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The EV battery market just got interesting

Oct 05, 2023

Good morning! 👋

I don’t know about you, but I sure am tired of the shenanigans. The markets are red again in early going as investors brace for Friday’s jobs reports.

Good luck with that.

The sad reality is that most investors have great intentions but fail because they lack the longer-term perspective needed to overcome short-term market chaos.

Wall Street, of course, knows this, which is why they do everything in their power to perpetuate the short-term lottery mentality that’s taken over in recent years.

If I’ve said it 1,000 times, I’ll say it again…

The odds that the S&P 500 will close higher tomorrow are 53% but 82.8% just 5 short years from now and 93.3% a decade out.

Here’s my playbook.

WWTFD: Private payrolls rise less than expected

The numbers are hot off Washington’s presses this morning.

Private payrolls rose less than expected… just 89,000 in September or 54% less than the 160,000 ADP expected. (Read) News outlets latched on, saying that this may give the Fed a reason to stop hiking rates, but I wouldn’t bet on it.

Official government numbers (which I maintain are more cooked than a Christmas goose) come out Friday and often differ materially from the ADP numbers.

Speculative putskies on the indices; and,
Buy deep-value stocks but especially low-beta, high-divvy choices

I recommend both in One Bar Ahead®, my premium research journal, in case you’re interested or that’s helpful. Upgrade to Paid

WWTFD (What will the Fed do), indeed!

Peak Oil Demand, same but different

The EIA and OPEC are apparently fighting over “Peak Oil Demand.” (Read)

Remember that?

Peak Oil Demand is an idea floated some time back that oil consumption eventually peaks when the highest level of global crude oil demand is reached. The thinking is that it will be followed by a permanent decline.

One problem.

Scientists and erstwhile environmentalists have been talking about Peak Oil for years… since 1956 actually. That’s when geologist M. King Hubbert first presented his theory and predicted that the US would peak in the late 1960 and early 1970s.

To be fair, Hubbert got US production right for a while, which gave his theory credence, but EIA data show that US oil peaked in January 2020. The jury is still out on the rest of the world and has been for roughly 50 years. In fact, the only thing that’s been consistent in all that time is that it’s never happened.

Peak Oil Demand came on the scene in the late 2010s; it’s really a different shade of the same argument. This time around, though, the idea is that global demand will peak and decline due to changes in consumer preference, rapidly advancing technology, and—big surprise—government policies.

I think it’s probably right because that’s how the world works, but the markets don’t give a rip about my opinion.

Major oil stocks are all down in the pre-market, naturally.

I know what I’ll be doing.

Basic economics dictates that anytime a scarce resource gets scarcer, prices rise. 😊

How we feel about it doesn’t matter.

Anybody using Microsoft’s combat goggles better hope Windows programmers weren’t involved

Yes, you read that right.

Microsoft makes combat goggles, and apparently, Pentagon buyers love ‘em. (Read)

I’m not sure soldiers will.

Microsoft’s early versions were apparently clunky helmets that have now been refined into flip-up visors. Still (and speaking from experience), the last thing you want in a life-and-death situation is a technology failure or something that interferes with your senses.

As much as I love the idea and believe in Microsoft itself, anybody using ‘em better hope that Windows programmers weren’t let within a country mile of the code, given the company’s legendary spinning wheel of death whenever something went wrong. [doh]

$STZ says Salud!

Constellation Brands (STZ) beats on earnings while the Modelo-fueled brand blast continues. (Read)

Bud has gotta be hatin’ this.

Constellation just reported double-digit sales growth this year as the company’s beer division continues to dominate sales. Top names include some of my faves: Corona, Modelo Especial, and Modelo Chelada, which, now that I think about it, I haven’t tried yet.

What’s more, the company raised guidance.

Investing takeaway: We’ve talked a lot in recent weeks about two things: 1) how I think earnings may be a lot stronger than many people think, and 2) how the markets will split, with the best in class rising to the top. Constellation is a great example, particularly in the beverages space.

It might be time for another look!

Meanwhile, investors would be wise to decide right now which stocks they’re going to hold as volatility increases and which ones they want to dump because they’ve run their course.

EV battery market just got interesting

It’s one of the oldest laws in the jungle... or at least the markets anyway.

Invest in the best and ignore the rest.

I’ve stayed away from EV batteries for years because I wanted to be farther up the proverbial food chain at a time when it was too challenging to pick the winners from hundreds of potential competitors.

That just got a little easier and more interesting.

Toyota just signed a $3 billion deal with LG Energy Solutions for lithium batteries that will be used to power EVs in the US. (Read) What catches my attention, though, is that CEO Young Soo Kwon said that the company now has 9 of the 10 top automakers as clients.

Another touchpoint, Mordor Intelligence states that “The North American Electric Vehicle Battery Market was valued at USD $1.82 billion in 2021 and is expected to reach USD $23 billion in 2027 which, if it happens, will be a CAGR of 30%+ during the forecast period (2022–2027).”

I can’t wait to see what Unka Elon has to say.