Haymaker Friday Edition

Haymaker Friday Edition
Thank you, Trader Ferg!
Hello, Subscribers:
In recent Haymaker editions, I’ve admitted that several of my bullish calls on commodities haven’t worked well. Exceptions were gold and silver for most of 2024 and, since last fall, natural gas. The dogs were copper, palladium and oil.
The latter’s flaccid performance last year was the reason that my pal Trader Ferg penned the following apologia to his fan base last month. But starting around December 7th , oil suddenly came to life. By Wednesday, it had risen by 15% in barely over a month (the last two days have, admittedly, produced a pull-back of about 2½%).
This brought its trailing 12-month return up to a respectable 23%, at least as measured by the main oil ETF. For sure, that has been aided by the positive “roll” on the underlying futures contracts but that was one of the positive attributes this newsletter highlighted.
Regardless, oil has been stuck in a trading range for over two years now. The leading energy ETF, XLE, has been as well, at least using 12/31/22 as the starting point. This means it has severely lagged the S&P 500’s two consecutive mid-20% return years. What tends to get forgotten, though, is that it absolutely crushed the S&P in 2022 when the broad market fell by 18.13% and XLE was up 64.17%. That’s the kind of hyper-muscular performance that deserves a breather.
Ironically, or not, it was the funeral-like sentiment Ferg refers to early in this note that set the stage for this out-of-the-blue rally. There’s no question energy investors were feeling blue indeed when his note went out into the blogosphere last month.

Evergreen Compatibility Survey
As you will read, Ferg correctly discloses the weak demand in China due to what looks like, to Team Haymaker, a deflationary bust similar to what Japan suffered 35 years ago. He also accurately describes the economic malaise currently afflicting Europe. Yet, per his comments, the developing world, outside of China, is a very different story.
Consumption in emerging countries continues to rise at a healthy clip. This is almost certainly why overall global oil demand hit a record of around 105 million barrels/day toward the end of 2024. (That factoid is courtesy of Cornerstone Analytics, one of our favorite energy authorities, and is not in Ferg’s article.)
Echoing a recurring Haymaker theme, Ferg is also appropriately highly critical of the International Energy Agency’s (IEA) abysmal statistical abilities (which strikes us more as disabilities). As we’ve frequently pointed out, the forecasting track record of the world’s leading official source of oil supply and demand statistics has been hysterically inaccurate. Quoting our friends at Goehring & Rozencwajg: “Ferg relays that the IEA’s cumulative undercounting of demand and overestimation of supply would make it the world’s 21st largest crude consumer.” (Emphasis added)
At the end of his note, Ferg gives you some specific names he likes.* We realize this is always a crowd-pleaser with our subscribers. Sharp-eyed readers may notice a name among them on which we previously provided some research. Like most energy equities, it hasn’t done much but it has been showing signs of perking up. An exception to this sector lethargy has been some of the natural gas producers which we highlighted in our Gas Pains MHM edition from last September. The returns on a few of those, plus natural gas itself, have been anything but painful.
*As always, we suggest you do your own research and consult with a financial advisor as necessary.
David “The Haymaker” Hay
Trader Ferg – Assessing Oil’s Risk Reward
Going over the oil bear case and some repositioning
Ferg (originally published January 8th) – [Abbreviated version below]…
Subscribe to Haymaker to read the rest.
Become a paying subscriber of Haymaker to get access to this post and other subscriber-only content.
A subscription gets you:
Subscriber-only posts and full archive | |
Post comments and join the community |

IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
David Hay shall have no responsibility for: (i) determining that any opinion, forecast, projection, risk assumption, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinion, forecast, projection, risk assumption, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinion, forecast, projection, risk assumption, or commentary discussed herein to any particular reader’s investment objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that David Hay has an advisory agreement, oral or otherwise, with any reader.
David Hay serves on the Investment Committee in his capacity as Co-Chief Investment Officer of Evergreen Gavekal (“Evergreen”), registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Evergreen in no way implies a certain level of skill or expertise or that the SEC has endorsed the firm or David Hay. Investment decisions for Evergreen clients are made by the Evergreen Investment Committee. Please note that while David Hay co-manages the investment program on behalf of Evergreen clients, this publication is not affiliated with Evergreen and do not necessarily reflect the views of the Investment Committee. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
20250117