• The Fed is likely to cut rates fewer times in 2024 than markets expect due to political considerations and a desire to appear apolitical. At most, expect 3 rate cuts.
• Global recession in 2023-2024 will be challenging for commodities due to lack of demand from China. However, long-term demographic trends in India and Mexico provide commodity upside.
• The dollar's share of global transactions and reserves has increased, entrenching its status as the global reserve currency. This reduces likelihood of alternatives like a gold-backed currency emerging soon.
• Quantitative tightening continues to withdraw liquidity from markets, with effects lagging by 12-18 months. Risky assets like stocks remain overvalued.
• Near-term, a defensive portfolio stance is warranted, focused on high-quality credits and cash flow. But maintain dry powder to take opportunities when cuts commence.

The US Federal Reserve is likely to cut interest rates in 2024, with market expectations pointing to possibly 6-7 cuts by the end of the year. However, the Fed seems intent on charting a more conservative path, with a maximum of only 3 cuts likely. Several factors contribute to this cautious stance.

Political Calculations Limit Fed Action

Fed Chair Jerome Powell wants to avoid any appearance of the Fed bowing to political pressure in an election year:

It seems Powell wanted to verbalize the pivot out of the way before the Iowa caucuses so it didn't appear that he was being reactionary come January the 31st. Furthermore, the Federal Reserve tends to not want to make a move that directly precedes election day so that they're not seen as trying to swing the election one way or the other.

With the Fed’s September meeting coming shortly before the November 2024 elections, major policy moves seem unlikely. At most, expect 2-3 small rate cuts of 0.25% before the elections.

Global Recession Challenging for Commodities

The coming global recession will prove challenging for commodities, given tepid demand from China:

The current Global recession is going to be very hard on Commodities, apart from uranium at the moment. Uranium aside, most commodities will struggle without China providing its typical counter-cyclical boost during downturns. However, there is a long-term upside tied to demographics.

Demographic Trends Support Commodities

Highlighting India and Mexico’s more favorable demographic profiles compared to China, and global infrastructure buildout to drive commodity demand. At some point, the politics of the day will fade and the opportunity will present itself for there to be another commodity supercycle The current Global recession is going to be very hard on Commodities. However, once the recession passes, emerging country development should buoy commodities.

Dollar Reigns as Reserve Currency

Despite chatter about alternatives, the US dollar has increased its share of global foreign exchange transactions and central bank reserves. This entrenches its status as the dominant reserve currency, with gold-backed alternatives unlikely to emerge soon without global instability:

Putting the world back on a gold standard however is something should not happen for a while because you're talking about World War III.

Quantitive Tightening Ongoing

Despite expected rate cuts, the Fed’s quantitative tightening remains ongoing. The lagged effects of the Fed’s balance sheet reduction will continue tightening financial conditions over the next 12-18 months.

Meanwhile, stock valuations stay elevated even as corporate earnings weaken and recession looms. With risky assets prone to selloffs, investors should adopt a defensive stance focused on high-quality bonds and dividend stocks. Alternatives like gold and uranium also warrant consideration.

Market Complacency Overly Optimistic

Markets seem overly optimistic on several fronts—the extent of imminent rate cuts, a quick turnaround from recession, and continued US dollar dominance of global finance. For now, investors would do well to temper their expectations and prepare their portfolios prudently. But also prepare to take advantage of the opportunities Fed rate cuts may provide.

Why Investors Should Be Cautious

Given the above analysis, investors should adopt a cautious, defensive posture at present while staying alert for opportunities. Specific implications include:

• Don't expect more than 2-3 small Fed rate cuts before late 2024. Markets are overly optimistic on this front.
• Reduce exposure to risk assets like stocks, especially growth/tech stocks. Earnings are likely to deteriorate further amidst recession.
• Diversify into alternatives like gold and uranium as buffers against market turmoil.
• Favor high-quality bonds and dividend stocks for income and downside protection.
• Hold cash to take advantage of opportunities when rate cuts commence.

In summary, while Fed rate cuts lie ahead, they may prove more modest than expected. Meanwhile, ongoing tightening and recession pose risks to overvalued stock markets. By taking a cautious stance focused on quality and diversification, investors can prudently navigate current uncertainties while preparing to seize prospective upside when growth resumes.

