Venture to the Bottom of the Sea
- Venture to the bottom of the sea?
- Pay attention to this new bull market (for now)
- Powell’s pivot… pause… “skip”
- More BRICS+ in the wall
- UFO or just SO (shiny object)?
Race to the Bottom
And so the race is on…
“Norway’s government is readying plans to open an area of ocean nearly the size of Germany to deep-sea mining,” reports the Financial Times’ front page today, “as it seeks to become the first country to extract battery metals from its seafloor.”
It’s a vast area in the seas off the Norwegian coast, stretching halfway to Greenland. The area might contain as much as 38 million metric tons of copper — “more than is mined around the world each year,” the FT points out. “Norway’s waters also contain other metals used in electric car batteries, including cobalt.”
To say nothing of the so-called rare-earth minerals that go into EV engines as well as the magnets in wind turbines.
But wait: None of this happens with a flip of the switch.
To be sure, the technology for mining metals from the seafloor is there. (We’ll talk more about that as the week goes on.) And Norwegian firms already have ample experience drilling for offshore oil and gas. Technology and know-how aren’t the obstacles.
No, the obstacles are procedural — and they’re considerable.
For one thing, the plan has to be voted on by the Norwegian parliament… and that probably won’t happen till this fall. Opposition from fishermen is likely — and for that matter, from Norway’s own environment ministry. Then there’s the European Union, United Kingdom and Russia — all of whom claim mining rights in Arctic waters.
For those reasons, we can confidently forecast the Arctic will not be the first place where metals are mined from the seafloor.
I hope you saw the note that Jim Rickards sent you last night from the Paradigm Pressroom. If not, he described how 2,000 miles off the coast of Hawaii, in the middle of the Pacific Ocean, lies a “super mine” holding an estimated $16 trillion fortune.
“And a $1 mining stock,” he says, “could soon be the first company in human history to dig into this underwater treasure. (It already holds a commercial contract valued at $85 billion).”
It’s a story you won’t hear about from the Financial Times or anyone else. Jim says we could be looking at profit potential of 100% in 24 hours… 10X over 12 months… and 100X over decades.
That’s generational wealth.
What’s more, “A catalyst date is quickly approaching for this $1 stock,” says Jim, “and it could kick off this whole mining process — potentially sending this $1 stock soaring for massive returns.”
“Respect This Bull Market” (For Now)
“Many high-quality stocks are set to move sharply higher now that we're in a new bull market,” says Paradigm value-and-dividend maven Zach Scheidt.
Quibble all you want with the definition of a “bull market” (I did on Friday)... and Zach would be the first to acknowledge the market isn’t out of the woods… “but even with these risks on the horizon,” he says, “it's still important to respect this bull market.
“You don't want to be left on the sidelines watching the rest of the world grow their profits. And that's exactly what could happen if you keep your money completely out of the stock market.”
Fact is, this month is the first time all year that the S&P 500 is not being propped up by only seven or eight tech-adjacent stocks riding the AI hype. Other names are finally catching a bid.
“I've got my eye on some energy stocks,” Zach says, “a handful of travel stocks, a few profitable tech plays and some medical device companies with growing profits. And I'll be sharing more of my top picks with you as the new bull market evolves.”
In the meantime, the S&P 500 is bumping up against another key technical indicator.
At last check, the index is up a quarter percent to 4,308 — a point shy of a “Fibonacci retracement level.” That is, the S&P has recovered 61.8% of all its losses between its January 2022 record highs and its October 2022 lows. (If you’re really curious about Fib numbers and the significance of 61.8%, here’s a summary from Investopedia.) A push through 4,309 would be more fuel for the 2023 rally — whether you want to call it a bull market or not.
Crude is down over 3% on the day for no obvious reason, a barrel of West Texas Intermediate retesting this month’s lows at $67.83. Gold is down four bucks to $1,956. Silver sits at $24 on the nose.
Crypto is hanging tough — Bitcoin just below $26,000 — the SEC lawsuits last week against Binance and Coinbase be damned.
“I think the SEC lawsuit is a nonevent,” Paradigm crypto evangelist James Altucher tells readers of Altucher’s Early-Stage Crypto Investor. “We've known all along that:
- “the SEC thinks these cryptos are securities although it's unclear why they think that
- “if these cryptos are securities, then Coinbase is trading them against SEC regulations.
“But of course, many people disagree with SEC chair Gary Gensler and this will have zero effect on Coinbase's viability as a business. It may mean they might have to change some of their procedures but we have no idea. The lawsuit has to be fought first, which will take time.”
Indeed, Gensler’s approach of “we won’t tell you how to comply with the law until we sue you for violating it” might get a chilly reception in court. For the sake of the rule of law, let’s hope so.
➢ That said, the Silicon Valley venture capital firm Andreessen Horowitz is hedging its bets — opening its first office outside the United States in London, specifically because the U.K. offers a less-hostile environment for crypto. “While there is still work to be done,” says the firm’s crypto branch co-founder Chris Dixon, “we believe that the U.K. is on the right path to becoming a leader in crypto regulation.”
For the record: JPMorgan Chase is settling out of court with Jeffrey Epstein’s accusers. Because of course it is.
The lawsuit was filed seven months ago — claiming JPM consistently looked the other way when it came to Epstein’s ongoing sexual predation because, well, he kept bringing in all these new wealthy clients.
Word of the $290 million settlement comes this morning after former JPM exec Jes Staley was deposed over the weekend.
Per The Wall Street Journal, “The lawsuit on behalf of women who accused Epstein of abuse helped expose details about the bank’s relationship with Epstein for years after his conviction, forced chief executive Jamie Dimon to answer questions under oath and led the bank to turn around and sue a former top leader, Jes Staley.”
