But to grow that food, Brazil depends on other nations for its most essential fertilizer — a mineral called potash.

In fact, Brazil imports about 98% of this critical nutrient from tens of thousands of miles away.

When the USA sanctioned Belarus in 2021 followed by Russia invading Ukraine in 2022, however, it exposed how fragile this supply chain really is.

Since Russia and Belarus control over 40% of the world’s potash supply, prices for fertilizer quadrupled almost overnight when the conflict began. 

One solution may lie in an ancient ocean in Brazil’s state of Amazonas.

As the waters of the failed ocean receded, they left behind vast deposits of salt. 

As a result, one of the world’s largest deposits may sit right in Brazil’s backyard.

Brazil Potash, a Canadian-incorporated mining company, is working to develop this massive basin — one which could change how the world’s largest food producer gets its most essential fertilizer.

A Basin Hiding in Plain Sight

The large deposit was first discovered back in the 1980s by Brazil’s state oil company, Petrobras.

While they were drilling for oil at that time, what they found instead was a basin potentially stretching 250 miles long by 93 miles wide containing vast deposits of potash.

A potash basin in Saskatchewan, Canada currently supplying a substantial portion of global potash today is currently being processed by several of the world’s largest resource companies like Nutrien, the Mosaic Company, and very soon BHP.

The basin in the state of Amazonas, on the other hand, is an untapped resource that’s been almost completely overlooked to date.

The location of the deposit also offers a rare combination of advantages.

The project sits just 5 miles from the Madeira River, a major transportation artery. 

That would help Brazil Potash solve one of the biggest challenges in delivering fertilizer — getting the product to farmers both quickly and cost-effectively.

It’s also approximately 100 miles southeast of the city of Manaus, a manufacturing hub of 1.7 million people. That means access to a skilled workforce and modern facilities.

The processing of the fertilizer is remarkably simple. It uses only hot water to separate the potash — no chemicals are required. 

Large sections of the processing plant can be built in Manaus’s climate-controlled warehouses and then moved by river barge to the site.

This prime location also means Brazil Potash can connect directly to the same transportation networks already used by major Brazilian farming companies.

Instead of waiting over 100-plus days for shipments from overseas suppliers, Brazil Potash’s management believes that farmers could receive their fertilizer in just 3 days.

When Markets Shifted Overnight

When the USA sanctioned Belarus in 2021, followed by Russia’s invasion of Ukraine in 2022, potash prices jumped from $300 to nearly $1,200 per ton almost overnight.

The impact reached far beyond fertilizer markets though. Rising fertilizer costs meant higher food prices worldwide, from wheat in Europe to soybeans in Asia.

For Brazil, the stakes were particularly high. Their farmers consume over 20% of the world’s potash, and their demand is growing much faster than the global average.

These farmers depend on suppliers from tens of thousands of miles away — mainly Russia, Belarus, and Canada — for approximately 98% of their potash.

Brazil’s government saw the warning signs. In 2022, they launched their National Fertilizer Plan with a clear goal: cut import dependence nearly in half by 2050.

Brazil Potash could play a key role in the shift. With production happening in Brazil, their projected cost to produce and deliver potash will be lower than the transportation cost alone for imported potash from competitors overseas. 

Source: Brazil Potash Prospectus 

This cost advantage doesn’t come from special technology or higher-grade deposits though.

It comes from simple geography – controlling this massive potash deposit located directly where the farmers need it most.

Beyond the First Discovery

While the basin’s location creates some obvious advantages, the sheer size of the basin could be even more important.

Brazil Potash expects production of the project to reach around 2.4 million tons of muriate of potash annually — enough to supply nearly 20% of Brazil’s current needs.

Estimates project that they could continue at that rate for up to 23 years or even potentially longer. 

But that’s just the beginning of what this basin could deliver. If all goes to plan, the company could potentially expand to two more deposits directly adjacent to them.

Major players are already taking notice.

