Sean Brodrick – Commodities In The Energy Sector Will Benefit From The Prevailing Macro Trends
Sean Brodrick, Editor of Wealth Megatrends, and contributing analyst to Weiss Ratings Daily, joins us to focus on the macroeconomic investment trends in motion and how they affect commodities like copper, oil, natural gas, lithium, gold and silver. We start off reviewing how inflation expectations and recent economic reports have shaped expectation for Fed rate hikes in the year to come. We dive into the bifurcation between the recession and contraction many pundits have been calling for since last year and counter-balance that against the better than expected jobs data, manufacturing data, and retail sales data. With Fed FOMC minutes due out this Wednesday, and the PCE inflation data out this Friday, it should provide more clarity as to the direction moving forward.
Another key area of discussion was around the Chinese economy and society reopening from 3 years of lockdowns, and what that may mean for demand of copper, oil, lithium, iron, steel, and many commodities. We wrap up with having Sean provide investable ideas from the energy sector where he is more bullish on dividend-paying oil companies than he is on the still struggling nat gas companies, and he reiterates the need for battery metals and many sources of energy generation for the future. As for precious metals, he is biding his time waiting for more corrective action to position on pullbacks.
There is another issue that I have touched on but is not considered at all and that is the amount of energy required to build the batteries for electric cars and the energy that they give off makes them uneconomical. What has propelled the human race forward is how we have been able to procure cheap energy, the new electric car batteries are a backward step in the evolution of energy for the advancement of humankind. The technology must radically change for them to be energy profitable. DT
Doesn’t matter since all economic activity goes to the bottom line and is good for GDP. LOL. B!
Ha! Well that is one way of looking at it Brumple. GDP growth needs all the help it can get, but the average person, and the average business could give a rip about overall national output.
However, as outlined below, there is definitely a “cost” behind the supposed growth and government investment in trying to force this change on citizens, and the common EV narrative conveniently ignores many of the energy paradoxes and waste issues for the sake of selling the public a nice-sounding story.
That’s a solid point DT. Most people focused on the EV narrative conveniently turn a blind eye to the energy costs that go into making the batteries, as well as the not-so-green landfill issue from used batteries.
Then, as we’ve discussed on here many times, and as Bob M. mentioned in his interview linked up above with Goldfinger, people neglect to consider where the energy is going to come from to charge their electric vehicles. Any thinking person would quickly realize that EV users globally are overwhelmingly charging the vehicles with power generated by coal plants, nat gas plants, or nuclear plants (the very same things those virtue signalers would be against and protest vehemently).
For the small percentage of EV drivers that are actually charging up their batteries with solar power, they neglect the huge not-so-green issue with used solar panels, just like their used vehicle batteries when they stack up in the landfills.
Hydro power is also a mixed bag that creates an environmental mess for those upstream and downstream, changing eco-systems, and robbing communities down river of the water supply that existed since people settled there. This was the case in many countries when huge dams were built over the last 150 years, and even recently with some of the injustices foisted on communities in China so they could build mega-dams. Closer to home, just look at the complete disaster that has played out in Arizona and Nevada with Lake Powell and Lake Meade and the associated dams, and ask the local communities, or Native Americans how they feel about the hydropower footprints and what it did to the environment. “Green” and “Renewable” titles sound nice, but they are often far from the reality.
It’s a nifty narrative until one peels back the layers of the onion, and then it starts to stink more and more. Anyone that actually thinks through the whole lifecycle of the products and all the energy needed will realize that it is not a progression to a better way of power, but often times, more energy intensive when the cost of making the batteries, replacing the batteries, making the solar panels, the rare earths needed for windmills as well as the energy needed to make and ship the windmills, or the environmental/social damage caused by damming up rivers and natural water supplies. Those driving around thinking they have the high ground and tooting their EV horns, rarely consider the paradox in thinking they’ve gone green, when the energy needed to for them to charge all the EVs is in fact mostly coming from the dreaded fossil fuels or nuclear power that they probably have stickers on their cars protesting.
There are similar wrinkles and inconvenient truths with using renewable power, and then storing the excess power in large vanadium redox energy storage batteries, without considering all the manufacturing energy that went into making the backup batteries in the first place. Energy production, storage, and distribution is messy any way you slice it, and there is no perfect system (well except for Nikola Tesla’s “free energy” ideas, and you see how well that went over to the energy tycoons in his time). There’s big business in making sure energy is not free and based on simple magnetism, and so we are forced to use a bunch of expensive and polluting alternatives to this day.
Bottom line: Even if policy makers and WEF cronies could get their wish and suddenly build out all those EV charging stations in place of all the gas stations with the snap of a finger (which they obviously can’t), then it would still be a mess on many levels for the reasons described above. The reality is that there are not enough raw materials or mines even close to ready to provide the copper, nickel, cobalt, graphite, lithium, tin, silver, manganese, etc… to meet the pie-in-the sky models and targets so many nations have. Someone needs to sit some of those bozos down and say… “look, these are cute ideas, but let’s talk about the limits of the energy grid, that you suddenly want to move all these vehicles onto, and off of fossil fuels. Um…. Houston… we have a problem…”
Lastly, there have been a large number of EVs that have caught on fire, especially in areas where the car is flooded with salt water, and I don’t hear the radical environmentalists panning that reality very often in their “save the world” narrative. 😉
Don’t disagree with any of the points made but ……doesn’t change the narrative for what to invest in. The need will be there cuz the EV revolution is the agenda…….and “that’s the bottom line”.
