Why Mining is Essential: Infographic

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Mining is critical to the province of Ontario in Canada. According to Ontario Mining Association, mining contributed over C$8.0 billion to GDP in 2021. The industry employed about 31,000 workers in direct employment. Many other interesting facts about the industry are in the above link.

In addition to the economic benefits, the mining of metals and minerals is also important for the well-being of the people not only in the province but also everyone around the world. I came across the following infographic showing how various metals are used in everyday items and functioning of our society. For example, who knew gold was a critical component in Covid-19 test kits.

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Source: Ontario Mining Association

Related ETF:

  • SPDR Gold Trust (GLD)

Disclosure: No positions

The Top 100 Arms-Producing and Military Service Companies, 2022

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The weapons industry is one of the major industries in the world. In some countries the industry accounts for a significant portion of the economy in terms of revenue, jobs and so forth. In the U.S. for example, defense companies are a source of employment for hundreds and thousands of workers. Similarly in developed Europe, thousands of workers are employed by defense firms. In addition to the need to fight terrorism, the onset of the Russia-Ukraine war in 2022 have made these firms even more critical to countries around the world.

From an investment perspective, many defense stocks offer steady growth and decent dividends. One way to identify firms in this sector is to review the top 100 companies in the world published Sweden-based SIPRI each year and identify potential firms to research. The 2023 report was release late last year with data from 2022.

The following are some key excerpts from the report:

  • The arms-revenue from the top 100 companies totaled $597 billion in 2022, a decrease of 3.5% in real terms from 2021.
  • Though the Russia-Ukraine war increased he demand for the products produced by these firms, supply chain issues, labor shortages, cost of materials and other factors adversely impacted their production capacity.
  • The total arms revenue of the 42 US companies in the list was $302 billion.
  • Only two companies from Russia are in the list since many don’t publish data.

The Top 100 Arms-Producing and Military Service Companies, 2022:

Source: SIPRI

Some of the firms listed in the above list include:

  • Lockheed Martin Corporation (LMT)
  • Boeing Co (BA)
  • Northrop Grumman Corporation (NOC)
  • General Dynamics Corporation (GD)
  • L3Harris Technologies, Inc. (LHX)
  • Raytheon Technologies Corporation (RTX)
  • BAE Systems PLC (BAESY)
  • Airbus Group SE (EADSY)

It remains to be seen if defense stocks would have another great run this year. As with the overall market, defense stocks are also richly valued now. So investors may want to wait for pullbacks and add in a phased manner.

Disclosure: No positions

How Do Canadian Stocks Perform After Market Crashes: Chart

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Equity markets do not always go up forever. Just like bull markets market crashes are also a feature of equity markets. However the good news is that stocks generally tend to recover after bear markets. So the trick for investors is not to sell out in panic when equities decline. Investors who are able to stomach the pain during bear markets and hold stocks for the long-term reap solid returns when stocks recover.

The following chart shows this concept in action in Canadian stocks. Similar to other developed markets, Canadian stocks also tend to return to growth after market crashes. The returns after 5-years for the three crashes shown above are indeed surprising.

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Source: Ontario Securities Commission

Related ETF

iShares MSCI Canada Index Fund (EWC)

Disclosure: No positions

Trade Between the EU and US: Infographic

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Trading between the European Union (EU) and the USA in goods and services is one of the largest between major trading blocks. For instance, in 2022 the EU exported more goods to the US than it imported from the US. The below infographic also shows that generally between these two partners have increased over the years.

Since the start of the Russia-Ukraine war, the EU has become a major market for American oil and gas exports.

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Source: The Council of the EU and the European Council

Mexico Has Become The Top Trade Partner of the US

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One of the beneficiaries of the phenomenon of “friendshoring” since the covid-19 pandemic has been our Southern Neighbor Mexico. Friendshoring is the concept of growing trade with friendly countries. When supply-chain issues became a major problem for companies recently many opted to try friendshoring by locating plants closer to home in nearby countries as opposed to all the way across the globe in China.

Mexico has traditionally been one of the major trade partners of the US due to its location. For years China was the top trading partner with Canada and Mexico always behind. That changed in 2023 when Mexico was the top trade partner of the US as shown in the chart below:

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Source: Friendshoring brings industrial-sized investment opportunity, Capital Group

In terms of products exported by Mexico the US, most are finished goods. For instance 75% of all autos assembled in the country are exported to the USA. World’s major auto makers such as Ford(F), General Motors(GM), BMW, Daimler, Toyota(TM) and Honda(HMC) have operations there. Recently EV-champion Tesla (TSLA) announced its plan to open a plant in Santa Catarina, near Monterrey in Mexico. The chart below the top export products from Mexico the US and vice versa:

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Source: Friendshoring brings industrial-sized investment opportunity, Capital Group

Manufacturing industry labor costs are lower in Mexico than China and Auto workers in Mexico also earn less those their counterparts in China. Hence the wage factor in addition to location and others are a big advantage to Mexico. As the chart above shows, Mexico is also a big exporter of other goods such as computers and appliances as well.

From an investment perspective, Mexico is an excellent choice for investors looking to profit from its booming economy. Currently about a dozen Mexican firms are listed on the US exchanges and a few trade on the OTC market.

Disclosure: No positions