Positioning Your Portfolio for a Potential Second Trump Presidency

Super Tuesday was, if I may, super obvious. Former President Donald Trump clinched nearly every delegate that was up for grabs, forcing his Republican challenger, Nikki Haley, out of the race, which all but guarantees his nomination. Trump’s poll numbers, as aggregated by RealClearPolitics, also show him pulling further ahead of President Joe Biden, whose own favorability remains in the doldrums as the border crisis continues unabated.

Eight months remain until the general election, but I don’t believe it’s too soon for investors to prepare for a potential second Trump term. And let’s be clear: Trump, should he win, would be constitutionally limited to a single additional term, the same as Biden. Since the current administration has reversed a number of Trump-era policies—especially those involving immigration—Trump and lawmakers would need to work fast to implement new legislation and policies before the end of those four years.

Below are three areas for investors to watch in the event of a Trump victory this November.

1. Immigration and Border Security

Immigration is the top issue on most Americans’ minds right now, according to a recent Gallup poll; it’s also arguably the topic most associated with Trump.

Since Biden took office in 2021, a record number of undocumented migrants have poured into the U.S., alarming families and businesses alike and straining many communities’ infrastructure and resources.

So far in fiscal 2024, which began in October 2023, there have been nearly 1 million recorded migrant encounters at the U.S.-Mexico border, exceeding the total amount in most previous years. The U.S. now has a record number of foreign-born people living within its borders at 49.5 million, or 15% of the total population, the Census Bureau reported in October.

Should voters put Trump back in the White House, I expect we’ll see swift action on the immigration front. We’ll likely see the re-implementation of old Trump policies, including “Remain in Mexico,” and as recently as last month, the former president vowed to enact “the largest deportation operation in American history.” A majority of Americans, or 53%, now support building a wall along the U.S.-Mexico border, according to a Monmouth University poll conducted in February.

The bottom line is that people want to feel safe. Safety is a fundamental need on Maslow’s hierarchy of needs, alongside food and water, and Americans are increasingly feeling unsafe.

2. Small-Cap Stocks Ready for a Rebound?

During President Trump’s administration, U.S. small-cap stocks, as measured by the Russell 2000, performed competitively with the S&P 500 as Trump shifted the government’s attention to domestic policy. This—coupled with the 2017 tax reform law, a historic wave of deregulation, low borrowing costs and low inflation—helped smaller, “America first” companies thrive.

Today, the market looks very different. Since the start of Biden’s presidency, the S&P 500 has advanced almost 40%, with the lion’s share of those gains occurring in the last four months as investors, anticipating rate cuts in 2024, scrambled to get exposure to large artificial intelligence (AI) stocks such as Microsoft, Alphabet and NVIDIA. The Russell 2000, by comparison, has remained essentially flat over the same period.

What this means is that small-caps are now at their lowest valuation relative to large-caps since the dotcom bubble more than 20 years ago. A buying opportunity?

Like immigration, I believe a second Trump term would hit the ground running supporting domestic-focused, Mom and Pop-style stores and businesses. During his administration, optimism among small U.S. businesses consistently ran high, with the National Federation of Independent Business’s (NFIB) Small Business Optimism Index hitting an all-time high reading of 108.8 in August 2018. Since that time, the index has fallen more than 17%, registering 89.9 in January 2024.

3. Recommitment to U.S. Energy

The last area I want to touch on is energy, which many voters and investors also associate with Trump.

During his administration, gasoline prices remained on the lower end as producers kept the oil flowing.

This came to a screeching halt four years ago with the pandemic, but since then, the U.S. has regained its status as the world’s leading supplier of crude. In December 2023, the last month of available data, the U.S. produced a jaw-dropping 13.3 million barrels per day on average. This resulted in a new record amount of oil pumped in a single year, surpassing the previous record set in 2019 when the U.S.

produced 4.49 billion barrels.

Interestingly, producers managed to do this even as the number of active oil rigs in North America has continued to trend down. According to Baker Hughes, there were 506 active rigs at the beginning of March 2024, down approximately 70% from the high in October 2014.