Franco-Nevada Corporation, one of the world’s most successful mining investment companies, has signed on as a cornerstone investor.

The Amaggi Group, one of the world’s largest private soybean producers with nearly $10 billion in annual revenue, has committed to a major offtake agreement.

The economics make it clear why these sophisticated players are getting involved.

The infrastructure is already in place to expand production significantly.

And with Brazil’s potash consumption projected to grow much faster than the global rate each year, the potential could be crucial for Brazil’s growing needs.

World-Class Mining with Local Leadership

With so much potential at play, Brazil Potash has brought on a world-class team to bring their plan to fruition.

Mayo Schmidt, who helped build Nutrien into the world’s largest potash producer with approximately $23 billion market cap, has agreed to chair Brazil Potash’s advisory board.

He’s joined by the former Attorney General of Brazil, the former Minister of Agriculture, and the former Senator of the largest farming region in Brazil among others.

The project has received a rare “Project of National Importance” designation from the government, while also gaining over 90% support from local indigenous communities.

Now, after years of preparation, Brazil Potash is ready to bring this asset into production.

The Path Forward

As global supply chains continue to shift, Brazil Potash stands at a pivotal moment.

• The Amazonas project has received all major permits to begin construction.
• They’ve already secured major offtake and transportation agreements with some of the biggest names in the industry.
• Plus, with multiple development catalysts on the near horizon, the project is projected to move toward production quickly.

The company’s agreements with major players like Franco-Nevada and Amaggi have already signaled what industry leaders are seeing in this property.

The timing couldn’t be more critical. The world needs 45% more food production by 2050 to feed a growing population.

Brazil, with its year-round growing season and abundant water, is uniquely positioned to help meet this challenge.

That’s why Brazil’s government has made domestic potash production a national priority, and why this ancient ocean basin could be key to feeding a growing world.

By. Stacy Graham

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Environmental factors include a company’s impact on the environment, such as its carbon emissions, resource usage, and waste management. Social factors include a company’s relationships with its employees, customers, and communities, as well as its impact on human rights and labor practices. Governance factors include a company’s management structure, board diversity, executive compensation, and shareholder rights. 

ESG investing seeks to balance financial returns with social and environmental responsibility. It aims to invest in companies that are sustainable and ethical, and avoid investing in companies that have a negative impact on society and the environment. 

ESG investing has gained popularity in recent years as more investors recognize the importance of considering non-financial factors when making investment decisions. It is also seen as a way to influence companies to adopt more responsible practices, as investors can use their investments as a way to pressure companies to improve their ESG performance.

Characteristics of ESG Exchange Traded Funds (ETFs)

ETFs in the ESG space are careful about screening out companies that don’t score well for the 3 main pillars of ESG Companies.  The ETHO Climate Leadership US ETF (ETHO), for example, screens out any companies associated with fossil fuels, tobacco, weapons and gambling companies, according to a report in US News and World Report.

ETHO Daily Chart (Tradingview)

Other  ESG ETFs mirror the same performance of ETHO, Some of them include:

• VanEck HIP Sustainable Muni ETF (SMI) 
• AXS Change Finance ESG ETF (CHGX)
• Nia Impact Solutions Fund (NIAGX)
• Democracy International Fund (DMCY)
• AXS Green Alpha ETF (NXTE)

Before you consider investing in any ETF, make sure to thoroughly research the fund’s mission and performance.

We will continue to keep an eye on the ESG sector in future reports.

The post <strong>What to Know About ESG Investing in 2023</strong> appeared first on Global Investment Daily.

This is democracy in action, and it’s exactly what Robinhood intended, even if its makers did not foresee COVID-19, a global lockdown and a rather abrupt piling in to stocks by amateur investors. 

