According to Frost & Sullivan, the global market for lithium-ion batteries is expected to double to $22.5 billion in 2016 from $11.7 billion in 2012.
Consumer goods and automobile sectors are driving the demand.
The share of the automobile sector in the lithium-ion battery market is expected to grow to 25% in 2016 from 14% in 2012, per the data from Frost & Sullivan. This represents a Compounded Annual Growth Rate (CAGR) of 37%. With the increasing use of lithium-ion batteries in consumer electronic products as well as efforts to promote the use of electric cars by many governments to curb pollution, the demand for these batteries is expected to rise
Among the elements of the universe, lithium is a real lightweight — the third lightest of them all with an atomic weight of 3, right behind helium at 2 and hydrogen at 1.
But as one of the most conductive metals in existence, lithium is a true heavyweight in the field of energy storage and battery design.
In hot demand as the chief ingredient in batteries where power and long life are critical — such as in electric cars and aerial drones — lithium is rapidly becoming one of the hottest commodities to invest in, driving multiple market segments from mining to manufacturing to advanced electronics.
Unfortunately, that hot commodity may be too hot to handle. It has been known to spontaneously combust, causing its batteries to fully discharge all of their stored energy in a flash — literally. We’ve all seen those YouTube videos of Tesla Motors’ electric car going up in flames when its lithium battery was punctured by road debris.
Will the explosion in lithium production and uses continue to make it one of the most promising commodities to invest in? Or will the literal explosion of its batteries cause its prospects to go up in flames?
Lithium Packs a Powerful Punch
Two important characteristics of lithium make it extremely sought after as the chief material in batteries:
- High reactivity: Like all alkali metals, lithium atoms give up electrons very easily, making them highly efficient producers of electric current.
- Light weight: As the third-lightest element in the universe and the lightest of all the solids, manufacturers can pack a tremendous amount of lithium into a small space while still keeping the overall weight of the package ultra light.
Combine these two characteristics, and you get an awful lot of electric power packed into a small space that is extremely light — perfect for powering everything from cell phones to tablets to cars to drones, which demand power and long battery life without adding a lot of weight.
Characteristics that make it temperamental to deal with:
- Flammable and explosive: When exposed to air, oxygen causes lithium to ignite and burn, while nitrogen binds to lithium atoms producing lithium nitride. If there is any water present — even air moisture — the lithium nitride hydrolyzes, releasing ammonia gas (which is caustic and corrosive) and hydrogen gas (which is explosive).
Thus, a simple puncture of a lithium battery’s protective casing can cause lithium to explode as it comes into contact with air and moisture, producing toxic and corrosive fumes and fires that are difficult to extinguish, requiring dry powders to put out. Quite the negative publicity, which has been readily brought to the public’s attention thanks to viral videos of burning cars.
Yet manufacturers are already finding ways of improving even this newest of technologies.
Keeping an Eye on Ions
While lithium batteries are pretty much the best one-time-use power cells on the market, it’s the reusable, rechargeable lithium-ion batteries that are most used in consumer devices from phones to music players to tablets and now even autos. In 2013 alone, over 5 billion lithium-ion batteries were sold to consumers, with demand soaring by the year.
Where disposable batteries use metallic lithium as the negative anode and manganese dioxide as the positive cathode, rechargeable ion batteries replace the manganese dioxide at the positive cathode with lithium cobalt oxide. While this increases energy density, making the batteries longer lasting, it also increases the risks of overheating, fire, and explosion.
To make ion batteries a little safer, manufacturers have replaced the lithium cobalt oxide with either lithium iron phosphate, lithium manganese oxide (one oxygen atom as opposed to dioxide’s two atoms), or lithium nickel manganese cobalt oxide. This latter one (NMC) is the favored configuration for electric cars.
The need for NMC batteries is so huge that Tesla Motors announced last month that it will build its own lithium battery factory — the world’s largest. The company is gearing up to begin production of its next generation electric car in three years’ time, and it doesn’t want any battery shortages to interfere with production.
