The last transport plane has left Afghanistan with the U.S. Ambassador on board. Secretary of State Anthony Blinken has said the U.S. Embassy in Kabul will remain closed. Against this low point in U.S. foreign policy the stock market is staying high.

Monday the S&P 500 closed at 4,529, up 19 points and holding above the 4500 level. The Dow Jones closed at 35,400, down 56 points and the Nasdaq Composite closed at 15,266 up 136 points and holding above 15,000.  This morning futures for all three exchanges are trading in the green. S&P futures are up 5 points, Dow futures are up 47 points and Nasdaq futures are up 17 points.  Yesterday's top gainers were across sectors and ranged from an upper limit of +3.6% for PayPal (PYPL) to a lower limit of +2.7% for Tesla (TSLA).

TOP GAINERS

Chart: The New York Times

TalkMarkets contributor Gail Tverberg says energy and resource deployment issues have a lot to do with why the U.S. ended it's involvement in Afghanistan in her TM Editor's choice piece, The Afghanistan Fiasco (And Today’s High Level Of Conflict) Reflect An Energy Problem. Below are some excerpts of what she has to say in her article:

"Even though it is not obvious, the United States is up against energy limits. It needed to pull back from Afghanistan to try to have enough energy to continue in its other roles, such as providing benefits for its growing army of retirees and building infrastructure to mitigate the COVID-19 downturn."

"The way energy limits play out is not at all intuitive. Most people assume that we will run out of oil, leading to a spike in oil prices. We will then transition to renewables. As I see it, this understanding is completely wrong. Limited energy supply first leads to a need for simplification: Stepping back from Afghanistan would be one such type of simplification. It would save energy supplies and reduce the need for greater tax revenue or added debt."

"President Biden’s abrupt pullout from Afghanistan reflects a reality that increasingly has to take place in the world. The US needs to start pulling back because there are too many people and not enough inexpensive ways to extract resources to fulfill all of the commitments that the US has made. As mentioned earlier, there are a number of obstacles to success in Afghanistan. Thus, it is a good place to start."

"We don’t seem to have a good way out of our current predicament. This seems to be what is behind all of the recent internet censorship. Renewables and nuclear require fossil fuel energy for their production and maintenance. The powers that be don’t want anyone to know that nearly all of the “happily ever after using renewables” stories we hear are based on wishful thinking."

Contributor  Frank Holmes reminds us that one of the reasons Afghanistan was considered important to U.S. strategic interests was rare earth elements (REE). He expounds upon this in the first section of his article Afghanistan Is Sitting On A Gold Mine. Literally. and then continues with a look at silver, 10 year treasuries and German demand for physical gold.

"The country sits atop what could be one of the world’s largest reserves of various metals and minerals, including not just gold but also platinum, silver, copper, iron, aluminum, and uranium. It’s believed to have so much lithium, an increasingly important metal that’s widely used in battery technology, that Afghanistan could one day be known as the “Saudi Arabia of lithium,” according to a 2010 memo by the U.S. Department of Defense.

The combined value of its minerals is estimated at between $1 trillion and $3 trillion. By comparison, opium poppy production in the country was valued at only $350 million in 2020, despite an increase in cultivation from the previous year.

Among Afghanistan’s rich resources are rare earth elements (REEs). REEs are those metals with unpronounceable names that are used in the manufacture of advanced technologies, including electric vehicles, wind turbines, and missile guidance systems. Your iPhone contains a number of them. Each F-35 fighter jet carries about half a ton of these strategic elements.

Mere hours after the Taliban completed its swift takeover of Afghanistan, a Chinese foreign ministry spokesperson said that Beijing was ready to participate in “Afghanistan’s reconstruction and development.”

I genuinely hope the development of Afghanistan’s resources, with or without China’s help, improves its citizens’ quality of life and brings the country into the 21st century...That said, the odds are not in the country’s favor, sadly. The so-called “resource curse” is a real thing."

Bigstock

Moving on to the markets TalkMarkets contributor Zacks Equity Research discusses Zoom Video in an article entitled Zoom Video Communications Beats Q2 Earnings And Revenue Estimates.

"Zoom Video Communications (ZM) came out with quarterly earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.16 per share. This compares to earnings of $0.92 per share a year ago...Over the last four quarters, the company has surpassed consensus EPS estimates four times."

"It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.09 on $1.01 billion in revenues for the coming quarter and $4.65 on $3.99 billion in revenues for the current fiscal year."

"While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future."

General Electric Corp.

The Staff at contributor Money Morning take a look at one of this year's top market performers in GE Stock Prediction For 2025: 110% Upside Potential. Here is some of what they have to say:

"General Electric Co. (GE) is an undervalued stock that could see an incredible, triple-digit rise over the next five years as airlines recover and rebound from their pandemic lows...with the air travel recovery following the fallout of the pandemic over the next year or so, things are looking up for GE Aviation...GE grew free cash flow by $2 billion year-over-year and even raised its free cash flow outlook for the year from the $2.5 billion to $4.5 billion range to $3.5 billion to $5 billion - turning cash positive a year earlier than anticipated."

"CNN analysts predict that GE will climb 22% in the next 12 months. If the stock continues that momentum, it would then reach gains that make for a share price of $235 by 2025 - a gain of roughly 110% over five years. And that is far better than anything the S&P 500 could hand you in that same time frame."

Caveat Emptor.

Chris Vermeulen notes that the recent remarks by the Fed, including those by Chairman Jerome Powell are the main drivers fueling the current rally in the stock market. In his article Fed Statements Drive New Rally Momentum In The Stock Markets he notes the following:

"Last week, the US Federal Reserve reiterated statements in support of continued easy money policies and support for a recovering US economy. Additionally, Jerome Powell made a statement suggesting tightening too early could be much more damaging than waiting until sufficient headwinds are behind us.

I interpret this as stating the current inflationary concerns are less important than the current global market expectations. We can likely weather moderate inflationary concerns if the economy continues to strengthen – whereas tightening right now may not reduce inflationary concerns and may prompt a broad market slowdown within the US and globally."

"Traders and investors perceived these comments as “Here we go – off to the races again” and the US markets rallied sharply on Friday and in early trading on Monday, August 30, 2021."

"We need to see this momentum carry forward through the end of September as the end of Q3:2021 should continue to trend higher with the US Federal Reserve’s recent statements. Additionally, traders should be positioning capital ahead of the end of Q3:2021 expecting another round of strong earnings and profits in October/November – pushing the Christmas Rally into high gear."

Pixabay

See Vermeulen's full article for his specific takes on the Nasdaq (QQQ) and the Russell 2000 (IWM).

That's a wrap for this Tuesday's round-up. Take care, get vaccinated and look out for deltas of all sorts.