Pro Perspectives 10/1/20

October 1, 2020

Stocks were broadly higher today. Crude oil and copper were crushed. 

Let's talk about crude. 

And it has to do with Trump (surprise!). 

There are three major forces at work against Trump. 

1) China  

China has spent the better part of the past thirty years executing on a plan to become the biggest, most powerful economy in the world.  They did so, in large part, by undercutting the world on price, which enabled them to build an export monopoly.  And they accomplished this by manipulating their currency — keeping it cheap.  The world allowed it. They liked cheap stuff, on the front end, but it came at with a big price on the backend.  

So, China was just years away from overtaking the United States as the world's biggest economy.  And then Trump became President, and threatened to reverse three+ decades of a perfectly executed plan by China.  To what extreme would they go to, to remove Trump? 

2) D.C. Politicians.   

Trump has blown up the game in Washington.  After four years in D.C., he remains an outsider.  And he's an equal opportunity career destoyer.  Democrat or republican, if you're against him, he will destroy you.  To what extreme would the career D.C. politicians go to, to remove Trump? 

3) Climate Change Activists

As we've discussed here in my daily notes, climate change activists believe that climate change is an existential threat to the world.  And the financial backing is nearly unlimited.  A group called Climate Action 100+ has the most powerful investors in the world (representing $32 trillion in assets under management).  And they have been dictating how major energy companies are deploying capital on new projects – forcing the pivot to climate responsible initiatives.  Major global government entities/cooperatives are also largely behind the activist movement, feeding the effort with cash and subsidies.   

They are all in, and near the finish line.  Standing in the way has been Trump.  They view Trump as a climate change denier, and therefore have explicitly said he (Trump) is an existential threat to the world.  To what extreme would the climate actioners go to, to remove Trump? 

The answer to all three questions, seems to be ‘whatever it takes.’

On the latter (climate actioners), it is a war against fossil fuels.  And they intend to take the industry to zero.

With this in mind, we've talked in recent months about the moonshot in Tesla. It seems clear that global capital has indiscriminately plowed into Tesla (likely by the entities mentioned above), as if this company represents the contraoil industry

If that’s the case, if Trump is re-elected, Tesla might be the greatest short of all time.  This is quite a chart…