Ferg's Finds
This is a short weekly email that covers a few things I’ve found interesting during the week.
Article(s)
This was a banger of a piece: Lyn Alden: Three Things Never to Fade
I’m long all three in some form in the portfolio:
Thing 2: Computation (Long Chinese tech)
Thing 3: Network Effects (Long Chinese tech)
When countries adopt cultural views or government policies against energy density for the sake of optimizing some other variable, they’ll generally diminish their share of the world’s economic output, either knowingly or unknowingly. They can make that decision, and the rest of the world will move on without them, until they choose something different.
Podcast/Video
Timely interview for anyone wondering what’s going on with the tariffs on Canada and Mexico oil imports: MacroVoices #465 Rory Johnston: Oil Markets Under Trump 2.0
Quote
Something to think about every time you get angry at someone’s opinion.
“If an opinion contrary to your own makes you angry, that is a sign that you are subconsciously aware of having no good reason for thinking as you do. If someone maintains that two and two are five, or that Iceland is on the equator, you feel pity rather than anger, unless you know so little of arithmetic or geography that his opinion shakes your own contrary conviction. So whenever you find yourself getting angry about a difference of opinion, be on your guard; you will probably find, on examination, that your belief is going beyond what the evidence warrants.”
-Bertrand Russell
Tweet
This little exchange made me laugh.
I wasn’t aware the gap was this large.
Charts
This article is well worth a read with the collapse of Norway’s government (Germany and the UK are in deep shit if Norway cuts them off, which I touched on in this Ferg’s Finds).
In 2023 the amount of electricity that Germany had imported was 15.3 TWh higher than the amount it had exported. This figure rose in 2024 to 31.9 TWh. In 2024 Germany’s average price for electricity was 9.9% higher than the price in its neighbouring countries, compared to 2.2% in 2023. It therefore made financial sense more often in 2024 for Germany to import electricity at lower prices than to generate electricity at higher prices.
An overview of Germany’s commercial foreign trade in electricity in 2024:
France: Export: 2.852,2 GWh Import: 15.691,9 GWh
Norway:Export: 1.227,7 GWh Import: 7.042,9 GWh
My favourite part of the article had to be this from a “German think tank” (which can be relied upon to be devoid of any thinking). It’s even funnier when considering Norway isn’t even in the EU.
Europe’s electricity system is the world’s largest interconnected grid linking nearly 600 million citizens, according to energy think tank Ember. It embodies the spirit of solidarity in the European Union and sharing resources with your neighbors. The rise of right-leaning parties with an emphasis on inward-looking policies is disrupting the harmony.
You better believe French voters will also pay attention if electricity costs continue to climb with talk of Frexit: Le Pen Plan for Power Market ‘Frexit’ Worries France’s Neighbors.
The National Rally’s policy to disconnect France power’s prices from neighboring markets, combined with tax cuts, could cut energy bills for French households by as much as 40%, Tanguy said.
Something I'm Pondering
I'm pondering, or more amused, how immune analysts' estimates are to negative news.
Tesla is in deep shit, with roughly half of its revenues from the US, a quarter from China, and a quarter from other countries.
EV sales are slowing in developed markets, while in developing markets, where the growth is, they are getting eaten alive by Chinese competitors. Breakingviews: BYD's outpacing of Tesla has only just begun.
Tesla is having a rough time in Europe:
Tesla registrations across EU countries fell 13% last year, with Germany—the bloc’s largest market—accounting for much of the decline. The EV maker has struggled in the country due to an aging model lineup, increasing competition, and the withdrawal of government subsidies in late 2023.
Tesla’s sales plummeted 41% last year in Germany, while overall battery-electric vehicle sales declined 27%.
These issues are minor for Tesla analysts, with them estimating earnings to grow an average of 23% per year through 2030.
Look how smooth those upward price target revisions are even as the stock price rolls over.
Classic bad news is still good news.
Apparently, China sanctions, Deepseek, and Huawei aren’t a threat to Nvidia growth projections.
In fact, China is a growth opportunity for them…
Yes, China is already 17% of Nvidia’s revenue (potentially 42% if you are to believe their revenue from Singapore (25%) is simply a sanction workaround for Chinese companies).
How are analysts viewing these risks? The last two months, they increased price targets and earnings estimates.
Nvidia analysts: “nothing to see here; slap 144% growth on it this year and 53% next year.”
Smooth earnings growth as far as the eye can see…
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.
Until Covid struck, I would have agreed with the Bertrand Russel quote.
The lockdowns, the coercion, the lying, helped me understand just how dangerous ignorant “liberal” views are. They are not just a harmless contrary opinions that one should tolerate… it’s what has enabled the worst totalitarian governments in history: Stalin, Mao, Pol Pot, Hitler…
The point you raise about the collapse of the Norwegian government and power exports is an important one, but I think it goes deeper than that. Europe has become far too reliant on interconnectors on the assumption that Norway is and will continue to act as Europe's battery - sending zero-carbon hydropower south when the wind doesn't blow in the North Sea or Germany. A fine strategy for individual country's but add it all up and each country is far too dependent on the same intermittent renewable energy source - wind.