The bottom line is humans need inexpensive energy and lots of it. It takes 800 times the energy capacity of the battery just to mine the materials to create it. Humans need more energy not less. Watch Tesla’s stock when the energy dreamers realize it is a zero plus game and if you are invested heavily in the battery material space you better get out before the trap door falls away from your feet. DT
Well….. everyone has their investment thesis…. I’ll stick to the critical metals for batteries….. do see some concerning signs in lithium plays as it’s getting into the cow pasture territory with some plays but nickel and copper have multiple uses anyways and take time for discoveries to become mines…… and the EV push isn’t abruptly coming to a halt any time soon. Solar and wind have huge issues as well and they’ve been completely ignored for the past 20 years.
Just look at osisko’s deal today….. follow the money and where it’s all flowing.
Somebody put up a presentation someone gave recently on EV and energy and said some of the things that DT is saying. At the end of the presentation he concluded that it doesn’t mean it won’t happen as there are shortages of everything that is going to make things work and advance in the present and future. There will also be scientific advances to help make it work cheaper and and easier. To think the reverse and not move forward would be a bigger mistake. (Paraphrasing. Slaying the messenger is also not an option)
Pres Biden announced new nuclear plants for Poland. How generous, & meanwhile USA gets windmills & butterflies
Nuclear is very misunderstood and underrated, after decades of fear-mongering and misinformation.
Contrary to the garbage narratives and falsehoods that have circulated the last few decades, nuclear power is actually the safest and most reliable form of energy generation and has killed the least number of lifeforms on the planet. It is criminal and reckless to be pursuing much more destructive forms of power generation with a government thumbs up, and then blacklisting the only carbon-neutral baselode power generation method that operates 24/7… rain or shine… wind or no wind…. and isn’t rerouting major river systems and related ecosystems.
Look at the freaking mess that is Germany over the last decade. They shoot their mouths off about stopping nuclear power, only to then fall flat on their faces with supposedly “renewable power” like solar and wind, which was an epic fail (hey ding-dongs… it’s Germany and not always sunny or windy).
As a result of their major energy debacle, then they started importing megatons of nuclear power from their neighbors in France (oh the irony), along with bringing in much more dirty and polluting coal. (yeah what a step forward you progressive European leaders).
Then, they figured after energy prices kept soaring that they’d just do a nat gas pipeline deal with Russia, and look at how stellar that has worked out for them. But hey, they did it all with a Green narrative, so at least people felt smug and righteous about all their terrible energy policies and decisions because they were saving the planet right? (wrong)
Walmart CFO: ‘There is considerable pressure on the consumer’
Ines Ferré·Markets – Yahoo Finance – Tue, February 21, 2023
“Walmart’s (WMT) cautious outlook for 2023 hints at a U.S. consumer increasingly squeezed by inflation, opting to buy necessities over discretionary items.”
“While the supply chain issues have largely abated, prices are still high and there is considerable pressure on the consumer,” Walmart CFO John Rainey told analysts during the company’s fourth-quarter earnings call on Tuesday.
“Given the persistence of high prices and the potential for further macro pressures, we’re taking a cautious outlook for the year,” said Rainey.
NatGas Bottom This Morning?
(PMs Last Friday?)
NatGas (NG1) bottom confirmed.
NatGas Trend: 48 business days inclusive.
Less one = Lucas Number 47.
SOXX:SILJ is right behind SOXX:SLV in turning down which is good news for the miners and metals…
All this good news with another low in NG and yet more bargain basement metal sector share prices.
I think I’ll let the good news continue and sit flat from the exit late January
Maybe a past return with longer term calls on the gold large caps, FNV NEM AEM.
For now better to put some capital in with leverage than get married prematurely holding the stocks.
Oh the underperformance of sector equities vs gold just goes on and on. But the hopium continues.
Gold down a measly 100 bucks or so, 1950 to 1840 since late January top, about 5%.
Most sector shares down multiples of that. Big cap like Aem down form 58 to 45 today, over 20% in less than a month.
Shares in the touted penny arcade much worst.
So much for these future multi baggers. Gonna take a long long time with gold in the stratosphere.
Any lasting turnaround needs the opposite. With shares at least holding pace.
But soon may be worth option calls as things are getting oversold in sector just to keep things interesting.
It all depends on which stocks you’re talking about when you say” Shares in the touted penny arcade much worst.” ….we discuss Dolly Varden a lot here for instance and it’s up 14% in the last month despite the drop in silver….. lots of the Penny arcade base metals up too like Osisko up 20% in the last month. Cheers
i’m talking about the vast majority which underperform gold on the upside and overperform on the downside.
Bob Moriarty: We Need A New Financial System Based Upon Natural Resources
Energy and Gold w/ Goldfinger (Robert Sinn) – Feb 21st, 2023
“We need a lot more metals in the future. Now, there’s some conclusions that I’ve come to. There is not enough lithium, nickel, and copper in the world to transition internal combustion engine vehicles to electric vehicles. And the fatal flaw to electric vehicles is where does the electricity come from to power them? And of course the electricity comes from fossil fuels. Instead of spending money on wars, we need to be spending money on infrastructure. We need to be spending hundreds of billions of dollars a year rebuilding our infrastructure and we’re not.”