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56 minutes ago
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The U.S. may be running short on rare earth.
In fact, after launching hundreds of missiles and guided weapons against Iran, there are reports from Reuters and the South China Morning Post that the U.S. may only have weeks of certain rare earth minerals available to build more of those weapons. After all, rare earths make up many parts of modern military systems, such as the Tomahawk missile, which relies on samarium-cobalt magnets in its actuators and guidance tail fins to handle high heat.
For years, the U.S. has been overly dependent on China, which controls about 80% of the world’s rare earth supply. However, as we’ve learned the hard way, that has to change. After all, without rare earths, the world can’t produce the millions of electric vehicles government leaders want on the roads.
We can’t produce smartphones, computers, flat panel televisions, wind turbines, electric vehicle batteries, computer chips, defense equipment, semiconductors, digital cameras, or catalytic converters. Even the U.S. Department of Defense could run low on rare earths and other warfighting products.
The good news is the world is on its way to breaking its dependence, creating opportunity for stocks and ETFs such as USAR, MP, and REMX.
1 hour ago
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So much for the pullback in oil. This morning, with the war showing no signs of cooling, crude oil is up $3.67 at $91.80. Unfortunately, conflicting reports from the U.S. and Iran over any talks are making a mess of futures this morning.
On one side, President Trump said Washington had “productive” conversations with Tehran. But Tehran rejected claims that it had been in contact with Washington, saying that it was just an attempt to manipulate markets.
After yesterday’s blowout rally, markets are back in the red.
The S&P 500 is down 0.26%, or by 17. The SPDR S&P 500 ETF (SPY) is down fractionally. The Dow is down 0.28%, or by 128. The Nasdaq is down 0.25%, or by 60 points. Oil is up $2.90 at $91.03. Gold is up $6.42 at $4,410.90. Bitcoin is up about $147 at $71,045.35.
And unfortunately, the war still shows no signs of cooling, as Iran drops missiles on Israel. In addition, while President Trump is determined to reach a deal, Israel says that it’s unlikely that Iran would agree to the demands.
And, while hopes for positive talks sent markets screaming higher yesterday, “No negotiations have been held with the US,” Mohammad Bagher Qalibaf, the speaker of Iran’s parliament, said, as quoted by the Associated Press. “And fakenews is used to manipulate the financial and oil markets and escape the quagmire in which the US and Israel are trapped.”
Citi Says $200 Oil is Possible
With war intensifying, oil could eventually test $200.
“We posit that the ongoing loss of energy supply to [the] global economy is so large (larger than the shocks of the 1970s as a share of oil supply) that it simply must be solved, either militarily or diplomatically, and that through various potential channels this occurs by mid-late April,” said the firm, as quoted by MarketWatch.com.
The firm expects things to only get worse, with Brent possibly running to at least $120 over the next month. If we see prolonged energy production through June, $200 oil could become a reality. “They come up with that number based on the typical relationship between inventory and price, given the world is now without 13.5 million barrels per day, taking out some 400 million barrels per month, due to Strait of Hormuz disruptions,” added MarketWatch.com.
That would aggressively force oil stocks and ETFs higher until demand destruction sets in.
Market Movers: Diamondback Energy
Analysts at Truist just initiated a buy rating on Diamondback Energy (NASDAQ: FANG). The firm noted that it “stands out as the last large-cap Permian pure-play E&P with a core focus on the Midland Basin and a secondary position in the Delaware Basin,” as quoted by CNBC.
Since bottoming out at around $140 in April, the FANG stock rallied to a high of $194.68. From here, we’d like to see an initial test of $210, which could happen with the U.S.-Iran war.
Analysts at Bank of America reinstated a buy rating on Microsoft (NASDAQ: MSFT | MSFT Price Prediction), noting that the tech giant is a beneficiary of AI monetization. We are reinstating coverage of Microsoft (MSFT)with a Buy rating and a $500 PO, implying 31% upside potential, supported by durable multi-year growth across cloud and AI. Microsoft’s advantage lies in its ability to capitalize on AI across both infrastructure and applications,” as also quoted by CNBC.
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