Actual-world limits… Rights aren’t the pressure of gravity… The magic of cash… The legal guidelines of finance… Diesel gas and AI led me right here…
Thirty years in the past, a buddy of mine misplaced his foot to a papermaking machine…
The particulars have pale from reminiscence, however I will always remember how a lot it shocked me when he referred to as and instructed me about it.
I vaguely keep in mind him describing the grotesque accident. I did not know what to say besides, “Wow, man, I am so sorry that occurred to you.”
I distinctly keep in mind the first time I noticed him afterward. I stood in his room and checked out the prosthesis located the place flesh and bone had been. It jarred me. I might by no means identified anybody who had misplaced a significant physique half.
Wanting again, it had an Outdated Testomony really feel to it. An eye fixed for a watch… besides my buddy hadn’t taken anyone’s foot. He was simply making a residing working harmful equipment. I suppose he let his focus slip and wham, the machine took his foot.
I am not saying God had it in for him. My buddy merely hit a tough restrict of actuality. His mistake was met by a machine with all the sympathy of a firing squad. It took a chunk of him in an instantaneous.
Had his foot been crushed by an avalanche or severed in a automobile accident, the finish consequence would have been the similar. The bodily world has its limits, and generally it is best you do not discover them.
The bodily world is not like the world of politics and beliefs…
People particularly like these realms.
For instance, take the rights to life and liberty. They’re essential underpinnings of the U.S. Structure, which we name the “Regulation of the Land.” We should always name it the “Regulation of the Individuals Who Stay on the Land.” The land does not care about us. It routinely swallows individuals and buildings that occur to be on the mistaken spot at the mistaken time.
Let’s face it, rights are great, however they don’t seem to be precisely the pressure of gravity. You may violate somebody’s proper to life and liberty. It is occurring proper now, throughout the world.
However you possibly can’t violate the legislation of gravity. In the event you step off the roof of a tall constructing, the universe will extract fee from you.
Bodily legislation is successfully the legislation of God. And as Cecil B. DeMille, director of the 1956 epic movie The Ten Commandments, famously stated:
We can not break the Ten Commandments. We are able to solely break ourselves towards them.
The markets and economic system are a hybrid of those worlds…
At instances, they abide by the Regulation of the Individuals Who Stay on the Land. Different instances, they comply with the legal guidelines of bodily actuality. However extra typically, they comply with points of each.
When these worlds work collectively, we hail the course of as a fantastic triumph. Of us get concepts. They need to flip them into actual services. So that they put cash to work and poof, the world is abruptly full of iPhones and Peloton bikes. Cash is earned, saved, and turns into capital for the subsequent try at incomes. It is a straight line from concepts to actual issues, made potential by the accumulation and allocation of capital.
However when ideology and the bodily world are at odds, issues can get dicey – quick. Once you drop bombs on a rustic that produces roughly 3% of the international oil provide, you should not be shocked to see oil rise from under $70 per barrel to a bit greater than $112 per barrel in 27 buying and selling days.
That makes life more durable for individuals who should purchase gas to dwell.
Like the different legal guidelines of males, you possibly can violate the legal guidelines of finance…
For instance, generally the market lets individuals purchase rubbish firms and make a fortune after they soar for one ridiculous cause or one other.
Or take the Federal Reserve and the U.S. Treasury. The Fed prints cash out of skinny air, buys Treasurys and mortgage-backed securities… and voila, loans are made, and housing is constructed.
You may get away with violating legal guidelines for longer than you’d think about… till you possibly can’t.
I imagine we’ve entered a time when the monetary and financial insurance policies of the previous few many years are colliding with the limits of the bodily universe. And physics will at all times win out.
Right now’s hyperabundance of cash must bow to the financial shortage of issues. Printing extra money does not make a semiconductor fab seem any sooner. Nor does it make copper seem quicker. It nonetheless takes twenty years or extra from the discovery of a copper deposit till the mine begins to supply usable ore. And even then, the ore nonetheless must be became copper cathode earlier than it turns into wire or pots and pans.
The scenario is nearly primitively easy.
People need issues. Producing issues requires manipulating bodily actuality in myriad advanced methods. They price time and effort and require wrestle. That is simply life.
Nevertheless, we regularly ignore the extra disagreeable realities of price.
We see our neighbor’s shiny new Tesla. We do not see the youngsters mining cobalt from rocks and dust in the Democratic Republic of the Congo. We see the bacon on our plate in the morning. We do not see the river of blood in Chicago that produced it.
As Mike Tyson may say, we do not take into consideration the prices till they punch us in the mouth.
COVID-19 landed a strong punch. So has the closing of the Strait of Hormuz.
Earlier than COVID, solely the geekiest monetary and business analysts even uttered the time period “provide chain.” Many people had by no means heard of it.
