Disclaimer: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!
Time for an additional “Panic Journal” episode after the final one is already from one yr in the past. Writing about that is for me one of the best ways to construction my ideas and perhaps it’s of curiosity for a few of my readers, too. In direction of the top, there’s even some sort of “actionable” content material, too.
Trump/Iran:
I believe the perfect recommendation on learn how to react to no matter Trump is saying is to not attempt to time something right here. As German “Finfluencer” Christian W. Röhl retains saying (freely translated): “In case you all the time react to what Trump is saying, you received’t make cash, you simply change into (equally) insane”.
Final yr, this was about Tariffs, then it was about Greenland and now it’s about Iran. Who is aware of what’s subsequent. Perhaps attacking Australia for some purpose ? Who is aware of.
From a extra strategic perspective, the narrative that the Trump administration is “good for enterprise and the economic system” appears to be now completely damaged.
Sure, Company Taxes within the US are decrease, and Mr. Trump needs the inventory market to be up “bigly” however the uncertainties round tariffs, “ideologically” pushed crack downs on immigrants, careless worldwide relationship administration and probably even a lot bigger authorities deficits on account of elevated navy spending are slowly exhibiting their affect.
One other instance: The White Home has been celebrating internet destructive migration yesterday, however inhabitants progress has been one of many distinct drivers of US progress up to now, primarily by way of “family formation” particularly in comparison with Europe or Japan. I assume this tailwind could have disappeared already, together with the immigrants who really are supposed to construct the homes.
Perhaps, however solely perhaps, the AI construct out can compensate for all of this, however perhaps not. My very subjective impression is that the well-known “American Exceptionalism” for shares appears to be relying now totally on the success of AI. Which I believe is sort of dangerous. The annual letter from Bireme Capital, to which I had linked to captures most of this and extra.
SpaceX/Indices
As my readers know, I’ve really a small “aspect wager” on the SpaceX IPO with my place in Rocket Web. Now increasingly particulars change into accessible about how it will work.
Mainly, Elon needs to take SpaceX public at a valuation of 1,75 trillion after merging it with XAI. The valuation is roughly 100x income. Two particulars that I discover attention-grabbing are:
- Elon needs to allocate 30% or extra of the 75 bn providing to retail traders.
- The index suppliers, on this case Nasdaq will grant an exemption and probably enable SpaceX to enter the Index already after two weeks as a substitute of 1 yr and are waiving free float necessities
- As well as, I learn that SpaceX weight within the Index could possibly be as much as 5x larger than its free float would justify.
The sport plan is fairly clear: Give as a lot as potential to Elon’s “price-insensitive” fanbase after which power the index funds to “battle” for the little free float accessible and permit the insiders a straightforward exit on the proposed nosebleed valuation.
However what does that imply for index traders for the longer term ?
As an index investor up to now, the large benefit was that you just mechanically caught the large winners slightly early.
Nvidia as an example entered the Nasdaq 100 in Could 2001 at a share worth of ~30-40 ca and a market cap of round 6bn USD.
So a long run index investor participated totally within the 400-500x during the last 25 years. Identical with Google, Amazon and all the different massive winners that drove previous index features. Even Meta IPOed “solely” at a market cap of ~100 bn in 2012. That’s the explanation why the Nasdaq100 returned round 16% p.a. for the final 20 years and making lots of people very rich.
SpaceX is the primary member of the “new breed” of IPOs the place most of the worth accretion principally occurs exterior the listed inventory market within the personal markets. As an Nasdaq Index investor you’ll be compelled to allocate a major half into this firm at a a lot later stage and at a a lot increased worth.
And SpaceX is simply the primary candidate of that new breed. OpenAI, Anthropic, Anduril, Stripe are different candidates which may go public at valuations at tons of of billions or ven trillions.
It is vitally seemingly that Index traders will take part (if in any respect) at a really late stage of the success of those firms. The conclusion is comparatively easy: The extra such IPOs and “fast entries” occur, the upper is the chance that Index traders will be unable to earn the returns that they did up to now when these firms entered the indices a lot earlier. There are clearly different components that affect returns as properly however this one might change into fairly important in 2026.
German Pure Gasoline storage / Renewables
Within the massive scheme of issues this can be a small matter however clearly personally related for me. Pure Gasoline is an important supply of vitality in Germany. We want it for the trade, to generate electrical energy and to warmth properties. Because of German climate, demand is way increased in Winter than in summer season. Due to this fact, Germany has created important Gasoline storage infrastructure that is ready to retailer as much as 3 months of peak WInter demand. I don’t must stress that solely a really small proportion of demand may be met with native sources.
