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Tag: commodities

China Concerns Cloud Retail Earnings Week

The following is an amended form of the Aug. 15 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack.

Some bad economic news out of China has weighed on risk sentiment overnight. The country’s central bank responded with a surprise rate cut. The impact is mostly limited to commodities so far, with WTI crude oil down 4% and copper off 2% in early Monday trading.

Starting tomorrow (Tuesday), the big box retailers will report earnings, with the likes of Walmart (WMT) and Home Depot (HD) up first. Wednesday we’ll get Lowe’s (LOW), Target (TGT), and TJX (TJX).

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Hugh Hendry, OG Contrarian (Szn 4, Ep21)

Hugh Hendry is a man who needs no introduction to contrarians. Over the course of this 90-minute conversation, he provided many views on markets, the economy, the Federal Reserve, China, and a lot more. Of particular interest to investors are his bullish views on commodities, oil producers, and luxury goods makers…

Content Highlights

  • Hendry’s most contrarian opinion right off the bat: The Fed is not responsible for the asset price bubble (2:40);
  • “We find ourselves in the fourth depression of the last 200 years” after “les miserables” period of 1830 to ~1855, 1870 to the late 1890s, and the 1930s (8:11);
  • “I don’t think we have inflation.” Sales of non-discretionary items are not increasing (13:53);
  • Very few people understand money and money creation. What are they missing? (28:56);
  • What’s behind the stock market rally this summer? It may be commodities, at least in part… (39:49);
  • Markets are ‘bucking broncos.’ Volatility can be a major distraction and nothing happens in a straight line. But commodity producers and uranium should be in good shape over the long term (46:55);
  • Background on the guest. As an ‘OG contrarian’ Hendry joins an exclusive list (54:58);
  • A little insight into Hendry’s current life and psychology (1:10:40);
  • Betting on the Chinese yuan weakening (1:14:37);
  • The odds of the 10-year treasury making new lows (1:22:44);
  • China invading Taiwan? Hendry sets the odds at 20% and says China will never have a stronger bargaining positioning vis-a-vis the U.S (1:24:16).

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

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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