The popularity of the app has led to what has since become known as the “Robinhood effect”–a phrase coined when the stock market, which tanked at the beginning of the pandemic, suddenly rallied within weeks, with some stocks hitting all-time highs. While there are plenty of theories floating around out there, the most popular is these young, inexperienced investors under stay-at-home orders started investing in droves, via Robinhood–and their stock picks defy traditional “logic”. 

Wall Street is now obsessed with “Robintrack”, which shows which stocks retail investors are pouring their money into. The Robinhood hot list, or leaderboard, has become a must-view document for hints as to market sentiment that isn’t necessarily driven by fundamentals. And the “leaderboard” isn’t a service offered by Robinhood itself; rather, it was a project created by a college student in 2018. 

But in this case, full-on trading “democracy” didn’t come about by any political change of heart by anyone. 

A huge catalyst has been the pandemic, and plain and simple boredom. 

As such the rise of retail investing can in many ways be chalked up to plenty of free time on the hands of young people who have a bit of cash, are thinking of the future, but have no real knowledge of how to invest. 

And they also have no fear of going against the grain and playing contrarian–even to legendary investors such as Warren Buffett or Carl Icahn. They also don’t feel the need to seek guidance from investment advisors. In the age of plentiful information, they’re happy going it alone. 

But there is also a potential “gaming” or “gambling” element to all of this, made much more alluring by zero-fee trading. 

The Market Has A New Driver Behind the Wheel

It’s hard to say exactly how much influence these new retail investors have on the market, or how much their influence has increased during the pandemic.  

But there are plenty of clues as to why Wall Street should be wary. 

A JPMorgan study released in August 2020 noted that the most popular Robinhood stocks tend to outperform their less-traded counterparts, which suggests that whether these amateurs know what they’re doing or not, they are indeed driving the market. Their lucky guesses and gut instincts are infectious.

The study found that as a stock increases in popularity on Robinhood, its returns outperform its less-popular peers on a one-week and one-month basis. 

JPMorgan also found that small and mid-cap companies (not large-caps) experience a bigger impact from the piling in of Robinhood users. 

The final opinion of the bank was that the Robinhood data “demonstrates the long-term persistence in individual trader behavior”. In other words, this rising class of young retail traders scoffing at the traditional ways are having a huge impact on the market. 

Wall Street was taken off guard, but in short shrift found the new game to play. Using the Robintrack leaderboard, according to Jim Cramer, Wall Street traders started stepping in pre-market to bid up stocks that ‘Robinhooders’ would like, then attempting to flip them to these young investors when the market opened, in the newest money-making game.  

But Robinhood is about democratizing the trading world, and since Wall Street became so obsessed with Robin Track, the zero-fee app has clamped down. It’s not sharing trading data with third parties anymore.

The app previously offered a stock popularity data feature, and anyone could view it. But in August, it turned that off. 

The giant hedge funds may be critical of these young investors piling into stocks that have even gone bankrupt, but they are hungry for Robinhood data because they are using it to drive their own returns, which speaks to the app’s incredible importance at this watershed moment in market history. 

What New Retail Investors Want

The average new retail investor isn’t likely to pour through the quarterly financials of their favorite stock pick. 

Instead, they consider wider trends, what will make an “impact”, what’s popular on Robinhood, and … ultimately, what’s cheap. 

They bought bankrupt Hertz and JCPenney even when everyone else was bailing because they were cheap and they saw the “bottom” for a rebound. They bought airlines in a bet against Buffett. They even bought cruise lines during lockdown. 

While they prefer renewable energy, they tend to add a single oil stock to their portfolio, which lately has been Marathon Oil (NYSE:MRO)–again, because it’s the cheapest major out there and looks like it could be flush with cash fairly soon, which suggests a bigger upside if oil prices climb. 

The bottom line is this: Whatever you thought you knew about the market has been upended. There’s a new force in town, and it’s young and doesn’t want your advice, which means that hedging on the next stock to rally requires getting into the head of the 30-something stay-at-home Robinhood investor. 

