Category: Insight

As 2025 draws to a close, financial markets and the broader economy find themselves at the intersection of several powerful forces: a battle between inflation and interest rates, rapid technological innovation, shifting consumer behavior, and an electrical grid feeling the pressure of rapid automation and digital expansion. What began as a year defined by rate debates has evolved into a broader story about how the United States is absorbing structural change. The themes of the past twelve months tell us as much about the decade ahead as they do about the year behind us.

Interest Rates and a Cooling but Resilient Housing Market

The Federal Reserve’s higher-for-longer posture continued to exert pressure across the economy, from housing affordability to equity valuations. Inflation proved stubbornly sticky, while job growth oscillated between strong and soft patches, complicating the Fed’s interpretation of true economic momentum. The government shut down key data releases, leaving Fed policymakers with an incomplete picture as they weighed interest rate decisions heading into the second half of the year.

Source: St. Louis FRED

In the housing market, the post-pandemic boom has gradually begun to soften. Home prices have remained elevated, particularly in regulatorily supply-constrained cities like New York, Miami, and Dallas, but the rate of appreciation slowed. The S&P CoreLogic Case-Shiller National Home Price Index rose just 1.3% in the twelve months through September 2025, the lowest rate of home appreciation since mid-2023. While affordability challenges have sidelined many potential buyers, further rate cuts in 2026 could rekindle momentum in the year ahead.

Source: St. Louis FRED

The AI Economy: Real Productivity Meets Bubble Anxiety

If 2023 and 2024 were years of artificial intelligence (“AI”) experimentation, 2025 marked the year AI went mainstream. More than one-third of American workers now report using AI tools on the job, and major corporations have integrated automation directly into their operating models. Artificial intelligence was even used in the editing of this article. Companies such as Amazon, UPS, Target, and Klarna announced significant white-collar job reductions as AI systems replaced administrative and managerial functions, a trend some have dubbed the “death of the middle manager.”

Public figures, including Bill Gates and Elon Musk, predicted that professional fields such as teaching, medicine, and corporate strategy may undergo profound transformation within a decade. Yet even as AI adoption accelerates, questions loom about whether AI-focused companies can justify their valuations. Many remain unprofitable, and concerns about frothy investor optimism persist.

OpenAI CEO Sam Altman captured the contradiction succinctly in an August interview: “Are we in a phase where investors as a whole are overexcited about AI? Yes. Is AI the most important thing to happen in a very long time? Also, yes.” Markets, for now, are trying to price both realities at once in this winner-takes-most AI race.

The Strained Electrical Grid and a New Geography of Computing

The explosion of AI models and the ongoing growth of electric vehicles have pulled America’s power grid into the center of macroeconomic discussions. Massive data centers, many clustered in states like New Jersey, have begun to significantly influence both local land markets and force electricity prices higher. Retail power rates in New Jersey climbed 19% this year, compared with a 6% national increase.

The question of where to locate future data centers has become contentious. Tech companies are increasingly competing for rural land, including farmland, as they seek open space and access to low-cost, efficient power generation. Meanwhile, policymakers are wrestling with how to balance innovation with local community needs and the affordability of consumer electricity.

Energy Secretary Chris Wright, however, pushed back against the idea that AI will inevitably raise energy prices. “The way to get electricity prices down,” he argued, “is to produce more electricity.” Companies such as Amazon and NVIDIA appear to agree, committing billions to new infrastructure designed to meet the escalating demand.  Several hyperscale data center operators are taking steps to reinvent electrical grid dynamics with announced projects that include their own “behind-the-grid” power sources.

A Splintered Consumer Base

The strength of the U.S. consumer, a traditional pillar of economic stability, looked increasingly uneven in 2025. High-income households continued to spend robustly, with the top 10% of Americans now responsible for nearly half of all consumer expenditures. Meanwhile, mid-market consumers struggled with rising costs of living, mixed employment markets, and managing their debt burdens in a less favorable interest rate environment.

Delinquencies on credit cards and auto loans have been rising for much of the year. Overall, unemployment has hovered near 4.5%, but younger workers have been facing far steeper challenges: Gen Z’s unemployment rate climbed to 10.4% in September, underscoring the shifting dynamics of the labor market.

