Monday, 17 June 2024

By Ryan Dinse Editor, Crypto Capital and Alpha Tech Trader

[4 min read]

Dear Reader,

The current discussion around nuclear energy in Australia is very polarised.

The left side says one thing; the right says the other.

And most people decide what they think based on that.

As an investor, you’ve got to avoid this trap and stay open to all possibilities.

The truth is that things are moving along on the nuclear front.

It’s an opportunity you should consider taking advantage of. It also has compelling environmental and economic benefits for the world at large.

Of course, nuclear is just one part of an energy system in flux.

It’s not the be-all and end-all, and there are risks to think of too.

It might not be the right option for Australia, though, as I’ll show you shortly, many other countries think it is the right option for them.

The world is attempting a once-in-a-lifetime transition from fossil fuels to a mixed bag of alternative energy sources.

There are a lot more complexities and nuances to this than most realise.

But as I’ll show you now, despite the political debate in Australia, the rest of the world is forging ahead with the nuclear option as an important part of a future energy grid.

In fact, some big-name investors are backing this future with cold, hard cash.

More on that shortly.

But first…

Nuclear is a popular choice

Nuclear isn’t such a dirty word in most other parts of the world.

Consider this…

France has been running its nuclear fleet since the 1960s, and today nuclear power makes up 70% of its energy production.

The power plants are dotted around the whole country.

Nuclear has looked like a very smart option from France, especially these past few years.

Right now, they export 3 billion euros worth of energy annually to European partners such as Germany, who desperately need cheaper energy in the wake of the Russia-Ukraine conflict.

France is actually the second biggest nuclear power generator behind the USA.

The world’s premier superpower is broadly supportive of plans for further nuclear expansion with Democrats getting behind the ‘clean’ benefits and Republicans backing the idea of ‘made in America’ power generation.

Elsewhere…

Post-Fukushima, Japan still has plans to re-activate 33 of its 54 nuclear power plants by 2030.

It goes to show that economic realities will trump all else, even in places you'd think more likely to embrace alternatives.

What about the big two up and coming economies?

China and India both have plans for more nuclear power.

China has 24 new plants under construction (55 already operating) and India has 8 on the go (22 already operating).

Interestingly, India is pioneering the use of thorium fuel (instead of uranium) in several facilities.

This is thought to be more efficient, produce less waste, and is less dangerous than uranium. It’s also more abundant and easier to find.

But thorium isn’t the only new development in nuclear energy…

Don’t ignore SMRs

Last week, a Bill Gates-backed company started construction of a small nuclear reactor (SMR) demonstration plant in Wyoming, USA.

The company is called TerraPower and also counts South Korean giants Hyundai and SK Inc. as investors.

Now, many critics scoff at the viability of SMRs; however, as an investor, I prefer to follow the money, not the opinions of others.

And the fact is, there’s quite a bit of money going into SMR technologies right now.

Another SMR-focused tech company called Nuscale ripped 50% higher over May on moves by the US government to support local nuclear energy.

As I said before, most other government around the world are backing nuclear right now.

But it’s still early days.

The TerraPower demonstration plant will cost US$4 billion and, funnily enough, is situated on a coal plant site owned by a Warren Buffett-owned energy company called PacifiCorp.

From coal to nuclear - an omen of things to come, perhaps?

In addition to being smaller and cheaper to construct, SMRs are experimenting with different technologies.

For example, this particular SMR uses sodium instead of the usual water as a coolant.

Because sodium can absorb a lot more heat than water, it’s more cost-effective.

While this all sounds good, remember that this project has been in the works since 2008.

And it’s not expected to be ready to operate until 2030.

The time-lag critique of nuclear power is probably a fair one, though a lot of that lag comes from regulatory processes rather than engineering issues.

However, once proven, this technology could spread very fast, especially in developing Asian economies looking for cheap, low-cost base load power sources.

SMRs are also the perfect partner for a raft of AI-intensive data centres planned or in construction that are set to put severe stress on energy grids.

In fact, as AI's strategic capabilities ramp up over time, energy security becomes even more of an issue than it is today—a fact that supports SMRs and nuclear more broadly.

Speaking of which…

A new report out this week

Energy seems to be developing into one of the decade's biggest stories.

As I said at the start, there’s a lot of political noise and no easy answers. You need to do your research and follow the clues.

But such research could be more important than ever.

You see, in a way, the flux in the energy world mirrors the 1970s, an era of similar tumultuous economic times.

Look out for a special report coming out later this week on this very interesting and important topic.

Regards,

Ryan Dinse,
Editor, Crypto Capital and Alpha Tech Trader

Ryan is a former financial advisor who over seven years helped more than 600 clients and had more than $150 million under management. This experience taught him that the mainstream investment industry has no interest in helping clients strive for greatness. He was told to make ‘safe’ investment plays and settle for average returns. It wasn’t good enough for Ryan.

In 2016, he embarked on a renewed mission: to help ordinary people lock onto extraordinary trends before they go mainstream. He’s an experienced small-cap trader and an expert in cryptocurrencies. He first bought Bitcoin [BTC] in 2013, when it was around US$600. Today, it’s around US$30,000.

His crypto advisory is a must for anyone looking to make digital assets a part of their long-term portfolio. Check it out here.

His tech advisory Alpha Tech Trader aims to identify and latch onto strong emerging opportunities in the tech sector, wherever they are in the world. Get more info here.

By Bill Bonner Editor, Fat Tail Daily

[4 min read]

Dear Reader,

‘Megapolitics attempts to extract major structural patterns that repeat throughout history. The factors leading to megapolitical change include topography, climate, microbes and technology. By taking into account how different factors influence human incentives, you can better identify the implications of change. This perspective allows you to perceive with greater clarity the rising and falling of governments, economies, cultures and violence.’ 