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Bannerman Energy

Bannerman Energy is an Australian uranium development company focused on advancing its flagship 3.5Mlb pa open pit uranium project in Namibia, a major global uranium producer. Bannerman is currently working on Front End Engineering and Design (FEED) and financing for the Namibia project. The company also holds a significant 41.8% stake in Namibia Critical Metals, developer of the large-scale Lofdal heavy rare earths project in Namibia, one of only a few heavy rare earth deposits outside China.

Ur-Energy

Ur-Energy is a U.S. uranium mining company well positioned to benefit from rising uranium prices driven by growing demand for nuclear power. Within-situ recovery operations in Wyoming, Ur-Energy has been producing from its Lost Creek facility since 2013 and can now effectively double licensed annual production capacity to 2 million pounds with its permitted Shirley Basin project. With over $70 million in cash, Ur-Energy is funded to ramp up low-cost production from its Wyoming hub as it restarts wellfield construction. The company utilizes mining methods with a light environmental footprint and advancing next-generation technologies to further reduce costs. If uranium prices continue strengthening, Ur-Energy offers leverage as an experienced producer with scalable, permitted projects in a rising uranium market.

Global Atomic

Global Atomic Corporation is a publicly traded company with two main divisions - a Uranium Division that is developing the large, high-grade Dasa uranium project in Niger, which is now fully permitted with excavation underway, and a Base Metals Division that holds a 49%stake in a zinc production joint venture in Turkey operated by Befesa. The joint venture recycles Electric Arc Furnace Dust to produce zinc oxide concentrate sold to zinc smelters globally. Global Atomic’s unique combination of uranium production and cash-flowing zinc operations positions it well for growth.

Energy Fuels

Energy Fuels is the largest uranium and advanced rare earth element producer in the United States. The company has significant uranium production capacity and long-term sales contracts with U.S. nuclear utilities that it expects to fulfil starting in 2023-2024. Energy Fuels is also quickly moving to establish a domestic rare earth element supply chain, with plans to produce high-value separated REE oxides by late 2023 or early 2024. The company additionally produces vanadium when conditions warrant, recycles materials to recover uranium, vanadium and medical isotopes, and is advancing capabilities for medical isotope production. Overall, Energy Fuels is a major U.S. producer of strategic minerals like uranium and rare earth elements that are critical for energy, technology, and medical applications.

American Lithium

American Lithium is developing large-scale lithium projects in Nevada and Peru as well as one of the world's biggest uranium projects, with the goal of playing a major role in the transition to sustainable energy. The company's assets are the advanced-stage TLC lithium project in Nevada and the Falchanilithium project in Peru, which have robust preliminary economic assessments. American Lithium also owns the Macusani uranium project in Peru, which has seen significant historical development. With assets at various stages of pre-feasibility and feasibility studies, American Lithium is positioned to be a major player in lithium and uranium mining.

Deep Yellow

Deep Yellow has systematically built a portfolio of high-quality uranium assets to establish a significant production platform and realize its vision of becoming a leading international uranium mining company. With its experienced leadership team at the helm, Deep Yellow has set its sights on diversified production of over 10 million pounds per year, capitalizing on forecast supply squeezes. Its flagship Tumas mine in Namibia already claims one of the world's largest undeveloped uranium deposits as Deep Yellow advances toward a 2024 construction decision. Meanwhile, its Mulga Rock project in Western Australia progresses through feasibility studies for targeted development. Beyond existing core assets, Deep Yellow has accumulated extensive exploration ground at two prime locations in Namibia and Australia's Northern Territory through strategic acquisitions. These prospects provide substantial opportunities for unlocking further discoveries to continually expand its project pipeline over time. As energy security needs escalate globally, Deep Yellow stands ready to deliver the reliable uranium production that transitioning electricity grids urgently demand. With its production timeline aligned with major forecast supply deficits, Deep Yellow aims to cement itself as the go-to uranium supplier of choice for nuclear utilities worldwide seeking security and diversity of supply. Backed by disciplined leadership, Deep Yellow represents an emerging industry force promising investors exposure to the full lifecycle of value creation across resource discovery, project development and multi-decade uranium production. By targeting low-cost mining jurisdictions, adopting proven processing technologies and securing key infrastructure advantages, Deep Yellow has systematically built itself to deliver sustainable investor windfalls as the uranium bull market unfolds.

