The U.S. Government Just Secured a Major Deal

China's dominance in two key parts of the technology sector may be slipping away...

Last weekend, President Joe Biden traveled to Hanoi, Vietnam for important meetings with its ruling Communist Party. For months, the Biden administration has pushed Vietnam to elevate the U.S. to its highest diplomatic status – which China and Russia already hold.

And now, it finally got its wish.

Headline No. 1:

The U.S. and Vietnam have begun a historic partnership.

McCall's Call: Vietnam added the U.S. to its list of top diplomatic partners over the weekend. It also announced a landmark deal between Boeing (BA) and Vietnam Airlines. As part of a deal worth $7.8 billion, Boeing will sell 50 of its 737 Max jets to the carrier to boost its presence in the region.

But more groundbreaking, the U.S. and Vietnam formed a partnership to boost semiconductor manufacturing and rare earths development.

The details of the agreement have yet to be made clear. But here's what we do know...

The U.S. government has a spending budget of about $100 million annually over the next five years to support semiconductor supply chains around the world. That spending was built into the $280 billion CHIPS and Science Act – which was designed to boost semiconductor manufacturing and reduce our reliance on China for those goods.

Now, there's a good chance that some of those funds will flow to Vietnam to develop its local semiconductor industry. And at least one U.S. chipmaker is already on board...

Intel (INTC) has committed about $1.5 billion to the country – where it will build its largest assembly and test facility in Ho Chi Minh City. And as the U.S. and Vietnam continue to solidify their diplomatic relations, I expect to see more investment from U.S. firms.

Then there's the topic of strengthening the supply chains for rare earth metals' production...

Behind China, Vietnam has the world's second largest deposits of these key minerals – which are critical components of electronics, defense weaponry, and more. So as the U.S. is looking to reduce its reliance on China for these minerals, it's turning its attention toward Vietnam.

Just this morning, we learned that Malaysia plans to enact an export ban on rare earth raw materials. It holds about 30,000 metric tons of these minerals, which is a small amount compared with other nations – like China's 44 million metric tons, for example. But it's more proof that countries are beginning to realize the importance of these key metals... and that they're looking to diversify away from China, too.

These headlines are still fresh, and there are a lot of details that need to be worked out.

But these are certainly some interesting developments in the semiconductor and rare earths industry that point to countries looking to shore up their supply chains outside of China. And this is trend I expect will continue.

Headline No. 2:

Two of this year's top performing large caps have one thing in common – obesity.

McCall's Call: Mega-cap tech stocks have garnered a lot of attention this year. The "Magnificent Seven" – Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META) – have crushed the return of the remaining 493 stocks that make up the S&P 500 Index.

But they aren't the only stocks putting up strong gains here in 2023.

Pharmaceutical giants Eli Lilly (LLY) and Novo Nordisk (NVO) deserve some time in the spotlight, too.

These two stocks have rallied to new highs recently. Eli Lilly is up about 63% while Novo Nordisk is up 47% year to date. And it's all thanks to surging sales of their diabetes and obesity drugs...

I suspect you've heard about the Ozempic craze. It has been called the "worst-kept secret in Hollywood" because celebrities including Elon Musk have taken it to lose weight. And I've discussed it several times here in Daily Insight.

Well, it should come as no surprise that this trend has continued to gain traction in the months since I first talked about it. And I don't expect that momentum to die down soon. Banking firm Barclays even predicts the market for obesity drugs will reach $100 billion by 2030.

This is an industry that has been building for years.

Novo Nordisk's Ozempic was originally approved by the U.S. Food and Drug Administration ("FDA") in 2017 for the treatment of Type 2 diabetes. The company's Wegovy was approved for obesity four years later. Meanwhile, Eli Lilly's Mounjaro was approved in May 2022 to treat Type 2 diabetes. And its FDA application to treat obesity could be approved as early as this year.

Considering all of these drugs require weekly injections that ensure folks come back for more and that they often come with a hefty price tag, they each have massive upside potential ahead. And the money is already pouring in...

Sales of Mounjaro climbed from a mere $16 million during the second quarter of 2022 to $979.7 million one year later. And according to some analysts, that figure could reach $26.4 billion by 2030. In Novo Nordisk's recently reported quarter, sales of Ozempic and Wegovy were up 50% and 344% year over year, respectively, through the first six months of 2023.

As investors, the big question for us now is whether all of the upside of treating obesity is baked into the share price or if there's still more room for growth.

Several companies are working on pill versions of these drugs, so will increased competition hurt the early leaders? And if so, are there investment opportunities out there that we should be keeping an eye on?

Then, there's the biggest question of all...

Will other drugs soon be approved as treatments for other ailments such as heart disease and addiction?

It's far too soon to know anything for sure. But rest assured that my team and I are keeping a close watch on this market for potential opportunities.

The bottom line is that this isn't a diet fad.

This a long-term trend that's only going to keep growing – especially as we continue to fight the ongoing obesity problem in our country. So as investors, we should be looking for ways to profit.

Here's to the future,

Matt McCall
Editor, Daily Insight
September 11, 2023

P.S. This time last year, economists were 100% certain that a recession was on the horizon.

Today, those odds stand at 15%.

So what happened? And what's likely to happen next in the stock market?

My colleague Brett Eversole and I have a huge prediction for you. But you'll have to join us for a special presentation tomorrow at 8 p.m. Eastern time to find out the details.

Click here to reserve your spot. It's absolutely free to attend.

Did You Miss My Latest Podcast?

I'm an optimist. But that doesn't mean I blatantly ignore what's going on around me – whether it's high interest rates or conflicts abroad. I just tend to see the world and the market through a glass that's half full. That viewpoint can oftentimes put me at odds with the masses. But I love being a contrarian. And I'm not alone.

On this episode of Making Money With Matt McCall, I invite another contrarian onto the show – my colleague Brett Eversole. Brett joins me for the third time to break down the market and discuss what we believe is coming.

Right now, we both believe that we're at the beginning of a great new bull market. Not everyone shares our opinion. There are many folks out there who don't think this will be a sustainable long-term rally. But Brett and I have plenty of stats to help back up our bullish claim. And we dive into all the exciting things that are propelling stocks forward today and for the future. Don't wait to tune in.