The full PDF of this report is available for download below.

Today we release the second in a series of Bear Market Anatomy reports. We find these reports useful for preparing for what to do when the market falls 15%. Today’s deck on Emerging Markets, like the previous deck on Canada and future decks on Europe, Japan, …

Read more

The full PDF of this report is available for download below.

Anatomy of A Canadian Bear is one of several market-specific bear market studies we are compiling. We wrote it to prepare for a

bear market, not to forecast one. Decisions about how to act in a drawdown are best made before it begins, against the historical record, and these studies are part of our firm’s effort to prepare.

The S&P/TSX Composite has fallen 15% or more from a closing high sixteen times since 1979. The average drawdown during those episodes was 27.6% over eight months; the median was 23.4% over six. The gap is almost entirely the two structural bears, 2000-02 and 2008-09, which fell roughly 50% and took an average of 51 months to regain their peaks. The ten event-driven bears averaged a 22.7% decline over three and a half months. The type of bear matters more than the average.

The findings most relevant to positioning:

• The recognition date, the first close 15% below the peak, has been a better point to add than to cut. From that date, the median further decline was 8%, and the twelve-month return was positive in eleven of sixteen episodes. The four exceptions were the two structural bears, 1980-82 and 2020.

• Consumer staples and utilities outperformed the index by an average of 27 and 19 percentage points through the declines. The rotation out of defensives and into cyclicals at the trough has a strong track record of outperformance; energy has been a reliable source of downside and an unreliable source of recovery.

• Small caps fall further and take longer to heal, with a median of 23.8 months to regain their peak against 13.2 for large caps. The small-cap rebound premium appears in the 2008-09 and 2020 recoveries and is absent otherwise.

• In local currency, the TSX fell less than the S&P 500 in 15 of 24 US corrections since 1979. In US dollars, the cushion disappears: -21% on average against -20%, because the Canadian dollar weakens when risk is sold.

• Dispersion is wide. In 2000-02 the index halved while the median constituent fell 6.9%. That dispersion breadth is where stock pickers earn or lose in a bear market.

Our Canadian Bull/Bear composite reads 60% through September 18th (the data cutoff for this study), below the 66% to 82% range that preceded past rate-driven and structural bear markets. Valuation is holding the composite up: the CAPE stands at 29.2, its 98th percentile since 2001. We expect a bear market starting from here to be more likely event-driven or cyclical than structural, and we would treat its recognition date as a point to add, at least given current data. That view would change if growth momentum and real commodity prices move into their upper quintiles with valuation unchanged, the configuration that preceded 2008.

2026 10 09 Massif Canadian Bear Market Anatomy V006

1.03MB ∙ PDF file

Download

Download

The full PDF of this report is available for download below.

Brent closed at $118.35 in late March, at the peak of an 11.2 million barrels-per-day disruption, the largest in oil history. By July 6, it settled at $71.57, below where it was when the conflict started. In 2022, Russia’s invasion of Ukraine removed a tenth of that volume and held Brent above $120 for three months, and above $100 for six.

Our new paper, Higher Floor, works through both halves of that comparison. The first half explains why the surge this year didn’t hold: the market entered the war oversupplied on paper, bypass pipelines and dark tankers cut the real physical loss below the headline figure, and the shortage that did materialize showed up in refining margins and grade spreads rather than in Brent or WTI.

The second half argues that the round trip also revealed the new higher floor for oil going forward, but events don’t support a higher sustainable ceiling. Three buffers that used to produce a lower downside (upstream investment, OPEC+ spare capacity, and commercial and strategic inventories) are thinner than they have been in years. We build the case for a durable floor near $70, $10 to $15 above the prior cycle floor, and lay out what that range means for underwriting energy equities between that floor and the ceiling that keeps forming slightly above $100.

Furthermore, we argue that this is what equity investors should want. A tight range of $70 to $100 is the best-case scenario for equity investors, not oil spiking to $100+.

An appendix takes one of the harder questions oil investors are currently dealing with directly: is the US-Iran standoff a new structural issue rather than a temporary diplomatic issue, and what a persistent, intermittent Hormuz disruption does to routing and refining exposure that a clean peace or a clean war would not.

Read more

The full PDF of this report is available for download below.

Interest rates are the price of sovereign money, and that price is increasingly set by geography rather than by the policy rate. This paper extends the geography-first thesis of From Geology to Geography from commodities to the term structure of interest rates. The long end of the world’s sovereign curves has migrated from an expectations-first regime, in which the ten-year yield forecast the average future policy rate plus a small and stable term premium, to a fragmentation-first regime, in which the term premium, the inflation-risk premium, and the dispersion of sovereign spreads carry a persistent and rising geopolitical charge. The investment implication is dispersion, not direction. This is not a call on the level of the ten-year yield; what has structurally repriced is the compensation investors demand for holding duration.

