The Foxhole

Everyone's watching the oil price. The harder problem is the gas that can't take a detour.

🧭 Unpredictable short term: JP Morgan admits it can't model how the crisis ends.
📖 Diversion in progress: Our full read on energy stocks as oil, gas and AI power collide.
⛽ Gas that skips the chokepoint: US LNG exporters that never route through Hormuz.

Oil is easing toward US$100 as Saudi Arabia repairs a bypass pipeline, because crude can be rerouted around a blockade. It’s a different story for gas. It has to be liquefied and shipped through the same chokepoints, and Qatar, a fifth of the world's LNG, has no pipeline to skirt Hormuz.

No detour, no quick fix. So while most people fixate on oil, the stickier risk (and potentially the more durable opportunity) could be gas.

Is there a quick fix for gas that I'm missing?

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mitchell_lawler

14h

Everyone's watching the oil price. The harder problem is the gas that can't take a detour.

No detour, no quick fix. So while most people fixate on oil, the stickier risk (and potentially the more durable opportunity) could be gas.

Is there a quick fix for gas that I'm missing?

👍🧠🔥

8 comments

mitchell_lawler

The rate hike just raised the bar every company you own has to clear before spending.

📈 Gone hiking: The Fed lifted rates for the first time since 2023.
🏗️ Disciplined by default: High-return, self-funding companies trading below fair value.
🎥 Protect your portfolio: "How to protect your retirement from a 2026 recession."

The Fed just hiked for the first time in three years and signalled higher from here. The reflex is to read that as a drag on growth. But the more optimistic read, for a long-term investor, is that it raises the required return that every company has to clear before it spends a dollar. It’s now harder to justify empire-building acquisitions and vanity projects.

In effect, the Fed just imposed a layer of capital discipline across your whole portfolio. However, it only works where management is rational in their response.

Who's the best capital allocator in the market right now?

👍🔥

12 comments

mitchell_lawler

A lot of companies don't have a moat, they have customers too busy to switch. AI agents could change that.

🤖 The quick switch: Meta's AI agent found and switched insurance for a US$3,500 saving.
🏰 Price aside: 12 companies with switching costs beyond customer friction.
📈 Insurance counter: WallStreetWontons outlines how Progressive could still be undervalued.

A lot of companies look more defensive than they really are. Their actual moat isn't a better product, it's the hassle for customers to find a better deal. This friction leads to many people paying more than they need to on insurance, flights, and hotels.

AI agents could remove that friction. One person reported to have handed over his auto policy to Meta's new agent, which proceeded to find and switch him to an alternative policy for US$3,500 cheaper in five minutes.

Which of your holdings survives once shopping around becomes effortless?

👍🧠🥱🔥🤡

9 comments

mitchell_lawler

Oil routes are being dismantled one by one. The durable winner could be the North American energy left standing.

🌍 Three chokepoints: Both major oil straits and the Saudi bypass are now compromised.
🛢️ Flowing freely: Undervalued North American producers that never touch a chokepoint.
⚙️ The distillate squeeze: An ETF of the companies that turn crude into diesel and jet fuel.

For the first time, the world's key oil chokepoints are all compromised at once: Hormuz throttled, the Houthis holding Bab el-Mandeb, and Saudi Arabia's bypass pipeline hit. Brent is near US$110 and US diesel just topped US$6 a gallon.

Oil (and the tankers hauling it the long way around Africa) might seem like an opportunity, but it fades the day the straits reopen. Arguably the more durable angle is based on what buyers do next… rebuilding around supply that can't be disrupted. That durable premium flows to North American oil, gas, and the refiners making the diesel that is now in short supply.

Do you think there is a long-term energy shift taking place that makes this more than a trade?

👍🔥🤡

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