Trump’s Critical Metals Plan Sparks a Rare Earth Rally

Rebels Edge – Market & Sports Update (February 5, 2024)

Key Concepts:

• Market Rebound: Discussion of a market recovery following a sell-off in gold, silver, and Bitcoin.
• Earnings Season: Analysis of current earnings reports and their impact on market sentiment.
• VIX (Volatility Index): Examination of the VIX’s movement and its implications for market stability.
• Prediction Markets: Utilizing prediction markets to gauge the likelihood and duration of a potential government shutdown.
• Critical Minerals & Rare Earths: Focus on the President’s plan to build a strategic stockpile of critical minerals and its impact on related stocks.
• NIL & Transfer Portal (College Football): Analysis of the disruptive effects of Name, Image, and Likeness (NIL) deals and the transfer portal on college football.
• Senior Bowl & NFL Draft Prospects: Review of standout players from the Senior Bowl and their potential in the upcoming NFL Draft.

I. Market Overview & Macro Analysis

The episode began with a contrast in weather conditions – John reporting from 85°F in Puerto Rico and Pete from a frigid Minnesota. The primary market focus was a rebound after a previous sell-off, particularly in gold, silver, and Bitcoin. Pete highlighted the ongoing earnings season, noting that despite bearish sentiment, many companies are exceeding expectations in earnings, revenue, and outlook. Specific companies mentioned included Amazon, Google, AMD, and Qualcomm, all of which are significantly influencing market direction.

The discussion touched upon the potential nomination of Kevin Walsh as Fed chairman, a point likely to be contentious with current Chairman Jay Powell.

II. Volatility & Technical Indicators

The VIX (Volatility Index) was a key technical indicator discussed. It had spiked to nearly 20 in the pre-market but quickly fell back below 17, settling at 16.50. Pete explained that a VIX of 16 suggests a potential 1% move in the S&P 500, aligning with the observed 0.5% movement during the day. He speculated the VIX could potentially drop into the 15s.

III. Government Shutdown Prediction Markets

John presented data from prediction markets regarding a potential government shutdown. The markets currently predict a 99% probability of a shutdown lasting between four and six days, a significant reduction from previous predictions of a 15+ day shutdown. This shift is attributed to the upcoming midterm elections and the Democrats’ desire to avoid a prolonged shutdown that could negatively impact their electoral prospects. John emphasized the reliability of prediction markets compared to traditional polls, as participants are investing their own money.

IV. Critical Minerals & Strategic Stockpile

A significant portion of the discussion centered on the President’s plan to create a strategic stockpile of critical minerals, mirroring the Strategic Petroleum Reserve. This includes rare earth elements like lithium, cobalt, manganese, and nickel, essential for defense, EVs, and various technologies.

The stock USA Rare Earth (USA) experienced a substantial increase, jumping $10 from $15.85. Pete illustrated the potential returns: a $1,000 share investment yielded a $10,000 profit, while a $1,100 investment in options generated a $6,000 profit. Critical Metals (CRML) was also highlighted as a stock with significant call buying activity.

Full disclosure was made regarding Mark and Pete’s board positions and investments in M2I, a rare earth play focused on the strategic mineral reserve.

V. Stock Specific Analysis

• Opera (OP): Opera experienced a significant surge after exceeding Q4 revenue guidance, projecting over $600 million in full-year revenue (a 26% increase from 2024). Pete advised against chasing the stock at its current price but recommended it for future consideration.
• Disney (DIS): Disney’s stock initially declined due to rising costs but recovered. Pete criticized the company’s expensive TV contract with the NBA, arguing it doesn’t hold the same value as an NFL contract. He pointed to LeBron James’ comments as an example of the disconnect between perception and reality.
• Ethereum (ETHU): Despite a 22% sell-off, John suggested this could present a buying opportunity, mirroring similar drops in gold and silver. He noted that forced liquidations were contributing to the sell-off and that a rebound could occur once this pressure subsides.

VI. College Football – NIL, Transfer Portal & Recruiting

The video segment featuring the case of Luke Felli, a linebacker who initially committed to Clemson but then flipped his commitment to Mississippi after receiving a larger NIL offer, sparked a discussion about the disruptive impact of NIL deals and the transfer portal on college football. Pete expressed concern about the lack of regulation and the potential for unchecked tampering. He noted that the current system allows players to essentially shop for the best financial offer even after enrolling in a school. John argued that the increased attention generated by these developments is ultimately beneficial for the sport, keeping it relevant year-round.

VII. NFL Draft & Senior Bowl Standouts

The Senior Bowl was discussed as a key event for NFL draft prospects. Pete highlighted several players who impressed, including:

• TJ Parker (Clemson): Edge rusher with exceptional strength and speed.
• Malachi Fields (Notre Dame): Wide receiver.
• Kaylin Black (Indiana): Running back.
• Caleb Banks (Florida): Offensive tackle, described as a dominant force.
• Zion Young (Missouri): Edge rusher, a rising prospect.

Pete also praised Texas Tech for producing several high-potential NFL prospects.

VIII. Personal Reflections & Tributes

Pete shared personal anecdotes about spending time with legendary college football coaches Tom Osborne and Lou Holtz. He praised Osborne’s commitment to developing character in his players and expressed sadness over Holtz’s recent admission to hospice care, acknowledging Holtz’s significant influence on his career as a two-year captain under Holtz.

Conclusion:

The episode provided a comprehensive overview of market conditions, technical indicators, and emerging trends in both the financial and sports worlds. The discussion highlighted the importance of staying informed about earnings reports, understanding volatility, and recognizing the disruptive forces shaping college football. The emphasis on critical minerals and strategic stockpiling suggests a growing focus on national security and supply chain resilience. The personal anecdotes added a human element, underscoring the importance of mentorship and the enduring legacy of influential figures in the world of sports.