Category: Critical Materials

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First Wave of Gulf War Hits CPI

Key Points

  • CPI jumped by almost 0.9% in March, fueled by a steep rise in crude oil prices.
  • A 21.2% jump in gasoline prices accounted for nearly three quarters of the monthly ​CPI increase.
  • We expect further waves as rising costs reach agriculture, mining, and transportation before filtering through to the broader economy.
  • The S&P 500 stalled at 6800.
  • University of Michigan consumer sentiment plunged to its lowest level since the late 1970s.

The first wave of price hikes hit CPI in March, with the index jumping 0.865%, fueled by a steep rise in crude oil prices driven by the war in the Persian Gulf.
CPI & Core CPI - Monthly

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Jobs Rise but Prices Soar, Growth Slows and Liquidity Tightens

Key Points

  • Non-farm employment jumped by 178,000 in March, well above the expected 60,000.
  • The unemployment rate declined to 4.3%.
  • Growth in aggregate hours worked, however, slowed to 0.4% over the past year.
  • The ISM Manufacturing Prices index jumped to 78.3%, warning of a price shock.
  • Aluminium prices soared to nearly $3,600/tonne due to supply shortages caused by the war in the Persian Gulf.
  • Brent crude closed the week at $109 per barrel, with no end to the Iran war in sight.

The BLS reported a 178,000 increase in non-farm payroll in March, well above the 60,000 forecast. Employment growth has been erratic, averaging less than 15,000 over the past 6 months.

Employment Growth

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Critical Materials – projected supply gap

Two interesting tables from ZeroHedge. First, is the projected increase in supply of key critical materials needed to achieve global net zero increase in CO2 emissions (NZE) by 2040:

Critical Materials - Expected Supply Shortage to achieve Net Zero by 2040

Second, is the expected supply shortfall by 2030:

Critical Materials - Expected Supply Shortage to achieve Net Zero by 2040

Industrial Metals are currently in a bear market, with DJ Industrial Metals Index ($BIM) testing long-term support at 150. Breach would offer a target of 110.

DJ Industrial Base Metals

Conclusion

Now may not be an opportune time to accumulate critical materials stocks but keep watch. Sooner or later, demand growth is likely to resume — as electrification and EV sales grow — leading to a supply shortfall as projected in 2030 above.

Acknowledgements

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Technology-critical elements

Technology-critical elements (TCEs) are elements for which a striking acceleration in usage has emerged, relative to past consumption, and which are critical to emerging technologies.

Wikipedia provides a useful list:

Rare-earth elements (REEs)

In atomic order:

Light (LREEs)

  • scandium
  • yttrium
  • lanthanum
  • cerium
  • praseodymium
  • neodymium
  • promethium

Heavy (HREEs)

  • samarium
  • europium
  • gadolinium
  • terbium
  • dysprosium
  • holmium
  • erbium
  • thulium
  • ytterbium
  • lutetium

Platinum-group metals (PGMs)

  • iridium
  • osmium
  • palladium
  • platinum
  • rhodium
  • ruthenium

Other elements

  • antimony
  • beryllium
  • caesium
  • cobalt
  • gallium
  • germanium
  • indium
  • lithium
  • niobium
  • tantalum
  • tellurium
  • tungsten
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