Ferg's Finds

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

Article(s)

Asymmetric Response: Russia just delivered a masterclass lesson in strategic escalation.

I had read a few pieces on the escalation, none of which mentioned this:

What’s most perplexing about Oreshnik is that it didn’t carry any munitions at all. There were no observable explosions on impact. The destructive force of the weapon derives solely from its kinetic energy: mass times velocity (e = (mv^2)/2). To put that into perspective: the energy delivery of a single, 100kg warhead at Mach 10 is more than twice as large as a 2000-pound bomb.

The ramifications of this are huge when you realise there are no defences for these missiles:

At speeds above Mach 5, rockets become very difficult to intercept; speeds above Mach 25 are infeasible, as the air in front of a missile turns into a plasma (those are the speeds at which objects from space enter the earth’s atmosphere).

It's crazy that the US still hasn't fielded hypersonic missiles and is crippling drone development: Report to Congress on Hypersonic Missile.

Russia reportedly fielded its first hypersonic weapons in December 2019, while some experts believe that China fielded hypersonic weapons as early as 2020. The United States does not have any fielded hypersonic weapons.

Hard questions need to be asked about the trillions spent on things like the F35 program when drones and hypersonic missiles potentially make them obsolete: The F-35 program's lifetime price tag tops $2 trillion, and the Pentagon wants jets to fly longer.

Podcast/Video

Joe Rogan Experience #2234 - Marc Andreessen

If you’re short on time, this Twitter thread broke a few of the key points down:

• How US is losing out in drones (90% of US military drones are Chinese-made).

• Government containing AI (Only 2-3 AI companies would be allowed to exist).

• Debanking as a weapon.

• Government mouse wigglers.

Quote

Greg Hayes, chief executive of Raytheon, said the company had “several thousand suppliers in China and decoupling . . . is impossible”. “We can de-risk but not decouple,” Hayes told the Financial Times in an interview, adding that he believed this to be the case “for everybody”.

Following this Matt Stoller noted: “the outcome of a war with China will rest on whether China decides to supply us.”

Tweet

If you can't decouple military suppliers, how will things be any different in other sectors?

Charts

While I regularly express my disdain for junior miners being a dumpster fire for shareholder value, there are a number of commodities where grassroots will have to plug supply-demand gaps going out a few years.

Something I'm Pondering

I'm pondering who will be the consolidators in some of the sectors I'm invested in. Offshore services are currently the prime example of consolidation, which is already well underway.

Railroads are an interesting case study (as are banks, semiconductors, airlines, and meat processors, to name a few).

Yes railroads played out over a few decades. I could see this playing out for a period with drillship day rates once cold stacked rigs are reactivated or scrapped (yes the companies will eventually screw things up and over order, but there will be a window when no new supply can come on and day rates will get silly.

I hope you’re all having a great week.

Cheers,

Ferg

P.S. If you’re interested in my story and why I started this Substack, you can read the story here.