Now, even my non-financially savvy associates and kin know China controls international uncommon earth refining. All of them know 20% of the world’s oil transits the Strait of Hormuz. And a few are fast to quote how a lot naphtha, refined merchandise, urea, and different supplies that energy and feed our trendy world transfer by way of the extremely contested waterway.
That is what a superb strong punch will do for you. It will wake you up higher than the most clangorous alarm clock ever might.
A good punch will threaten a essential physique half.
It is what occurred to the Western world in March 2020 and once more in February 2026. Each instances the ache, swelling, and disfigurement lasted properly past the preliminary affect.
I began occupied with the ‘subsequent punch’ final December…
That is once I seen that 95% of the nation’s knowledge facilities use diesel backup mills.
You see, data-center clients now routinely require “5 nines” reliability. They’re even writing it into contracts. Which means the knowledge middle should ship 99.999% uptime. That is simply 5 minutes and 26 seconds of allowable downtime per yr. A microsecond extra, and firms lose income on initiatives, most of which are not making a revenue but.
In The Ferris Report, I confirmed how an prolonged energy outage in a spot like Loudoun County, Virginia – Information Heart Alley – might trigger an in a single day 3% spike in nationwide diesel demand. That would simply ship costs at the pump north of $10 a gallon. The nationwide common diesel value is about $5 now, so $10 is probably going a conservative guess.
I beneficial two oil refiner shares in the crosshairs of this potential disaster. They’re each up greater than 80% since December. (Ferris Report subscribers can discover that situation here. And should you do not already subscribe to The Ferris Report, click here to study extra.)
They benefited as the battle in Iran pushed up gas costs. (I will not fake I predicted that in December.) Even with oil and fuel costs retreating from their April battle highs, the crack unfold – the value of gasoline and diesel gas minus the price of the crude oil required to make them – has soared to all-time highs and now sits round $65 a barrel. That has stored these shares hovering.
I notice that rearranging your portfolio to learn from a possible disaster will not be a well-liked transfer…
It results in disappointment the majority of the time. However when it does ship, it tends to make up a variety of floor – particularly when the majority of oldsters are dropping massive.
Think about that seven months in the past you’d purchased two shares that will rise 80% as all the massive AI shares both rose a bit, fell a bit, or fell loads. That is precisely what has occurred since I beneficial the refiners in December.
Amongst the largest AI names, Alphabet (GOOGL) and Nvidia (NVDA) are the solely two which might be up by double digits since December 24. Via yesterday’s shut, they had been up 13% and 10%, respectively. That is not dangerous, however it’s not 80%. Microsoft (MSFT) was down 18% and Palantir Applied sciences (PLTR) and Oracle (ORCL) had been each down greater than 30%.
I promise you, paying 100 or extra instances gross sales for any enterprise (like people did with Palantir in 2025), carries substantial danger.
Understanding how essential backup energy is for data-center house owners and their clients would have helped you see the vitality commerce in December. It is the place the actual positive factors in the AI growth have been for some time.
You may in all probability title different methods the bodily world is profitable out.
For instance, my buddy and legendary pure sources investor Rick Rule, of Rule Funding Media, has been saying for years that “both the value [of uranium] goes up or the lights exit.”
The lights have stayed on, and the value has gone up… and can seemingly go up some extra. I do not imagine the uranium bull market is over but.
That very same dynamic applies to copper, uncommon earths processing, chemical manufacturing, and a bunch of bodily merchandise and processes that monetary establishments, central banks, and governments cannot print out of skinny air.
I’ve already picked at the least a dozen shares with this concept in thoughts, and a few of them are completely crushing the market. I anticipate that to proceed for years to return.
New 52-week highs (as of seven/16/26): AXA (AXAHY), Alpha Architect 1-3 Month Field Fund (BOXX), Chemed (CHE), Canadian Nationwide Railway (CNI), Healthpeak Properties (DOC), W.W. Grainger (GWW), Coca-Cola (KO), Kayne Anderson Vitality Infrastructure Fund (KYN), Lamar Promoting (LAMR), LXP Industrial Belief (LXP), Marathon Petroleum (MPC), Match Group (MTCH), Omega Healthcare Traders (OHI), Pembina Pipeline (PBA), Invesco Excessive Yield Fairness Dividend Achievers Fund (PEY), Starbucks (SBUX), Snap-on (SNA), State Avenue SPDR Portfolio S&P 500 Worth Fund (SPYV), Union Pacific (UNP), and Visa (V).
In right now’s mailbag, suggestions on Dr. David “Doc” Eifrig’s new investing instrument that tracks market “rotation,” which we wrote about yesterday and debuted to the public earlier this week…
Present Retirement Dealer subscribers and Stansberry Alliance members can discover this new instrument here… and should you’re in studying extra and becoming a member of them, click here for the details and a free demo in Doc’s presentation…
Do you’ve got a remark or query? As at all times, e-mail us at feedback@stansberryresearch.com.
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Good investing,
Dan Ferris
Medford, Oregon
July 17, 2026
