Ferg's Finds

This is a short weekly email that covers a few things I’ve found interesting during the week.

A bit of housekeeping: I've paused paid subscriptions on my Substack while I restructure a few things in the background. It should only be back up in a few days, but for now, no one new can subscribe to paid tiers. For paying subscribers, your current subscription will be extended by the period I've paused payments for (~4weeks).

Article(s)

I’ve been trying to ramp up my reading again lately, as it took a backseat (along with sleep) to being a parent.

I’m reading two books currently (notes to come).

• The Energetic Investor: Nurturing Mind, Body & Investment Mastery for Lasting Prosperity, by Kevin Bambrough

• The Money Game Paperback, by Adam Smith (this was via recommendation by Paulo Macro).

I also have a few websites where I like to read the notes on books before committing to reading them. Derek Siver's book notes is one of my favourites.

Investing/interest

• Fossil Future, by Alex Epstein

• China’s World View, by David Daokui Li

Parenting

• Playful Parenting, by Lawrence Cohen

Podcast/Video(s)

I loved Paulo and Chase's answers to this question on parenting so much that I clipped them out here.

Quote(s)

90% of parenting is your kids simply observing how you live your life

-Martin Prior

Tweet/notes

It doesn't appear that this trend will slow with the passage of the Genius Act.

As the government has found itself another large buyer of treasuries right when it needed it.

The Genius Act enhances financial stability: Mandates 1:1 reserves in low-risk, liquid assets (e.g., U.S. dollars, Treasuries, cash) held under custodial controls.

Charts

Over the past decade (until 2022), China’s exports to the US were approximately double those of ASEAN (Association of Southeast Asian Nations).

On the back of the trade war, it's flipped, with China exporting nearly double to ASEAN compared to the US.

Something I'm Pondering

I’m pondering the growth in electricity demand resulting from air conditioning.

In developing countries, people are trying to increase their standard of living and get AC, while developed countries are busy trying to AC their computers (AI).

AC use is expected to be the second-largest source of global electricity demand growth after the industry sector, and the strongest driver for buildings by 2050.

The stock of air conditioners in buildings is forecast to rise from roughly 1.6–1.8 billion units today to around 5.6 billion by 2050.

Cooling already accounts for ~10% of global electricity consumption, and as adoption grows it is poised to become the single largest driver of building electricity demand growth through 2050.

What does the split look like?

Most research points to it being 80-90% developing market demand (depending on how aggressive you get on data center projections).

The IEA finds that the “lion’s share” of new cooling demand will come from emerging markets, with just three countries – India, China, and Indonesia – accounting for about half of global growth in AC energy use by 2050. In total, the vast majority (on the order of ~80–90%) of the increase in cooling electricity consumption is forecast to occur in developing regions

An interesting implication of this is that it will mostly add substantial baseload demand at night.

India illustrates this trend: its installed AC stock is projected to skyrocket from only about **48 million units in 2020 to over 1 billion by 2050, a more than 20-fold jump.

The issue is particularly sensitive in the fastest-growing nations, with the biggest increase happening in hot countries like India – where the share of AC in peak electricity load could reach 45% in 2050, up from 10% today without action. This will require large investments in new power plants to meet peak power demand at night, which cannot be met with solar PV technology.

It’s the same trend across the rest of Asia.

How to play this trend?

I have a few ideas….

I hope you’ve all been having a great week.

Cheers,

Ferg

P.S. I’m looking at a few Asian and African countries and wondering which indexes might replicate this sort of performance over the next few decades.

Update: Warsaw’s exchange performance isn’t nearly as impressive when take into account this period of currency depreciation (which I’d missed with the above).

One last thing…

A bit of housekeeping: I've paused paid subscriptions on my Substack while I restructure a few things in the background. It should only be back up in a few days, but for now, no one new can subscribe to paid tiers. For paying subscribers, your current subscription will be extended by the period I've paused payments for (~4weeks).