The “Renewable Energy” Misnomer and Bond RSI Lower Than 08′

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 WantRenewable 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.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.