Hey Influence Traders,
Greetings from Mexico – I made a Power Move to escape the cold/snow and catch some rays!
Mucho gusto!
We’ve got a new Super Bowl champion (with an old captain at the helm).
That win kicked off the week with a bang and it does not look like it will slow down.
We’ve got a $1.9 trillion stimulus package on the horizon …
And the Fed is arguing for full employment next year …
Meanwhile, the circus continues in DC as Trump’s second impeachment trial kicks off “with a sense of urgency.”
The outcome might be pre-ordained, but it will be good theater either way.
Champa Bay!
Never count the old guy out – Brady led the Bucs to a win and claimed his seventh Super Bowl ring.
A lot of people said that Brady was too old to compete with the young guns. But don’t dismiss the old guard … particularly when they want it.
Experience counts – whether looking at quarterbacks and teams or trading stocks!
How Did I Do?
I picked the winner, lost the over and won the coin toss.
In the words of Michael Lee Aday (aka the recording artist Meatloaf), “Two out of three ain’t bad.”
By the way, I was one of the 23 million people who bet a total of $4.3 billion on the game.
Stimulus and The Fed
Many on both sides of the aisle are saying that President Biden’s planned $1.9 trillion recovery plan is excessive and will lead to inflation.
Treasury Secretary Yellen came to Biden’s defense this weekend and urged Congress to pass the bill, claiming that it will lead to full employment next year.
She argued on Sunday that there are 10 million Americans who are unemployed and another 4 million who’ve dropped out of the labor force, and that these people and small businesses need help to get back on their feet.
Yellen continued on, saying that while inflation is a concern, she has the experience to deal with it, and there is no reason in her mind to have a long, slow recovery when we can act fast.
Without the bill she believes that it will take until 2025 to get unemployment to the key 4% level.
Her views seem to be in the minority in both parties
In addition to the general dismissal of the inflation concern, there was no mention of the nature and quality of the jobs that she believes will be created.
We knew we were going to get an aggressive Treasury Secretary …
And to paraphrase a famous football coach rant, “She is who we thought she was!”
Old Guard
Alphabet, Amazon, Apple, Facebook and Microsoft saw combined revenue growth of $1.1 trillion over the past year and their combined market caps skyrocketed to $8 trillion
All that tech is going to need things dug out of the ground.
So don’t bury mining …
Lithium & Cobalt
Lithium demand is being driven by the battery market, particularly with the rise of electric vehicles.
Big producers like Albemarle (Ticker: ALB), Tesla (Ticker: TSLA) and Lithium Americas (LAC) look strong for the long-term.
But there is another crucial element to battery production – cobalt.
Cobalt is a rare, hard, metallic element with broad applications, from magnets to chemical catalysts.
But more than half of all cobalt produced is used to make battery chemicals for EV batteries, along with production of superalloys used in aircraft engines.
Cobalt is expensive, which means that price swings can greatly impact revenue …
I’m keeping my eye on these two:
Glencore (Ticker: GLNCY): The world’s largest cobalt producer. Cobalt is a minor part of its business, but every $1 change in the price per pound of cobalt can impact Glencore’s earnings by $100 million.
Vale (Ticker: VALE): A Brazilian miner that recently struck a deal to sell 75% of its future cobalt production from its Voisey’s Bay mine in Canada to two companies: Cobalt 27 Capital and Wheaton Precious Metals. That move gave it the cash to increase development.
Adios for now …
Cutting Through the Noise for You,
Frank