Virgin Atlantic’s Pioneering SAF-Powered Transatlantic Flight

A little over a century ago, Captain John Alcock and Lieutenant Arthur Whitten Brown became the first people to make a nonstop, transatlantic flight. Beginning in Newfoundland and ending with a nonfatal crash landing on the west coast of Ireland, the trip took some 16 hours in a World War I bomber, at an average speed of 120 miles per hour.

At the end of this month, if all goes according to plan, history will be made once again when a jet powered by 100% sustainable aviation fuel (SAF) will cross the Atlantic Ocean for the first time ever.

Virgin Atlantic, the British carrier founded by billionaire Richard Branson, received permission from the United Kingdom’s Civil Aviation Authority (CAA) this week to fly from London to New York to test the feasibility of using only green jet fuel on long-haul flights. The demonstration is scheduled for November 28.

The Promising Future of SAF

What is SAF? Advocates tout it as a cleaner alternative to traditional jet fuel, pointing to its ability to reduce CO₂ emissions by up to 80%. Produced from various sources such as waste oils, fats and feedstocks, the fuel is considered “sustainable” because it doesn’t compete with food crops or water resources, and it doesn’t cause deforestation.

SAF is currently more expensive to manufacture than conventional kerosene, but as is the case with many other alternative energy technologies, scaling up is key to lowering costs. Solar energy, once so prohibitively expensive it could only be used on satellites, was in 2020 proclaimed the “cheapest electricity in history” by the International Energy Agency (IEA).

With production volumes rapidly increasing, SAF is poised to become a primary tool in helping the commercial aviation industry achieve net-zero emissions by 2050, according to the International Air Transport Association (IATA). Last year, between 300 and 450 million liters (approximately 80 to 118 million gallons) of SAF are believed to have been produced, a 200% to 350% increase from 2021 and as much as a 1,700% increase from 2019. Responding to the Biden Administration’s challenge to produce 3 billion gallons of SAF by 2030, London-based Shell said it would begin ramping up supply for the U.S. market.

How BWB Designs Are Shaping More Sustainable Aviation

SAF isn’t the only technology that companies are eyeing to improve efficiency. A new aircraft design, one that some people describe as resembling a manta ray, could become part of airlines’ global fleets sooner than expected.

Known as a blended wing body (BWB), this design reimagines the commercial aircraft, doing away with the tubular fuselage and replacing it with a broad, triangle-shaped body. The layout provides additional lift and lowers aerodynamic drag by as much as 30%, which in turn cuts fuel consumption in half and reduces emissions and noise.

The BWB concept also offers a potentially more comfortable passenger experience. Because the interior is much wider and roomier than a traditional tube-shaped jet, seating on domestic flights could be spaced out more and even arranged with three aisles instead of the usual one or two. The aircraft is currently intended to serve the middle market of the airline sector, able to seat between 230 and 250 people. (The typical Boeing 737, by comparison, can carry between 108 and 215 passengers.)

In August, the U.S. Air Force announced that it was investing $235 million over the next four years into aircraft startup JetZero, which plans to have a full-scale BWB concept ready to test by 2027. The Los Angeles-based company, whose name is a clever play on “net-zero,” was founded in 2021 with the goal of developing “the next generation of sustainable jets.” 

You can see some conceptual artwork of the aircraft and its interior by clicking here.

Balancing Fleet Growth with Sustainable Goals

Sustainable jet fuel and more aerodynamic aircraft designs are just two examples of investments airlines are making to bring emissions down to zero by 2050. That year, an estimated 10 billion passengers will fly commercially across 22 trillion kilometers (13 trillion miles), significantly adding to greenhouse gases if nothing changes.

Take a look at the chart below. In just 10 years’ time, the number of commercial aircraft in the global fleet is set to grow dramatically, depending on the market. Consultancy firm Oliver Wyman believes India will more than double the number of commercial jets, from 626 today to 1,350 in 2033. Eastern Europe will also see massive growth, its fleet size expanding by 84%, followed by China (+65%) and the Middle East (+64%). The only market to shrink, according to Oliver Wyman, will be Russia, which could see the size of its fleet decrease by 25%, from 736 today to 554 within a decade.

To bring the entire industry into compliance and achieve net-zero emissions, trillions of dollars will need to be spent over the next 30 years to develop more sustainable fuels, more aerodynamic body designs, more efficient operations and much more.