Source: St. Louis FRED

Healthcare Reimagined as GLP-1 Adoption Surges

Perhaps no sector experienced as dramatic a transformation as healthcare. GLP-1 drugs, once primarily used to treat diabetes, rapidly entered the mainstream as a legitimate weight-loss treatment. A Gallup survey found that 12.4% of U.S. adults used semaglutide-based medications in 2025, up from 5.8% as recently as February. Insurance plans, employers, food manufacturers, and medical device companies all felt the second-order effects of America’s latest health kick.

Obesity rates, long stubbornly high in the U.S., have begun to decline. Meanwhile, pharmaceutical companies such as Novo Nordisk and Eli Lilly are racing to develop pill-based GLP-1 formulations. If pill-based GLP-1 drugs become widely available, they could lower treatment and distribution costs by eliminating injections and specialty delivery, while expanding access through primary care. Broader, earlier use could shift healthcare spending away from costly downstream conditions, such as diabetes, cardiovascular disease, and orthopedic interventions, toward preventive pharmaceutical management. Over time, this would change insurer, employer, and public health spending patterns by increasing pharmacy costs upfront but reducing long-term medical claims.

Housing Scarcity and the Debate Over a 50-Year Mortgage

Even with cooling prices, housing remained scarce across major metropolitan areas. New policy proposals attempted to bridge the affordability gap, including a controversial 50-year mortgage suggestion aimed at lowering monthly payments. While a longer mortgage term does reduce payment size, the total interest burden balloons dramatically. On a $325,000 home, a 50-year loan would generate more than $833,000 in interest, double that of a 30-year mortgage, and over five times that of a 15-year.

Such a structure might expand the pool of eligible buyers, but likely at the cost of pushing prices even higher, an ironic outcome for a policy intended to ease affordability.  Many experts believe that housing supply in certain regions of the country has been constrained by regulation and that a housing market realignment is possible simply by reducing the red tape and letting homebuilders build.

Market Performance: Strong Gains Amid Uncertainty

Despite recurring volatility, 2025 has proven to be a strong year for equities, led by technology, biotech, real assets, and precious metals as markets reprice the future based on the current path of economic, monetary, and international trade policies. U.S. Large Cap Stocks returned over 17%, the Nasdaq Composite more than 21%, and semiconductor stocks surged nearly 50%, fueled by soaring AI computing demand.

However, real assets and commodities stole the spotlight, with gold and precious metals posting extraordinary gains. Gold has jumped nearly 60% as the flock to real assets persisted.

Financials also outperformed with broad equity benchmarks across the Dow, S&P, and Russell families, delivering double-digit returns.

Looking Ahead

The defining story of 2025 is one of economic realignment. Higher-for-longer rates pressured valuations by raising discount rates, triggering a broad repricing of risk across assets. AI shifted from a speculative idea to a foundational technology. A strained power grid emerged as a national constraint on economic prospects. Healthcare has entered a new era of productivity, while housing scarcity and affordability and socioeconomic inequality remain persistent challenges.

As we look toward 2026, the U.S. economy remains dynamic and resilient, but several increasingly complex economic realignments are at our nation’s doorstep. Volatility will likely persist, but so will abundant opportunities, particularly in real assets and critical minerals, select equities, and sectors positioned to benefit from a decade of reinvestment in U.S. energy infrastructure, manufacturing, production, and refining capacity, and advanced technologies.

Refresh of: “Will 2025 Be the Year of Autonomy?” (Feb 2025)

Author: John Heneghan, with Gemini and Grok AI Assistance

When we asked in February if 2025 would be the year of autonomy, the answer proved to be a resounding “yes,” though not in the ways expected.  Developments the past nine months have clarified the autonomy investment thesis: large-scale autonomy is not just about the robots; it’s about an autonomous nervous system.

While individual self-driving cars and humanoid robots remain headline-grabbers, the critical, enabling infrastructure—a global, low-latency “nervous system”—has recently moved to center stage. This shift has been occurring across three key earthly domains: military, commercial, and labor.