The post RobinHood and the Rise of Retail Investing Under COVID-19 appeared first on Global Investment Daily.

For decades, megatrends have always set the stage for winning investments, whether they involved technological revolutions, government driven regulation or population demographics. 

This has certainly continued to ring true with ESG investing, and not even the Covid-19 pandemic has been able to slow down the momentum. In fact, quite the opposite. 

Over the past half decade, ESG (Environmental, Social and Governance) has emerged as the new global megatrend, muscling out its own space and even outcompeting other megatrends. Every year, more than $3 trillion in new global funds have been flowing into the $30 trillion ESG market--and even the Big Banks are feeling the ethical squeeze keenly.

Bank of America has named climate change and moral capitalism as two of the 10 megatrends that will dominate the 2020s.

And now, many investment banks won’t even touch fossil fuels, especially coal, with a 10-foot pole.

Warm Moral Glow (But Making Money Helps)

Last year, no less than 26 banks announced they would no longer finance new coal plant projects anywhere on the planet, while another 22 banks pledged to stop direct financing for new thermal coal mine projects.

Leading up to the 2015 Paris climate talks, Goldman Sachs, Citigroup, JPMorgan Chase, Bank of America, Wells Fargo, and Morgan Stanley aka the Big Six all pledged to freeze financing for coal projects especially in the developed world or lower their credit exposure to coal miners. 

They weren’t just paying lip service to climate change, either. 

Last year, Goldman Sachs made history after becoming the first Wall Street bank to use its fat wallet to renounce fossil fuel investments. GS ruled out financing any new oil exploration or drilling in the Arctic, as well as financing any new thermal coal mines anywhere in the world. Goldman declared climate change as one of the “most significant environmental challenges of the 21st century” and has pledged to invest $750 billion over the next decade into areas that focus on climate transition.

In April 2020, Citigroup pledged to stop financing thermal coal miners by 2030, while Germany’s largest lender, Deutsche Bank, vowed to cut ties with any banks that continued to derive more than half their revenues from the coal industry by 2025.

They are in good company, too.

In January 2020, BlackRock Inc.(NYSE:BLK), the world’s largest asset manager with more than $7 trillion in assets under management (AUM), pledged to grow its ESG and green portfolio from $90 billion to more than a trillion dollars over the next decade.

But ESG is no longer merely associated with a warm moral glow and second-rate returns.

Green investing can be a serious money-spinner, too, as the red-hot renewable energy, EV and hydrogen sectors are proving: All three continue to handily outperform the global equities and bond markets.

The scary thing is that the ESG drive has actually been gaining momentum during the Covid-19 pandemic. 

According to research provider ETF Flows via MarketWatch, $15 billion in new funds flowed into ESG funds during the first half of 2020, or 40% faster this year compared to a year ago.

During the first quarter of 2020, a good 10-out-of-12 ESG-focused index funds that were surveyed outperformed the S&P 500, while all 11-out-of-11 foreign-based ESG funds have trounced their respective international benchmarks.

#1 Renewable Energy

The Covid-19 pandemic has taken a heavy toll on the fossil fuel sector and accelerated the shift from coal and oil to renewables like wind and solar.

Widespread lockdowns have resulted in energy demand plummeting: Oil demand fell by 30 million barrels per day at the height of the lockdowns, equivalent to 30% of pre-crisis demand evaporating. A new report by the International Energy Agency (IEA) states that global energy demand is set to plunge 6% Y/Y in 2020, roughly the same as losing the entire energy demand of India.

And there has never been a worse time to be invested in fossil fuels, with companies in the space recording massive asset write-offs and a growing pile of stranded assets. Consequently, fossil fuels’ most popular benchmark, the Energy Select Sector Fund (XLE), has lost nearly 36% in the year-to-date despite paring back much of its earlier losses after the epic oil price crash that sent oil prices into negative territory for the first time ever.

