Kontrarian Korner #81 - Purple Drink Capital

Dec 12, 2025

A fascinating dive into market trends unfolds as experts discuss the implications of the recent Fed meeting. They highlight a bullish outlook for small caps and express skepticism towards AI in the tech sector. Precious metals, particularly silver, are poised for a breakout, with copper expected to thrive as China revives. The strategic importance of bellwethers like Newmont for gold and Exxon for oil & gas is analyzed. The conversation wraps up with insights on navigating inflation risks as we approach 2026.

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INSIGHT

Dovish Fed Fuels Cyclical Leadership

The Fed's post-meeting tone looks dovish and sets up a bullish few months for markets.
Small caps (IWM) leading versus mega-cap tech signals a rotation into cyclical risk-taking.

INSIGHT

AI CapEx Is Paused, Not Dead

Skepticism about AI CapEx's durability has paused momentum but not ended the trade.
The AI/CapEx cycle may mirror shale: slow to blow up and needs an external shock to violently reverse.

ADVICE

Trade Price Action, Not Headlines

Use price action and market cycles rather than reacting to news when trading.
Expect a sustained bull run for roughly 12 months following a true capitulation event.

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Yesterday, I had PurpleDrinkCapital back on the podcast for an update on what he is seeing in markets. We talked about the recent Fed meeting and broader markets, and we also bounced around the different commodity sectors. He explained what he looks for in the charts and how it impacts his strategy, but it was a great conversation for a broad look at financial markets as we head into 2026. For anyone listening on Apple Podcasts or Spotify, we were looking at charts a fair bit, so you might want to switch over to Substack or YouTube. You can find his Substack below, but you can also find him on Twitter.

Podcast Summary

* The recent Fed meeting, and how it sets up the market from here.

* Signs of life in the small caps $IWM and the Dow Jones Transportation Index.

* Skepticism around AI CAPEX and the tech sector.

* Why he focuses on price action, market cycles, and why he thinks the broader market should be fine until inflation rears its ugly head.

* The whole periodic table lighting up as we get rate cuts with relatively stubborn inflation.

* What he expects for gold and silver in 2026.

* Why he thinks copper will really kick into gear when China kicks into gear.

* Why he focuses on bellwethers for different sectors, like Newmont $NEM for gold, Freeport $FCX for copper, and Exxon Mobil $XOM for oil and gas.

* What his process looks like, and why focuses on charts as a way to distill where buyers and sellers are willing to step in for any security.

* Natural gas, his career experience in energy, and why he hates the sector with volatility and its exposure to weather.

* Uranium, the Trump Administration involvement in the sector, and why he likes the setup for the next couple years.

* How oil and gas is out of favor, why he likes the setup for back half of 2026, and why he pays more attention to Exxon breaking out than the oil price.

* Podcast Recommendation: The Athletic Football Show.

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