Animal Spirits

Rare Earth ETF Commentary Highlighting Global Supply Shift

"This episode is brought to you by VANC. Rare earth metals are the hidden backbone of modern technology and defense, powering everything from smartphones and electric vehicles to fighter jets and wind turbines. Van recognized this early, launching the rare earth and strategic metals ETF, ticker RMX, 15 years ago, well before supply chain security became a global priority. Today, China dominates the production and refining capacity of rare earths, creating real challenges for the global supply security. As these materials are essential for technological innovation, clean energy, and national security, that's why countries around the world are racing to build their own supply chains and reduce reliance on China. As this global shift continues, investment in the rare earth ecosystem is growing rapidly from mining to advanced manufacturing. Investors can access this powerful trend through REMX. Visit van.com/remx compound to learn more."

The transcript opens with an advertisement for VANC, highlighting their early launch of a rare earth and strategic metals ETF (ticker RMX). The speaker underscores the global shift driven by the geopolitical dominance of China in rare earth production and outlines the increasing importance of securing domestic supply chains to support technological innovation and defense. This commentary emphasizes a bullish outlook on the rare earth sector and positions the ETF as a means for investors to tap into this trend.

AMX Positioned for Strong Growth in a K-Shaped Economy

"AMX, uh, AMX is just in the absolute sweet spot of this K-shaped economy. They are a premium product for premium spenders and they are killing it. Their total build business shows 6% to 8% year-over-year growth. Goods and services, as well as travel and entertainment, are up 9% and 8% respectively this quarter. Look at the year-over-year growth among younger demographics: Gen Z is growing at 39%, while millennials are growing at 12% compared to baby boomers at only 4%. Moreover, millennials now represent 30% of total spending, surpassing baby boomers. How crazy is this?"

The speaker offers strong company commentary on AMX, noting robust year-over-year growth across various business segments. The metrics indicate that AMX is capturing an increasing share of spending among younger consumers, suggesting a bullish outlook for the company in a K-shaped economy.

Company Commentary: Delta Airlines' Dominance in the Industry

"Delta is now 60% of the industry's profits. Kind of wild. They're killing it. I mean, they're by far the best airline. It's not even close, right?"

The speaker highlights Delta Airlines' impressive performance, noting that it now captures 60% of the industry's profits and is regarded as the best airline. This commentary underscores Delta's dominant market position and conveys a strong, positive outlook on the company.

Company Commentary on Costco's Expanding PE Multiple

"I did some research over the weekend. Um, and the PE of Costco going back to the start of the 21st century was around 20. Then it just exploded higher, got as high as 60 earlier in the year. I think it's not solely because Costco is suddenly massively more profitable; rather, it’s a combination of modest margin tailwinds, emphasis on modest growth in e-commerce and international scale, the strength and stability of the membership model, a premium multiple for perceived defensive qualities, and investor rerating dynamics."

The speaker provides detailed commentary on Costco's valuation, noting that its PE ratio has expanded from around 20 to as high as 60. The commentary stresses that this increase isn’t driven by a marked improvement in profitability, but by various qualitative factors such as margin tailwinds, e-commerce growth, and a stable membership model. This adds investor color to the stock without making a direct trade call.

Target Underperformance Highlights Execution Issues

"I pulled up Target, Walmart, and Costco over the last five years. Now, maybe this is just an inflation story, but Walmart and Costco have been phenomenal stocks for this decade. Target has gotten smoked."

The discussion compares the performance of key retail stocks where Target, down 33% this year, is lagging while Walmart and Costco continue to perform strongly. The commentary suggests that Target's underperformance may be a result of execution issues rather than a mere inflation story.

Nvidia Valuation and the AI Bubble

"With like Nvidia, let's just say the poster child of this era. It's trading at I don't know what is it trading at 35 times forward earnings. If you look out to 2029 ... there's no world in which these numbers make sense."

The speakers discuss Nvidia's high forward earnings multiple, suggesting that the current AI boom may be inflating valuations to bubble territory. There is a cautionary tone regarding whether the sector can sustain such high valuations amidst a backdrop of strong fundamentals and excessive spending.