📈 Goldman backed US stocks

What’s going on here?

ExxonMobil kept making noise in the lithium sector, despite the fact that industry pioneers are taking a breather.

What does this mean?

The lithium industry was the place to be two years ago, with prices so high that producers could turn a small share of the market into reliable paychecks. Now, not so much. The precious metal is mainly used to make batteries that power smartphones, laptops, and electric cars – all of which have fallen out of favor now that folk are hard-pressed to afford even their monthly essentials. The metal’s price has fallen some 80% over the last couple of years, forcing even major producers to pause expensive projects and warn of compromised profit. Exxon clearly has stellar self-belief, though. The oil and gas behemoth still plans to get its first lithium project up and running by 2027, predicting that’ll make it one of the world’s ten biggest lithium producers by 2030.

Why should I care?

Zooming in: Industry veterans are quitting while they’re ahead.

Lithium producers have been forced to subsidize their work with their own wallets, so they’ve been stalling as many projects as possible. Thing is, lithium projects are a slow burn: producers spend years making them fit to run. Exxon, then, may be on the money. By spending the cash it makes from oil and gas to build up production sites now, Exxon should be ready to rumble while the rest of the industry is only warming up its machines.

The bigger picture: Don’t be a dodo.

Higher interest rates have made it far more expensive for smaller oil companies to borrow money and keep up with richer established ones. So instead, they’re finding power in numbers through a slew of mergers. Exxon’s taken advantage of that opportunity, snapping up small fry. But even the biggest oil companies could face extinction if they don’t keep pace with the green energy transition – and lithium’s not a bad place to start.

What’s going on here?

Goldman Sachs eagerly upgraded its predictions for the S&P 500 index this year, stunned by US stocks’ record-breaking run.

What does this mean?

Wall Street started penning in predictions for US stocks months ago, but the ink isn’t dry yet. The S&P 500 index, which tracks the biggest US companies, has been breaking record after record – and that has analysts scrambling to rewrite their expectations for this year. Goldman Sachs just upgraded its forecast for the third time, projecting that the index will reach a level of 5,200 by the end of 2024. While that’s only 4% higher than today’s point, it’s a serious increase from the 4,700 that Goldman predicted back in November, making the big bank one of the most optimistic in the market.

Why should I care?

The bigger picture: America’s buckling down and beefing up.

Goldman also pushed its 2024 earnings-per-share forecast for the index up slightly to $241 – or around 9% more than last year. What’s more, Goldman estimates that AI will make stateside companies more productive over the next ten years. And because higher productivity has historically turned into fatter profit margins, the big bank reckons that the tech could pull the biggest US firms’ margins up from 12% today to 16% over the next decade.

Zooming in: Welcome to the land of opportunity.

If Goldman’s right, those souped-up profit margins should translate into 3% more profit a year for S&P 500 companies. That’s worth watching for investors, because the stock market’s returns should match that uptick. On top of that, remember that many of the most promising AI-focused firms are in the US. So far, investors have been rewarding the companies that stand to build a super-smart future, and that’s unlikely to stop anytime soon.