Fergs Finds

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

Article(s)

Energy system transformations and energy security by John Kemp

Some fantastic charts that help visualise the fact that Asia has driven ~80% of the increase in global energy use, with Asian energy consumption set to keep growing ~4% a year, while the rest of the world’s energy growth is sub 1% per year.

All energy sources are growing rapidly in Asia, with the big question for me being whether storage can allow solar to keep growing (I plan to dig into this).

Podcast/Video(s)

Morgan Housel - The Art of Spending Money (EP.466)

“All behavior makes sense with enough information.” Your spending habits are rooted in past experiences, emotional wounds, and unconscious programming shaped during childhood. Understanding this provides both self-compassion and empathy for others’ seemingly irrational financial choices.

Quote(s)

“You can measure everything about a bubble except the most important part: When investors will stop believing in it. The end of the bubble is just the end of enthusiasm. And enthusiasm isn’t a tamable statistic. It’s a hormone that owes nothing to the logic of your data.”

-Morgan Housel

Tweet/notes

The contrarian signals are coming in hard and fast.

Charts

This is why I’ve focused so heavily on Asia recently as it’s in the driver’s seat for global growth and energy demand.

This chart illustrates the point well: the world’s energy consumption, excluding Asia, has been essentially flat over the last decade.

Something I’m Pondering

In my last few “Finds” I’ve pointed out how flawed some economic data is.

• US Manufacturing: How GDP Hides Industrial Decline

• US job openings: The Ghost Job Crisis Exposed

• Oil Demand: Where are the oil barrels? IEA gap deepens confusion over looming glut (hint; missing barrels = Asian consumption growth).

This recent release on the federalreserve.gov website pointed to a whooper of a “discrepancy” in that Cayman Islands as % of foreign holdings of treasuries was 17.6% not the previously thought 4.85% meaning its the largest foreign holder of treasuries and absorbed 37% of net issuance…

The Cross-Border Trail of the Treasury Basis Trade, Accessible Data

Why this matters?

Based on Federal Reserve research and historical hedge fund trading patterns, approximately 65% of Cayman Islands hedge fund Treasury holdings are likely attributable to the basis trade, which is heavily leveraged (typically 10-20x). At the same time, the MOVE index (VIX of Bonds) has been setting new lows after the liberation-day spike.

High leverage with low volatility… what could go wrong?

Cheers,

Ferg

P.S. I wrote this piece to outline a few of the rules I stick to religiously to protect myself from a dose of FOMO…