Yields Have Peaked this Cycle

On a final note, it looks more and more likely that Treasury yields have peaked in 2023, which seems to indicate that the market believes the Federal Reserve is at the end of this tightening cycle. It could also be good news for stocks in 2024.

This year’s spike in yields was initially driven, of course, by the Fed’s commitment to maintaining high interest rates to combat inflation. This pushed the yield on the 10-year Treasury bond to over 5% from a summer low of nearly 3.7%.

However, this upward trend is reversing, with the 10-year yield dropping to about 4.6% today. This decrease indicates a growing buyer interest, which pushes bond prices up and yields down. The Bloomberg U.S. Aggregate Bond Index is on track to post its third straight annual loss, which would be the longest losing streak on record.

As a result, defensive stocks, which have not performed as well as the broad S&P 500 this year, may become more attractive. Many investors consider these stocks stable, as they belong to companies whose products are consistently in demand, regardless of economic conditions. Examples of defensive stocks include utilities (NextEra Energy, Duke Energy, etc.), staples (Procter & Gamble, Coca-Cola) and so-called “sin stocks” (Altria Group, Philip Morris).

Index Summary

• The major market indices finished mixed this week. The Dow Jones Industrial Average gained 0.65%. The S&P 500 Stock Index rose 1.31%, while the Nasdaq Composite climbed 2.37%. The Russell 2000 small capitalization index lost 3.15% this week.
• The Hang Seng Composite lost 2.14% this week; while Taiwan was up 1.06% and the KOSPI rose 1.74%.
• The 10-year Treasury bond yield rose 5 basis points to 4.623%.

Airlines and Shipping

Strengths

• The best performing airline stock for the week was Ryanair, up 13.5%. According to Travel.State.Gov, passport issuance in 2023 achieved over 24 million passports, which is up 9% compared to 2022. Morgan Stanley continues to believe that this is not a “one-and-done” revenge travel spike but a durable growth trend. In addition, the group explains that travel behavior post-pandemic would likely be similar to the behavior exhibited after similar crises like WW1/Spanish flu in 1918 and after WW2 in 1950/60s, delivering a “golden age of travel” in the 2020s.
• Scorpio Tankers posted third-quarter earnings per share (EPS) of $1.91, down 45% versus last year, yet above consensus of $1.55. The beat was driven by slightly higher-than-expected time-charter equivalent rates (TCE) at $28,300 per day (above the $27,600 per day consensus) and positive operating leverage.
• During the third quarter, Sun Country earned $0.14 per share, ahead of the $0.11 consensus, on stronger scheduled service revenue. Third quarter revenue delivered at the high end of initial guidance along with an 8% EBIT margin compare very favorably to numerous domestic low-cost outcomes this quarter.

Weaknesses

• The worst performing airline stock for the week was Air Transport Services, down 27.4%. Wizz reported second quarter net income of €342 million, a large miss versus Bloomberg consensus of €447 million, with lower revenue per available seat kilometer (RASK) and much worse ex-fuel CASK (up 2% year-to-year).
• According to Stifel, the Canal Authority announced further reductions to the already reduced number of daily transits as the water levels in Gatan are low. Typically, the Canal allowed 36 transits per day which had been cut to 32, and 24 currently, 22 in the month of December, 20 in January, and 18 in February (until further notice). The biggest impact is clearly LPG, which Stifel estimates could see a middle single digit decline in vessel availability. Behind that would be LNG, followed by dry bulk and tankers which should see a small shift, but in a tight market, every basis point matters.
• Bank of America reports that airline stocks continued to decline in October, down 16% in the fourth consecutive month of underperformance, compared to the S&P’s -2%. Year-to-date, airline stocks are now down 16%, compared to the S&P 500’s positive 9% performance through October, with the group outperforming in January, February, May, and June. Fourth quarter 2023 guidance announced during earnings pointed to continued softness in pricing, pushing EPS estimates lower.

