The DOW Jones, NASDAQ and other economic indicators continue to hit new records under the deregulation policies and economic growth policies touted by Pres. Trump. For casual observers, playing the stock market seems like a sure bet. To some degree, that may be true.
Historically, the markets have shifted on presidential election nights as corporate decision-makers are already well aware of impending policy directions. Pres. Obama had an environmental protection leaning that increased business expenses and caused a downturn for non-green companies. Those policies also helped surge green businesses. The “Trump Bump” in November started an uptick in many industries based on confidence that corporate profits would soar. But with summer waning and many of the pro-business policies in place, it’s time to start separating true earners from those organizations that were overly confident.
The international demand for lithium continues to grow because it is a necessary element in batteries, air conditioners and other products. Although little actual mining is conducted in the United States, there are American-based outfits with their hands in the Australian and South American cookie jar.
Albemarle is a North Carolina company that earned the National Mining Society Award in 2015 for excellence and has deep investments in Chile and Australia lithium mines. It’s considered a lithium super power and has been gobbling up other outfits such as Rockwood Holdings and Rockwood Lithium. The aggressive outfit plans to double lithium output as global demand rises. The stocks have been steady and profitable over the last five years. Other lithium mining outfits that appears solid include Sociedad Química y Minera de Chile, FMC, Lithium Americas and Nemaska Lithium. Lithium mining is for real.
Where’s the Actual Stock?
This year’s trade deal with China to open markets for U.S. Beef exports seemed to put beef producers on a stock uptick. Unfortunately, beef producing outfits face a more complex and shifting market. Japan recently slapped a 50 percent protection tariff on frozen American beef just as exports to China began. The Japanese move will undoubtedly hurt beef exports. Doubling down on the industry woes is the fact that China can now send cooked chicken products to the U.S. Although Commerce Secretary Wilbur Ross was correct in touting the fact that American beef picked up 1.4 billion potential consumers, major beef companies such as Tyson are also vested in poultry and could lose market share at home. It will be a while before the dust settles and NAFTA negotiations are underway. Don’t get enthusiastic about protein stocks just yet. Wait until the new NAFTA is signed.
Electric Cars: Curb Your Enthusiasm
Last year, Tesla moved more electric cars than any other company in the United States. That’s unwelcome news for front man Elon Musk, whose environmentally friendly marketing has drawn the attention of major competitors. Volkswagen, Nissan and others are gearing up to take a bigger bite out of the electric car market. Although Tesla is well-positioned and enticing, massive global car manufacturers are pacing themselves for sales dominance as the e-car market develops. Tesla is the sexy short-term stock buy that investors should keep a wary eye on. There’s a battle royale coming in this industry. Tesla could end up being the Indian motorcycle of the electric car industry, a high-quality product that struggles against top competition.
A wise approach to today’s investing is to look at steady earners that caught a modest Trump Bump. Suddenly upswings may be confidence-based and not grounded in reality.