Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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The Boom in Battery Metals for EVs Is Turning to Bust

By Rhiannon Hoyle and Julie Steinberg, The Wall Street Journal, 2/20/2024

MarketMinder’s View: First, please note that this article mentions a few mining stocks in discussing a broader theme and note that MarketMinder doesn’t make individual security recommendations. Our interest here is the broader theme: Cratering prices for nickel and lithium, two electric vehicle (EV) battery metals, illustrate once again the idea that investing on big, long-term government plans everybody knows about is a terrible thesis to own or buy virtually anything. In 2020 and 2021, the notion the EU and US were going to pour cash into EVs and EV infrastructure development led loads of people to wonder if they shouldn’t have direct, even pure-play exposure to battery metals—bidding up stocks of those firms as a result. Now, some of those mentioned herein aren’t pure-play firms, but rather they are much more diversified and subject to loads of other demand trends than merely EVs. But for those who did dive into direct exposure, consider: “Producers of lithium and nickel, which are used in lithium-ion batteries for EVs, have been stalling projects and closing mines to save cash after a painfully quick fall in commodity prices. Prices of lithium are down as much as 90% since the start of last year, while the price of nickel has roughly halved.” Ironically, that may help reboot EV demand if it flows through to cheaper battery prices, which is kind of how cycles work. You go from overextended prices on excess optimism to steep declines until the fundamental economics shift.


Israel’s Economy Shrinks More Than Expected on Gaza War

By Staff, BBC, 2/20/2024

MarketMinder’s View: Israeli GDP contracted by -19.4% annualized in Q4 after Hamas’s deadly October 7 attack and the resulting war disrupted local commerce broadly. Underlying data highlight the degree of disruption the war has caused: “[Israel’s Central Statistics Office] said private spending dropped by 26.3%, exports fell by 18.3% and there had been a 67.8% slide in investment in fixed assets, especially in residential buildings. The construction sector suffered from a lack of labour, due to military call-ups and a reduction in Palestinian workers. Meanwhile, government spending, mainly on war expenses and compensating businesses and households, jumped by 88.1%.” This illustrates a point we often make: Stocks pre-price widely known factors—even major tragedies—and then tend to move on quickly. In Israel’s case, stocks fell sharply in the immediate wake of 10/7, likely pre-pricing the economic effects GDP data highlight. But they stopped falling in late October and have since rebounded to well above pre-attack levels—despite the ongoing war—and that is true whether measured using the MSCI Israel or TA-125 Index, in USD or shekels (per FactSet). Always remember: Widely watched events with predictable economic effects are unlikely to sway stocks for long.


A $6 Trillion Wall of Cash Is Holding Firm as Fed Delays Cuts

By Alexandra Harris and Nina Trentmann, Bloomberg, 2/20/2024

MarketMinder’s View: Well, ok sure—higher rates have lured more cash into money market funds and such, likely ditching low-yield savings accounts. But all the talk here of cash’s allure and reference to 2023 as “The Year of Cash” seems a bit off when you consider global stocks’ 23.8% return last year (per FactSet) more than quadrupled cash yields—and this was in a year when cash inflows were large, as the article notes. If stocks can dominate in those conditions, where is the evidence they need massive flows to rise from here? As for companies holding lots of cash, those cited (which, by the way MarketMinder doesn’t make individual security recommendations) are largely Tech firms that routinely have cash-rich balance sheets. This is a sign of stability in a sense, but we don’t see companies’ carrying more cash—to the extent they are—as any more problematic now than it was in 2010, when claims of cash hoarding ran wild.


The Boom in Battery Metals for EVs Is Turning to Bust

By Rhiannon Hoyle and Julie Steinberg, The Wall Street Journal, 2/20/2024

MarketMinder’s View: First, please note that this article mentions a few mining stocks in discussing a broader theme and note that MarketMinder doesn’t make individual security recommendations. Our interest here is the broader theme: Cratering prices for nickel and lithium, two electric vehicle (EV) battery metals, illustrate once again the idea that investing on big, long-term government plans everybody knows about is a terrible thesis to own or buy virtually anything. In 2020 and 2021, the notion the EU and US were going to pour cash into EVs and EV infrastructure development led loads of people to wonder if they shouldn’t have direct, even pure-play exposure to battery metals—bidding up stocks of those firms as a result. Now, some of those mentioned herein aren’t pure-play firms, but rather they are much more diversified and subject to loads of other demand trends than merely EVs. But for those who did dive into direct exposure, consider: “Producers of lithium and nickel, which are used in lithium-ion batteries for EVs, have been stalling projects and closing mines to save cash after a painfully quick fall in commodity prices. Prices of lithium are down as much as 90% since the start of last year, while the price of nickel has roughly halved.” Ironically, that may help reboot EV demand if it flows through to cheaper battery prices, which is kind of how cycles work. You go from overextended prices on excess optimism to steep declines until the fundamental economics shift.


Israel’s Economy Shrinks More Than Expected on Gaza War

By Staff, BBC, 2/20/2024

MarketMinder’s View: Israeli GDP contracted by -19.4% annualized in Q4 after Hamas’s deadly October 7 attack and the resulting war disrupted local commerce broadly. Underlying data highlight the degree of disruption the war has caused: “[Israel’s Central Statistics Office] said private spending dropped by 26.3%, exports fell by 18.3% and there had been a 67.8% slide in investment in fixed assets, especially in residential buildings. The construction sector suffered from a lack of labour, due to military call-ups and a reduction in Palestinian workers. Meanwhile, government spending, mainly on war expenses and compensating businesses and households, jumped by 88.1%.” This illustrates a point we often make: Stocks pre-price widely known factors—even major tragedies—and then tend to move on quickly. In Israel’s case, stocks fell sharply in the immediate wake of 10/7, likely pre-pricing the economic effects GDP data highlight. But they stopped falling in late October and have since rebounded to well above pre-attack levels—despite the ongoing war—and that is true whether measured using the MSCI Israel or TA-125 Index, in USD or shekels (per FactSet). Always remember: Widely watched events with predictable economic effects are unlikely to sway stocks for long.


A $6 Trillion Wall of Cash Is Holding Firm as Fed Delays Cuts

By Alexandra Harris and Nina Trentmann, Bloomberg, 2/20/2024

MarketMinder’s View: Well, ok sure—higher rates have lured more cash into money market funds and such, likely ditching low-yield savings accounts. But all the talk here of cash’s allure and reference to 2023 as “The Year of Cash” seems a bit off when you consider global stocks’ 23.8% return last year (per FactSet) more than quadrupled cash yields—and this was in a year when cash inflows were large, as the article notes. If stocks can dominate in those conditions, where is the evidence they need massive flows to rise from here? As for companies holding lots of cash, those cited (which, by the way MarketMinder doesn’t make individual security recommendations) are largely Tech firms that routinely have cash-rich balance sheets. This is a sign of stability in a sense, but we don’t see companies’ carrying more cash—to the extent they are—as any more problematic now than it was in 2010, when claims of cash hoarding ran wild.