Opportunities

• According to Bank of America, Japanese inbound tourists are 28% above 2019 levels (excluding Chinese) – and the bank sees further recovery ahead with Chinese inbound gradually recovering and forward bookings showing that Japanese business outbound is further normalizing in the coming quarters.
• On scrapping from Alphaliner: “The demolition of twenty-year-old and over tonnage aggregated only 70 vessels for 140,000 TEU so far this year. That leaves, in theory, a large recycling potential for the next few years. However, many vessels remain in sound technical condition or perfectly fit for certain trades where very little -or no replacement- is on the way. This is especially true in the smaller sizes. As a result, a lot of ships in this age group will likely continue to trade in the coming years, especially carrier tonnage, irrespective of the market headwinds or tougher environmental regulations.”
• Ryanair announced a new dividend policy with a maiden dividend of €400 million (2% yield) payable as €200 million in February 2024 and September 2024. The new policy has a 25% payout from fiscal year 2025. In addition, surplus cash could be returned as a special dividend/share buyback. With a net cash position of €2 billion at the end of 2024. There could be a special dividend or buyback next year, in addition to the €400 million announced ordinary dividend.

Threats

• According to Cowen, ASMs for airlines are scheduled to grow 11.0% year-over-year and 8.7% year-over-year in the fourth quarter 2023 and first quarter 2024, respectively. Capacity growth will be constrained by GTF engine groundings and airlines’ efforts to better align supply with demand. Domestic capacity is scheduled to grow 8% and 4% in the fourth quarter (4Q) and the first quarter (1Q), while international capacity is scheduled to grow 22% and 23% in 4Q and 1Q, respectively.
• Maersk now expects that its full year results will be toward the bottom end of the guided range. The bottom end of Maersk’s guidance implies a fourth-quarter Ocean EBIT loss of $1.1 billion, or an EBIT margin of around -15-20%. This would be the weakest EBIT margin ever for Maersk Ocean and is in sharp contrast to ONE’s guidance (-2.7%).
• IndiGo provided an update on GTF engine disruptions, warning of an incremental mid-30s aircraft (10% of the fleet) grounded from fourth quarter 2024 and reconfirming its fiscal year 2024 capacity guidance. The update looks to be an important inflection point around GTF engine risks, helping the market quantify capacity disruptions during peak groundings.

Luxury Goods and International Markets

Strengths

• Watches of Switzerland, the top seller of Rolex watches in the United Kingdom, jumped on Tuesday by more than 10% after the company reported strong quarterly results. The company said it is on track to hit its targets in the current year, with second-quarter sales in the U.S. growing by 11% while sales in the United Kingdom were flat, as some stores were closed for renovations.
• Tesla is taking steps to begin operations in Chile, where it registered Tesla Chile SpA, for activities ranging from car sales to energy generation, capitalizing on the country’s immense lithium reserves. Despite the region’s low electric vehicle adoption, Tesla’s move reflects a strategic interest in a market abundant in lithium, a key component in electric vehicle batteries.
• RealReal, a secondhand clothing and handbags reseller, rose this week by 37.75%, becoming the best performing stock in the S&P Global Luxury Index. The company surpassed expectations with

Weaknesses

• Eurozone business activity declined in October, raising the risk of recession in the Euro area. The Composite PMI fell to 46.5, its lowest since November 2020. New orders and exports shrunk, and services contracted in Germany, France, and Italy.
• China’s year-over-year exports declined 6.4% versus a decline of only 3.5% that was expected. Imports unexpectedly rose by 3% year-over-year versus an expected decrease. The trade balance was reported for China at 56.53 billion versus 82 billion expected.
• Sleep Number Corporation was the worst performing S&P Global Luxury stock, losing 41.12% in the past five days. Shares declined after facing a 13% year-over-year sales drop and earnings miss, due to a sudden decline in consumer demand. The company is working to revamp its marketing strategy to highlight affordability and competitive value, shifting away from promoting overall smart bed systems and instead encouraging consumers to purchase setups that fit their budget; the company’s CEO, Shelly Ibach, reported improved sales in October following the shift.

Opportunities

• The French conglomerate Louis Vuitton announced that it is buying American sunglasses brand Barton Perreira for roughly $80 million. This acquisition should help the company to access entry-level shoppers. Barton Perreira was founded in 2007 and has stores across the United States. With the LVMH purchase, the brand will expand its footprint in Asia and Europe, where LVMH has a big presence through its luxury brands.
• Ethiopian Tamirat Tola won the men’s New York City Marathon wearing Adidas super shoes, the same model in which Tigst Assefa broke the women’s marathon world record in September in Berlin, Germany, reported the Wall St. Journal. The super shoe came to the spotlight back in 2016 during the U.S. Olympic marathon trials. The Adidas-brand shoes are pro-elite-level running sneakers, known for their stacked foam, carbon-plated rocker design.
• With growing optimism that the Federal Reserve is done hiking rates in the United States, yields have been declining and the dollar weakening, pushing global equities higher. Our in-house oscillator, seen here, indicates that global luxury stocks are in oversold territory, despite the recent bounce, and further upside is possible.