As the ever-increasing production of portable consumer devices, electric cars, and even electric military equipment will dramatically increase the demand for lithium-ion batteries, lithium may well provide investors with an investment opportunity of a lifetime.
As noted in the graph below, lithium production has already tripled this century, from 200,000 tons in the year 2000 to over 600,000 tons last year.
Luckily for manufacturers, mining lithium is relatively inexpensive, especially at brines in high mountain plateaus, where lithium coats the surface of the ground after the sun has evaporated the water from the deposits.
Because miners can simply scrape lithium off the surface of the ground, brine excavation is just about the only lithium extraction game in town, with actual hard rock mining of lithium priced out of the market by the brines.
The highest concentrations of lithium are found in the high altitude regions of the Andes Mountains in Chile, Argentina, and Bolivia, as well as in the mountains of Tibet and China. Mid-range concentrations of lithium can also be found in the mountain ranges of Nevada, California, Colorado, and Utah.
Future electric energy material providers:
- Sociedad Quimica y Minera (NYSE: SQM): This $8.7 billion mid-cap based in Chile is the largest producer of lithium in the world in the largest lithium-producing country in the world. While lithium production is only 10% of the company’s output, the company mainly engages in the production and distribution of specialty plant nutrients, iodine and its derivatives, potassium chloride and potassium sulfate, industrial chemicals, and other commodity fertilizers. So you get some diversification. The stock jumped some 30% from $26 to $34 on Tesla’s announcement of its proposed new car model and battery factory.
- FMC Lithium, a division of FMC Corp. (NYSE: FMC): This $10.4 billion American large-cap is the world’s second-largest producer of lithium, with a 23% market share. The company’s main focus is in agricultural, consumer, and industrial markets for crop protection chemicals, including insecticides, herbicides, and fungicides. Its stock also rallied on Tesla’s news, rising some 9% from $72 to over $78.
- Rockwood (NYSE: ROC): This $5.9 billion American mid-cap recently purchased a 49% share in Talison Lithium, granting it access to the largest known lithium reserves in the world. The company develops, manufactures, and markets specialty chemicals including lithium and rubber/thermoplastic components to the auto industry. Its stock has risen some 17% over the past month from $68 to $80 on Tesla’s news, as well as on improved company positioning within its markets.
- Global X Lithium ETF (NYSE: LIT): Of course, you also have a lithium ETF if you want to spread your investments across multiple holdings. Trading since 2010, LIT holds all three of the above listed lithium producers as its top three holdings — FMC weighted at 19.31%, ROC at 19.15%, and SQM at 7.5%. LIT’s shares have risen 16% from $12 to $14 over the past month.
Lithium’s Powerful Future
Although there are already some experiments being conducted on even newer battery technologies using magnesium-ion cells instead of lithium-ion, still more powerful batteries than magnesium cells are sticking with lithium — including lithium-sulphur and lithium-oxygen combinations.
Given its light weight, ease of chemical reactivity, and inexpensive extraction and production, you can bet on lithium powering cell phones, laptops, tablets, cars, drones, and all the other new gizmos the next generation of techies will invent.
In fact, lithium presents us with a rather longer-term investment opportunity compared to most technologies. By investing in materials that are used across multiple technologies rather than investing in an individual device or brand, we avoid the short-term crashes that come from a company or product that has suddenly been made obsolete by a competitor.
While electronic consumer products and companies come and go, lithium will remain as the product that will power them all for decades to come. This featherweight packs
Wall Street Gave Campaign Donations
Biden Received $74M, Trump Received $18M
Despite enjoying one of the best bull runs in history, the market is looking forward to a new sheriff. According to the Center for Responsive Politics, Biden is the chosen one. Wall Street gave campaign donations to Democrat Joe Biden $74 Million, while incumbent President Donald Trump got $18 million. This included contributions since 2019 and until the first two weeks of October.
Biden’s Wall Street Supporters
Joe Biden’s campaign is about to amass $1 billion in the remaining days before the election. Among the Democratic nominee’s supporters is former Goldman Sachs President Harvey Schwartz. He gave $100,000 this October to the Biden Action Fund and other various party fundraisers.