1. Military: Strategic Drones

The war in Ukraine has rapidly evolved from remotely piloted drones to a proving ground for AI-driven autonomous systems. We are now seeing:

• Autonomous Targeting: Reconnaissance drones identify a target, “drop a pin,” and an autonomous strike drone is automatically dispatched to the location with minimal human intervention.
• AI-Enabled Munitions: New hardware, like the “AeroVironment Switchblade loitering munitions”, now features onboard AI for autonomous target recognition and route-planning.

The Starlink Connection: This entire “war of autonomy” is enabled by Musk controlled SpaceX’s Starlink Low Earth Orbit (LEO) satellite communication network. Portable Starlink (and secure Starshield for military and intelligence applications) terminals on the front lines provide the high-bandwidth, low-latency connection required for real-time video feeds and beyond-line-of-sight command and control. Starlink dominates mobile frontline bandwidth, but fixed infrastructure and rival LEO constellations (OneWeb, Guowang, Amazon’s Kuiper) are in trials. Ukraine also uses Inmarsat, Iridium, and fiber where available.

2. Commercial: Tesla FSD

Since our article, Tesla has moved from data collection to building tangible features for its robotaxi network. The October 2025 rollout of Full Self-Driving “FSD” (Supervised) v14 is the clearest evidence yet.  Lest we confuse our readers, v14 is not unsupervised robotaxi ready.  v14 Supervised marks the first robotaxi-grade user experience, but full unsupervised operation awaits regulatory approval and v15+.  FSD v14 benefits from over 6 billion miles logged versus Waymo’s ~25M (public 2025 figures).

• “Arrival Options” allow a user to select where the car should stop (e.g., “Curbside,” “Parking Lot”), a vital skill for a commercial ride-hailing service.
• Smarter Navigation now integrates routing with the core neural network, allowing the car to handle real-time detours—a non-negotiable for an autonomous taxi.

The Starlink Connection: While individual Tesla cars don’t require constant satellite internet for driving, a future fleet of millions of Cybercabs and autonomous Tesla Semis will. They will need to download large software update files, upload terabytes of fleet-learning data, and receive real-time fleet management instructions, making a ubiquitous LEO network indispensable.

3. Physical Labor: ‘East vs. West’ Robot Race

In our February article, we highlighted Tesla’s Optimus as the key player in labor autonomy. However, this ‘Western’ narrative is now being directly challenged by an ‘Eastern’ counterpart: China’s XPENG and its ‘IRON’ humanoid robot.  There are other global robot competitors including Figure.ai, already shipping robots for simpler humanoid tasks, and Unitree G1, being used in Chinese factories.

Here is comparative table of the leading robot offerings.

As of today, it looks like a full-blown strategic race between Tesla Optimus and XPENG IRON with each pursuing a different playbook.

• The “Western” (Tesla) Strategy: This is a vertically integrated, “all-or-nothing” manufacturing play. The stated 2026 goal for the new Optimus V3 is to deploy it in Tesla’s own factories first, solving its own complex labor needs before selling the robot externally. See this X post on Optimus’ methodic ramp from prototype to production.
• The “Eastern” (XPENG) Strategy: This is a parallel, “boots-on-the-ground” approach. XPENG’s ‘IRON’ (a direct 5’10”, 154-lb competitor) has also been tested on its EV assembly lines. However, at its AI Day on November 5, 2025, the company revealed a more nuanced 2026 commercialization plan:
  • Manufacturing is Hard: The CEO admitted large-scale, complex factory use is likely 3-5 years away.
  • Immediate 2026 Goal: Their 2026 mass-production goal is to first deploy IRON in commercial service roles—as receptionists and guides in their showrooms.
  • Industrial Niche: Simultaneously, they are partnering with industrial giants like Baosteel to use IRON for simpler, high-value inspection tasks.

The Starlink Connection: This ‘East vs. West’ race for labor autonomy only reinforces the network thesis. Like the Cybercab, a global fleet of competing robots—whether Optimus, IRON, or others—will function as “edge devices.” They will all need a robust “nervous system” to connect back to their central AI “brains” for software updates, shared learning, and remote operation. This creates a strategic race not just for the robot, but for the secure, high-bandwidth network.  Starlink/Starshield currently leads in global scale and latency—critical for edge-to-cloud learning.

