 20 years …
And the full breakdown of the SpaceX, OpenAI and Anthropic IPOs against the CAPE at 42 …
While You Read This, Premium Members Already Have:
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The JP Morgan oil inventories chart showing 2026 stocks plunging below every year since 2017, with the July/August shortage window mapped
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The rare earth price table: yttrium up 14,000% since April 2025, terbium up 350%, dysprosium up 450%, and what it means for the sector
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The century-long capex study: what happened to markets after 1929, 1972, 2000 and 2008 when cash-rich giants started selling stock, now that Google has raised $84.7 billion in its first issuance in 20 years
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The AI economics breakdown: why OpenAI and Anthropic must double revenue every year until 2030, and the $1.1 trillion question nobody in the IPO queue wants asked
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The property turn: Westpac investor loan applications down 20% in three weeks, what the banks are seeing, and our two property deep dives
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This week's members video: Steve walks through the full oil-to-recession-to-response sequence on camera
The oil clock runs out in July or August. The investors who do well through what follows will be the ones who were positioned before it arrived, not after. That preparation is what Premium is for.
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