Baselode Energy

Baselode Energy is a Canadian uranium exploration company focused on the Athabasca Basin area in northern Saskatchewan. The company controls over 264,000 hectares of land that is free of any option agreements or underlying royalties. In September 2021, Baselode discovered the near-surface ACKIO uranium prospect on its exploration properties. The ACKIO prospect measures over 375 meters long and over 150 meters wide, with at least 9 separate uranium mineralized zones. Mineralization starts as shallow as 28 meters and 32 meters beneath the surface, extending down approximately 300 meters depth, with most mineralization occurring in the top 120 meters. The ACKIO prospect remains open at depth and to the north, south and east for further expansion. Baselode's exploration strategy centers on discovering high-grade uranium deposits outside of the Athabasca Basin near the surface in basement rocks. The company uses innovative and established geophysical survey methods to identify prospective shallow drill targets for high-grade uranium mineralization related to underlying structural controls. This technique has led Baselode to the discovery of the ACKIO prospect.

Nucelar Fuels
Nuclear Fuels Inc. is a Canadian uranium exploration company focused on in-situ recovery (ISR) projects in Wyoming and other proven jurisdictions globally. The company's priority asset is the Kaycee project in the Powder River Basin of Wyoming. This project has historical uranium resources distributed along a 33-mile mineralized trend with over 110 miles of mapped roll fronts. The property has been drilled extensively with over 3,800 historical drill holes. Nuclear Fuels has consolidated control of the Kaycee district, acquiring multiple historical uranium deposits and exploration targets. This positions the company to potentially advance the project portfolio into production. Beyond Kaycee, Nuclear Fuels plans to leverage its technical expertise to explore additional uranium properties and opportunities in established mining districts globally. Through aggressive exploration and consolidation of historical resources, the company aims to develop a pipeline of projects, prioritizing those that can be fast-tracked to production using the in-situ recovery mining method.

ISOEnergy
IsoEnergy is a Canadian uranium exploration and development company with projects focused in the Athabasca Basin of Saskatchewan. The company's flagship property is the Larocque East project in the eastern Athabasca Basin. This project hosts the high-grade Hurricane uranium deposit, which has the highest grade Indicated uranium resource globally. In addition to its exploration projects, IsoEnergy owns several permitted, past-producing uranium and vanadium mines in Utah. These mines are currently on standby but can be rapidly restarted to position IsoEnergy as a near-term uranium producer. The company has a toll milling agreement in place with Energy Fuels Inc. to process ore from its US projects. Beyond its Canadian and US assets, IsoEnergy holds uranium projects in various stages of exploration and development in Australia and Argentina. This diversified portfolio provides leverage to rising uranium prices across different jurisdictions. The company is advancing its Athabasca Basin projects while continuing the exploration on its global assets to drive future production growth.

Atha Energy

ATHA Offers Leveraged Exposure to World-Class Uranium Districts Athabasca Uranium Inc. (ATHA) provides investors with targeted leverage to potentially significant uranium discoveries across some of the world’s most prolific regions for new supply. As a focused mineral exploration company, ATHA has methodically accumulated the single largest exploration package covering the renowned Athabasca Basin. Spanning over 6 million acres, their claims provide unrivalled exposure to this district which has historically produced high-grade uranium deposits. Additionally, ATHA holds extensive prospective ground in the similarly uranium-rich Thelon Basin. Between these two core holdings in prime Canadian uranium provinces, the company has positioned itself amongst acreage with a proven exploration upside. Importantly, a subset of ATHA’s Athabasca land package involves a 10% carried interest in claims operated by sector leaders NexGen Energy and IsoEnergy. With ATHA carried through key exploratory expenditures, this allows leveraged participation alongside seasoned management advancing projects in the basin. For investors, ATHA brings focused leverage to maximizing discovery potential across districts that have delivered huge economic uranium resources. As sentiment improves around uncovered uranium value still unearthed in these Canadian districts, ATHA offers a targeted way to ride the upside. Their vast claim packages in underexplored but prolific terrain form the springboard for potential mineral discovery and resource growth in the coming bull cycle.