4. Grand Unifier: The “Golden Dome”

Is tying our autonomy thesis to SpaceX’s Starlink and a new defense initiative a space fantasy?

Based upon 2025 developments, the most logical conclusion is that this is more of a space reality than pure space fantasy.

In May 2025, the U.S. government announced the “Golden Dome,” a proposed space-based missile defense system—a protective layer of satellites to intercept hypersonic threats. Just days ago, reports emerged that SpaceX is a leading contender for up to $2B in funding—alongside Lockheed and Northrop—per recent reports.  See linked article above.

This concept is no longer science fiction precisely because Starlink has proven that a mass-produced, low-latency satellite constellation is viable.

Conclusion: As Above, So Below

The “East vs. West” race for autonomy won’t be a contest for just the factory floor—it will be decided in low-earth orbit. As the ancient hermetic principle states, “As above, so below.”

While competitors like XPENG are formidable, they are focused on the ‘below’—the earthly, physical robot. While the ‘West,’ through the strategic alignment of SpaceX and Tesla, has a profound, asymmetric advantage from ‘above’.   SpaceX is potentially building the global nervous system (Starlink/Starshield) that all “Western” autonomous fleets will depend on.

Note, Starlink’s commercial terms of service prohibit military use; Starshield is the DoD-hardened variant with a separate constellation.  There are also many risks to this thesis, including but not limited to the following bearish cases:

Key Risks to Thesis

• LEO Commoditization: Kuiper live 2026 → pricing pressure
• Regulatory Delay: NHTSA robotaxi approval slips to 2027+
• China Exclusion: Starlink banned in largest EV/humanoid market

The Golden Dome project validates the potential for an artificial autonomous network.

When you view all the pieces as one integrated system—the Golden Dome as the defensive shield, Starlink/Starshield as the nervous system, FSD/Cybercab as the logistics fleet, and Optimus as the labor force—the sheer scale of this economic gambit becomes clear.

Wall Street Consensus (TSLA)

• Rating: Hold (30+ analysts)
• 12-Mo Price Target: $370–$390
• Implied: ~3–8% downside from ~$404
• Bull Case: $600+ (Wedbush) on AI/Optimus
• Bear Case: $120–$200 on margins/regulation

Galactically speaking, Elon announced at Tesla’s recent annual meeting of shareholders that he is exploring ways for Tesla shareholders to invest in SpaceX.

For Tesla and its investors, the Pinky and the Brain answer remains:

‘The same thing we do every day—try to take over the world.’

This time, with satellites.

By John Heneghan with research assistance by Grok and Gemini AIs

The term “Debasement Trade” has been trending on social media sites and on financial news networks between October 5th and October 9th, 2025, suggesting something noteworthy within the collective consciousness.  The significant increase in search and discussion volume corresponds with major market movements and macroeconomic events in early October 2025:

• Gold, silver, and bitcoin have reached recent record highs.
• Ongoing U.S. government shutdown has raised concerns about fiscal stability.
• U.S. dollar has been experiencing a noticeable decline.

The ‘Debasement Trade’ is surging, driven by a perfect storm of policy anxiety over government debt, inflation, and weakening confidence in fiat currencies generally.  Investors more broadly may be preparing for a new global monetary policy regime and financial system necessitated by the clash between government largesse (fraud, waste and abuse) and technological innovations that hold the promise of controlling this beast.

The “Debasement Trade” is defined as any investment strategy where individual and institutional investors move their money from fiat currencies, such as the U.S. dollar, into hard or scarce assets that are perceived as more stable stores of value. Residents of developing nations, like Argentina, Brazil, China, India and Zimbabwe, have learned the tricks of the debasement trade the hard way over the centuries. In theory, hard assets are somewhat insulated from devaluation by governments through excessive money printing.

