Nick Hodge – Fed Policy Expectations, Opportunities In Select General Equities, The Uranium Surge, And Thoughts On Copper Stocks
Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us to review the key macroeconomic movers, Fed policy expectations, some select opportunities in US equities, the surge in uranium and uranium stocks, and how he is playing the copper stocks.
We start off reviewing the markets reactions in Q4 of last year to the Jerome Powel “pivot party” and then the easing of speculation rolling into the first month of 2024. One question Nick poses is whether the Fed has backed themselves into a “credibility corner” where they are trying to stay tough on fighting stickier inflation higher than their target goal, but conceding they’ll likely need to start cutting rates later in the year to deal with weakening economic conditions. We touch upon the government’s role in bankrolling and fueling the recent GDP growth, the continued inversion of the yield curve, and what could happen as it flattens out, and how rate sensitive areas of the markets like REITs and Utilities have started to move. Nick also points out that other sectors like consumer staples, insurance companies, and Asian markets like Japan, the Philippines, and South Korea have been robust.
Next we get Nick’s take on the surge in the uranium price and related uranium stocks, where he points out that actually looking at the equities by way of ETFs like URNM or URA compared to the moves in the spot pricing, that there is still a lot of potential revaluation higher to be seen as the equities play catchup. Nick sees this sector as right in the middle of a bull market, and had trimmed some positions like Skyharbor Resources (SYH.V) in early December, anticipating there would be pullbacks that could be bought. He pointed out how many newer retail investors in the uranium stocks, shifted from overzealous to overly bearish in a short period of time, instead of positioning during pullbacks for the inevitable move higher in the equities as the bull market has continued to unfold. In addition to some of the larger companies he mentioned like Energy Fuels (UUUU) , Uranium Energy Corp (UEC), and enCore Energy (EU), he also thinks some smaller companies putting out recent news look compelling: noting the recent news from Premier American Uranium (PUR.V), Nuclear Fuels (NF.CN), and IsoEnergy (ISO.V) combining with Consolidated Uranium (CUR.V).
Wrapping up, we get Nick’s outlook for how the copper sector will continue to evolve, balancing out the medium-term to longer-term fundamentals, with the divergence we’ve seen the last few years in the copper producers versus the stark underperformance of most copper junior developers and explorers. He discusses the different timeframes he has, in relation to the macroeconomic backdrop, for how he’ll be looking at the large-cap and micro-cap companies.
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Why an ‘Un-Inverted’ Yield Curve Could Be More Chilling for the Stock Market
Nicholas Jasinski – Barron’s
“One of Wall Street’s favorite recession predictors—an inverted yield curve—is getting less inverted, but that isn’t all good news for investors. How the curve un-inverts matters, too.”
https://www.barrons.com/articles/stock-market-treasury-yield-curve-inversion-f366e665
Recession Deniers Are Making The Same Mistake As During The Dot-com And Housing Bubbles, Top Economist David Rosenberg Says
Theron Mohamed) – Business Insider – 1 week ago
“They’re ignoring the inverted yield curve, shrinking money supply, and leading indicators, he says.
The economist warns the stock market typically plummets by about 30% during recessions.”
“Virtually every economist is doing what they did at the end of 2007, 2000 and 1989 — gazing into the rear-view mirror instead of looking through the front window,” the Rosenberg Research president said in his latest memo to clients, published on Tuesday.
The “soft landing” crowd are focusing on lagging and coincident economic indicators instead of forward-looking ones, Rosenberg explained.
He pointed to a classic recession indicator, the “yield curve” – the difference between 2-year and 10-year Treasury yields. It’s been inverted for 13 months, the longest period since 1979-80, and by as many as 157 basis points, the most extreme inversion since 1981.
“Why would anyone bet against a metric that has gone 8 for 8?” Rosenberg queried, referring to the yield curve’s flawless history of heralding recessions.
Global Uranium Market Size Is Expected to Reach $3.27 Billion By 2027
January 10, 2024 – Financial News Media Group LLC
“Nuclear power is becoming a more dependable and scalable energy source due to the world’s growing demand for electricity, particularly in emerging economies. Thus, the market for uranium mining is supported. Nuclear power becomes a more appealing alternative as countries work to fulfill these targets and switch to low-carbon energy sources. In order to meet these environmental goals, increasing nuclear power depends heavily on uranium mining. There is a strong correlation between the demand for nuclear power worldwide and the uranium market. Uranium is needed as a fuel for nuclear reactors because nuclear power is becoming more and more popular as nations look for greener, more sustainable energy sources. A report from Market Reports World said that the Global Uranium Market is anticipated to rise at a considerable rate during the forecast period, between 2024 and 2030.”
Steelers at Bills Sunday at 1:00 pm in Highmark Stadium in Buffalo. Buffalo has the worst winter weather on the planet. Let it Snow, Let it Snow, Let it Snow! The Bills have a loyal fan base, and they are used to this weather, but they don’t have the best running team. It should be interesting. It’s for The Wild Card spot. DT
Michael Green – Uranium’s Problem, Copper’s Abundance, and Gold’s Institutional Barriers
Resource Talks – Jan 10, 2024
01:00 important warning
01:25 what just happened in macro?
14:15 aren’t worsening demographics bullish for copper?
20:50 are there still any opportunities in commodities?
23:20 what part of the energy subset will thrive in the 2020s?
29:00 will solar & wind demand save industrial commodities?
31:10 will Wall Street be buying commodities soon?
37:30 what do professional money managers want to see?
39:00 how can institutions can exposure to uranium?