So what gives? A new report by the U.S. Energy Information Administration (EIA) asks this very question, finding that new and improved technologies, including hydraulic fracturing (fracking) and horizontal drilling, “have increased well productivity, enabling U.S. producers to extract more crude oil from new wells drilled while maintaining production from legacy wells.”

Producers, in other words, are able to do much more today with far less.

As such, Trump 2.0 would have even less incentive to continue subsidizing renewable energy development. Last year, it was reported that he would “gut” the Inflation Reduction Act (IRA), Biden’s centerpiece climate legislation, chockfull of tax incentives, funding and loans to help the economy transition to clean energy.

Index Summary

• The major market indices finished mixed this week. The Dow Jones Industrial Average lost 0.93%. The S&P 500 Stock Index fell 0.18%, while the Nasdaq Composite fell 1.17%. The Russell 2000 small capitalization index rose 0.37% this week.
• The Hang Seng Composite lost 1.18% this week; while Taiwan was up 4.49% and the KOSPI rose 1.45%.
• The 10-year Treasury bond yield fell 10 basis points to 4.076%.

Airlines and Shipping

Strengths

• The best performing airline stock for the week was JetBlue, up 11.4%. SkyWest, Inc. announced a new flying agreement with United Airlines to place 20 partner-financed E175s under a four-year contract. The 20 E175s will join the SkyWest fleet throughout 2024. “We’re delighted to continue enhancing our United partnership and pleased that we’re able to deliver on the strong market demand,” said Chip Childs, President and CEO of SkyWest.

• According to Bank of America, U.S. container imports are trending up 15-20% year-over-year in February 2024 led by improving furniture imports. Vessel congestion is down to 4.8% of the fleet (from 7% in early January) despite Red Sea disruptions.
• According to Bank of America, airline stocks rose 9.9% in February compared to the S&P 500’s 5% return. This follows a lackluster January for the group at -0.8% compared to the S&P 500’s 1.6% gain, but year-to-date, airline stocks have gained 9.0% compared to the S&P 500’s 6.8%.

Weaknesses

• The worst performing airline stock for the week was American Airlines, down 6.1%. According to Bank of America, during the Presidents’ Day week, system net sales fell 1.0% year-over-year for the week compared to a 3.4% gain last week in the first down week since the beginning of the year.
• According to Morgan Stanley, spot rates for the second week of the Chinese New Year were announced and confirmed to have tracked downward on major European and North American routes. The bank thinks the seasonal correction in rates will likely continue until at least the end of March 2024.
• According to Travelport, booking data shows that Asia Pacific airline ticket prices are normalizing at a moderate pace. Short-haul airfares are under pressure from rapid capacity restoration with Chinese airfares particularly soft, while long-haul airfares are seeing more moderate year-over-year declines.

Opportunities

• American Airlines announced an order of 260 aircraft that includes 85 Boeing 737 Max 10 aircraft, 85 Airbus A321neos, as well as the 90 E175 jets. Moreover, the company announced agreements including options and purchase rights for an additional 75 A321 by Airbus and 75 Max 10 by Boeing, in addition to the 43 options for E175 planes.
• According to ISI, following two weeks of moderation, the Evercore ISI Air Cargo Cos. improved, moving up from 49.6 to 50.2, as international sales rose while domestic activity was unchanged.
• According to Bank of America, Chinese international air travel spending trended at 76% of 2019 levels in February, with traffic and yields at 81%/94% of 2019 levels. Thailand saw the most additions of flights post-Chinese New Year as the permanent visa-free program provides strong tailwinds for ongoing demand. Additionally, the U.S. Department of Transportation recently approved 100 weekly flights between U.S. and China from late March, up from 70 currently.