Recent Performance for Debasements

Global currency debasement has propelled investment capital toward tangible, inflation-resistant assets in 2025. Hard assets like gold and precious metals serve as classic hedges against fiat erosion, while gold miners and strategic mineral plays amplify leverage to underlying commodity price trends. Spot prices for gold and silver have hit multi-year highs, outpacing broader equities, while miner ETFs have leveraged operational efficiencies and margin expansion from falling input costs like oil.  Broader precious metals have surged 45–65% YTD, with miners outperforming spots due to equity-like upside in a low-rate environment.

The following table of year-to-date (YTD, Jan 1–Oct 9, 2025) and last 12 months (L12M, Oct 9, 2024–Oct 9, 2025) performance reflects this “debasement trade,” with central banks diversifying reserves into gold (now the second-largest global reserve asset) and demand surging for uranium and rare earths tied to energy transitions and defense and technology supply chains. These hard or real assets have decisively outperformed both the S&P 500 and US Aggregate Bonds.

As we’ve covered in four monthly newsletters starting in April, 2025, we developed an internal strategic materials fund (basket or sleeve of securities) called Forge Ahead to align with these perceived long-term structural trends of the U.S. strategic sourcing of raw materials. We developed Forge Ahead sleeve because we were uncomfortable taking the easy thematic path with the Rare Earth/Strategic Minerals ETF (REMX). We were uncomfortable with REMX’s historical Chinese company exposure of 30% to 40% since China is the U.S. primary adversary in this economic competition.

As a quick reminder, the building blocks for Forge Ahead were as follows:

1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium. Strategic materials like rare earths are vital for defense and technology but are heavily reliant on foreign supply.
2. Critical Materials – Cobalt, Graphite, and Aluminum. Critical materials like cobalt are essential for batteries, yet their domestic supply chains are vulnerable.
3. Essential Materials – Steel, Copper, and Cement. These essential elements are the building blocks for manufacturing plants and related infrastructure.

Forge Ahead is comprised of sixteen natural resource equities with position sizes ranging from 3% to 7.5% within the sleeve.  Client model allocations to the Forge Ahead basket roughly range from 3% to 7% depending on client risk tolerance with more risk tolerant accounts receiving a higher allocation.

Servant client portfolios were generally deployed to Forge Ahead securities in mid-July.  We are tracking a proxy Forge Ahead portfolio that is up 17.5% from its hypothetical deployment through the business close on October 9^th.  Like REMX ETF’s performance year-to-date and over L12M, performance gains in the short life of the Forge Ahead sleeve have been broad-based, led by Lynas Rare Earths Limited (LYSDY) up more than 100% followed by gains of 30% or more by MP Materials (MP), Alpha Metallurgical Resources, Inc. (AMR), Albemarle Corporation (ALB) and Southern Copper Corporation (SCCO).  (Past performance of this hypothetical Forge Ahead sleeve is not necessarily indicative of future performance, nor actual client account performance achieved using this strategic allocation.)

Insights from Investment Luminaries

Prominent investment voices have been echoing this debasement narrative, viewing real assets as essential portfolio anchors amid eroding trust in fiat currencies. While X posts from Ray Dalio and Paul Tudor Jones were sparse on specifics, their recent public statements (interviews, writings) align with a 1970s-style inflationary regime redux.

• Ray Dalio (Bridgewater Associates Founder): In early October 2025, Dalio likened today’s environment to the early 1970s—high debt, supply shocks, and monetary easing—urging investors to hold “more gold than usual” as the premier hedge against debasement and geopolitical risks. Dalio emphasized gold’s uniqueness as a bulwark in a “changing world order.”
• Paul Tudor Jones (Tudor Investment Corp Founder): Jones, in October 2025 interviews, called 2025 “so much more potentially explosive than 1999” due to bull market froth and policy-induced inflation, recommending a mix of gold, cryptocurrencies, and tech stocks for the rally’s “blow-off top.” He sees gold as a core inflation hedge, noting ingredients for a “massive rally” in real assets before any peak, amid deficit-fueled dollar weakness.
• JPMorgan Analysts: Dubbed the “debasement trade” in October 2025, citing flows into gold, silver, Bitcoin, uranium, copper, and shipping as unprintable assets amid Washington gridlock and yen/dollar slides.

