Ferg's Finds
This is a short weekly email that covers a few things I’ve found interesting during the week.
Article(s)
Aitkenadvisors: The Millennium Bridge as a metaphor for Trump
Aitkenadvisors: If forty million people say a foolish thing…
Podcast/Video(s)
Jeffrey Gundlach: Surreal (H/T PauloMacro)
The presentation had some great charts.
The Fed Will Choose Inflation Over Recession | Vincent Deluard
This chart is from Jeffrey Gundlach's presentation, but it does fit well with Vincent's observations.
Quote(s)
"I'm not predicting, I'm observing."
-George Soros
Tweet/notes
Oils structural demand substitution is a trend I'm keeping an eye on
It's not as simple as the US ICE efficiency gains reducing gasoline consumption as they have been largely offset by US consumers' preference for larger vehicles. Hence, the overall effect is more marginal than the above table would have you believe.
The bigger trend to watch is EV/Hybrid and LNG/CNG substitution in China (were energy security is a priority).
I question the narrative that EV and now largely PHEV penetration globally will displace a significant amount of oil consumption, as passenger vehicles account for ~25% of global oil demand. While PHEV efficiency is incredible, so is their price, which could create a lot of first-time buyers in developing markets, creating a classic case of Jevons Paradox.
Charts
Across multiple commodities, we have seen Western strategic stockpiles depleted.
Strategic Petroleum Reserve SPR (-45% from peak)
US strategic stockpile of tin (currently 180T vs peak of 250,000T or -99.99%)
Western Platinum stockpiles (The Platinum Stock Supply Crisis)
Even Megatonnes to Megawatts was a stockpile and provided 9720T of U308 per year from 1999 to 2013 when it ended (when this program started, it represented 20-25% of supply).
There is one country that consistently appears on the other side of this trend and is reaching record highs in its strategic stockpiles.
Something I'm Pondering
One can't look at this gold-to-coal ratio without pondering: are we setting up for the third heavy reversal in a decade, or is this time different?
I hope you’ve all been having a great week.
Cheers,
Ferg
P.S. This is today's co-working spot on Ada Bojana (where Montenegro borders Albania).
