Rare earth shares soar amid threats from China

Channel: Fox Business
Published: 05/29/2019 07:31 PM

Loup Ventures managing director Gene Munster discusses how the U.S.-China trade war may affect rare earth metals. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New York...

You know economic theory. That'S guided american-style capitalism is centered on the magic of comparative advantage, which isn't the same as being the best just being the most efficient. Now. For that reason, we've been told that everyone wins with free trade and to celebrate when other nations are willing to provide cheaper versions of stuff that we could also produce. Now, generally, i agree, bu ...
there are variables to this line of thinking and we are learning again today to hard way. You know years ago to the united states and other countries stop mining rare earth materials because well they were being produced so cheaply out of china. Well, this morning a talk of china, weaponizing rare earthmaterials, to hurt american companies and consumers again proves there are several ways to measure opportunity costs or what we give up in any trade relationship, and the conclusion is, there are greater benefits to a society than cheap stuff, Namely our jobs, physical and economic security and our independence joining me now to discuss loop ventures management director, gene munster, jean all of a sudden rare earth materials could be weaponized by the chinese and by the way they did this not too long ago with japan. Over a dispute, so it wouldn't be the first time charles. It would not be the first time - and this is the other edge of that sword when we think about comparativeadvantage - something that i too believe is important for trade equity and for raising the overall standard of living across the globe. But there are some consequences and what we're seen from beijing today is a perfect example of that, and ultimately this is the the the most current layer in this trade dispute and one that is going to have some consequences on some companies over the near term. Not necessarily the long term, though yeah i want to, i want to talk to you about the company that shortly, but to that point it's just right now, saber-rattling i mean i think china is smart enough to know they continue to push the envelope on this sort. Ofstuff and they run out the clock, you know supply chains if they move they're not coming back.

If they force us to do things like actually exploit our own reserves, then they'll never be able to sell us anymore. So that's a real calculated gambit on there part right now, isn't it it is, and it's a similar gamble that some of the u. s. is doing around agriculture too, as we increase some of the tariffs on or is trying to increase the some of the tariffs on Eggs going into china u. s. agriculture going into china the game. The chess match is very similar on both sides, and so this, of course, is china's leverage point here: anda big one. This is 80 % of rare earth materials that the u. s. uses least the tech industry comes from china. I'M glad that you pointed out there is a difference between rare earth that these are in fact abundant, and so over the long term, the the supply curve, the us would be able to find ways whether it's from outside of the us other countries. But i want to quickly emphasize something that's really to this topic.

Charles is i've recently spoken to a former us trade official and when two things were clear, one is that it is difficult to predict how this plays out. That was most clear. The second piece is that what china andthe us can both replace is supply side, so the us can find other ways to get these minerals. China can find other ways to get agriculture, but one thing that cannot be replaced is the us economy, the consumer, 5 % of the globe's population, but 25 % of the buying power. That, ultimately, is a greater leverage point for the u. s. in these discussions, and i i agree you a thousand percent when i hear folks suggest otherwise that china would simply find other customers. I just scratched my head and wonder: maybe if they found life on mars gene before i let you go, we got a minute to go. A lot of people think the semiconductors are thebest way to gauge the markets and economies, particularly global economies, semies. Obviously, in the eye of the storm here getting hit pretty good. What do you think about them? Near-Term? So i think that they're going to continue to be under pressure. I think that i would agree with that.

They'Re a great barometer in terms of how just the health of different economies are training. Ultimately, as i believe that longer term, once we get through some of this trade dispute, the semis are going to start to move higher. So near-term, charles answer, your question. I don't see any real catalyst to own these besides invidia, that's one company that i think has a particularly good positionbut longer-term. They continue to be good stories. Don'T jean! This is a great conversation. I'M glad you weighed in on it appreciated. Thank you very much.

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