Threats

• The inflation expectations for the next 12 months in the Eurozone rose to 4% from 3.5%. In addition, the three-year inflation expectation remains unchanged, at 2.5%. European Central Bank (ECB) chief economist Lane, usually a dove, said progress on inflation is still not sufficient, as it is mostly due to the decline in energy prices. More progress on core inflation measures is required. The ECB has an inflation target of 2%. 
• Richemont reported a surprising 2% decline in operating profit for the fiscal first half, attributing it to a drop in revenue from luxury watches and reduced spending by high-end consumers. Chairman Johann Rupert cited inflation, slowing economic growth, and geopolitical tensions for the unexpected downturn, projecting that the luxury-goods industry won’t raise prices for the next two years, leading to a 12% decline in Richemont’s shares this year.
• Shiseido Co. has revised its annual profit forecast, expecting a 42% reduction in core operating profit to ¥35 billion ($231 million) and a 2% decrease in revenue to ¥980 billion, attributing the decline to decreased demand from Chinese consumers following the release of treated radioactive water at Fukushima. Sales in China and the travel market dropped around 10% in the third quarter, prompting the company to cut back on marketing and promotions, with the anticipated impact of the wastewater release extending into the first quarter of 2024.

Energy and Natural Resources

Strengths

• The best performing commodity for the week was zinc, rising 3.33%, on supply curtailments and potentially on the improved recent performance of iron ore, reflective of China’s property market stabilizing. According to Goldman, for much of 2023, iron ore has been seen as the China commodity property short. Yet, the commodity’s fundamentals and price resilience has defied these expectations. Indeed, rather than facing a surplus for this year, the iron ore market is now set for a clear deficit. In this context, Goldman revised its full-year average 62% iron ore forecast for 2023 to $117 per ton and for 2024 to $110 per ton.

• China agreed on another decades-long liquefied natural gas (LNG) deal with Qatar in a further move to safeguard its energy security. China Petroleum & Chemical Corporation signed a 27-year LNG deal with Qatar Energy, the Gulf company noted. The joint venture between the Middle East company and Sinopec will deliver 3 million tons of LNG per year from the North Field South project to Sinopec’s receiving terminals in China.
• Oil gained after Saudi Arabia and Russia reaffirmed that they will stick with oil supply curbs of more than 1 million barrels a day through the end of the year, but still finished the week down close to 5%. The announcement by the OPEC+ heavyweights on the prior weekend comes after the fading Israel-Hamas war premium and concerns over weaker global demand pushed oil prices down by more than 6% last week. The dollar also dropped, making commodities priced in the currency more appealing.

Weaknesses

• The worst performing commodity for the week was natural gas, dropping 13.51%, as Bloomberg reported that warmer weather this week curtailed demand by 5.6% and U.S. dry natural gas production hit a record high, as reported by EIA. Mining investments in Peru are set to fall to at least an eight-year low next year due to a lack of new copper projects, the head of the country’s industry group SNMPE said on Tuesday. Expenditure is likely to come in at $3 billion to $3.5 billion next year, said SNMPE President Victor Gobitz, who also heads one of Peru’s largest mines, Antamina.
• Codelco has cut the premium it charges Chinese clients for refined copper sales next year by 36%, reflecting the lackluster state of the country’s metals industry, which has been hit by a tepid economic recovery. The world’s biggest copper producer set the surcharge at $89 a ton over the price for immediate delivery on the London Metal Exchange, down from $140 a ton for this year, according to a person with direct knowledge of the matter, who asked not to be identified as the negotiations are private.
• According to Bank of America, nickel demand continues to increase on the back of rising electric vehicle (EV) penetration rates. Yet, these gains have been more than matched by a remarkable investment in supply, which has pushed the global market into surplus. Of course, most of these additional nickel units are coming from Indonesia on the back of investment from China, with the domestic Indonesian market now visibly oversupplied.