During the 3rd quarter, Wall Street investors lined up to support the Dems. Beginning last week, Biden, the DNC, and other committees received over $330 million. In comparison, Trump and the GOP received a total of $220 million.
Bigger than Obama, Smaller than Hillary’s
Biden’s Wall Street donations are larger than the total of Obama’s two runs for president. It falls short of Hillary Clinton’s $87 million hauls in her doomed 2016 run.
As early as January, the Biden campaign approached Wall Street hotshots for support. These included Evercore founder Roger Altman and investor Blair Effron, Blackstone CEO Jonathan Gray, former Citigroup exec Ray McGuire, Centerbridge Partners co-founder Mark Gallogly, and former U.S. Ambassador to France Jane Hartley. A lot of them hosted fundraising events or donated money.
Biden also got big money from supporters from Paloma Partners and Renaissance Technologies. Renaissance’s founder Jim Simons donated $7 million to two super Biden PACs way back in March. He added over $350,000 to the Biden Action Fund in June. Henry Laufer, Renaissance’s chief scientist, gave $625,000 in June to the American Bridge PAC. Meanwhile, Paloma Partners founder Donald Sussman gave $9 million to Biden’s super PACs. An added $20 million from other hedge funds and private equity firms rounded off the total.
Most Ever Spent by the Industry for an Election
This year, the investment community gave $625 million in contributions for election campaigns. This covers not only the presidential elections but also congressional and senate contests. It stands on record as the most ever spent by the finance and investment industry.
From the total, $370 million went to super PACs and groups allowed to raise infinite funds.
Democrats got the lion’s share at 63% while the GOP got 37%. $161 million went straight to Dem candidates, while $94 million went to Republicans. Compare it to 2016, where the GOP received half of Wall Street’s money.
Funding for the Dems remained high despite talks of pushbacks to big business. There is opposition within the camp in naming business leaders to the Biden cabinet. Progressives are vocal about not wanting their candidate to cozy up to the big business.
Jeff Hauser of the Revolving Door Project researched potential Biden Cabinet selections. He is “cautiously optimistic” that Wall Street’s funding can influence future appointees. Hauser does believe that the sector’s contributions can help open doors to the Biden White House. He voiced concerns about “conventional thinkers within the Biden world.” These people might insist on paying “deference to the source of that $75 million.”
Meanwhile in the White House
For Donald Trump, Wall Street isn’t as enamored if you look at the numbers. He received a paltry $20 million during his initial run for president. Four years later, donations to his cause are $2 million less. Analysts noted that many previous finance backers held back on the reelection campaign. These include people who gave millions during Trump’s 2017 inaugural.
Records show that previous supporters helped Republican Senate or House candidates instead. The market’s support for Trump waned due to his coronavirus response. Anonymous sources noted that investors backed off despite Trump’s tax and regulation cuts. Since they think Trump is about to lose, these leaders don’t want to invest in him further.
Trump donor Dan Eberhart said “Wall Street is watching the same polls as everyone else. They can see the direction the campaign is going and they are starting to alter their strategy.” He added that “It’s about risk management. If they can’t beat Biden, they know they are going to have to join him.”
Watch this as CNBC breaks down Wall Street campaign donations during the 2020 election:
With its contributions, Wall Street implied a decision to support Joe Biden. Should he eke a win, Wall Street will definitely look for returns on its investment. They should remember that this man won over progressives like Senators Elizabeth Warren and Bernie Sanders, who aren’t exactly priority invites to ring the stock exchange opening bell. How do you think this will pay off for big money? Let us know what you think by sharing your thoughts in the comment section below.
Pelosi Says No Stimulus Even as Coronavirus Cases Rise
With days before the elections, House Speaker Nancy Pelosi says “No” to stimulus relief. She then blamed the White House for the failure.
In a letter to House Democrats, Pelosi heaped the blame on the White House. “For a long time now, Congressional Democrats have laid out a strategic plan to crush the virus. The White House and Mitch McConnell have resisted, and on Sunday, Mark Meadows told us why saying ‘We’re not going to control the pandemic.'” Pelosi referred to Chief of Staff Meadow’s interview last Sunday on CNN’s “State of the Union.”
