| January 27, 2025
Tech stocks are selling off sharply today, triggered by concerns that China’s just-released DeepSeek AI assistant may steal the thunder from U.S.-based platforms like OpenAI’s ChatGPT. Before this week, however, markets have been responding with gusto since November’s presidential election, especially in a few key—and perhaps expected—industries.
The biggest winner so far was the automobile industry, led by Tesla, up an impressive 70% since Election Day as of Friday. General Motors, while not quite as flashy, was up about 5%. Despite President Donald Trump’s rollback of Biden-era electric vehicle (EV) mandates, Tesla has continued to command investor confidence, possibly due to Elon Musk’s close ties to the president.
Electricity producers also saw a boost, driven by the AI boom. Data centers, which currently consume 1-2% of global power, could grow to 3-4% by the end of the decade, according to Goldman Sachs.
And let’s not forget the airlines industry. United Airlines, up 33%, capitalized on record-breaking TSA screenings in 2024, operating its largest-ever domestic schedule and expanding international routes.
I also want to share the best performing industries for the five-day period as of last week, as President Trump has signed an historical number of executive orders (EOs) since taking office. The list includes many of the same areas—power generation, construction & engineering, consumer finance, retail—but there’s an interesting addition: industrial REITs.
The industrial REIT ticker is represented by a single stock, Prologis, the world’s largest industrial property developer. According to the Wall Street Journal, the company has seen its warehouse business explode since the election. It’s also been dipping its toes in the white-hot data center market, selling a facility in the fourth quarter, with more in the pipeline.
Why the Arctic Matters
But let’s pivot to a different story—one unfolding far from Wall Street. I recently spoke with Jonathan Roth, founder of ResourceWars.com and a veteran of capital markets, who highlighted an increasingly urgent issue: the Arctic.
As polar ice caps melt, new opportunities—and risks—are emerging in this increasingly contested region. Nations like the U.S., Russia and China are jockeying for influence, not only to access the Arctic’s vast natural resources but also to secure strategic military and trading advantages.
Greenland, in particular, is shaping up to be a geopolitical hotspot, and it’s no wonder that Trump has repeated his interest in acquiring the island.
A Treasure Trove Beneath the Ice
During our conversation, Jonathan emphasized the Arctic’s immense resource wealth. The region is home to some of the world’s largest untapped reserves of natural resources. A 2008 study by the U.S. Geological Survey says that the Arctic holds 1,670 trillion cubic feet of natural gas and other fuels—equivalent to Russia’s entire oil reserves and three times those of the U.S.
Greenland, the world’s largest island that isn’t a continent, is rich in critical minerals essential for modern technologies, including rare earth metals, graphite, niobium and titanium. These materials are vital for everything from smartphones to EVs to military hardware.
Ice loss in the Danish territory has also exposed significant deposits of lithium, hafnium, uranium and gold. A 2023 survey by the Geological Survey of Denmark and Greenland evaluated 38 raw materials on the island, most of which have high or moderate potential.
Russia’s Arctic Ambitions
Jonathan also pointed out that Russia has been quietly building its Arctic presence for over a decade. It now has the most significant military presence in the region, with refurbished Soviet-era bases and a fleet of nuclear-powered icebreakers.
In 2024, some 38 million metric tons of cargo were shipped through Russia’s Northern Sea Route (NSR), a record amount for a single year and a nearly tenfold increase from a decade earlier. The NSR is central to President Vladimir Putin’s vision of a shipping lane that rivals the Suez and Panama Canal, but challenges like shallow, ice-filled waters and foggy conditions mean the route has a long way to go before becoming a global sea lane.
The country’s Arctic ambitions are about more than just trade. The region is a cornerstone of its strategy to secure military and economic power. This poses a significant concern for the U.S. and its allies, especially as climate change accelerates ice melt and opens up new access routes. Russia’s dominance in the Arctic could disrupt global trade, heighten geopolitical tensions and undermine U.S. strategic interests.
The U.S. Lags in Icebreaker Capabilities
While Russia boasts dozens of icebreakers, including nuclear-powered vessels, the U.S. is woefully behind. Jonathan highlighted that the last heavy polar icebreaker built by the U.S., the Polar Star, was commissioned nearly 50 years ago, in 1976. Meanwhile, the newer Polar Security Cutter (PSC) class of icebreakers, intended to bolster U.S. capabilities, has faced years of delays and budget overruns.
While Russia boasts dozens of icebreakers, including nuclear-powered vessels, the U.S. is woefully behind. Jonathan highlighted that the last heavy polar icebreaker built by the U.S., the Polar Star, was commissioned nearly 50 years ago, in 1976. Meanwhile, the newer Polar Security Cutter (PSC) class of icebreakers, intended to bolster U.S. capabilities, has faced years of delays and budget overruns.
Recognizing this, the U.S. has partnered with Canada and Finland under the ICE Pact to develop a new generation of icebreakers. Finland, which designs 80% of the world’s icebreakers, brings valuable expertise to the table.
Greenland: A Strategic Prize
Greenland’s importance extends beyond its resource wealth. Jonathan noted the island occupies a key position along two potential Arctic shipping routes—the Northwest Passage and the Transpolar Sea Route. As sea ice continues to melt, these routes could significantly reduce shipping times and bypass traditional chokepoints like the Suez and Panama Canals.
Greenland is also home to Pituffik Space Base (formerly Thule Air Base), a critical U.S. military installation for missile early warning and space surveillance. The base’s strategic value is compounded by Greenland’s role in the so-called GIUK Gap (Greenland-Iceland-United Kingdom)—a naval chokepoint in the North Atlantic.
Investment in Pituffik has been inconsistent, however, and its importance has waned since the Cold War. Renewed attention to Greenland could help the U.S. counter Russia’s growing Arctic dominance and China’s ambitions as a “near-Arctic” power.
What’s at Stake
The Arctic’s significance isn’t just about resources or shipping lanes. It’s about power, influence and the ability to shape the future of global trade and security.
For investors, the region offers opportunities in sectors like energy, mining and infrastructure. Companies involved in rare earth mining, icebreaker construction and Arctic logistics could see significant growth as nations ramp up their Arctic investments.
As always, investors should keep a close eye on these developments. The Arctic may be cold, but the race for its riches is heating up.
To watch my full interview with Jonathan Roth, click here!
Happy Investing, |
