Juggling Dynamite

John Hussman is one of the most analytically-rigorous fund managers out there. He is widely respected on Wall Street — not just for correctly calling the busts of both the 2001 Dot-com and 2008 housing bubbles AND positioning his clients advantageously in advance — but also for his brilliant commentary & charts that he publishes regularly.

When it comes to recognizing asset bubbles, John is THE expert.

He is also a researcher and expert on the COVID-19 pandemic.  Here is a direct video link to part 1.

Here is a direct video link to part 2.

Here is a link to John’s November letter When Bubble Meets Trouble.  Here’s a taste:

“My real concern is for passive investors – particularly charitable organizations whose missions would be compromised by a loss of over 50% in their equity investments (and whose missions might be enhanced by avoiding even part of that), and retirees who have barely enough to enjoy their future, but with most of it dependent on the temporarily bloated prices they see printed on a page or flashing on a screen.

Measured from current extremes, I expect that the unwinding of this bubble will drag S&P 500 total returns below Treasury bill returns for least a decade, and possibly two. Yet like other bubbles, I expect that most of the damage will come off the top, resulting in market conditions that are reasonably investable within a year or two. Presently, the valuation measures we find best correlated with actual subsequent market returns are at the most extreme levels in U.S. history. “

Disruptions in global supply chains have accelerated interest in recycling materials of all kinds, especially in the electric vehicle sector.  As major economies transition to emission-free vehicles over the next decade and beyond, recycling battery components is a huge growth area, and innovation is naturally rising to the opportunity, see Northvolt produces battery cells with recycled nickel, manganese and cobalt:

Swedish battery firm Northvolt said Friday it had produced its first battery cell with what it described as “100% recycled nickel, manganese and cobalt.”

In a statement, the Stockholm-headquartered company — which has attracted investment from Goldman Sachs and Volkswagen, among others — said the lithium-ion battery cell was manufactured by its recycling program, Revolt.

The cell’s nickel-manganese-cobalt cathode had been produced using metals “recovered through the recycling of battery waste.” Tests showed that performance was on a par with cells made using metals that had been freshly mined, Northvolt said.

On Friday, the business said the design of its own recycling facility would be expanded so it could recycle 125,000 tons of batteries annually.

…It will use materials from end-of-life EV batteries as well as scrap from Northvolt Ett, the company’s gigafactory, where the first battery is expected to be produced before the end of 2021.

Like peak oil theorists since the 1950s, those adamant that a shortage of metals will prevent the migration to EVs from ICE (internal combustion engines) are ignoring the role human ingenuity plays in evolving our systems and solutions over time.

And for those convinced that EV production is worse for the environment than ICE, a study commissioned by The Wall Street Journal from The University of Toronto found that at 20,600 miles, the greenhouse gas emissions from building and driving the two cars are roughly the same. Then EVs win for the rest of their extended lifespan–even assuming the mining of virgin metals for battery manufacturing.

Recycling battery materials will improve the environmental and financial equations even more in favour of EVs.

Danielle was a guest with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets. Here is a direct audio link.