Making Hay Monday – January 5th, 2026

2 weeks ago 83 views 4 min read

David Hay

Editor

Haymaker

Making Hay Monday

The K-Shaped Economy Comes Due

“Quiet inflation feels better than loud austerity.” -Billionaire investor, Ray Dalio

“Anybody who disagrees with me will never be Fed Chairman.” -Donald J. Trump (perhaps, not to mention, acting president of Venezuela?)

Upgrade to paid

The K-Shaped Economy Comes Due

Hello, Subscribers:

A recurring theme of this newsletter has been the unprecedented nature of financial and economic conditions in the post-Covid era. Our acknowledgement of this has caused us to note multiple times that because there has been such a convoluted confluence of forces, both good and bad, making credible forecasts was nearly impossible.

Yet, at times, we have fallen into the trap of going beyond our preferred “anticipations” and all too often made predictive declarations. Moreover, we have done so without the appropriate qualification about the uncharted waters we’ve been in – and are still in.

Unquestionably, some of those have worked out wonderfully, particularly our repeated urging for our readers to have considerable precious metals exposure, including the related miners. Additionally, we have endorsed the accumulation of key industrial metals, and their producers, like palladium, copper and, more recently, aluminum.

Our bond market calls have also been almost totally spot-on, particularly our very bearish views on long-term Treasuries starting in mid-2020 and continuing into early 2022. Anticipating one of the worst bear markets in bond market history definitely ranks as one of our best calls. Moreover, we correctly foresaw the related inflation eruption that was looming. We began to write about that in this publication’s predecessor newsletter in 2021. It was further chronicled in the elder Haymaker’s book, Bubble 3.0, published in segments beginning at the start of 2022.

Another anticipation about which we can hold our heads high was our table-pounding bullish stance on energy at the end of 2020. This was vehemently advocated in our December 2020 newsletter Totally Toxic. (Note, both the bond and energy recommendations were contained in Haymaker’s predecessor newsletter, the Evergreen Virtual Advisor, aka, EVA.)

Total Return of the State Street Energy Sector Select (XLE) vs the S&P since 12/31/20

Bloomberg

As you can see above, despite the energy sector’s big lag since the start of 2023, it has roughly doubled the S&P’s total return since the start of 2021. Despite that outperformance, it remains brimming with bargain-priced stocks (though after today’s explosion in oil service stocks, that list has shrunk a bit). The energy sector continues to represent less than 3% of the S&P 500’s market value. That’s barely over one-third of Nvidia’s capitalization alone!…