She noted: “From ‘hoax’ to hundreds of thousands dead, the White House has failed miserably — not by accident, but by decision. Now we know why they resisted science at the expense of lives, livelihoods, and the life of our democracy. Again, it was a decision to do so.”
US Treasury Secretary Steve Mnuchin negotiated with Pelosi for weeks. The Speaker set a deadline last week to finish the stimulus package. The deadline allows the legislators to vote on the final bill before the elections.
The Democrats passed a $2.2 trillion Covid- aid 19 bill. But, Senate Republicans and Mnuchin found the budget too expensive. They countered with a lower costing bill at $1.8 trillion. Trump said he can go higher if needed.
In the end, both sides remained far apart in negotiations. Pelosi threw in the towel yesterday.
A Case of Bad Timing
The decision to forego talks on stimulus relief comes at the heels of higher Covid-19 cases. Infections reached a record high over the weekend, with over 83,000 new cases reported. As of this week, there are 1.7 million Americans infected and 227,000 dead. Yet, there are no signs that the pandemic is slowing down.
There are reports that House Democrats could grow in number in this year’s elections. Pelosi committed to writing legislation in aid of struggling American workers. She said: “This week, we continue to put pen to paper, with thanks to our Committee Chairs for their mastery of the legislation and loyalty to America’s working families.” She included a dig on Trump and Senate Majority leader Mitch McConnell. “The President’s words only have meaning if he can get Mitch McConnell to take his hand off the pause button,” she added.
Trump Fires Back
In response, the White House fired back at Pelosi last Tuesday. Trump said “Nancy Pelosi is only interested in bailing out badly-run, crime-ridden Democrat cities and states. That’s all she is interested in. She is not interested in helping people.”
Trump promised that once the GOP wins, they’ll get an aid package ready. He said “After the election, we will get the best stimulus package you have ever seen. I think we are going to take back the House because of her.” Trump looked forward to getting the House back. He said “I think you have a lot of congressmen and women – Republican – that are going to get elected. We will take back the House. We’ll hold the Senate. We’ll hold the White House.”
Other CARES Act Benefits Expiring Soon
Besides a stimulus check, Americans received many benefits under the CARES Act. This bill expired last July, but some of the provisions managed to hold on longer. Here are some of the benefits and their shelf lives.
401(k) hardship withdrawals and loans, unemployment can continue to do so until the end of 2020. You will owe taxes on the withdrawal, but there aren’t any automatic deductions. Tax payments can spread out up to three years. 401(k) loan payments due between March 27 to December 31 will extend to next year, but with interest.
Federal enhanced unemployment benefits ended in July will continue in some other form. Depending on your state’s coverage, some provisions will remain in place until the end of the year. Self-employed, independent contractors, and gig economy workers remain qualified for state benefits. These last until December 31, 2020.
Bans Will Remain
Evictions will remain banned until the end of the year. This is via a “historic” order from the Centers for Disease Control and Prevention.
Those needing mortgage relief due to coronavirus can still request help. They can choose between six months of deferral or lower payments. While the CARES Act doesn’t specify the duration, it’s likely available as long as the pandemic is ongoing. At the least, this covers loans until the end of the year.
Finally, the student loan moratorium remains in effect until January 2021.
To paraphrase a famous saying: When Elephants and Donkeys fight, it’s the grass that suffers. A week to go before the elections and much-needed relief remains unavailable. Americans who remained resilient must now endure a few more months. They will need to fend for themselves while Congress and the Senate bicker over details.
Watch this as Donald J. Trump, the President said that House Speaker Nancy Pelosi is only interested in bailing out badly-run Democrat cities and states:
Who is to blame for these negotiations made in bad faith? Is it the Democrats led by Nancy Pelosi and their spend-at-all-costs proposal? Or is the GOP, who insisted that lower is better? Let us know what you think by leaving your comments below.
Stocks Post Its Worst Day in A Month
Wall Street took a beating Monday as stocks posted its worst day in a month. Rising coronavirus cases and a fading stimulus relief led investors to sell-off.