Threats

• According to JPMorgan, for Boeing to acquire Spirit, Spirit will have to divest its Airbus content and these talks are reportedly underway. Spirit’s content on A220, A320 and A350 are all physically separate from its Boeing work and thus easy to divest, at least logistically. Spirit’s Airbus work is currently cash flow negative so they do not expect Airbus to pay much for it but there may be some consideration.
• According to Morgan Stanley, the FedEx (FDX) quarter could also see an update to the future of the USPS contract. The USPS drawdown appears to have already begun and the group will await details on how much volume will decline post the September contract expiry, as well as what cost actions FDX could take to offset the volume loss. The bank believes the USPS has been FDX’s largest customer and the loss of volumes could weigh on operating leverage in the business, even if incremental margin contribution from the business was relatively low.
• According to Bank of America, Spirit lowered capacity growth each month beginning in May. While summer months saw around 400 basis points (bps) of system capacity reductions, May cuts were the most significant, lowered by 790bps. While cuts were seen across Spirit’s network, Latin America flying saw a greater share of the reduction, coming down by about 800bps each month.

Luxury Goods and International Markets

Strengths

• Prada reported an earnings beat in the fourth quarter. The company was classified as the hottest name on the Lyst Index, which ranks the most searched/desired luxury names. Prada’s Miu Miu division was number two on the list. Retail sales for Miu Miu jumped 82% in the last quarter of 2023 compared to a 10% rise in Prada.
• China surprisingly reported stronger-than-expected export and import data. In February, exports increased 7.1% year-over-year, above the expected increase of only 1.9%. Imports jumped 3.5% year-over-year versus the expected 1.5% rise. Year-to-date trade balance is at $125.16 billion, above the forecasted $106.8 billion.
• RealReal Inc., an online platform for reselling previously owned luxury items, was the best performing S&P Global Luxury stock, gaining 32.25% in the past five days. Shares continued to outperform for the second week in a row after the company announced a quarterly earnings beat and set a new strategy to expand the number of current stores from 13 to 30 in the next five years

Weaknesses

• Overall, the Eurozone reported stronger economic data this week. Europe’s largest economy, Germany, posted a wider trade balance surplus than expected, at a record of 27.5 billion euros. Both imports and exports beat consensus.
• The Sentix Investor Confidence Index in the Eurozone climbed higher. The index was reported at -10.5 in March, up from -12.9 in the prior month, remaining in negative territory but moving higher. The Eurozone’s Final Service PMI was reported at 50.2, above the preliminary reading of 50.0. Service sectors moved into expansionary territory, while manufacturing activity in the Eurozone remained in contractionary territory, below the 50-mark.
• Faraday Future Intelligence was the worst performing S&P Global Luxury stock, losing 32.83% in the past five days. This is now a penny stock, with high volatility after losing 99% of its market share last year. Shares closed at 19 cents on Friday.

Opportunities

• Birkin handbag producer, Hermes, continues to benefit from having access to super-rich customers and has been passing manufacturing costs to shoppers while keeping sales strong. The company raised the cost of the basic Birkin 25-centimeter handbag in its U.S. stores by 10% to $11,400 before sales tax, while the company’s more exotic handbags made with materials such as crocodile skin, jumped more than 20%. However, the premium price difference between Hermes and its closest competitor, the Chanel Classic Flap, shrank from 70% in 2019 to 2% last year, according to PurseBop founder Monika Arora.

• Kering may be preparing to buy Marcolin, an Italian manufacturer and distributor of branded sunglasses and frames. According to JPMorgan, if Marcolin becomes part of the Kering Group, there would be benefits from synergies, manufacturing efficiencies, and distribution. It would be a transformative acquisition for Kering’s eyewear division, adding over 35% incremental revenue and around 15% additional profits.
• The United States will report retail sales data next week. Bloomberg economists are expecting the sales to improve, pointing to strong consumer spending habits. Sales will be released on Thursday, March 14.

Threats

• Operations at Tesla’s gigafactory plant near Berlin were suspended due to an arson attack on energy infrastructure by an environmental organization known as Vulkangruppe (Volcano Group). Since February 29, around 80 to 100 environmental activists have occupied part of the state forest in Brandenburg near the Tesla plant, where Elon Musk plans to expand his production facility. The company said it did not expect production to resume this week, and it estimated the cost to its operations at several hundred million euros.
• This week, Tesla reported declining sales in China, saying they fell 19% year-over-year in February. Tesla shipped 60,364 cars from China in February. The slowdown was most likely caused by reduced purchases during the Lunar New Year holidays. Tesla shares declined 12% this week, and Elon Musk lost his title as the richest person to Jeff Bezos, owner of Amazon.
• Apple’s iPhone sales in China declined 24% during the first six weeks of 2024, while the main competitor, Huawei, saw sales jump 64% in the same period. Huawei’s launch of the advanced model Mate 60 Pro triggered a wave of patriotic buying and took market share away from Apple.

