🔋🔌 We Got Some Catching Up To Do
Happy Hump Day everyone,
Before we begin, hopefully you saw our Sunday edition of Hump Days. We wanted to let you know that the Sunday edition from now on will have more of a technology focus! Since I’m from the Bay Area (Silicon Valley), we thought it would be perfect to share with you what’s going on in the tech world, including new and upcoming tech and our opinions on startups and tech innovation!
This week, we saw Bill Hwang get arrested for fraud and racketeering, the FDA officially banned menthol cigarettes, Boeing lost out on $1.1B on Trump Air Force One contract, the Saudi economy is pumping thanks to the oil boom, Berkshire disclosed a huge stake in Activision, and Amazon continued to fight and win against the worker unionization effort.
Enjoy this week’s newsletter!
- Humphrey & Rickie
In the Markets
Featured Story
In 1848, it was the race for gold. In 1955 (and 2021 for a bit), it was the race to space. In 2022, we have the race for electric vehicle batteries… and it’s a race the United States is currently losing.
For years, the world’s biggest maker of electric car batteries, Chinese-owned CATL, received lavish subsidies and soft regulatory treatment from Beijing to ensure that China would hold the technology of the future.
Even before batteries are made and sold, Chinese companies hold much of the supply of raw materials. China has committed to spend at least 71B yuan ($10.8B USD) to scale battery component output; in some cases, tripling production capacity to completely take over a market they already dominate. In the case of Semcorp, the world’s leading supplier of battery separators, they aim to lift their global market share “from 31% in 2021 to 50% in 2025” according to their chairman.
While just a fraction of what China plans to spend over the next few years, the Biden administration announced a $3.1B plan to make EV batteries and components domestically in an effort to make the U.S. less reliant on foreign countries. The goal of this investment from the White House is to have electric vehicles make up over half of U.S. new vehicle sales by 2030. The problem with this goal, however, is that the U.S. has only about 5% of the manufacturing capacity needed to hit that target.
To make up that gap in EV battery infrastructure, Biden invoked the Cold War-era Defense Production Act in March to encourage the domestic mining, processing and recycling of lithium, nickel, cobalt, graphite and manganese. Additionally, the White House gave foreign companies incentives to build refining and manufacturing capacity in the U.S.
Much is left to be seen on the road towards clean energy independence. It’s going to take complex strategic moves to put in place the infrastructure required to achieve that dream; something that China has been doing for years in preparation for a time like this where the world would be forced to buy from them. This is truly the next frontier as we shift away from oil production, an industry that the U.S. and middle-east have dominated, and towards clean energy production.
We could talk for days about domestic EV battery production and the ethical and environmental dilemmas that the industry faces (and maybe we will one day 👀). In the meantime, enjoy the rest of the newsletter and reply to this e-mail with any questions if you have any!
Weekly News Roundup
Biden Administration Announces $3.1B Plan to Make EV Batteries in the U.S. (CNBC)
On Monday, the Biden administration announced that it will provide $3.1B in funding to support efforts to make electric vehicles batteries and components in the United States. In a separate release, the Department of Energy said an additional $60M will be available to support the reuse and recycling of used EV batteries.
HY: I still don’t drive electric, but my next car I will be highly considering an EV - better for the environment. Also, gas prices.
Twitter, in Possibly Last Quarterly Report, Sees User Growth (ABC News)
Twitter reported increased profit, revenue, daily active users in their latest quarterly report. The San Francisco tech company canceled a conference call with executives and analysts and cited the reasoning as Musk’s buyout. Given that the conference call was canceled, they offered little guidance on what to expect in Q2. Twitter has traded flat in the days following the report.
HY: Elon wants to take Twitter private, so we’ll see if that happens. It’s become more of a political story at this point, and we’re continuing to monitor what happens with Twitter and how it will affect their valuation/stock price.
U.S. Consumers Shrug Off High Inflation, Lean on Savings to Boost Spending (Reuters)
U.S consumer spending rose more than expected in March amid strong demand for services, while monthly inflation surged by the most in 16 years. Consumer spending, which accounts for more than 2/3 of U.S economic activity, surged 1.1% last month. The strength in consumer spending heading into Q2 put fears of recession on pause after the economy contracted in Q1.
RH: I’ve long heard that recessions are a psychological phenomenon. If the people think a recession is going to come, it will come. It seems as though the people do not believe a recession is imminent.
Chart of the Week
Coming into the historic Federal Reserve meeting today, many investors are increasingly worried about the state of the economy/market.
However, history says that stock market performance after interest rate hikes is actually pretty decent. Lots of fear out there but remember that it’s all a long-term game.
In Case You Missed It
This new content style is more investigative / journalistic. However, not many people on YouTube loved the fact that I was covering Logan Paul, a controversial figure in social media.