The Dow Jones Industrial Average closed 2.3% lower. It fell down 935 points during the day before settling 650 points lower. All Dow stocks closed in the red except Apple, which eked out a .01% gain. It was the Dow’s worst day since September 3.
Meanwhile, the S&P 500 closed for the day at 1.9%, marking its worst day since late September. The tech-heavy Nasdaq Composite, which bounced back from its lows in the morning, finished lower at 1.6%.
While all sectors across the board experienced losses, some got crushed more. These include energy, industrials, and financials.
Higher Cases of Coronavirus
With eight days remaining before the elections, investors are starting to get jittery. Despite lots of talks, Congress has yet to approve a stimulus package. Cases of coronavirus are jumping in all states, and it recently hit a daily high average of 68,767 last Sunday.
Meanwhile, big tech companies are set to report earnings later this week. This lot includes Microsoft, Apple, Google, Facebook, and Twitter. Fawad Razaqzada of Think Markets noted that the reports can inject further volatility. In the note, Think Markets believed that “on a more macro level, ongoing US stalemate over US fiscal stimulus and the rapidly spreading Covid-19 is going to determine the direction for the wider markets.”
Tom Lee, head of research at Fundstrat Global Advisors, thinks Covid is a big influence over the market. He said “It’s almost as important as the Fed right now. Covid is suppressing the economy, and it’s essentially offsetting easy money. If we didn’t have Covid, people would be going out and spending money. It’s acting as a huge headwind.”
No Relief in Sight
Brad McMillan, CIO of Commonwealth Financial Network, thinks the reality hit investors hard. He told CNN business: “I think a big difference this time around [is]…there’s been a tremendous amount of hope baked into the market for quite a while, and we saw some things over this weekend that hit those assumptions hard.” The negotiations for a new relief package is gone at least until after the elections. Senate Majority Leader Mitch McConnel adjourned the Senate after confirming new Chief Justice Amy Coney Barrett. They will resume their session on November 9, or six days after the elections.
Without a clear stimulus plan, the US economy could start to double-dip. And if the rise in coronavirus cases continues, the business will shut down again. This nightmare scenario is haunting the market at present. Steven Wieting, the chief strategist at Citi Private Bank, sees dimmer prospects. “The ability to fight the virus further right now is very much in question, and it’s a political question.” Wieting believes that Washington could take months before anything gets done. This made investors tentative.
Tom Lee added that “We have a lot of things to be anxious about in the next couple of weeks. That’s why this is a pre-election market. But post-election, I think a lot of things that make people nervous turn into a tailwind. The post-election stimulus is a when not an if. Even if it’s a mixed Congress, I think there’s still some common ground. It’s just the scope that’s different. It would be a smaller package.”
Eight Days Remaining
The final eight days before the elections usually brings good vibes for Wall Street. This year, the bulls will need some extra running following Monday’s selloff spree.
Sam Stovall, chief investment strategist history, observed this bull phenomenon. Since 1944, the S&P 500 rose on average 2.5% in the eight days before elections. The index is up 17 out of 19 times, or 89%. The biggest rise came during the recent financial crisis, with the S&P 500 roaring back 18.5% in a bear market rally. That year, Democrat Barack Obama won over the GOP’s John McCain. The market sunk back to new lows after the election. It bottomed out four months later. The first decline in 1968 (-0.8%), happened as Richard Nixon won over Democrat Hubert Humphrey. The other was in 1988 when Republican George H.W. Bush won against the Dems’ Michael Dukakis.
Wall Street needs to get its act together with eight days remaining. A short, decisive victory by either party can help uplift America’s image. And with all the drama removed, maybe the market can go back to its winning ways.
Watch this as Stocks fall sharply at open amid Covid-19 resurgence:
Stock investors of The Capitalist, are you selling off right now, or are you holding off for a bigger payday? Do you think the market will rally in the next few days, or do you foresee better days after the elections? Share with us your stock scenarios as we count down to the elections. Leave your thoughts in the comment section below.
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