Confirming Statements from U.S. Treasury

Importantly, Scott Bessent, confirmed as U.S. Treasury Secretary in early 2025, has been vocal on fiscal-monetary mismatches exacerbating debasement, aligning with investors’ real-asset pivot. His rhetoric since his February appointment as Treasury Secretary underscores policy risks without endorsing specifics, but hints at potential structural shifts in U.S. fiscal and monetary policy.

• Scott Bessent: In a September 2025 critique, Bessent lambasted the Fed’s Quantitative Easing policies for creating “perverse incentives for fiscal irresponsibility” and widening wealth gaps via “wealth effect” policies—implicitly fueling debasement fears that have boosted gold. Earlier, in February 2025, he hinted at exploring a “new gold exchange standard” to counter dollar erosion, noting gold’s role as a “gauge of monetary debasement.” On Bitcoin (another debasement trade proxy), Bessent demurred in August (“We’re not buying that… yet”) but acknowledged bitcoin’s real asset-like appeal amid U.S. policy volatility.

With gold’s market cap increasing $8.9 trillion year-to-date in 2025 and bitcoin market cap increasing another $1.0 trillion, even a modest “debasement trade” allocation would significantly enhance the performance traditional 60/40 stock-bond portfolio. Servant Financial client portfolios have long held, meaningful allocations to gold, bitcoin and other inflation-hedges for their unique portfolio diversification benefits against the universal, yet unseen tax from inflation and fiat currency debasement.  The more recent addition of the Forge Ahead sleeve has added another hardened weapon against currency debasement and geopolitical risks.

This is our last Materials in Focus newsletter. Once again, a reminder below that we categorized raw materials into three investment-relevant groups:

1. Strategic Materials – Rare Earth Elements (REEs), Semiconductors, and Lithium
   Vital for national defense and advanced technologies, yet heavily reliant on foreign supply chains.
2. Critical Materials – Cobalt, Graphite, and Aluminum
   Essential for energy storage and transportation, with vulnerable domestic sourcing.
3. Essential Materials – Steel, Copper, and Cement
   The foundational components of industrial infrastructure.

Spotlight on Essential Materials: Steel, Copper, and Cement

Research suggests that demand from hyper scaled AI data centers, electrification structures, and shipbuilding could increase domestic steel consumption by 2-4 million tons annually through 2030. This equates to a 1-3% CAGR for domestic steel. Similar to other raw materials China dominates global steel production with approximately 54% market share. Our research for “National Champions” identified U.S. Steel (since acquired by Nippon Steel), Nucor Corporation, Worthington Steel, and Arcelor Mittal.

One raw material input to make steel, depending on method used, is metallurgical coal. Metallurgical coal is primarily used in basic oxygen furnaces (BOF), while smaller quantities can be used in electric arc furnaces (EAF). Given cleaner energy regulations and goals domestically, the United States produces the majority of its coal (70%) by EAF process and the other (30%) by BOF. The opposite is the case in many other countries, like Japan (Nippon steel). Details of the Nippon Steel / U.S. Steel acquisition include a National security agreement which gives the standing Presidential administration authority to appoint a board member and a non-economic “golden share” giving veto power over certain production and staffing decisions. The deal also required Nippon to make significant investments in U.S. facilities.

Since our last newsletter, the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. The act contains a number of tax provisions that promote investment in domestic production of raw materials and manufacturing. One provision is an expansion on the list of 45X credits for critical minerals production to include “metallurgical coal” effective in 2026 tax year. If unfamiliar with this credit, it is generally 10% of production costs (excluding labor and overhead), although with metallurgical coal the credit is 2.5%.  In addition to metallurgical coal, the previously approved list of minerals eligible 45X credits at the 10% rate includes several natural resources familiar to newsletter readers – aluminum, cobalt, graphite, lithium, titanium, and, of course, a number of the rare earth elements.   For 45X production tax credit purposes, it doesn’t matter if the coal is used domestically or exported overseas. Given the tax credit and investment of Nippon Steel in US facilities (including basic oxygen furnaces), we thought Alpha Metallurgical Resources and SunCoke Energy were also contenders in the steel sector for taking advantage of the changing geopolitical landscape.

