Justin Seda E Cauberghe @Fostijn: "On February 2nd, 2026, I..."

Thailand

On February 2nd, 2026, I posted here on eToro that oil looked extremely cheap. My view was based on the 𝐎𝐢𝐥/𝐆𝐨𝐥𝐝 𝐫𝐚𝐭𝐢𝐨 (𝐔𝐒𝐎𝐈𝐋/𝐆𝐎𝐋𝐃). What I did not anticipate at the time was a potential conflict in the Middle East and the supply disruptions that could follow. In previous posts I also mentioned a simple but fundamental principle: 𝐭𝐡𝐞 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐢𝐬 𝐞𝐬𝐬𝐞𝐧𝐭𝐢𝐚𝐥𝐥𝐲 𝐞𝐧𝐞𝐫𝐠𝐲 𝐭𝐫𝐚𝐧𝐬𝐟𝐨𝐫𝐦𝐞𝐝. When the price of energy rises significantly, it increases costs across the entire economy and puts pressure on corporate profits. So let’s look at where the 𝐭𝐎𝐢𝐥/𝐆𝐨𝐥𝐝 𝐫𝐚𝐭𝐢𝐨 stands today. Currently, 𝐨𝐧𝐞 𝐨𝐮𝐧𝐜𝐞 𝐨𝐟 𝐠𝐨𝐥𝐝 𝐛𝐮𝐲𝐬 𝐫𝐨𝐮𝐠𝐡𝐥𝐲 𝟓𝟔 𝐛𝐚𝐫𝐫𝐞𝐥𝐬 𝐨𝐟 𝐨𝐢𝐥, while the long-term 𝐦𝐨𝐧𝐭𝐡𝐥𝐲 𝐚𝐯𝐞𝐫𝐚𝐠𝐞 𝐢𝐬 𝐚𝐫𝐨𝐮𝐧𝐝 𝟐𝟔 𝐛𝐚𝐫𝐫𝐞𝐥𝐬. Historically, this suggests that 𝐨𝐢𝐥 𝐬𝐭𝐢𝐥𝐥 𝐥𝐨𝐨𝐤𝐬 𝐫𝐞𝐥𝐚𝐭𝐢𝐯𝐞𝐥𝐲 𝐜𝐡𝐞𝐚𝐩 (but not that cheap anymore) versus gold and may have further upside. However, i𝐢𝐟 𝐨𝐢𝐥 𝐩𝐫𝐢𝐜𝐞𝐬 𝐜𝐨𝐧𝐭𝐢𝐧𝐮𝐞 𝐭𝐨 𝐫𝐢𝐬𝐞 𝐬𝐡𝐚𝐫𝐩𝐥𝐲, 𝐭𝐡𝐞 𝐜𝐨𝐧𝐬𝐞𝐪𝐮𝐞𝐧𝐜𝐞𝐬 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐠𝐥𝐨𝐛𝐚𝐥 𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐜𝐨𝐮𝐥𝐝 𝐛𝐞 𝐬𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭. Higher energy costs can slow economic activity while simultaneously pushing the cost of living higher. In other words, 𝐰𝐞 𝐜𝐨𝐮𝐥𝐝 𝐦𝐨𝐯𝐞 𝐭𝐨𝐰𝐚𝐫𝐝 𝐚 𝐬𝐭𝐚𝐠𝐟𝐥𝐚𝐭𝐢𝐨𝐧𝐚𝐫𝐲 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭 — where economic growth stagnates or declines while inflation continues to rise. 𝐒𝐭𝐚𝐠𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐢𝐬 𝐨𝐧𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐭𝐨𝐮𝐠𝐡𝐞𝐬𝐭 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭𝐬 𝐟𝐨𝐫 𝐭𝐫𝐚𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬. In the 1970s — the last major stagflation period — most financial assets struggled. Stocks delivered weak real returns and bonds were heavily damaged by inflation and rising interest rates. 𝐎𝐧𝐞 𝐫𝐚𝐭𝐢𝐨 𝐈’𝐦 𝐰𝐚𝐭𝐜𝐡𝐢𝐧𝐠 𝐜𝐥𝐨𝐬𝐞𝐥𝐲 𝐫𝐢𝐠𝐡𝐭 𝐧𝐨𝐰 𝐢𝐬 𝐒𝐏𝐇𝐃 / 𝐒𝐏𝐘. SPHD tracks high-dividend, low-volatility companies, while SPY represents the broader S&P 500. 𝐖𝐡𝐞𝐧 𝐭𝐡𝐢𝐬 𝐫𝐚𝐭𝐢𝐨 𝐫𝐢𝐬𝐞𝐬, 𝐢𝐭 𝐦𝐞𝐚𝐧𝐬 𝐝𝐞𝐟𝐞𝐧𝐬𝐢𝐯𝐞 𝐢𝐧𝐜𝐨𝐦𝐞 𝐬𝐭𝐨𝐜𝐤𝐬 𝐚𝐫𝐞 𝐨𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐢𝐧𝐠 𝐭𝐡𝐞 𝐨𝐯𝐞𝐫𝐚𝐥𝐥 𝐦𝐚𝐫𝐤𝐞𝐭. Historically, this tends to happen when the 𝐦𝐚𝐜𝐫𝐨 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭 𝐬𝐡𝐢𝐟𝐭𝐬 𝐚𝐰𝐚𝐲 𝐟𝐫𝐨𝐦 𝐞𝐚𝐬𝐲 𝐥𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐚𝐧𝐝 𝐭𝐨𝐰𝐚𝐫𝐝 𝐡𝐢𝐠𝐡𝐞𝐫 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧, 𝐡𝐢𝐠𝐡𝐞𝐫 𝐫𝐚𝐭𝐞𝐬, 𝐚𝐧𝐝 𝐬𝐥𝐨𝐰𝐞𝐫 𝐠𝐫𝐨𝐰𝐭𝐡. During the stagflationary 1970s, markets rotated strongly into sectors like 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐮𝐭𝐢𝐥𝐢𝐭𝐢𝐞𝐬, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐡𝐢𝐠𝐡-𝐝𝐢𝐯𝐢𝐝𝐞𝐧𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬, while many growth stocks struggled. If the SPHD/SPY ratio continues its uptrend, it could signal that investors are gradually rotating toward 𝐢𝐧𝐜𝐨𝐦𝐞 𝐚𝐧𝐝 𝐫𝐞𝐚𝐥-𝐚𝐬𝐬𝐞𝐭 𝐞𝐱𝐩𝐨𝐬𝐮𝐫𝐞 again. 𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐞𝐥𝐲 𝐚 𝐫𝐚𝐭𝐢𝐨 𝐰𝐨𝐫𝐭𝐡 𝐤𝐞𝐞𝐩𝐢𝐧𝐠 𝐨𝐧 𝐭𝐡𝐞 𝐫𝐚𝐝𝐚𝐫. $SPY (State Street SPDR S&P 500 ETF) $SPHD (Invesco S&P 500 High Dividend Low Volatility ETF) $OIL $GOLD

Not investment advice. The author may have financial interests in the mentioned instruments.