New job, new firm but the same Free Whelan. Thank you for your continued support and keep unlocking valuable insights into the global market every week with me!
Good afternoon and welcome to June following an amazing May,
We are also now just over a month away from our Australian Investment Summit in London, working with the LSE showcasing some great companies to the UK market. Find out more here.
Big shoutout to the “Sell in May” crowd for successfully getting it wrong again.
This is why rhyme based investing is stupid. The US market just had the best May in the last ten years.
What usually happens then? Usually (doing all the work) markets are up if May is strong. Funnily enough you can say that about most months, because the market is usually up.
In an election year June is usually up more than usual. Usually. See below.
Source: Canon Investment Research
Also, this is why you don’t be short into month end when the tails are up.
Critical Minerals
I spent the tail end of last week at the Australian Critical Minerals Conference, seeing some great speakers and making some new contacts.
I came away with some interesting titbits that have been cooking away in my little brain. I cover these in the Friday Podcast, link here.
The first came from the CEO of the WA Chamber of Minerals & Energy, Rebecca Tomkinson, regarding the logistics behind building the WA government’s wind generation policy. I’ll try as best as I can to relay it easily.
There is 350 gigawatts of power generation proposed by WA through wind, including their hydrogen policy.
Each gigawatt of power needs 170 wind turbines to generate.
Each turbine requires 12 escorted truck movements (big truck, cars in front, power lines need to be shifted etc)
That means to meet the target there needs to be 306,000 escorted truck movements.
Leaving aside anything we already know about how much copper, steel and everything else we need to build the turbines, dwell on the sheer volume of diesel required to shift them into place.
The other interesting note was about Neodymium, used in most EVs.
90% of NdPr (used in EVs- magnets etc) is produced by China. Most of their concentrate to make it is sourced from Myanmar. Unless your EV is Japanese (they source theirs from somewhere else) you’re almost certainly assisting some very ordinary things in that part of the world.
Speaking of China
China, adding to renewables…which would be great if you’re into that kind of thing.
Source: Ember
But then also…not. They’re still adding to coal.
We need more power and it can’t be wind. That’s assuming we’re going to move in the same direction as the rest of the world re data. Remember last week I spoke of the demand for data centres being way underestimated.
Larry Fink, BlackRock CEO at the WEF in Riadh a month ago dropping truth.
"The world is going to be short power, short power. And to power these data companies you cannot have just this intermittent power like wind and solar. You need dispatchable power because you can't turn off and on these data centres."
Copper, quick reminder of the Goldman Sachs “5 Ds” and why copper is gonna copper. Data Centres are on the list.
But don’t charge in when inventories are high. How high? Over a standard deviation above average high.
This was posted by Head of Commodity Strategy at Westpac Rob Rennie last week.
Stay safe and all the best,
James
A quick detour to announce the BPC NRL Tipping Competition!
Welcome to the BPC NRL Tipping Competition for 2024. The season has kicked off with a bang in the glittery lights of Las Vegas. Panthers are favorites to take the crown again but the Broncos look like a formidable opponent to take revenge from the heartbreak of 2023. BPC loves its footy and we're very excited for the season ahead. We also love to win stuff so please keep an eye out for the prizes on offer. Sign up and join the game!
