Germany Chancellor plans lithium deal with Serbia after Rio ruling
Olaf Scholz plans to visit Serbia this week to secure supplies of lithium that are critical for the nation’s energy transition and auto industry.
Veteran portfolio manager Don Coxe has identified an interesting economic trend that could explain the stalled equity-market cycle, David Parkinson noted in his investment column in last weekend’s Globe and Mail.
Coxe, chairman of Coxe Advisors LLC, re-introduces the concept of “stagflation” — an unsavory combination of high inflation and low economic growth — which hasn’t been used since the 1970s when inflation was running at double digits.
Coxe says that while current inflation is only running around 3% in North America, the key drivers of inflation in the 70s are also present in the present-day economy, that is, rising prices for food, fuel and metals.
Parkinson quotes Coxe:
“An OECD economic cycle in which prices of foods, fuels and precious metals rise far more strongly than prices of manufactured goods – or workers’ wages – is inherently stagflationary. A greater and greater share of total consumer spending goes to the commodity producers who own the farmland, the mines or the oil wells. The industrial and service-based economies find they cannot deliver the kind of strong, sustained, low-inflation economic growth that was the pattern for most of the postwar era.”
The theory is borne out when comparing the stock prices of the world’s biggest energy, mining and fertilizer companies, which have soared over the past decade, compared to high-tech stocks like Cisco Systems, which was the world’s most valuable stock in 1999 but has since stalled, notes Parkinson.