Three facts frame a single repricing. The term premium has exited the 2014-to-2021 regime, with the ACM ten-year term premium estimate near 0.6% in May 2026, accounting for more than half the recent rise in yields. The price-insensitive official buyer that anchored the Treasury market is retreating; China’s holdings, for example, have fallen to $652.3 billion, the lowest since September 2008. And the equity-bond correlation that made government bonds a portfolio hedge has inverted, averaging near +0.6 since 2022. The risk-compensation component of interest rates is doing the work, the marginal price-setter has shifted from a price-insensitive official buyer to a return-sensitive private one, and duration now amplifies equity drawdowns when the shock is supply-side.

The intellectual lineage of this thesis runs from weaponized interdependence to the 2022 freeze of two-thirds of Russia’s central-bank reserves, which converted reserve assets from negligible-credit-risk instruments into confiscation-risk instruments. The revealed preference of the offical buyer is now gold: central banks have bought more than 1,000 tonnes annually for four years, lifting gold’s reserve share above 23%. We sit between the de-dollarization camp and the dismissers. The dollar will not be dethroned, no liquid substitute exists at scale, and most of the reserve-share decline is valuation rather than reallocation. But the term premium is set at the margin, and the marginal reserve manager has ever more reason to diversify.

Fragmentation enters the curve through four channels: the term premium, the inflation-risk premium that links the rate regime to commodity supply shocks, the withdrawal of the official bid, and the fiscal-credibility channel that disperses sovereign spreads. The euro area is just one laboratory; the market now prices sovereigns on credibility rather than geography, tightening Italy while widening France. US fiscal arithmetic is another, with the interest bill self-reinforcing, pushes the premium higher before any geopolitical shock.

For a real-asset portfolio, the duration ballast is no longer reliable, the real risk-free rate is structurally higher, sovereign dispersion is an opportunity, and the inflation-risk premium specifically rewards real assets. We assign roughly a one-third probability that the shift proves cyclical. The more likely path is that the price-insensitive buyer has left the building, and the risk-free rate is now a variable with a widening distribution.

Read more

Commodity pricing has shifted from a geology-first regime to a geography-first regime. By geology-first, we mean the orthodox cost-curve framework in which the cleared price reflects the marginal producer’s cash costs, ore grades determine competitive position, and supply responsiveness sets the price. In the new geography-first regime corridors, jurisdictions, processing nodes, and sovereign policy tools more persistently shape cleared prices, the spread of realized prices around those benchmarks, and the equity valuations of producers themselves. We do not claim that geology no longer has importance, far from it. Ore grades will still decline; marginal costs still matter. We do claim that the marginal-cost variable has been demoted, and that the dominant explanatory variable for cleared prices, basis differentials, and producer netbacks is the political and institutional architecture governing the movement of commodities, wellhead, mine, or smelter to end user.

The possibility of this occurring was foreseen by many organizations, although typically, organizations that come in for scorn by market participants. The IMF first diagnosed the potential in October 2023. In Chapter 3 of the World Economic Outlook, titled “Fragmentation and Commodity Markets: Vulnerabilities and Risks,” the IMF concluded that Russia’s 2022 invasion of Ukraine “caused major commodity markets to fragment,” and that “commodities are particularly vulnerable to fragmentation due to concentrated production, hard-to- substitute consumption, and their critical role for technologies.” The IMFs modal global GDP loss from bloc-based fragmentation is a modest 0.3 percent. We disagree with this particular aspect of the work; it undersells the significance, but the qualitative work is sound. The implication for the real-asset investor is dispersion, not direction. The benchmark contract may or may not move; the basis around it almost certainly will.

The case for regime change is best made by walking it. The historical record from 2000 to 2026 contains its own inflection points, six of them, and the cleared price tells the story plainly enough once the right questions are asked of it. The intellectual lineage is older than the data: Grotius and Selden argued sovereignty over space four centuries ago, Mahan, Mackinder, and Spykman returned to it in the age of coal and steel, and Farrell and Newman have given the contemporary version a name, weaponized interdependence. From the framing, the work descends to the income statement, where geography enters as a tariff, a basis differential, a permitting delay, a sanction carve-out, a chokepoint premium. Five case studies follow, chosen because each isolates a distinct mechanism at play in the regime change and supports different flavors of investment thesis. The portfolio implications and the caveats close the piece.

Our verdict, defended at length in what follows, is that the regime change is structural rather than cyclical, that it has been underpriced by indices and by most fundamental-equity research, and that the dispersion in producer valuations it produces is presently the largest single source of investment alpha available in the real-asset universe.