Opportunities

• According to BNEF, innovation and scale have driven down the costs of renewable technology significantly between 2010 and 2020, noting that solar experienced a 29% learning rate compared to onshore wind of 14% and Li-battery of 18%. Cost declines over the last three years have been reversed due to the Covid pandemic and supply chain challenges. However, BNEF believes further cost declines will continue as clean energy deployment accelerates as inflation normalizes and supply chain constraints ease.
• According to Morgan Stanley, the energy sector has performed strongly in the last three months, up 18% relative to MSCI Europe since the start of August. Several arguments behind the group’s late August sector upgrade have played out, including upgrades to earnings and yield compression. Yet, the sector still offers long-term attractions including high dividend and free cash flow yields, strong buybacks, and inflation and geopolitical risk diversification.
• VanEck, one of the world’s largest exchange traded fund providers, indicated on Wednesday that it is bullish on the commodities market. The firm predicted that markets are in the early stages of what it thinks will turn out to be a super cycle in commodities. “The second half of the year, starting June 30, you saw the long end of the curve start to go up as interest rates started to normalize. With that, you got significant outperformance from commodities over stocks,” VanEck stated in an investor note.

Threats

• Shares in Enviva Inc., the world’s largest producer of wood pellets for burning in power plants as a cleaner substitute for coal, plunged 85% this week on losses that were four times higher than the period a year ago. The company noted it may not be able to continue, as an ongoing concern is that outstanding debt is approaching four-times its market capitalization. It is unlikely the company will stop production, but the equity holders will be wiped out.
• A trucker strike in the Democratic Republic of Congo is blocking exports of copper and cobalt mined by producers including Glencore Plc and China’s CMOC Group Ltd., according to people familiar with the matter. The drivers have refused to transport the metals, which are key to the global green-energy transition, from the mining hub of Kolwezi since last week, the people said. They are demanding an additional $700 per journey as danger pay.
• In a blow to the nuclear industry, NuScale Power Corp., the first company with U.S. approval to build a small-scale nuclear reactor in Utah, is cancelling its plans to go forward with construction as costs surge. Nuclear power is seen as one way to help meet the clean energy goals the U.S. is trying to achieve, according to a statement from the DOE.

Bitcoin and Digital Assets

Strengths

• Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was FTT, rising 197.31%.
• It took just over 18 months, but Bitcoin is finally back to where it traded before the event that precipitated the last crypto crash, reports Bloomberg. Bitcoin rose as much as 3.9% to reach $36,900 on Thursday.

• Monthly spot trading volumes on centralized cryptocurrency exchanges recorded their first increase in four months, jumping 87.2% to $632 billion in October. This was the largest monthly increase recorded since January 2021, when the industry’s last bull market got underway, writes Bloomberg.

Weaknesses

• Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the week was Tether Gold, down 2.35%.
• JPMorgan expressed doubt about the sustainability of the recent crypto market surge, stating that the “crypto rally looks overdone,” according to Bloomberg. 
• Michael Novogratz doesn’t expect U.S. lawmakers to make headway on regulating the crypto sector before the 2024 election, according to Bloomberg.

Opportunities

• HSBC Holdings plans to offer institutional clients a custody service for digital assets such as tokenized securities, the bank’s latest move in the new area of finance. HSBC will work with Ripple Labs, owned by technology firm Metaco, on the safekeeping services, writes Bloomberg. 
• Circle Internet Financial, the issuer of USDC stablecoin, is considering going public early in 2024. The company is talking to advisers as it prepares for a potential IPO, according to Bloomberg. 
• JPMorgan Chase’s JPM Coin now allows clients to program their accounts by plugging in a set of key conditions, enabling them to move funds to cover overdue payments and margin calls. Further down the line it may help them seize on differences in exchange rates, writes Bloomberg. 

Threats

• Indian authorities have arrested eight people in India where a $300 million crypto scam that duped around 100,000 people continues to unravel. Four cops were among those arrested, writes Bloomberg.
• Ava Labs, the developer of blockchain project Avalanche, cut jobs by 12% in the latest round of layoffs to hit the cryptocurrency sector, writes Bloomberg. 
• The top 13 public crypto-mining companies sold the equivalent of all the Bitcoin they minted in October, plus a little more, while the digital asset posted one of its biggest rallies since token prices crashed last year, writes Bloomberg.

Gold Market

This week gold futures closed at $1,939.60, down $59.60 per ounce, or 2.98%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week lower by 6.84%. The S&P/TSX Venture Index came in off 2.85%. The U.S. Trade-Weighted Dollar rose 0.75x%.

