Get your motor running with a potential 1,178% gain
Tuesday, 2 April 2019
By Bernd Struben
- Unthinkable only a few years ago
- ‘Trump Rebukes Globalists — Citizenship Matters!’
Regular readers will know I’m a bit of a petrol head.
There’s nothing like the growl of a properly tuned V8 winding through the gears to turn my head. Unless, of course, it’s the growl of a properly tuned V10 or V12.
So it shouldn’t come as any surprise that I’m not eagerly queuing up to be the first in my rural South Australian neighbourhood to put an electric vehicle (EV) in my garage.
Not that many city dwelling Aussies are doing the same just yet either.
Any guesses on the number of EV sales Down Under last year?
If you said 2,500 — or anywhere near there — go to the front of the class.
That’s out of a total of just over 1.15 million new vehicle sales, by the way. Meaning EV sales last year represented about 0.22% of the total market share.
But that’s set to change.
You may have read about Bill Shorten’s rather ambitious new target for EVs. Under a Labor government, Bill says, 50% of all new vehicle sales in Australia will be electric by 2030.
That means going from 2,500 annual sales today, to some 600,000 10 years from now.
Of course Bill hasn’t seen fit to explain how the government — meaning us taxpayers — is going to fund this momentous shift over to EVs. He’d prefer to wait until after the federal election before releasing that bombshell.
But while I expect Australia to fall well short of his pie in the sky target, one thing is clear. The EV market, currently worth some $278 billion per year globally, is going to grow. Fast.
Just have a look at what’s happening in Europe.
Last year saw some 15 million new vehicles sold in Europe. Of those 1.5% were EVs. That’s still only a small fraction of total sales. But the EU is gearing up to change that.
In March the EU tightened the emissions rules for cars, cutting down on the amount of CO2 they’re permitted to emit. The plan is to pave the way for the EV industry. And as petrol cars — and petrol itself — get slugged with ever higher taxes, EVs will surely benefit.
Is the heavy hand of government distorting market efficiency?
But that doesn’t mean we, as investors, should ignore the opportunities government intervention presents.
And few governments have the will and ability to swing a bigger stick at the free market than China’s Communist Party.
China, as you know, has a bit of a pollution problem. And a lot of people. And the world’s largest car market.
In 2018, there were 27.3 million new vehicles sold in China. That’s almost double the amount sold in Europe.
4.9% of those vehicles — some 1.3 million — were EVs. That figure was up from just 777,000 EVs the previous year. And it’s more than all the cars sold in Australia last year.
These kind of growth figures — 62% year-on-year in the world’s largest car market — have attracted the attention of far more than just Elon Musk and Tesla.
The rapid growth may be distorted by government intervention, but that doesn’t mean there’s not big money to be made. Especially for companies that can solve EVs’ short range issues.
While a 200km range may be OK in congested cities, it’s a different story across most of Australia, the US, and swaths of Eastern Europe.
The Holy Grail for the EV market is to eliminate eight-hour recharge times and expand the potential driving range from a few hundred kilometres to thousands.
And that’s precisely what one small Aussie company is aiming to do.
My colleague Ryan Dinse recently profiled this stock over at his introductory investment service, Exponential Stock Investor.
If all goes to plan with the company’s EV charging patent, he expects its share price to rocket, potentially by as much as 1,148%.
Here’s what Ryan has to say about the technology:
‘This eye-popping battery discovery is something completely different and revolutionary. And arguably, vastly more important.
‘Thanks to a stunning breakthrough in chemical engineering, this ASX-listed company has hit on a genius way to “supercharge” the performance of any battery powered vehicle.’
Now a look at the markets…
Overnight, the Dow Jones Industrial Average closed up 329.74 points, or 1.27%.
The S&P 500 gained 32.79 points, or 1.16%.
In Europe, the Euro Stoxx 50 index finished up 33.67 points, or 1.00%. Meanwhile, the FTSE 100 added 0.52%, and Germany’s DAX closed up 155.95 points, or 1.35%.
In Asian markets, Japan’s Nikkei 225 is up 65.80 points, or 0.31%. China’s CSI 300 is down 0.05%.
In Australia, the S&P/ASX 200 is up 29.04 points, or 0.47%.
On the commodities markets, West Texas Intermediate crude oil is US$61.71 per barrel. Brent crude is US$69.01 per barrel. (More on oil below…)
Turning to gold, the yellow metal is trading for US$1,287.72 (AU$1,810.63) per troy ounce. Silver is US$15.11 (AU$21.25) per troy ounce.
One bitcoin is worth US$4,138.12. As you can see in the one-month price chart below (in US dollars), bitcoin continues to defy the naysayers and march stubbornly higher.
Click to enlarge
The 1.0% overnight rise puts bitcoin up 5.7% since Wednesday. And up 12.2% since its recent low on 5 March.
Bitcoin’s resilience and recent resurgence came as no surprise to our in-house crypto experts, Sam Volkering and Ryan Dinse. They not only forecast that bitcoin will regain its highs of 2017 but will…eventually…far surpass them.
To stay abreast all of Sam and Ryan’s latest crypto investing advice, click here for more.
In the world of fiat currencies, the Aussie dollar is worth 71.12 US cents.
Unthinkable only a few years ago
With WTI crude up another 2.2% since this time yesterday, you may be wondering what’s going on with that ‘flood of oil’ I’ve been banging on about.
Don’t worry. It’s still there. And I expect we’ll see it drive crude prices back down 10–20% from their current levels by July…if not sooner.
‘What started as an American phenomenon is now being felt around the world as U.S. oil exports surge to levels unthinkable only a few years ago…
‘Oil traders and shale executives believe U.S. crude exports are set reach 5 million barrels a day by late 2020, up another 70 percent from current levels. If the U.S. hits that target, America will be exporting, on a gross basis, more crude than every country in OPEC except Saudi Arabia.’
Even if OPEC+ manages to commit and stick to renewed output cuts through 2020 — which is doubtful — the cartels ability to manipulate global prices is waning fast.
But, for the moment, oil traders have again turned bullish on an improved global growth outlook (meaning higher demand for crude) and on a belief that OPEC+ will be able to extend their current cuts into the second half of 2019.
The Iranians, for one, share that optimism. As Bloomberg reports:
‘In Moscow on Monday, Iranian Oil Minister Bijan Namdar Zanganeh told reporters it “should be easy” to extend curbs into the second half of the year, after a meeting with Russian counterpart Alexander Novak.’
Maybe Novak broke out the vodka for his meeting with Zanganeh. But to date the Russians have been dragging their heels on any further output reduction commitments. And there was no corroboration from Novak that doing so ‘should be easy’.
Don’t forget that Donald Trump is once again upping his rhetoric that energy costs are damaging global growth prospects. Both Russia and the Saudis want warmer relations with the US. And Trump is their best bet to achieve that.
As Trump dials up the pressure I expect Saudi Arabia or Russia — or both — to blink in the leadup to their next planned meeting at the end of June.
In the leadup to that meeting, overly bullish expectations could see traders push crude higher from here. If you’re thinking about shorting oil, you might want to wait a few weeks.
That’s all for today.
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Finally, here’s the latest in politics from The Australian Tribune:
‘Trump Rebukes Globalists — Citizenship Matters!’
‘Viewed through the lens of radical left globalists, your citizenship isn’t worth the price of the paper it’s printed on.
‘And national borders should be relegated to the history books.
‘Just have a look at the hubbub in the US over adding citizenship status to the nation’s...’
If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.
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