Matthew Siu 

‘Megapolitics’ is our not-so-secret weapon. It gives us an edge, we believe, by helping us understand the deeper currents of politics and economics. 

You could, for example, watch the weather. Day by day, it changes. One day is hotter. The next day it rains. You could guess about what will happen as the days go on. But it is very useful to know that there are seasons... patterns that repeat themselves... never exactly the same, but always, reliably present. 

Megapolitics is really nothing more than an insight, but an important one: there are seasons in our markets and politics too. You may think, for example, that ‘the government would never allow that to happen’... or that it won’t happen because ‘no one wants that.’ 

But then... it happens anyway. 

People — smart people especially — fool themselves. Regularly and consistently they over-rate their ability to understand what is going on...and their competence to control the future and take the kinks out of history.  They undertake vast programs and projects to make the world a better place – the Crusades, WWI, the Russian Revolution, the Great Leap Forward – and end up making history kinkier than ever.   

The problem arises from the nature of life itself. It is, as Wallace Stevens put it, ‘an old chaos about the sun.’ There are an infinite number of things going on... and an infinite number of ways to look at them. We humans, however, do not have an infinite amount of time or an infinite brain capacity. So, we put things into categories (a process that Kant described as the ‘categorical imperative’) in order to simplify them.

Danger

Proto-humans had to make quick decisions in order to survive. If they saw a big, hairy thing charging in their direction, for example, they didn’t have time to wonder about what genus or species the thing might be... or if it was not some optical illusion caused by the setting sun... or a practical joke played on us by one of our own tribe members. They had to run... as fast as possible... to survive. Our ancestors, the survivors, were those who ran... not those who wondered for too long.  

Today, we receive thousands of ‘messages’ — advertising, notices, data, opinions, and observations. We go through them on our computer screens... as quickly as possible... picking out those that are worth our attention. Most are disregarded immediately. Some are noticed... and studied carefully. A few actually change our ideas or behaviour. 

Most people are busy; they sort things into very simple categories — good or bad; red or blue, friend or foe. Enemies are ‘bad’ people; that’s all you need to know. 

The world of finance too can be reduced to the simplest dichotomy. Prices are either going up or down; why complicate it? 

But oversimplifying can cause big mistakes. ‘Enemies’ are not always real enemies. Wars are not always worth fighting. And stock market prices do not always go up. 

For a hint about what is really going on, we need to understand the seasons. We can look out the window and see the sun peeking through the clouds... but it also helps to know that it is springtime. 

Natural Patterns

In the most simplistic, superficial sense, people make their choices and try to get what they want. But in the deeper, mega-political world, what they want has nothing to do with it. Megapolitics describes the profound currents of history... like the Gulf Stream... an immense underwater river. On the surface, it is not even visible. But underneath the waves, it carries warm water across the Atlantic and makes Northern Europe habitable. It is a natural pattern. It influences us; we have no influence over it.  

Megapolitics recognises that ‘stuff happens’ whether you want it to or not. Who wants to die, for example? But everyone does.  

And who can imagine that the US empire will be brought to its knees? But that will happen too. 

Megapolitics encourages us to look beyond the slogans and platitudes we take for granted. The Titanic was considered unsinkable...until it sank. And now, many people think the Fed ‘wouldn’t allow’ a major recession, runaway inflation, or long-lasting bear market. But can the Fed really prevent these natural corrections? Probably not. 

At another level, we believe that ‘all men are created equal,’ for example... and that we should ‘do unto others as we would have them do unto us.’  

But when power shifts dramatically, equal rights vanish. Imagine an invasion by a race of aliens with vastly superior technology. They might treat humans like we treat cattle... or snakes. Even among humans, huge disparities in power lead to relationships that are in no way ‘equal.’ That was the underlying story of the 18th and 19th centuries, when Europeans had such a big advantage in firepower over the indigenous peoples of Africa, Southeast Asia, Australia and the Americas that they were able to colonize huge expanses of territory. The locals may have had ‘rights,’ but only those the conquerors chose to give them. 

Megapolitics exposes the patterns and realities that few people want to think about. It makes us suspicious about ‘what everybody knows’ and sceptical about ‘what everybody believes.’ Does the war in the Ukraine really make any sense? Can the Fed really know what interest rates America needs? Does US democracy really work the way the voters believe? 

We have more questions than answers. But merely asking them gives us an advantage over most investors. 

Questions

How, when, why does a great empire die? The US/Anglo/Western empire seemed to peak out around 1999. Since then, despite record highs in nominal terms, US stocks and bonds have lost ground in real terms — measured in gold. This has happened against a background of soaring debt — from $5 trillion to $35 trillion of government debt alone — which was supposed to ‘stimulate’ growth.  

And what is going on in the markets? In addition to the trends of days, weeks, and months, there are “Primary” trends that can take decades to play out. It appears that a major turning point was reached between the summer of 2020, when US bond yields bottomed out, and the end of 2021, when US stocks hit all-time highs. Where to now? Checking with CNN or Bloomberg won’t tell us. Maybe the Primary Trend patterns will. 

And what about inflation and debt cycles? What’s in store for a country that has nearly four times as much debt as GDP? And what’s ahead for a democracy in which most voters want neither candidate and the most important issues are decided by big money influencers?  

Few people will want to go too deeply into these questions. Good guys versus bad guys, us versus them, red versus blue — that’s enough for most of us. 

But in the difficult years ahead, shallow analysis could prove disastrous. 

Stay tuned. 

Regards,

Bill Bonner,
For Fat Tail Daily