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Tag: China

The Bullish Case for Rare Earths: Louis O’Connor (Szn 4, Ep. 20)

Published August 1, 2022

Louis O’Connor, CEO of Strategic Metals Invest, joins the podcast to make the case for rare earth metals. These commodities, hitherto unavailable to retail investors, are now accessible and entering the mainstream…

Content Highlights

  • Rare earth metals (sometimes called rare earth elements) are intrinsic to daily life. They are part of modern technology as diverse as electric cars, military applications, solar applications, nuclear reactors, and more (3:01);
  • China produces more than 80% of the world’s rare earths and refines metals even mined in the U.S. (5:39);
  • Okay, so what are these rare metals exactly? There are 17 in all, though not all are exactly rare, or vital… (8:12);
  • Rare earths have outperformed almost all major asset classes the last five years (14:22);
  • The supply picture for rare earths is complicated, while demand is quite inelastic, depending on a diverse set of buyers… (18:58);
  • Rare earths are entering the mainstream and production is increasing in the U.S., where it is more expensive (23:01);
  • There is a specific rare earth where the investment opportunity is particularly compelling at present (31:58);
  • Tellurium, on the other hand, is one that is not deemed particularly advantageous at the moment (35:50).

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Assessing the Precarious State of Markets With Marc Chandler (Szn 4, Ep 18)

Published July 6, 2022

Marc Chandler, chief market strategist at Bannock Burn Global FX, joins the podcast to discuss the precarious state of markets and what he is expecting from upcoming releases of key economic data. He also provides a pair of investment ideas for these times, with the understanding that nothing here is to be taken as investment advice.

Content Highlights

  • The coming week brings a number of crucial economic data around employment and inflation. What to expect (2:50);
  • “I don’t think we’re in a recession yet. But I think it’s going to be hard to avoid one.” Cracks are appearing and these warrant attention (3:51);
  • Weekly jobless claims (up Thursday) can be a leading indicator of recessions (5:30);
  • Non-farm payrolls are up on Friday. What to expect (11:34);
  • Core inflation is actually receding from highs, but the Fed can’t (and more importantly won’t) declare victory over inflation quite yet (14:42);
  • Recent days have seen a shift in market sentiment, to where a rate cut is starting to be priced in (17:43);
  • What is an investor to do here? The guest has two ideas, at opposite ends of the risk spectrum (25:23);

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MoreAssessing the Precarious State of Markets With Marc Chandler (Szn 4, Ep 18)
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The Yield Curve Inverteth

Published July 5, 2022

The following is an amended form of the Daily Contrarian briefing from July 5. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack.

The yield-curve between the 2-year and 10-year just inverted. What this means is the shorter-dated yield (the 2-year in this instance) is actually higher than the longer-dated one (the 10-year). To be specific, the 2-year yield is currently 2.81% while the 10-year is 2.80%.

So there you have it. It’s not the first time this has happened this cycle. In fact, the 2/10 curve inverted as recently as June 14. Also in March. This is one recession predictor that is deemed to be pretty accurate for reasons that are discussed in this Investopedia article.

This yield curve inversion gives us something to talk about today, as things are still mostly quiet after the long holiday weekend. Most of the action this week is back-loaded, with the June jobs report due on Friday.

Markets got some good news around easing of China tariffs over the weekend, but the mood is mostly pretty dour. CNBC reports the outlook for the second half is “not looking good.” A contrarian indicator? Maybe. Or maybe it just isn’t a good idea to fight the Fed?

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Americans have apparently started tapping into their savings to cope with inflation. That’s not good, but there is a ready-made boogey man in the Federal Reserve. Lest we forget: the Fed insisted the inflation we were seeing last year was transitory. They’ve changed their tune on this, but the point is they don’t have political leeway to reverse course again — until inflation is well and truly under control (or they have some data to point to that will allow them to ‘declare victory’).

Whatever your views on all this, the truth is nobody has any idea what is going to happen. There are educated guesses but there are also people with a vested interest in pushing a specific narrative. Do your own research, make your own decisions.

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