Another element providing some tailwinds to the domestic steel producers is the increases on Section 232 tariffs on steel and aluminum, up from 25%. (Section 232 Tariff Increase)

With regard to our next essential material copper, global demand is expected to increase at a CAGR of 2-3% through 2035. The executive order Section 232 investigation on critical minerals and derivative products put a recent spotlight on copper. President Trump has suggested on social media that the investigation will result in copper materials and products getting a similar 50% sectoral tariff starting in August. (EO: Section 232 Investigation) Its not a surprise that China does the majority of copper refining ~40% globally.  Freeport-McMoRan Inc. and Southern Copper Corporation are two companies we think worth paying attention to.

Lastly, global demand for cement is expected to increase at a CAGR of 4-5% through 2033. China leads global supply of cement with an approximate 51% market share. But the United States domestic production meets about 80-85% of domestic demand, leaving only 15-20% imported from other countries. Canada leads US cement imports with ~40%. A few domestic companies we are watching are Vulcan Materials Company and Martin Marietta Materials.

Nucor Corporation (Ticker: NUE)

• Location: HQ in Charlotte, North Carolina. Operates 300+ facilities across U.S., Canada, and Mexico. Major steel mills in Alabama, Indiana, and Texas.
• Focus: Leading steel producer specializing in carbon and alloy steel products and steel recycling.
• Use Case: Supplies steel for construction, automotive, energy and heavy equipment.
• Strategic Edge: Largest U.S. steel producer with a low-cost, vertically integrated model.
• Website

Worthington Steel (Ticker: WS)

• Location: HQ in Columbus, Ohio. Operates 30 facilities across U.S., Canada, and Mexico. Key processing plants in Ohio, Michigan, and Alabama.
• Focus: Processes and distributes flat-rolled steel products for automotive, construction and industrial applications.
• Use Case: Supplies steel for construction.
• Strategic Edge: Spun off from Worthington Industries in 2023, WS leverages a customer-centric, value-added processing model with just-in-time delivery.
• Website

ArcelorMittal (Ticker: MT)

• Location: HQ in Luxembourg City, Luxembourg. Major facilities in Europe, North America, Brazil, and Asia.
• Focus: World’s second largest steel producer, offering flat and long steel products and a smaller mining segment for iron ore and metallurgical coal.
• Use Case: Supplies steel for construction, automotive, and energy sectors.
• Strategic Edge: Global scale and diversified portfolio provide cost advantages and supply chain control.
• Website

Alpha Metallurgical Resources (Ticker: AMR)

• Location: HQ in Bristol, Tennessee. Operates 20+ metallurgical coal mines and preparation plants primarily in Virginia and West Virginia.
• Focus: Produces metallurgical coal for steelmaking, with minor thermal coal output.
• Use Case: Metallurgical coal is critical for coke production, used in BOF for steel.
• Strategic Edge: One of the largest U.S. metallurgical coal producers.
• Website

SunCoke Energy (Ticker: SXC)

• Location: HQ in Lisle, Illinois. Operates cokemaking facilities in Illinois, Indiana, Ohio, Virginia and Brazil, with logistics terminal in the U.S.
• Focus: Produces high quality coke for steelmaking and provides coal logistics services.
• Use Case: Coke is essential for steel production. Logistics services handle coal and other bulk materials for industrial clients.
• Strategic Edge: One of the largest U.S. coke producers with long term contracts ensuring stable revenue.
• Website

Freeport-McMoRan (Ticker: FCX)

• Location: HQ in Phoenix, Arizona. Operates several open pit copper mines in North America, two molybdenum mines in Colorado, and one mine in Indonesia.
• Focus: Leading international mining company specializing in copper, gold, and molybdenum. World’s largest publicly traded copper producer.
• Use Case: Supplies copper for electrical infrastructure, construction, and industrial applications.
• Strategic Edge: Operates long lived, geographically diverse assets with significant reserves.
• Website

Southern Copper Corporation (Ticker: SCCO)

