Welcome to our Friday mailbag edition!
Before I get to your questions, I want to tell you about an exciting project I’m about to unveil…
You might remember that I wrote to you a few months back about the trading habits of members of Congress. This was in response to a reader calling out what he views as corruption by the elites.
I put my investigative journalism skills to good use. And what I revealed back then was both shocking and eye-opening. Some of the country’s highest-level politicians and decision makers are making a lot of money in the stock market.
And it showed that the people elected to act on our behalf can’t help but have a strong allegiance to the corporations they invest in with their own portfolios.
And this is contributing to the Great Distortion between the financial markets and the real economy I’ve been telling you about…
Well, the good news is that you don’t need to sit on the sidelines while they line their own pockets.
Over the last two years, I’ve developed a special proprietary system. It’s based on the systems and analytics that my employers at Chase, Lehman Brothers, Bear Stearns, and Goldman Sachs paid me millions to develop during my 15 years working on Wall Street.
In these distorted times, it could help you make up to 10x your money in less than a month…
And the timing couldn’t be better. That’s because there’s an event guaranteed to happen this August… that I believe could unleash a $4 trillion market shock… and kick off the next chapter of The Great Distortion.
Using my new system, you can take advantage of this… whether the markets go up or down.
In today’s extremely volatile markets, I bet that sounds like music to your ears!
Well, to find out more, join me for my urgent investment briefing next Wednesday, June 15 at 8 p.m. ET. I’ll reveal all the details then…
And I’ll even reveal the name of a stock my system is flashing a “buy” on right now so you can get started making money straight away.
Now, back to the mailbag…
Every week, we receive some great questions from your fellow readers on our recently published essays.
Today, we have questions on the U.S. dollar, a recent recommendation I made to profit from the New Energy shift, and exorbitant CEO compensation…
We’ll start this week with this follow-on question from Ernie. I recently replied to his earlier question on the U.S. dollar’s reign as the world’s primary reserve currency…
Nomi did a great job of discussing the reserve status of the U.S. dollar. Later, there was a discussion of currencies used in trade. It’s easy to conflate these terms. But aren’t they very different?
– Ernie B.
Hi Ernie. Thanks for your kind words and excellent question. The answer is yes… The status of the U.S. dollar as a reserve currency and as a currency used in global trade speak to two different roles that it plays.
The dollar is the world’s dominant reserve currency. Global central banks hold nearly 60% of their total allocated reserves in dollars. That could be in the form of cash or U.S. Treasury securities.
In terms of its use as a currency of global trade and financial transactions, between 1999 and 2019, the dollar accounted for 96% of trade in the Americas. 74% of trade in the Asia-Pacific region… and 79% of trade and financial transactions in the rest of the world.
Europe is the only place where the dollar isn’t the main currency used for trade. There, the majority of trade takes place in euros.
Also, because the U.S. dollar is accepted in so many places throughout the world, some countries consider it their official currency, instead of having a separate local currency.
So, the U.S. dollar is the primary currency for both global reserves and global trade. And as I explained recently, I don’t see that changing any time soon. Thanks again for following up, Ernie.
Next, a question about the recommendation I made in my recent video update from Vancouver… In order to take advantage of the broad New Energy sector, I recommended the VanEck Rare Earth/Strategic Metals ETF (REMX).
Reader Galen is wondering why I recommended an investment that is heavily weighted towards China…
Having watched your video from Vancouver and hearing your recommendation for REMX, why would I only want to invest 7% in Canada and three times that percentage in China?
–Galen F.
Hi Galen, thanks for the question. First, it’s important to note that it’s impossible to follow or invest in certain major evolving, or even established, trends and simply ignore China. That’s why I write about China frequently.
Please be assured that I wouldn’t recommend an ETF without knowing the positions and the money flows of its largest holdings.
For REMX, the country weightings, as of the end of May 2022, are:
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Australia: 39%
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China: 27.75%
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U.S. 15.5%
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Canada: 7.5%
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France: 5%
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Netherlands: 4.9%
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Other/Cash: 0.35%
Second, while it’s true that REMX holds many Chinese producers, this is because it accurately reflects the current state of rare earths minerals as the world produces them today.
I wrote about rare earths and their uses a couple of months ago. They’re used in everything from iPhones, electric cars, flat-screen TVs, and computers to sophisticated military equipment.