Strengths

• The best performing precious metal for the week was gold, but still off 2.98%. China topped its gold holdings for a twelfth straight month in October, adding to a wave of purchases by global central banks that has lent support to bullion prices. Stockpiles of gold reported by the People’s Bank of China (PBOC) rose by about 740,000 troy ounces in October, according to official data released Tuesday. That is equivalent to about 23 tons and takes total holdings to 2,215 tons.
• Fortuna Silver Mines reported third quarter adjusted earnings per share (EPS) of $0.10, ahead of the consensus estimate of $0.07, on pre-released production of 128.7k ounces gold. The beat was largely due to higher sales and lower taxes with a minor boost from lower costs in the third quarter. AISC was $1,312 per ounce compared to the $1,354 per ounce consensus.
• Sibanye-Stillwater concluded the agreement with the Association of Mineworkers and Construction Union and the National Union of Mineworkers for employees at its Kroondal PGM operations, according to an emailed statement. The agreement is inflation-linked, with category 4-8 employees receiving a minimum of 6% in each of the five years of the agreement.

Weaknesses

• The worst performing precious metal for the week was palladium, down 14.12%. Last year palladium prices spiked to an all-time high with the Russian invasion of Ukraine. However, Russia, which supplies about 40% of the world’s demand, found new trade routes through Asia to sell its metal. Gold declined after the precious metal briefly rallied above $2,000 an ounce on Friday following U.S. data that pointed to a cooling labor market. Nonfarm payrolls showed that hiring slowed more than anticipated in October, while the unemployment rate rose to the highest in almost two years. That suggested the central bank’s policies are bringing inflation under control and interest rates are nearing their peak. However, the yield curve surged mid-weak for the 1-year note through to the 10-year bond, erasing the steady fall in yields over the past month in a single day.
• Pan American Silver reported third quarter adjusted EPS of $0.01, below consensus of $0.07, on production of 5.69 million ounces silver and 244,200 ounces gold. In the gold segment, cash cost was $1,187 per ounce, while the silver segment mines reported cash cost of $13.13 per ounce.
• B2Gold reported third quarter adjusted EPS of $0.05, which was a miss versus Bloomberg consensus at $0.07. Versus consensus, the miss was driven by lower-than-expected gold production (and sales) and modestly higher costs.

Opportunities

• Newmont Corp., the world’s top gold producer, will forge ahead on a plan to find $2 billion in cash (including through mine sales and project divestments) after closing the largest takeover in the mining industry this year. Denver-based Newmont closed its roughly $15 billion acquisition of Newcrest Mining Ltd. on Monday, ending a nearly year-long effort to buy the Australian gold miner. Now, with all regulatory hurdles out of the way, Newmont CEO Tom Palmer says the combined company can start a process to sell mines and decide which exploration projects to prioritize over the next two years. 
• Newmont has not decided whether to sell the Cripple Creek & Victor gold mine following its $15 billion takeover of Australia’s Newcrest Mining, the largest transaction in gold-mining history. However, Chief Executive Tom Palmer said the mine was smaller than many of the operations that Newmont now owns, and the company wants to raise some $2 billion from selling mines and rescheduling developments. 
• Barrick Gold Corp. announced that it has agreed to subscribe for 21,265,370 units of Hercules Silver Corp. in a non-brokered private placement at a price of $1.10 per unit, for total consideration of $23,391,907. Each unit is comprised of one common share and 0.32 of a common share purchase warrant, where each whole warrant will entitle the holder for a period of two years to acquire one Hercules common share at a price of $1.32 per common share.

Threats

• Palladium dropped below $1,000 an ounce for the first time in five years as demand falters amid a slowdown in car sales, the rise of electric vehicles, and as users switch to cheaper platinum. The metal, which is almost entirely used in catalytic converters that curb emissions, has slumped this year as slowing economic growth hurts global auto sales.

• According to Bank of America, for diamonds, the bank believes that higher rates and weaker growth could put the consumer under pressure which translates to less diamond demand and downward pressure on prices. The group now models slower price recovery. Eventually, a consolidated supply side and producer discipline puts a floor under prices.
• De Beers CEO stated: “Macro-economic challenges continue to affect the diamond sector. The retail recovery in China remains slow. And the voluntary import moratorium on rough diamonds into India will see extended Diwali holidays and factory closures in the world’s largest diamond cutting center.”

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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 (09/30/2023): 

Scorpio Tankers

Sun Country Airlines

Wizz Air Holdings

Ryanair Holdings

AP Moeller – Maersk

Sibanye Stillwater

B2Gold

Tesla

LVMH

Richemont

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

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