The relevance of that storage turned clear when the Russians first throttled the fuel pipelines in 2021 and then Northstream II was blown up in 2022.
This led to panic buys of the then Inexperienced Ministry of economics in 2022 which in flip led to report excessive fuel costs in 2022.
Following these occasions, the German Authorities launched some minimal necessities for fuel storage plus incentives for utilities to purchase pure fuel prematurely and compensate them in the event that they must promote it cheaper in a while.
The brand new German Authorities beneath the the Economics Secretary Katharina Reiche (former worker of utility Eon and supposedly an Vitality professional) nonetheless determined that these incentives should not wanted anymore in 2025 and anticipated that “the market will clear up this” and decrease the prices for the Authorities (and tax payers/customers).
Quick ahead to Finish of March and the market “solved” it in a means that regardless of a comparatively delicate winter, fuel storage ranges are at a report low of 20% as this chart reveals:
Now as everyone knows, the provision of worldwide LNG is fairly handicapped, as Qatar has shut down its services which took round 20% of worldwide capacities off the market. A few of that appears to be now completely broken.
Though pure fuel wholesale costs in Europe got here down somewhat bit over the previous few days, they’re nonetheless 80-100% increased than finish of final yr or starting of this yr:
In fact, the motivation of the utilities to refill fuel reserves with none assist proper now could be zero.
Again in 2022, Mr. Habeck began shopping for Pure Gasoline with Authorities cash to start with of March when storage ranges have been at 30%. This time round, Ms Reiche remains to be solely “monitoring the scenario” 4 weeks later at a a lot decrease stage of reserves.
With the worldwide scarcity of LNG, it has clearly not change into simpler and cheaper to refill German storage ranges. Since 2022, Europe is relying way more on US LNG imports as this chart reveals:
However Mr. Trump wouldn’t be Mr. Trump if he wouldn’t already threaten Europe repeatedly with stopping LNG exports if Europeans don’t behave the way in which he needs us to behave.
To high issues up, Ms Reiche is planning to section out subsidies for Renewables and likewise make life tougher for battery vitality storage in response to some leaked paperwork and focus much more on fuel fired infrastructure for electrical energy technology sooner or later.
So what does all of this imply ? For my part which means that vitality costs would possibly keep increased for longer and the chance of a “panic reserve shopping for” spike like in 2022 is growing.
As the value of pure fuel can also be driving the value for electrical energy, everybody who makes use of electrical energy has some important danger that these payments would possibly rise considerably within the coming weeks/months.
Again in 2022, this led to a brief lived increase of renewable vitality shares. Curiously, to this point this hasn’t occurred. Listed here are the inventory costs of the principle German gamers which look very miserable:
Particularly builders look fairly ugly, as their “improvement pipelines” have been hit massively by oversupply, increased rates of interest and usually extra destructive sentiment.
Curiously, for a lot of electrical energy shoppers in Germany, the invoice has decreased this yr because the Authorities has been taken over the associated fee for electrical energy transmission and is paying the TSOs straight (amongst them the previous employer of Ms. Reiche).
General, the sentiment vs. renewables is admittedly dangerous with lots of particularly the builders struggling to maintain afloat.
To be sincere, I don’t know what the longer term will appear to be for builders, however operators of renewable vitality crops might need some “upside optionality” on this atmosphere.
So primarily in an effort to hedge my private electrical energy worth publicity, I made a decision to purchase a 1,5% place in a small German Photo voltaic PV operator known as 7C Solarparken. /C Solarparken was already a part of my 2022 “Freedom Vitality” basket. They’ve first rate publicity to probably rising electrical energy costs and the inventory is admittedly low cost ~5x EV/EBITDA and 0,6x e-book worth. They’ve little or no publicity to improvement initiatives and generate tons of money.
Structurally, additionally they will profit from much less renewables improvement exercise going ahead, as each new PV plant cannibalizes current ones to a sure extent.
That is clearly not a long run progress play however slightly a 6-12 month “hedge” in case our Authorities fuxxs up the refilling of the fuel storage in the course of the yr, which I see more and more possible.
Bonus soundtrack:
Who would match higher to my “Panic Journal” than Hamburg legend Udo Lindenberg and his “Panic Orchestra”. Right here, an early tune from him known as “Andrea Doria”:
Udo Lindenberg – Andrea Doria (Video von 1973)