Energy and Natural Resources

Strengths

• The best performing commodity for the week was zinc, rising 5.31%. According to Bank of America, metal market participants have held perennially bearish zinc views, on expectations that mine supply increases would push the market into surplus. But the anticipated glut has so far not materialized, because mined and refined production have consistently underperformed. Mine supply therefore remains the key constraint on zinc, which should continue to support prices.

• According to Bank of America, nickel prices have been under pressure in recent months on Sino-Indonesian production increases. Yet, ongoing discussions over production curtailments in Indonesia continue as the government’s mine permitting process is dragging on (prompting traders to close some of those short positions).
• According to Bloomberg, copper rose along with most other base metals as inventories fell and investors braced for demand signals from China’s annual parliamentary meetings. The country’s political elite are gathered in Beijing for the National People’s Congress, with economists expecting it to set an economic growth target of around 5% for 2024.

Weaknesses

• The worst performing commodity for the week was wheat, dropping 3.50%, on expectations that the South American harvest will be large and Ukrainian suppliers are price takers in this market, as reported by Dow Jones. According to JPMorgan, U.S. natural gas consumption was down 9% year-over-year this week, driven by lower residential/commercial demand and power burn. On a week-over-week basis, total demand decreased by 11% to 91.7 Bcf/d, similarly on the back of lower residential/commercial demand and power burn.
• According to JPMorgan, U.S. natural gas prices have been under pressure given the surprise increase in supply approaching year-end, warm winter weather, and the start-up delay at the Golden Pass facility. The 25% decline in futures strip since the end of the third quarter of 2023 to $2.52 per MMBtu is now below the marginal cost of supply in most U.S. dry gas basins.
• According to BMO, spot HRC prices declined further over the past two weeks, with prices dropping 11% to $800 per ton. Market sources attributed the recent decline to mills offering discounts to entice buyers.

Opportunities

• According to Bloomberg, the U.S. uranium enrichment industry would get a $2.7 billion infusion in a government funding bill, reflecting efforts to wean the nation off nuclear fuel imported from Russia. The funding, which was requested by the White House, is part of a broader plan by President Joe Biden’s administration to buy enriched uranium directly from domestic producers.
• As reported by Bloomberg, China can aim to approve as many as 10 new nuclear reactors a year to accelerate its rapid expansion of capacity, according to the chairman of one of the nation’s largest developers. Three or four new reactors will be added to the national fleet this year to take China’s capacity to about 60.8 gigawatts, according to Lu Tiezhong, chairman of China National Nuclear Corp.
• Natural gas has been on a steady downtrend since August of 2022 when prices peaked at just under $10.00 mcf and dropped to $1.50 by the last week of February with some of the warmest weather on record. Natural gas suppliers are finally starting to pull in the reins with EQT Corp., the nation’s largest producer, announcing it will slash production by 30 to 40 billion cubic feet on net production through March. Bloomberg reports this is about 5% to 7% of EQT’s production. Chesapeake Energy Corp. and Comstock Resources Inc. both announced they would reduce output last month.

Threats

• According to UBS, OPEC announced that OPEC+ members have extended their 2.2M barrels per day voluntary cuts until the end of June 2024. These cuts had been announced at the last OPEC+ meeting on November 30, 2023, and were in place until the end of March 2024.
• According to Morgan Stanley, Chile’s lithium exports totaled 21.6kt in February, up 23% month-over-month and up 20% year-over-year, as per customs data. Chile’s lithium exports to China rose a remarkable 64% month-over-month and 68% year-over-year during the same period. In a market where supply seemed limitless in 2023, maybe the pickup in Chinese buying just reflects their willingness to buy more since prices collapsed last year and not a surge in demand.
• Panama Trade and Industry Minister Jorge Rivera told reporters Wednesday that it will cost around $800 million to close Canadian miner First Quantum’s copper mine, Reuters reported.  Rivera said that an inter-ministry coalition, which is working on the mine’s closure plan, is looking for alternative measures to obtain funds so that the state does not have to dip into its own coffers.

