An old flyer tumbled across the empty parking lot, bouncing off a dirty snow pile before getting stuck in the oversized grill of a BMW Roadster.
It was 25 degrees in Hagerstown, Maryland, and the outlet mall parking lot was all but deserted. The handful of SUVs and minivans that lined the front row of spaces were outnumbered by the older cars in the workers’ lot in the back.
The wife and I were going skiing and stopped on the way to pick up some gear from The North Face outlet. It was a waste of time.
I’d been to this particular place before — an outlet mall where it was hard to find parking and they used to bus in old ladies on shopping excursions from Pennsylvania and West Virginia.
But that was in the before times — before COVID and the new normal. The current look of the place was shocking. I’d say out of roughly 110 stores that used to fill the four store-lined promenades, there were maybe 25 still open.
And one was a consignment store.
Most of the top brands — Nike, Polo Ralph Lauren, Clarks, and Under Armour — were gone, although Coach and North Face still held on.
The glass storefronts were adorned with giant happy faces on large posters with ad slogans to cover the emptiness. “This Place For Lease,” they begged.
I wondered how long it would be before some bored teenagers put rocks through all that plate glass. That would kill it, of course; like an old barn that loses a bit of roof, they go down fast after that.
It must be costing the owner, Simon Property Group (NYSE: SPG), hundreds of thousands of dollars a month. That idea is not reflected in the share price, however, as SPG has almost tripled since the March 2020 lows.
The shops that remained were full of ill-sized wares, or they were ugly or odd. It makes sense that in a world where flagship shops can’t get supplied, overflow stores have it worse. We left without buying anything.
Shortages
I’ve been trading the shortages by recommending shipping companies and semiconductor manufacturers.
Shipping is up because it costs more to ship products. The freight rate to ship a container from China to California went from $1,350 in February 2021 to $15,218 today. Obviously, container shipping companies are making a lot of money.
Semiconductor companies are also making a lot of money. Not only was there a decline in production during the pandemic, but there was also a surge in demand.
Demand for chips was 17% higher in 2021 than in 2019, and with the 5G rollout, this demand is expected to surge even more.
As you know, most chips are made in Asia. In the last two decades, U.S. production has fallen from 37% to just 12%.
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Computer chips are important to U.S. manufacturing as well as advanced weapons systems for the military. The Biden administration is attempting to fix the problem by proposing a bill that will give away $52 billion to companies that make chips in the United States.
And remarkably, it seems the bill will pass.
Last Friday, the U.S. House of Representatives passed the COMPETES Act by a vote along party lines, 222-210. The Senate passed a similar bill last June. Now these two pieces of legislation will be reconciled and a bill should be put on President Biden’s desk to sign.
Biden said in a statement, “I look forward to the House and Senate quickly coming together to find a path forward and putting a bill on my desk as soon as possible for my signature.”
This bodes well for companies that manufacture semiconductors in the United States. In my expansive research, I’ve discovered what I expect is the only company that is a pure play on U.S. semiconductors. It only manufactures in the U.S., and it’s Department of Defense (DOD) certified. This means its chips can go into weapons systems.
I’ve written a special report detailing this unique opportunity; it’s currently in production, and my design team says it will be finished on Wednesday. You’ll want to own this company before Biden signs the bill. Keep an eye out for this free report.
All the best,
Christian DeHaemer Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
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