And I mentioned that China holds most of the cards in the rare earths market. It produces and processes almost 60% of global rare earth supplies. (If you missed that dispatch, you can catch up here.)
But other nations are increasingly focusing on their own methods of sourcing, producing, or forming other alliances in the rare earths arena. This includes the U.S., as I wrote to you about more recently.
So in time, we can expect to see China’s percentage of REMX shift as other countries supply a greater portion of the world’s rare earth minerals and metals.
In general, when I recommend an ETF investment to take advantage of a growing trend during this period of great distortion, I am following the overall flow of investment money and making suggestions on that basis.
REMX targets rare earth metals, which are currently just a tiny part of the overall global mining environment. I believe it is the best vehicle to target this growing mining sub-component.
REMX is also the most tradable ETF. That’s because it invests in the biggest and most liquid companies that generate at least half of their revenues from the global rare earth and strategic metals space.
The REMX portfolio is also rebalanced quarterly. So if, say, a Canadian company’s market cap increases relative to a Chinese company holding, REMX might buy more of it. That would mean it could capture a larger percentage of the REMX ETF.
The overall point is that this market is small and REMX provides the best way to gain broad exposure to it.
All of that said, it is my goal to provide investment suggestions based on our themes, analysis, and current market conditions.
I might recommend specific U.S., Canadian, or Australian companies in my other subscription services, such as Distortion Report. And I’ll always provide in-depth analysis of the company and the market it operates in when I do. (If you’d like to become a subscriber, you can sign up here.)
Finally, a note from a reader that I’m sure echoes the thoughts of many others reading this…
Hi Nomi, this question doesn’t pertain to any of your essays, but I believe a lot of your readers would like to hear your point of view on CEO compensation.
I read on one of the news feeds that JPMorgan Chase CEO Jamie Dimon was being given a $52 million retention bonus! I find it hard to believe that any one person is that important to any corporation.
Mr. Dimon has been compensated very well throughout his career and surely doesn’t need this money. So why is it being offered? CEO compensation is already outrageous. This just seems like a slap in the face. Couldn’t this money be used to pay JPMorgan associates a little better, or even be given back to investors? I would like to hear your opinion on this.
By no means is Mr. Dimon the only CEO that could be said to be “overpaid.” Once these men and women become billionaires, what is the point of continuously giving them more and more money? I don’t understand the thought process of these boards of directors, unless there is some kind of good old boys’ club (which I believe to be the problem).
– Jerry K.
Hi Jerry, I totally agree. Jamie Dimon has certainly made enough money. His 2021 compensation package was massive – $84.4 million.
Now, a lot of that is a combination of stocks and options – $52.6 million worth. That means he likely has to hold onto those for some specified period of time.
And it’s not just Jamie Dimon… Last year, Goldman Sachs CEO David Solomon raked in $35 million in total compensation. This was double his take in 2020.
The point you make about the boys’ club mentality gets to the heart of super-high CEO compensation, in general. No one in the club wants to be making less than the other CEOs.
In a way, that keeps compensation going higher. It’s as much a game or competition – to be the best compensated, richest, most powerful CEO – as it is about the actual money.
This is another sign of the Great Distortion I’ve been telling you about between the financial elite and ordinary Americans. The money keeps flowing to the top, while everyone else gets screwed over!
But as I mentioned up top, I’ve found a way to help you even the score… It involves a new strategy I’ve been testing over the last two years.
I’ll reveal all the details in my urgent investment briefing next Wednesday, June 15 at 8 p.m. ET. It would be great if you could join me…
And that’s it for this week’s mailbag. Thanks again to everyone who wrote in. And thanks in advance to those of you who will be tuning in next Wednesday night.
If I didn’t get to your question this week, look out for my response in a future Friday mailbag edition.
I do my best to respond to as many of your questions and comments as I can. Just remember, I can’t give personal investment advice.
And if there are any other topics you’d like me to write about, I’d love to hear from you. You can write me at feedback@rogueeconomics.com.
In the meantime, happy investing… and have a fantastic weekend!
Regards,
Nomi Prins
Editor, Inside Wall Street with Nomi Prins
To thank you for attending on June 15, I’ll even give away the name of a recommendation that I believe could double your money. So be sure to save your spot here, and I’ll see you on Wednesday.
Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.