What could a tumultuous week at the White House, lithium batteries and tech company probes mean for you and your investments? (Reading time 3:30 mins)
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1. Trump wins some then loses some
Just when President Donald Trump thought he could finally rejoice over his first legislative victory since taking office, a former national security advisor pleads guilty to lying to the FBI.
The US Senate passed the Republic tax bill that includes a decent slash in corporate taxes – good news for Trump. However, Michael Flynn’s guilty plea regarding conversations he had with Russian Ambassador to the US – not so good.
What does this mean if you’re invested in the stock market?
The approval of tax cuts is good news for investors. Lower taxes usually mean profitable companies will have more money to invest for growth, and provide larger dividends to shareholders.
The tax cut news should help drive the stock markets even higher despite the growing political uncertainty that comes with any investigations into Russia’s meddling in the US elections – particularly those involving Trump’s inner circle.
What does this mean if you’ve invested money with AtlasTrend?
We have a simple rule: don’t bet on Trump and don’t bet against Trump. We believe the best way to do this is to invest in companies that are set to do well in the long term regardless of prevailing political risks.
For example, whether Trump is President or tax cuts become a reality is unlikely to have a huge impact on how Amazon’s business performs globally in the next 10 years. Most of Amazon’s performance is driven by the change in consumers worldwide shifting their shopping habits online.
2. World’s largest battery hits South Australia
South Australia is now home to the world’s largest lithium ion battery courtesy of Elon Musk and a thread of tweets between a couple of billionaires.
The state received Tesla’s mega-battery one day ahead of the 100-day deadline Musk had imposed – otherwise it would have been free.
It’s a major win for South Australians and will hopefully shake up the country’s energy market, which has been in a shambles this year.
What does this mean if you’re invested in lithium shares?
Share prices of lithium miners have done well over the past couple of years, mainly driven by increasing forecast demand as more car manufacturers announce plans to electrify their vehicles.
The other large-scale potential uses of lithium batteries is for power storage like the mega-battery in South Australia. They are ideally suited to store renewable energy (solar, wind) which unlike traditional fossil fuel energy sources, can’t continuously generate electricity throughout the day.
However, it isn’t all good news. Scientists are already working on new battery technologies that have greater capacity and are safer than lithium.
What does this mean if you’ve invested money with AtlasTrend?
We believe the green energy revolution extends far beyond lithium.
Our investment team have been conducting deep research into this area, with a view of launching a clean disruption fund soon that can invest across a number of key industries such as renewable energy generation, battery technology, electric cars etc.
We believe it could be one of the most transformational trends over the next 10 years as it will fundamentally change the way we generate and use energy around the world.
3. Facebook and Google under investigation
The Australian Competition and Consumer Commission (ACCC) has launched an investigation into Facebook and Google’s effect on Australia’s media industry.
They will attempt to ascertain whether the market power of these tech giants is putting traditional publishers at a disadvantage.
What does this mean if you’re invested in Facebook or Google’s parent company Alphabet?
In short, no material impact. Australia is a small market for Facebook and Google relative to their global operations.
What is more interesting for investors in more traditional Australian media companies is that it highlights the huge threat to their business. If you’re invested in these companies, you may want to look at how Facebook and Google might impact your investment returns.
What does this mean if you’ve invested money with AtlasTrend?
Some of our managed funds are invested in Facebook and Alphabet.
As these technology giants continue to grow their size and market share, they will come under greater government scrutiny around the world.
We keep a watch on this as it is one key risk which can potentially derail their success over the longer term if major governments (like the US and EU) try to curb their market power.
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