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Need to Know: Here’s one asset in an ‘up crash’ — and the stocks tied to it are lagging behind the move

There always seems to be an unusual commodity that captures the attention of the market.

Last year it was uranium, which had both a theme — the need for clean energy provided by nuclear reactors — and a supply element, as an exchange-traded fund started gobbling up supplies on the open market. That ETF, the Sprott Physical Uranium UUT, -0.42% trust, is now down 21% from its September peak (right about the time this column wrote about it), though it is up 48% from its July lows.

Now it’s lithium that is capturing the market’s attention. As the auto market transitions to electric vehicles, those EV companies turn to lithium-ion batteries. There are also supply issues, with Bank of America analysts noting canceled projects and discipline from miners supporting prices.

Earlier this week, Australian miner Allkem AKE, -6.67% OROCF, +6.44% reported rising sales, production and shipments, and forecast lithium carbonate prices to rise 80% in the first half of the year. “The company continues to experience very strong demand for its spodumene concentrate and lithium carbonate as supply side tightness persists in raw materials and throughout the battery supply chain,” Allkem said.

Lithium prices are surging.

Analysts at UBS in Australia this week said lithium was in an “up crash” due to EV demand, hiking their spodumene forecast by 39% and carbonate price estimate by 70%. Allkem, the UBS team says, offers pure-play exposure to lithium, with many positive catalysts on the horizon if it can execute. Mineral Resources MIN, -3.05% offers an “interesting entry” given its exposure both to lithium production and mining services, while diversified giant Rio Tinto’s RIO, -2.26% lithium aspirations “appear too distant/small to gain significant exposure.”

UBS forecasts supplies of lithium to lag demand.

JPMorgan analysts pointed out North American lithium and rare earth stocks have lagged behind prices. In the lithium space, the analysts are overweight IGO IGO, -4.12%, Lithium Americas LAC, -3.15%, Allkem, Piedmont Lithium PLL, -1.78% and SQM SQM, -2.61%, and neutral on Albemarle ALB, -1.16%, Mineral Resources and Pilbara Minerals PLS, -6.07%.

The chart

Here’s one way to view inflation — the price of a can of Campbell’s CPB, -2.63% tomato soup. “We’ve tracked the price of Campbell’s iconic tomato soup over the past 124 years because of its remarkable consistency as an identifiable product over time. In fact, if you had a time machine and could travel to nearly any point in time from January 1898 to the present, you could likely find a 10.75 ounce size can of Campbell’s condensed tomato soup stocked for sale in American grocery stores,” writes the Political Calculations blog. As for the inflationary signal, it’s on the verge of the $1 per can level.

The buzz

Netflix NFLX, -1.48% shares plunged 20% in premarket trade, after it reported a lower-than-forecast 8.3 million subscriber additions in the final quarter, and forecast first-quarter additions significantly below estimates. Credit Suisse, Morgan Stanley and Barclays were among the brokers immediately cutting ratings.

Peloton Interactive PTON, -23.93% is set to rally, after denying it is entirely cutting production and prereleasing fiscal second-quarter numbers. Peloton shares rose 6%, after a 24% slide on Thursday.

Intel INTC, -2.95% will invest at least $20 billion in a new chip-making facility in Ohio. The company said the investment, outside the Columbus area, will help meet demand for advanced semiconductors.

The famed rock singer Meat Loaf has died.

The market

It looked like a rough close to a difficult week, with both the S&P 500 ES00, -0.60% and Nasdaq-100 NQ00, -0.94% contract retreating, with market analysts noting extra volatility could be in store due to the expiration of options contracts.

The yield on the 10-year Treasury TMUBMUSD10Y, 1.792% slipped to 1.79%.

Top tickers

Here were the most active stock market tickers on MarketWatch as of 6 a.m. Eastern.

Ticker
Security name
TSLA, +0.06%
Tesla
GME, -3.66%
GameStop
NFLX, -1.48%
Netflix
AMC, -1.36%
AMC Entertainment
NIO, +1.75%
NIO
AAPL, -1.03%
Apple
NVDA, -3.66%
Nvidia
BBIG, -13.25%
Vinco Ventures
AMZN, -2.96%
Amazon.com
SOFI, +9.41%
SoFi Technologies

Random reads

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