Alex here with your latest Friday Macro Musings. This week’s Musings are shorter than usual as I’m currently on a plane to Cuba for a 3-day trip. It’s my first time visiting the small commie island. If any of you have suggestions for things to do or restaurants to eat at, shoot me a reply to this email and let me know!
Articles I’m reading —
Give this WSJ article titled If You Want “Renewable Energy”, Get Ready to Dig a read (link here) h/t to @wolfejosh for the find. It’s written by Mark Mills, an engineer/physicist that currently serves as a senior fellow at the Manhattan Institute and a faculty fellow at Northwestern University’s McCormick School of Engineering and Applied Science.
Mills does a persuasive job of dismantling the “renewable energy” misnomer by laying out the very real environmental costs of these “green” technologies. Mills writes:
A single electric-car battery weighs about 1,000 pounds. Fabricating one requires digging up, moving and processing more than 500,000 pounds of raw materials somewhere on the planet. The alternative? Use gasoline and extract one-tenth as much total tonnage to deliver the same number of vehicle-miles over the battery’s seven-year life.
Building one wind turbine requires 900 tons of steel, 2,500 tons of concrete and 45 tons of nonrecyclable plastic. Solar power requires even more cement, steel and glass—not to mention other metals. Global silver and indium mining will jump 250% and 1,200% respectively over the next couple of decades to provide the materials necessary to build the number of solar panels, the International Energy Agency forecasts. World demand for rare-earth elements—which aren’t rare but are rarely mined in America—will rise 300% to 1,000% by 2050 to meet the Paris green goals. If electric vehicles replace conventional cars, demand for cobalt and lithium, will rise more than 20-fold. That doesn’t count batteries to back up wind and solar grids.
I worry that the climate change debate has become so politicized and dogmatic that the solutions we’re turning to are ill thought out and suboptimal to other existing and practical options such as nuclear and natural gas. For a longer read on Mills sobering take on our current energy dilemma, check out this paper he authored here, where he “highlights the physics of energy to illustrate why there is no possibility that the world is undergoing—or can undergo—a near-term transition to a ‘new energy economy’.”
Lastly, Europe may be going fiscal… Check out this Reuter’s exclusive on Germany announcing a potential u-turn in their fiscal policy (link here). Keep an eye on this story, it’ll be a big macro development if Europe starts boosting its government spending.
Charts I’m looking at—
This move in bonds has been something else.
Video I’m Watching —
Ray Dalio of Bridgewater put out a 30-minute video this last week where he shares his thoughts on China, the rise of nationalism globally, and some of his biggest worries for the economy going forward. It’s a good summary of some key things to stay abreast of, though I’m not nearly as bullish on China long-term as he is (link here).
Also, if you’ve got another 8-minutes to spare then go ahead and give this video from commodity fund Gorozen a watch where their head PM lays out his fundamental bull case and why he thinks the yellow metal is going to $2,500 this time around. I’m a fan of their work and find them to be some of the better commodity researchers out there (here’s the link).
Book I’m reading —
This week I’m finally starting Neil Stephenson’s Snow Crash. As a dedicated sci-fi fan I have to say that I’m embarrassed that it’s taken me this long to get around to reading Snow Crash, let alone any Neil Stephenson book. I’ve heard from countless others over the years how amazing this book is so I’m excited to finally get around to reading it.
I’m only just cracking it open and hope to finish it over the weekend. I’ll let you guys know what I think.
Quote I’m pondering —
[Horse] Racing is simple. Everything about the game is logical and common sense and elementary. All the figures and the mathematics and the mechanics of racing can be understood by a child in junior-high school. But the game is decked out in an endless number of minor contradictions and open switches and deadfall traps, in order to lure the average player into doing everything wrong. ~ Robert L. Bacon
Replace Horse Racing with trading/investing and it’s just as true…
If you’re not already, be sure to follow me on Twitter: @MacroOps. I post my mindless drivel there daily.
Have a great weekend.
Co-Founder of Macro Ops. Alex is a former US Government Counterintelligence Professional, U.S. Army Interrogator, and USMC Scout Sniper. He’s an independent trader with over 10-years in markets.