Source: CNN Money

Coal stocks are absolutely getting mauled: The sector’s best-known name, Peabody Energy Corp. (NYSE:BTU), has tanked 70.2% since the beginning of the year and 85.3% over the past 12 months.

Source: CNN Money

The good part: The renewable energy sector has been gleefully bucking this trend, thanks to continuing healthy growth in the midst of the storm.

The IEA has reported that renewable electricity generation increased 3% during the first quarter thanks to a flurry of new wind and solar PV projects coming online. Renewables now contribute 28% of global electricity generation up from 26% at the beginning of the year.

Not surprisingly, renewable energy stocks have been flying: The sector’s favorite benchmark, the iShares Global Clean Energy ETF (ICLN), has tucked on gains of 36% in the year-to-date and nearly 50% over the past 12 months compared to a 4.7%  gain by the S&P 500.

Source: CNN Money

Invesco WilderHill Clean Energy ETF (PBW), an ETF designed to track US-listed stocks in the Clean Energy sector, has returned 54.1% YTD and 78.7% over 52 weeks.

Source: CNN Money

The solar sector has been doing gangbusters, with the Invesco Solar ETF (TAN) up nearly 70% YTD, with some of its top stocks up in triple-digits:

• SolarEdge Technologies (NASDAQ:SEDG)– 127.3% YTD Return
• Enphase Energy (NASDAQ:ENPH)–173.1% YTD Return
• Sunrun Inc.(NASDAQ:RUN)–228.8% YTD Return

Source: CNN Money

#2 Hydrogen Fuel Cell Stocks

After several false dawns, the hydrogen sector has suddenly come alive with a bang.

Back in June, the European Union outlined its ambitious new hydrogen strategy that will help companies in the region achieve carbon neutrality by 2050. Among other things, the EU pledged to build 40 gigawatts of electrolyzers by 2030, which works out to 160x the current global capacity of 250MW.

Meanwhile, the U.S. Department of Energy recently announced its first hydrogen investment dubbed the H2@Scale initiative whereby it will invest $64 million in a handful of companies to undertake hydrogen research projects.

The hydrogen bug has bitten even energy utilities, with renewable energy giant, NextEra Energy Inc. (NYSE:NEE), recently talking up plans to convert its natural gas plants to run on hydrogen.

Predictably, hydrogen stocks have become hot property: Plug Power Inc. (NASDAQ:PLUG) +235.3% YTD, Ballard Power Systems (NASDAQ: BLDP) has racked up YTD gains of 100.4% while Bloom Energy Corp. (NYSE: BE) is up 76.6% over the timeframe.

That said, one Wall Street analyst has warned of a hydrogen bubble.

#3 EV companies

Just like hydrogen fuel cell makers, investors can’t seem to get enough of EV companies, thanks in large part to the successes of the leader in the space, Tesla Inc. (NASDAQ:TSLA), as well as the ESG boom.

TSLA stock has surged 268% this year and a staggering 570% in 12 months, giving the company a market cap bigger than General Motors (NYSE: GM), Ford Motor Company (NYSE: F), and Fiat Chrysler Automobiles US (NYSE: FCAU) combined. 

Indeed, TSLA has run up so much that the company has announced a five-for-one stock split. That has, ironically, sparked off yet another rally presumably because the shares are now more affordable, never mind the fact that’s a moot point in this era of fractional trading.

Investors appear thrilled that Tesla has continued defying Wall Street’s bearish expectations. During its latest earnings call, the Palo Alto, California-based EV manufacturer delivered 90,650 vehicles vs. 83,000 units that Wall Street had chalked in for the company. That’s a remarkable feat given the Covid-19 backdrop;  but more importantly, it’s also proving that even dirt-cheap fuel prices cannot stop the green revolution.

Source: CNN Money

Tesla’s EV peers have similarly been on a tear: Chinese EV manufacturer, NIO Inc. (NYSE:NIO), has soared 233% YTD, while Nikola (NYSE:NKLA) and Workhorse (NASDAQ: WKHS) are up 315% and 407%, respectively.