We suggest downloading and reading the PDF version of this report. Paid Subscribers will see a download link below.

Read more

Paid Subscribers to the Real Asset Handbook via our website will find a link with a password to access a CPI Dashboard that they can use to examine their own stocks. For those of you with a free Substack subscription, we will roll out a paid subscription next week and make the Dashboard available at that time.

We suggest downloading and reading the PDF v…

Read more

We suggest downloading and reading the PDF version of this report. Download link at the bottom of the report.

Chemring (CHG LN) is experiencing a surge in orders amid an era of rearmament and geopolitical tensions. A company once synonymous with decoy flares and pyrotechnics, it now has a record order book exceeding £1 billion, with demand so robust that…

Read more

We will be conducting a live interview with EQX CEO Darren Hall on Thursday, November 13, at 11:00 a.m. If you are interested in joining the call, you can sign up below:

Zoom Link to EQX Call

Please note that Massif Capital is invested in EQX via the company’s US listing. We use USD throughout this discussion, including the share price.

Read more

We suggest downloading and reading the PDF version of this report.

Lundin Mining Part 2 Massif Capital

5.13MB ∙ PDF file

Download

Download

A Strategic Analysis Framework for Valuation of Lundin Mining

As we demonstrated in part one of this two-part report on Lundin Mining (LUN), the company has undergone a transformative five-year period that has positioned the company well for the future. Two critical variables will determin…

Read more

We suggest downloading and reading the PDF version of this report.

Lundin Mining Part 1 Massif Capital

5.39MB ∙ PDF file

Download

Download

This is part one of a two-part report on Lundin Mining. The report is divided into two parts: a backward-looking section (Part One) and a forward-looking valuation section (Part Two). Unl…

Read more

This report was first shared with the investors in Massif Capital Real Assets Strategy and subscribers to the Real Asset Handbook on our website on July 23rd. Since then, the idea has increased by 54%. We will be rolling out subscriptions to the Real Asset Handbook through Substack, at a special introductory rate, in the coming weeks.

Although you can re…

Read more

The modern economy runs on copper—it powers renewable energy systems, supports urban infrastructure, and underpins the global digital transformation. Our latest white paper, Zambia’s Copper Renaissance: Navigating Opportunities and Challenges in Africa’s Most Promising Copper Jurisdiction, delves into why Zambia is a rising star in the copper mining lan…

Read more

Water technology is a critical yet underappreciated pillar of the global industrial economy. As water scarcity intensifies and demand continues to rise, industries face mounting risks tied to water access and quality. From semiconductors to power generation, water plays an indispensable role in production processes, with ultra-pure water (UPW) systems s…

Read more

Harbour Energy (HBR) is a compelling investment opportunity in the European Independent E&P sector. Through strategic mergers and acquisitions, HBR has become one of the largest independent oil and gas producers globally, with a diversified asset base, robust financial profile and a steep discount to intrinsic value.

The recent acquisition of Wintershall…

Read more

What are assets in a warzone worth? How should we think about such assets? What about assets in countries engaged in conflict but far away from fighting? These questions will become increasingly important for investors as the era of geopolitical naivety in investing ends. This is especially true for investors who seek out idiosyncratic opportunities in …

Read more

Unlike many Uranium investors, we do not think the uranium macro thesis is sufficiently compelling to justify sustained equity exposure to either uranium or uranium miners. This

is primarily because our research indicates that commodity prices never explain more than about 50% of a natural resource producer’s equity price, albeit in any given year it mi…

Read more

Var Energi (VAR) is Norway’s third-largest oil and gas producer and one of Europe’s largest gas exporters from the Norwegian Continental Shelf (NCS). Founded in 2018 through the merger of Eni Norge and Point Resources, VAR is listed on the Oslo Stock Exchange, with Italian energy giant Eni as its largest shareholder. The company has equity stakes in app…

Read more

We have spoken with subscribers and reassessed the Real Asset Chartbook; many people have commented that it is a fire hose of information, rather than a succinct delivery of a few key points in the world of liquid real assets. As such, we will pivot slightly to see if the product, delivered differently, is more appealing. The PDF Chart Book, which conta…

Read more

In this series on the history of US Trade Policy, we utilize a framework outlined by Douglas Irwin in his excellent history of US Trade Policy, Clashing Over Commerce, to step back through history and understand how we arrived at our current state. The previous installments, including the first installment, which outlines the three Rs framework, are lin…

Read more

We have spoken with subscribers and reassessed the Real Asset Chartbook; many people have commented that it is a fire hose of information, rather than a succinct delivery of a few key points in the world of liquid real assets. As such, we will pivot slightly to see if the product, delivered differently, is more appealing. The PDF Chart Book, which conta…

Read more