Hey Influence Traders,

In addition to the big headlines, current events in India and Africa are significantly influencing U.S. stock markets.

Elections in India are creating a sense of political uncertainty.

President Modi has declined in popularity.

His praise for the Butcher of Tehran who recently died in a helicopter crash has not helped.

It is unsure whether the current ruling party, the BJP, will retain power.

Some see the BJP as critical for continued economic reforms and investment policies that favor foreign investments.

Those reforms could have a significant impact on the technology, pharmaceutical and manufacturing sectors.

U.S. companies have invested heavily in India to try and capitalize on its projected economic growth, which is expected to reach a market capitalization of over $5 trillion.

But continued regulatory changes are needed to maximize that potential.

Until politics and regulations shake out, U.S. companies with significant presence in India could see volatility.

Africa is also growing in importance.

The U.S. is pushing hard to transition from a fossil fuel to green energy economy.

That will require shoring up critical mineral supply chains.

These are necessary supplies, and the U.S. is lagging in production.

Many African nations are significant exporters of critical minerals and other natural resources essential for technology and manufacturing.

As such, changes in political stability or economic policies in countries like Nigeria, South Africa, or the Democratic Republic of the Congo can impact the supply chains and costs for U.S. companies relying on these resources​.

That is why recent political developments in South Africa and Nigeria are being closely monitored by investors​.

Just like with India, instability in Africa could cause fluctuations in commodity prices due to changes in African export policies or production levels, which will impact U.S. companies.

The Biden administration is not making it easy on domestic fossil fuel producers.

The cost of drilling on public lands has recently increased.

New rules increased the government’s share of the profit of oil that’s sold after being drilled on federal lands from 12.5% to 16.67%. 

They also raised the rents charged to oil companies for drilling on that land and increased the amount companies must pay upfront as a bond to ensure that they clean up their oil and gas wells once the drilling process ends. 

On the coal front, two recent administration proposals would prevent companies from applying for new coal mining rights on federally owned lands. 

At the same time, the administration is making it more difficult for global enemies to profit in the U.S.

Sanctions against the Venezuela oil industry have been reinstated.

Companies will have 45 days to wind down their transactions with the nation’s oil and gas sector.

Tariffs on Chinese electric vehicles will quadruple, from 25% to 100%. 

Tariffs on Chinese solar cells will double from 25% to 50%.

Chinese battery tech is also getting slapped.

Such batteries provide critical energy storage, which allows solar and wind power to be used at times when it is not sunny or windy.

Existing tariffs have largely kept Chinese imports out, so this could be the nail in the coffin.

But this will require the U.S. to step up domestic supply chains or source from more friendly/neutral locations.

Some are concerned that new import tariffs risk slowing the deployment of climate-friendly technology.

U.S. production is lagging and needs to pick-up.

Critical to that technology is rare earth elements.

We recently made a solid trade in MP Materials (Ticker: MP), which runs the Mountain Pass mine in California.

MP is currently the only viable domestic rare earth mining operation.

A more global player is Lynas Corporation (Ticker: LYSCF) out of Australia.

Its $7billion market cap is more than twice that of MP.

It is the largest rare earth player outside of China.

And I’ve got it on good authority that LYSCF is shipping material to the U.S. for permanent magnet production.

Another global mining leader is Newmont Mining (Ticker: NEM).

While it does not mine for critical rare earth elements, NEM is the world’s largest gold miner.

It has done well with the recent spike in the price of gold.

But the CAPEX for new and existing projects is on the rise.

Instability on the African continent will exacerbate that issue.

I’m looking for NEM to lose some of its luster.

I’m a positive guy, but perhaps it’s time to put on a down trade.

Andrew and I are going to explore a long LYSCF/short NEM trade.

Come find another winning trade with us in our next live session.