• Location: HQ in Phoenix, Arizona. Operates primarily in Peru and Mexico with exploration projects in Chile, Argentina and Ecuador.
• Focus: One of the largest integrated copper producers, focusing on copper mining, smelting, and refining with by products like molybdenum, silver, and zinc.
• Use Case: Supplies copper for electrical applications, construction, and infrastructure.
• Strategic Edge: Industry leading low-cost production. Large copper reserves and expansion projects.
• Website

Vulcan Materials Company (Ticker: VMC)

• Location: HQ in Birmingham, Alabama. Operates 400+ facilities, including 240 aggregates quarries, 130 asphalt plants, and 70 concrete plants, across 22 U.S. States and Mexico.
• Focus: Largest U.S. producer of construction aggregates. With additional production of asphalt and ready-mix concrete.
• Use Case: Aggregates and concrete are critical for cement intensive construction
• Strategic Edge: Extensive U.S. quarry network provides proximity to high demand markets, reducing transport costs. Long-life reserves ensure supply stability.
• Website

Martin Marietta Materials (Ticker: MLM)

• Location: HQ in Raleigh, North Carolina. Operates 350+ facilities, including 200 aggregate quarries, 120 asphalt/concrete plants, across 28 U.S. states and the Bahamas.
• Focus: Major producer of construction aggregates with additional operations in asphalt, ready mix concrete and magnesia-based chemicals for industrial applications.
• Use Case: Supplies aggregates and concrete for cement heavy infrastructure.
• Strategic Edge: Diversified portfolio and strategic acquisitions expand market reach.
• Website

Example of National Champion Playbook

We believe recent corporate events with respect to rare earth producer MP Materials (MP) featured in our May article Strategic Materials in Focus – Rare Earth Elements and Lithium are instructive of this Administration’s National Champions strategy for domestic producers of strategic, critical, and essential materials.

• July 10, 2025 – MP Materials Announces Transformational Public-Private Partnership with the Department of Defense to Accelerate U.S. Rare Earth Magnet Independence
• July 15, 2025 – MP Materials and Apple Announce $500 Million Partnership to Produce Recycled Rare Earth Magnets in the United States
• July 16, 2025 – MP Materials Announces Commencement of Proposed $500 Million Public Offering of Common Stock
• July 17, 2025 – MP Materials Announces Pricing of Upsized $650 Million Public Offering
• MP Materials stock price rose 40% for the trading week ended July 18, 2025.

In addition to the Administration providing direct financing and facilitating additional financings from supply dependent corporate end users, we believe the Administration will also use tax and tariff policies to promote domestic production.   Tariff policies are mostly self-evident, but within the OBBBA there is a little know provision that encourages domestic production of natural resources, manufacturing, and other production activities.  The OBBA includes a Special Depreciation Allowance for Qualified Production Property.  Think of this as the Build Baby Build provision.

The act allows an additional first-year depreciation deduction equal to 100% of the adjusted basis of “qualified production property (QPP).” Under prior law, owners of nonresidential real property had to depreciate the cost of such property over a 39-year period. A “qualified production activity” is defined in the OBBBA as manufacturing, production (e.g. agricultural production and chemical production) or refining of a “qualified product” which is generally defined as tangible personal property.   Construction of QPP must begin between January 19, 2025, and January 1, 2029; and be placed in service before January 1, 2031.

Forge Ahead

This piece wraps up coverage of our rigorous work to develop an internal Strategic Materials Fund (basket of securities) to align with these perceived long-term structural trends of the U.S. strategic sourcing of raw materials.  We’re pleased to announce that we’ve named this client portfolio sleeve Forge Ahead. Forge Ahead is comprised of sixteen natural resource equities with position sizes ranging from 3% to 7.5% within the sleeve.  Client model allocations to the Forge Ahead basket roughly range from 3% to 7% depending on client risk tolerance with more risk tolerant accounts receiving a higher allocation.    Servant client portfolios were deployed to Forge Ahead this past week beginning on Monday with incremental deployment on Friday.

“I don’t believe in pessimism.

If something doesn’t come up the way you want, forge ahead.”

~ Clint Eastwood