Bitcoin and Digital Assets

Strengths

• Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Floki, rising 260%.
• Smaller cryptocurrencies are starting to pull ahead of record-setting Bitcoin as traders bet the tokens are next in line to set all-time peaks. An index tracking the bottom half of the largest 100 digital assets is up about 60% over the past month, beating the 56% advance in Bitcoin, writes Bloomberg.

• Investors dumped a record amount of cash into BlackRock’s Bitcoin ETF while the cryptocurrency surged to an all-time high. The iShares Bitcoin ETF pulled $788.3 million on Tuesday, its thirty-seventh consecutive inflow. The fund has now swelled to $11.5 billion in assets, writes Bloomberg.

Weaknesses

• Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the week was Kaspa, down 11.90%.
• Spain has banned Worldcoin for up to three months, reports Reuters, drawing a sharp rebuke from Sam Altman’s company, amid perceived privacy risks from the venture which scans irises in exchange for a digital ID and free cryptocurrency.
• MicroStrategy led cryptocurrency-linked stocks lower in premarket trading on Tuesday, reports Bloomberg, as Bitcoin’s blinding rally took a short breather.

Opportunities

• Pantera Capital is raising money from large investors to buy deeply discounted Solana tokens from the estate of bankrupt digital-asset exchange FTX. Pantera is seeking funds for the Pantera Solana fund which has an “opportunity” to buy up to $250 million worth of SOL tokens from the FTX estate, according to Bloomberg. 
• Bitcoin miner Core Scientific has struck a deal to provide data-center services to CoreWeave, a cloud computing company that’s among the hottest startups in the AI race. The mining company will supply up to 16 megawatts of data-center infrastructure to CoreWeave under a multi-year contract, writes Bloomberg. 
• Bitcoin rose to $70,000 for the first time this week, even as traders appear to be shifting their attention elsewhere for higher returns in fringe tokens know as meme coins, writes Bloomberg. 

Threats

• An appeals court in Montenegro has rejected a lower court’s decision to extradite disgraced cryptocurrency entrepreneur Do Kwon to the U.S. to face trial on fraud charges. In a decision announced on its website the appeals court agreed with Kwon’s lawyers that the February 21 ruling was flawed and sent the case back to the lower court for a new trial, writes Bloomberg. 
• Coinbase says “a small subset of” users may see intermittent zero balance across their Coinbase accounts and latency across pages, according to Bloomberg. 
• Chinese crime syndicates are using cryptocurrencies to launder billions of dollars, including money raised from helping supply drugs to the U.S. or scamming American victims. These gangs are exploiting the decentralized nature of cryptocurrency markets to evade the grasp of Chinese and foreign authorities, according to an article published by the Wall St. Journal.

Defense and Cybersecurity

Strengths

• Kratos Defense & Security Solutions, Inc. has secured a $499 million contract to develop anti-tamper technology for U.S. Department of Defense programs, reports Yahoo! Finance, aiming to protect critical information from tampering, with completion expected by February 2030. President Michael Johns highlighted the contract as a pathway to new customers and an opportunity to safeguard national security systems with their advanced technology.
• Palantir Technologies secured a $178.4 million contract from the U.S. Army for TITAN, a project involving AI and machine-learning-powered mobile ground stations, reports Barron’s. The project aims to enhance defense capabilities with partners like Northrop Grumman and Anduril Industries, marking a significant stride in software-defined warfare.

• Aerovironment Inc. rose 29.13% this week and was the best performing stock in the XAR ETF on surging volume.

