🇺🇸 Oh, the breakout continued in the Lithium ETF ($LIT)...

+44.6% in the almost four months since its bottoming was noted here. That's a 34.8% gain on $SPY over the same period.

Chinese regulators had shut some mines down (compressing supply 8-9%), some other big miners had cancelled expansion, and EV sales had re-accelerated as the spot price had bottomed one day prior to the linked post in August.

Of course it was never financial advice...

🧪 INTELRUNNER 🧪

🇨🇱 🇺🇸 The iShares MSCI Chile ETF is crushing this year. $ECH is up 53% and counting year-to-date (vs. 17% for $SPX). Why?

1️⃣ Copper is up 27% this year, and materials make up 40% of $ECH. Higher copper prices lift revenues, earnings, and dividends for mining giants like Sociedad Quimica y Minera de Chile SA ($SQM).

2️⃣ Lots of earnings surprises have pushed the gap between Chile and the broader emerging markets, while consumer sectors have benefited from wage gains due to a tight labor market.

3️⃣ Domestic politics have turned conducive. After a two-year battle, a market-friendly draft constitution was approved (with no massive royalty hike for miners). This has narrowed the equity risk premium in Chile.

4️⃣ Banco Central de Chile cut the base policy rate to 4.75% in July and signaled a willingness to go further. This was the last in two years' worth of cuts in a cycle that saw the rate fall from 11.25%. Obviously this reduces the cost of funding & debt, revives credit demand, and rerates domestic banks (20% of $ECH—Santander Chile's net income is +63% YoY). It also supports the peso, which...

5️⃣ The Chilean Peso has appreciated 7% against the Dollar this year. It's been buoyed by copper prices, the carry trade, and a two-year cutting cycle at the central bank. $ECH is dollar-denominated, so appreciation in $CLPUSD boosts the gains of its dollar-denominated investors.

🕯 INTELRUNNER 🕯