It seems smuggling over the US-Mexico border is increasing, with more people trying to contraband one hot item into the US.
It’s not drugs…but eggs.
Yep, you heard right.
More Americans have been trying to smuggle chicken eggs across the border after egg prices shot up a whopping 60% in one year.
Seems that the culprit — along with inflation, of course — is an avian flu. Although, there are plenty of ‘chicken conspiracies’ getting around the internet…along with memes:
I know it’s a meme, but notice how wealth has shifted from paper money to physical things.
Welcome to the era of shortages, inflation, and supply disruption. We’ve been talking plenty here in Money Morning about scarcity. In fact, if you haven’t already, check out James Cooper’s ‘Age of Scarcity’ presentation.
But the main story this week revolves around the US Federal Reserve meeting and if they’ll give any indication on when they’ll stop raising rates.
Markets got some hope last night after the employment cost index, which is a measure of wages, increased less than expected in the fourth quarter.
As Ian Shepherdson from Pantheon Macroeconomics summed up, courtesy of the Australian Financial Review:
‘The key message here is that Powell’s oft-expressed fear of the risk of a wage-price spiral is no longer realistic.
‘Core private sector wage growth leads core-core CPI inflation, and the message now is clear: The Fed should not tighten further. The 0.25 per cent hike tomorrow is a done deal, but we are raising the chance of no hike in March to 70 per cent from 60 per cent.’
The expectation is that the Fed is getting ever closer to a pivot, and when it does, it could boost growth stocks. And here, there’s a massive story playing out…
2022 was a milestone year for investment in the energy transition
Investment into the energy transition keeps ramping up and, in this respect, 2022 didn’t disappoint.
Last year was a record year in investment into the transition with a total of US$1.1 trillion flowing into the sector, according to BloombergNEF:
Source: Bloomberg NEF
But what’s even more striking is that 2022 was also the first year where investments into the energy transition came head to head with fossil fuels. Global fossil fuel investments including upstream, midstream, downstream, and unabated fossil power generation were also US$1.1 trillion.
As BloombergNEF said:
‘Our findings put to bed any debate about how the energy crisis will impact clean energy deployment. Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute on transition plans. Investment in clean energy technologies is on the brink of overtaking fossil fuel investments, and won’t look back.’
One more thing about this…
While the largest sector in investment terms for the transition is still renewables, raking in US$495 billion in 2022, looking at the graph above, you can see the massive jump in electrified transport (in green).
Spending on electric vehicles and infrastructure came in at US$466 billion, or a whopping 54% increase year-on-year.
Not only is investment flowing in, but incentives are also starting to flow.
We could be on the verge of an EV price war
I’ve written plenty about the US inflation Reduction Act (IRA) and how The European Union is also looking at offering incentives so as not to fall behind.
Through the IRA, the US has now started offering tax credits for electric vehicle buyers…and we’re already starting to see some effects of these on the EV market.
A couple of weeks ago, Tesla announced it was cutting prices for some of its electric vehicles by up to 20%.
At the time, Tesla said it was slashing prices because it was passing on discounts to customers after prices fell on their supply chains. But the cuts also make their EVs eligible for the US$7,500 government tax credit.
Tesla has seen slower sales and has been losing market share, so cheaper prices could boost sales.
And last night, Ford followed.
Ford said it was dropping prices on their Mustang Mach-E electric SUV by as much as US$6,000, along with expanding its production capacity.
And we could see more automakers drop prices to compete…and more EV adoption.
Incentives and record amounts of investment are flowing into the energy transition, and this could make for an interesting year for renewable energy stocks…especially if the Fed starts wavering…
Editor, Money Morning