Weaknesses

• The United Nations’ investigation has revealed Hamas, recognized as a terrorist group by the U.S. and EU, committed cruel and inhumane treatment of women during its October 7 attack in Israel, reports AP News. After examining thousands of photos, hours of footage, and numerous interviews, the full extent of the violence remains uncertain, with failed ceasefire negotiations further complicating the situation amid the devastating toll of the conflict on both sides.
• Intensified clashes between Israeli forces and Hezbollah across the Lebanon border, marked by increased rocket attacks and diplomatic efforts to avert a second major conflict, have escalated with casualties and a potential truce in discussion amidst broader regional hostilities.
• Aersale Corp. lost 23.04% in the past five days as the company’s fourth quarter results were reported weaker than expected.  

Opportunities

• Lockheed Martin has offered to buy small satellite manufacturer Terran Orbital, which it partially owns, for over $500 million, intending to accelerate its space strategy by assuming Terran’s debt and paying $1 per share for outstanding stock, as revealed in SEC filings by both companies.
• Albania has inaugurated NATO’s first air base in Kucova, marking a significant step in bolstering the Balkan region’s defense capabilities against Russia’s “neo-imperial” ambitions, with Prime Minister Edi Rama highlighting the move as crucial for regional security and the country’s aspirations for closer integration with NATO and the EU.
• Pratt & Whitney, under RTX, will supply GTF engines for Icelandair’s 35 new Airbus A320neo family aircraft, marking its first GTF partnership, alongside a long-term EngineWise service agreement for maintenance and support.

Threats

• After Russia disclosed sensitive discussions about Ukraine aid, Germany faces pressure from allies to enhance security protocols. This came following revelations that German military officers used the non-encrypted platform WebEx for a meeting, leading to a leak that exposed plans and conversations about military aid and operations. The incident, which included discussions about supplying Ukraine with Taurus missiles and revealed details of British and French troops in Ukraine, has prompted an investigation by Germany and calls for unity among allies.
• Europe faces a significant challenge in supplying Ukraine with artillery shells due to a scarcity of gunpowder, exacerbated by the EU’s import ban on Xinjiang cotton—a critical raw material for gunpowder production. This has led to efforts to ramp up production and find alternative sources only just beginning to mitigate the shortfall.
• A Russian missile exploded near a convoy carrying Ukrainian President Zelensky and Greek Prime Minister Mitsotakis in Odesa, resulting in five deaths but no injuries to the leaders, underscoring the grave dangers of the ongoing conflict and highlighting the international repercussions and need for enhanced air defense systems.

Gold Market

This week gold futures closed at $2,184.80, up $89.10 per ounce, or 4.25%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 9.36%. The S&P/TSX Venture Index came in up just 0.72%. The U.S. Trade-Weighted Dollar fell 1.06%.

Strengths

• The best performing precious metal for the week was palladium, up 7.17%, which appeared to be triggered by massive short covering, as reported by Bloomberg. The World Platinum Investment Council (WPIC) reported that supplies of recycled platinum have fallen to the lowest point since records began in 2014. They attribute the fall in the recycling stocks largely to a strong crackdown in China on catalytic converter thefts, which has also been a factor in North America. The platinum market slipped into a deficit last year, which the WPIC expects to continue into 2024.
• According to Bloomberg, China’s central bank added gold to its reserves for a sixteenth straight month in February, extending a long buying spree that’s helped to support the precious metal’s surge to a record high. Bullion held by the People’s Bank of China rose by about 390,000 troy ounces last month, according to official data released Thursday.
• According to Bloomberg, gold – a safe-haven asset that generally thrives during times of lower interest rates and geopolitical upheaval — is understandably having a moment. As investors bet the Federal Reserve will trim rates in June following a slew of mixed U.S. data reports, the precious metal that is stored in both federal depositories and individuals’ sock drawers is now at an all-time high.