The EV explosion is expected to continue, with Bloomberg New Energy Finance predicting that 10% of new vehicle sales in 2025 will be electric compared to only 2.7% in the current year. Still, a cross-section of Wall Street has sounded the alarm on the sector due to thin or non-existence profits (Tesla and NIO) or lack of products (Nikola and Workhorse).

The post Best Way to Play the ESG Investment Banking Mandate appeared first on Global Investment Daily.

It’s no longer about politics or morality. It’s about making money—plain and simple.

And it’s disrupted Wall Street to the point that BlackRock is now king, and JPMorgan Chase and Goldman Sachs are scrabbling for purchase after having jumped on the impact-investing train less enthusiastically.

BlackRock is ruling the roost precisely because it understood—at the right time—where big capital would end up fleeing.

ESG (environmental, social and governance) investing means different things to different people.

To the climate and other activists, it means putting your money where your mouth is: Investing in companies that are contributing to society in one way or another. It means disowning those who leave heavy environmental footprints, pay no attention to the human rights element in their supply chains, fail to give back to their communities or engage in questionable business practices.

For energy, it’s meant choosing renewables instead of fossil fuels, among other nuances.

For manufacturers, it’s meant paying close attention to the sweat shop origins of products and local labor laws.

For miners, it’s meant making sure we’re not dealing with blood diamonds or cobalt mined by children in the Democratic Republic of Congo (DRC).

And while all of those are highly honorable issues that investors should be concerned with, they failed to gain mainstream attraction because it’s always about the bottom line. So, if the big money isn’t buying into it, it’s not going to be a megatrend.

Wall Street won’t buy anything if it’s not profitable.  

Now, it is.

Why? Because big money has determined in this day and age that profit is more likely if risk is mitigated, and climate change has suddenly become real. So, too, in the era of immensely powerful social media, the risk of reputation damage for social irresponsibility or poor governance is very real.

Risk perceptions have changed, in other words. And the COVID-19 pandemic is changing them even more profoundly.

Following the Big Money

BlackRock has rolled out six new ESG-focused ETFs since January 2020 alone—three of them just in June, at the height of the pandemic.

For the first time in history, BlackRock is selling ESG as a value-based investment strategy.

And it’s not just about climate change. It’s about COVID. It’s about racism. It’s about humanity in general, and big money is buying it.

It’s easy enough to map. ESG ETFs raked in a massive $4 billion in April 2020, and in June 2020 they saw $52 million in outflows based on Bloomberg data, while inflows for the month were over $13 billion. Of that, three BlackRock ESG ETFs were responsible for $8.5 billion in inflows. By July, BlackRock had scooped up $60.4 billion total in ETF inflows.

The money speaks for itself, and ESG competition is on.

JPMorgan even calls this the turning point for ESG investing. I

“The COVID-19 crisis has not only brought on the greatest recession since World War II, but investors are also calling it the 21st century’s first ‘sustainability’ crisis and one that has renewed the focus on climate change, acting as a wake-up call for decision makers to prioritize a more sustainable approach to investment,” wrote JPMorgan’s co-heads of sustainability research Jean-Xavier Hecker and Hugo Dubourg.

The million-dollar question, then, is this: Is the ESG investing megatrend here to stay?

Most likely. That’s because it’s all about risk mitigation, and investors have changed how they view risk, intrinsically. The COVID-19 pandemic hit this point home: This isn’t likely to be the last pandemic, nor is climate change going to suddenly disappear after taking this long to ping mainstream radar.

Further, with the rise of social media, which serves as the most powerful system of accountability that the world has ever seen, companies can no longer afford to play fast and loose with reputation. One wrong move can spark a Twitter storm that sends stocks plunging and investors running for the hills.

The post ESG: The Biggest Megatrend in a Century appeared first on Global Investment Daily.