What the lawsuit did not accomplish was to expose the names of other wealthy and powerful people who had their way with teenage girls, aided and abetted by Epstein and Ghislaine Maxwell.
That might have occurred with further discovery and a trial, but it’s no surprise the power elite won’t allow that to happen. Really, $290 million is a small price for JPM to “take one for the team” — about 0.74% of its revenues last quarter, to be precise.
Worst of All Worlds for the Fed (and the Rest of Us)
The Federal Reserve is being too cute by half going into its policy-setting meeting this week, according to Jim Rickards.
As you might recall, the month began with the Fed signaling through Wall Street Journal reporter Nick Timiraos that it will not raise the fed funds rate this Wednesday — but still leave the door open for an increase at its July 26 meeting.
So not a “pivot” to lower rates or even a “pause” to the increases... but rather a “skip.”
“Here’s the problem,” in Jim’s assessment: “The analysis behind the skip policy assumes either that the economy remains strong, inflation remains high and further rate hikes are needed or that the economy weakens, inflation comes down and the skip can turn into a pause.
“This binary scenario assumes that a weak economy (and higher unemployment) means lower inflation and that a strong economy (and tight labor markets) means persistent high inflation.”
In other words, we’re back to the “Phillips Curve” — a long-discredited theory that the Fed still clings to like a dog that won’t let go of a disintegrating chew toy.
The Phillips Curve says all else being equal, low unemployment is accompanied by high inflation, and high unemployment comes with low inflation.
The problem is that all else is rarely equal and there’ve been many instances over the last century in which the theory doesn’t hold. “The Phillips Curve is a joke,” Jim says bluntly.
“The Fed’s belief in the false Phillips Curve means they have missed the most dangerous outcome of all — high unemployment (due to recession), and high inflation (due to fiscal policy, expectations and asset bubbles).
“This is known by the ugly name ‘stagflation.’ If that case materializes, the Fed will face the worst possible outcome. They will need to raise rates to fight inflation even as the economy sinks into a severe recession.”
Shades of the early 1980s, right?
Again, the Fed makes its announcement on Wednesday. But tomorrow, the Labor Department issues the May inflation figures. We could be staring down stagflation starting this week.
“If inflation comes in hot, and the Fed sticks to its plan to skip a rate hike, then inflation expectations may shift upward, and inflation may begin to feed on itself.”
More BRICS+ in the Wall
You can almost hear the gnashing of teeth in Washington, D.C.
From the Reuters newswire: “Saudi Arabia wants to collaborate, not compete, with China, the kingdom's energy minister declared on Sunday, saying he ‘ignored’ Western suspicions over their growing ties…
“Asked about criticism of the bilateral relationship during an Arab-China business conference, Prince Abdulaziz bin Salman said: ‘I actually ignore it because... as a business person... now you will go where opportunity comes your way.’”
As noted here last Wednesday, Saudi Arabia is one of eight countries that have applied for membership in the BRICS grouping that currently consists of Brazil, Russia, India, China and South Africa.
It’s only a matter of time before Saudi Arabia starts selling oil to China and taking yuan for payment instead of dollars — a development occurring in parallel with the BRICS’ plans to introduce a super-currency alternative to the dollar at its meeting on Aug. 22.
Meanwhile, Pakistan just used Chinese yuan to pay for a shipment of Russian oil.
That’s according to Pakistan’s oil minister, cited in a Reuters story that calls the development “a significant shift in its U.S. dollar-denominated export payments policy.”
Pakistan has expressed interest in joining the BRICS; it’s already a member of the Shanghai Cooperation Organization along with China, India and Russia. “Pakistan has lots of Chinese yuan,” points out Paradigm energy-and-mining expert Byron King — yuan that Pakistan collects from the sale of minerals to China.
All in the family, right? No dollars needed…
The location of the BRICS conference in August might still be up in the air.
It’s supposed to be in South Africa. But as we mentioned last month, South Africa is a member state of the International Criminal Court — and in theory is obligated to arrest Russian president Vladimir Putin, who’s under ICC indictment.
There was talk of granting Putin diplomatic immunity, but it turns out that might violate South African law. So now reports are surfacing in the South African press that the government might opt out of hosting the summit. The alternative venue? China — which does not belong to the ICC.
The aforementioned Byron King reminds us of another factor in play: South Africa’s mismanaged power grid is on the verge of collapse.
Having the lights go out while you’re announcing a new alternative to the dollar is not a good look. China can be counted on to choreograph it just right.
I’m Not Saying It’s Aliens, But…
“Thank you for reading and acknowledging my email, much less publishing it,” a reader writes after Friday’s mailbag — in which he brought up “the whistleblower who came forward about extraterrestrial visitors.”
“Too bad,” he says, “there was no reply or further discussion. As a longtime ‘conspiracy theorist,’ I’ve been proven correct an amazing number of times.”
Dave responds: Well, I’m glad you didn’t take my curt response as a dis. Because that wasn’t my intention.
On the one hand, given everything that’s happened since 2020 — arbitrary lockdowns… riots brought on in part by economic insecurity… a tightening noose of censorship… the risk of getting “financially cancelled”... and the starkest threat of nuclear war in 60 years…
… it’s kinda hard to get worked up about something as nebulous (so to speak) as aliens.
But on the other hand, aliens are right up there with everything else that’s happened in the last three years (I think I’ve run this meme before, but I came across it again today)...
Again, I’m glad you didn’t take my one-word response the wrong way. And thanks for the opportunity to revise and extend my remarks. I suspect this won’t be the last time we’ll be addressing the matter in these digital pages…