Weaknesses

• The worst performing precious metal for the week was platinum, but still up 3.03%, on expected production cuts from the producers as they re-benchmark their costs to produce. According to Bloomberg, Sibanye Stillwater reported a $2 billion loss last year, after taking an impairment against its U.S. palladium mine. The company joined its South African rivals – Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. – in announcing a dramatic slump in earnings as the prices of platinum, palladium and rhodium declined sharply last year. 
• According to Scotia, Fresnillo’s EBITDA of $305 million in the second half of 2023 came in 14% below the consensus at $356 million. Full-year EBITDA contracted 13% year-over-year in 2023 to $656 million despite a 10% revenue increase, a clear indication of cost deterioration across the company’s operations.
• According to BMO, Argonaut Gold Inc. released fourth quarter 2023 adjusted EPS of -$0.02, below consensus ($0.00). The miss versus consensus was mainly driven by higher costs, not surprising given the challenging start at Magino due to unplanned plant shut-downs. Argonaut noted that it has received multiple term sheets to refinance and potentially upsize its existing $250 million term loan and revolver.

Opportunities

• According to Canaccord, Hochschild Mining has announced that its 100% owned subsidiary Amarillo Mineracao has entered an option to acquire a 100% stake in the Monte do Carmo project in Brazil from Cerrado Gold.
• According to Bloomberg, Ramelius Resources is in exclusive due diligence to acquire Toronto-listed WA gold miner Karora Resources, which it hopes will add a new production center to replace its ageing Edna May asset. Ramelius boss Mark Zeptner will spend $700 million to $1 billion for the acquisition.
• According to BMO, palladium prices had a 12% rise to >$1,050 per ounce, reversing all the losses seen over 2024 to date. This comes amid some concern over the ongoing viability of U.S. operations, plus growing expectations of supply cuts in South Africa. Moreover, covering of the extended short positions in the palladium futures market undoubtedly augmented the gains.

Threats

• Artemis Gold announced an accelerated expansion plan, to emphasize the potential scale of Blackwater, which also helps to bring forward production and cash flow. They estimate the accelerated expansion could provide a 30% uplift in output through 2035 at 10% lower costs. Sounds like the engineering plan is to expand the currently-in-construction 6 Mtpa to an annual processing capacity of 25 Mtpa which should improve the future valuation, but it’s a little too early to factor into the Artemis valuation currently, as first gold pour is expected in the second half of 2024.
• According to Bloomberg, the Turkish unit of SSR Mining Inc. will pay for all cleanup costs following a landslide at its Copler gold mine in eastern Turkey, a top government official said, without citing a specific figure. Speaking to Bloomberg after a cabinet meeting late Monday in Ankara, Energy & Natural Resources Minister Alparslan Bayraktar said the costs will include the removal of about 10 million tons of waste soil.
• According to Bloomberg, South Africa’s platinum producers are in crisis, as slumping metal prices force jobs cuts and erode profits. The nation’s platinum sector — which accounts for about 70% of global output — has been a key export industry and generates jobs for hundreds of thousands of people in a country with one of the world’s highest unemployment rates.

U.S. Global Investors, Inc. is an investment adviser registered with the Securities and Exchange Commission (“SEC”). This does not mean that we are sponsored, recommended, or approved by the SEC, or that our abilities or qualifications in any respect have been passed upon by the SEC or any officer of the SEC.
This commentary should not be considered a solicitation or offering of any investment product. Certain materials in this commentary may contain dated information. The information provided was current at the time of publication. Some links above may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/31/2023):

Tesla
Apple
SkyWest Inc.
United Airlines
American Airlines
Boeing
Airbus
FedEx Corp.
Chesapeake Energy
Sibanye Stillwater
Impala Platinum
Argonaut Gold
Ramelius Resources
Karora Resources
SSR Mining
Prada
Kering
Hermes

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges.

The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index.

The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500.

The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The S&P Global Luxury Index is comprised of 80 of the largest publicly traded companies engaged in the production or distribution of luxury goods or the provision of luxury services that meet specific investibility requirements.

The Sentix Investor Confidence Index rates the relative six-month economic outlook for the euro zone.

RealClearPolitics aggregates polls for presidential and congressional races into averages, known as the RealClearPolitics average.

The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 8% of the Russell 3000 total market capitalization.

The National Federation of Independent Business (NFIB) Small Business Optimism Index is a monthly data point that indicates the health of small businesses in the US. The index is a combination of 10 seasonally adjusted components that measure the expectations and outlook of small business owners.

The Baker Hughes North American Rotary Rig Count is a weekly census of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States and Canada.