45:30 why won’t professional money managers flood the commodity market?
59:00 does Michael Green still like gold?
01:04:10 what’s the issue with commodity cycles?
01:10:30 does macro even matter still?
Michael Green doesn’t know what he is talking about in relation to the way homes use copper now verses 1900. A home that was wired in 1900 might have had 4 to 12 circuits with a 30-amp to 60-amp service. A ground wire wasn’t included and there were very few receptacles or appliances. Now there are all kinds of electric devices that require separate circuits, and the wiring is quite often still 12 gauge although 14 gauge is allowed for shorter runs. The typical service for a smaller home now is at least 100 amps with a minimum of 24 to 32 circuits and more common these days are 200-amp services, sometimes with 60 circuits. With air conditioning, 8 to 10 separate cct’s for kitchen use, (split receptacles and regular receptacles, fridge, stove, dishwasher, microwave, and kitchen lighting. Not to consider outdoor wiring, receptacles and lighting, garage needs, the average home uses far more copper than was required in the 1900’s. The hydro code is restrictive to the point that you must follow their guidelines or risk losing your insurance in a fire situation. There is just no comparison. DT
Good points DT. I don’t necessarily agree with all the points Michael Green made on a few commodities and related resource stock sectors, but still found it an interesting and thought-provoking conversation. It also can be instructive to get a range of different ideas and perspectives, sometimes even ones that challenge or conflict with an idea one already holds, to then more fully crystalize one’s own thinking and personal investing thesis.
Battery Metal Price Plunge Is Closing Mines and Stalling Deals
Thomas Biesheuvel – Bloomberg News – January 9th, 2024
“A meltdown in some of the most-hyped energy-transition metals is wreaking havoc across the mining world, stalling projects, scuppering deals and triggering a scramble for cash that promises to reverberate through the industry for years.”
“Lithium — the ultra-light metal used in electric-vehicle batteries — has plunged more than 80% from a late-2022 record, as the market whiplashed from shortage fears to a mountain of surplus inventories. Nickel and cobalt have also tumbled, weighed down by an influx of new production amid concerns that the shift to EVs may not be as smooth and quick as predicted.”
“It’s a dramatic reversal from the ebullience of recent years that sent prices soaring and sparked a rush by some of the auto industry’s biggest players to secure future supply. Now, several carmakers are getting cold feet and abandoning deal discussions, according to mining investment bankers and industry executives. The low prices are making it harder for mine builders to raise money from more traditional sources as well, at a time when the industry is also grappling with rampant inflation driving up the cost to build new projects.”
https://www.bnnbloomberg.ca/battery-metal-price-plunge-is-closing-mines-and-stalling-deals-1.2019715
It is very difficult for me to believe anything coming out of Wall Street or Government data. It might be different if their deception, intervention and self serving information have not been disproved over time. It has made it very difficult to invest when the “System” has morphed into a massive insider trading activity enabled by Regulators.
But thanks for the various “main stream” postings as they all have to be considered to understand reality, if even that is possible.
Thanks Lakedweller2. Yes, it’s hard to believe any government or media numbers, but some of those posts are just to put at least some context around the supply/demand sides of the equation. Obviously pricing is the final arbiter of value, but I use the sector news and stats more as picking up on the fundamental megatrends in motion.
Yes…and you do an exceptional job keeping us informed and I much appreciate it. I would be lost otherwise.
The KER interview with Nick Hodge, and then the string of uranium posts, and eventually the Critical Minerals article linked above, really got my gears turning early this morning. This, of course, led to another rant that I posted on Substack this morning for subscribers.
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Surfing The Waves In Commodities and Resource Stocks – A Quick Rant On Lithium, Uranium, and Copper Stocks
Shad Marquitz – Excelsior Prosperity – 01/12/2024
https://open.substack.com/pub/excelsiorprosperity/p/surfing-the-waves-in-commodities
That is really a great rant and needs to be published in main stream media if they have any interest in facts and the truth, other than constantly trying to manipulate favorable prices for corporations and other thieves.
Much appreciated. Yeah, I’ve got not delusions that the main stream media will pick up my Substack article… but am happy to share it with the good folks here in the KER crew. 🙂
There are massive protests going on in Germany because The German government has taken away the farmer’s diesel fuel subsidy. Farmers and truck drivers have rolled out their rigs and are shutting down The German Autobahns. The mainstream media here hasn’t reported on this so North Americans aren’t informed of what is happening. The farmers and The German truck drivers have shut down The German economy, the most powerful economy in Europe. DT
Great point DT. My wife was showing me some of that news as it relates to German protests for farmers, truck drivers, railroad workers, and others sick of the green policies (and where the subsidies are going and not going) continuing to hurt their businesses and livelihoods, as well as jacking up their overall prices for consumers across the country.
>> I get into Germany being the perfect poster child of what not to do for energy policies in my Substack rant posted above.
Tucker Carlson on the shutdown of The German economy.
The Inverted Yield Curve Is Reversing Course: Why It Matters
Brad Smith and Eyek Ntekim – Yahoo Finance – October 24, 2023
“One of Wall Street’s most-watched recession indicators is the inverted yield curve. An inverted yield curve is when the yield on a shorter duration Treasury, such as the 2-year, are yielding more than those on a longer duration, such as the 10-year…”
“But what happens when we un-invert?… Before the last four recessions, we’ve actually seen the yield curve un-invert. So what happens when it un-inverts, and the key to understand here the Professor Harvey was talking to me about, is why it un-inverts?”
https://finance.yahoo.com/video/inverted-yield-curve-reversing-course-152533265.html