Nuclear Goes Nuclear

The Daily Peel has been confirmed as the most powerful media organization in existence. Major nuclear energy investments have been announced barely a month after our piece focused on the energy source. Find out what’s going down—and whose fired up—below.

September 25, 2024

Silver banana goes to…

In this issue of the peel:

  • Consumers need to read a book. The only thing on more of a rampage than inflation in recent years is confusion about the economy. This week’s reports from the University of Michigan and the Conference Board put those into plain sight.

  • Nvidia shares have entered a bizarro world, rising for a reason that would drive most other stocks off a cliff. Chinese stocks ripped on new stimulus announced overnight in EST between Monday and Tuesday while Visa falters on fresh antitrust charges. Finally, Starbucks needs more than pumpkin spice to get back on its feet.

  • The Daily Peel has been confirmed as the most powerful media organization in existence. Major nuclear energy investments have been announced barely a month after our piece focused on the energy source. Find out what’s going down—and whose fired up—below.

Market Snapshot

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Macro Monkey Says

Bipolar Consumers

Economic problems appear to be rising almost as fast as mental health disorders here in the United States.

These economic health disorders were put on full display Tuesday with the Conference Board’s latest consumer sentiment reading.

We get the final numbers from the University of Michigan’s survey on Friday. However, comparing the Conference Board’s data to preliminary numbers from UMich paints a picture of a confused consumer.

Let’s get into it.

The Numbers

Just like when we were all watching the last presidential debate, consumer confidence fell by the most it has in years this month.

In September, the Consumer Confidence Index fell a not-so-nice 6.9 points to 98.7 from an upwardly revised August reading of 105.6. A reading above 100 means vibes are more good than they are bad, and under 100 means they’re more bad than good.

Once again, the level of the index isn’t the concerning part—it’s the direction.

Falling below 80 generally forecasts a recession. While the overall index wasn’t close to this level, the subindexes weren’t looking so hot.

The Present Situation index fell like it was Joe Biden getting off a bike, dropping 10.3 points to a still-very-high 124.3. However, the Expectations Index is on thin ice, declining 4.6 points to 81.7. 

The overall Confidence Index is made up of five subcomponents, two of which are covered in the Present Situation index and three in the Expectations Index. These include business conditions, labor market conditions, the outlooks for both, and finally, the outlook on income prospects.

Respondents are essentially asked if each one of those subcomponents is “Good or Bad” or “Better or Worse,” creating ten possible responses.

And In September, every single one of them deteriorated—except one. Expectations that jobs will become “More Available” grew 0.1%, but it was entirely offset by a 1.3% increase in those responding that jobs will be “Less Available.”

Down bad perspectives on the current and future state of business conditions feed into weaker expectations for the labor market. Subsequently, weaker expectations in the labor market cause consumers to expect a hit to their personal finances.

That’s why you see a 2% increase in those expecting their incomes to decrease over the next six months, alongside a decline of 0.6% among those expecting incomes to rise over the same period.

However, we know that consumers—luckily for them—aren’t economists. So, we can’t be surprised by this cocktail of confusion that emerges when you mix the University of Michigan’s data with the Conference Board’s.

As reported last week, the University of Michigan purports that current Consumer Sentiment, assessment of Current Conditions, and Expectations all improved on a monthly basis in September.

Sentiment increased 1.6%, Current Conditions increased 2.6%, and Expectations were up 1.2%.

Further, Sentiment and Expectations each increased annually as well, by 1.8% and 11.1% respectively. However, consumers' assessment of current conditions declined by 11.5% compared to September 2023.

The Takeaway?

Measuring consumer sentiment and expectations can be helpful and marginally predictive, but not when similar reports are pulling in the opposite direction.

This data only serves as supporting evidence of the dramatic uptick in uncertainty. From a technical perspective, consumers have no idea what’s going on.

Not that economists have much of an idea either, but like the old saying goes—if you’re not at least a little confused, you’re not paying attention.

What's Ripe

Chinese Stocks (KWEB) 10.32%

  • Bad news is good news between China’s economy and the stock market. Lousy macro data has spurred hefty stimulus, lifting shares in U.S. traded ADRs.

  • Long-duration names rode the news the highest as the People’s Bank of China enacted an off-schedule rate cut and announced further fiscal stimulus.

  • Part of the stimulus includes $70bn in direct lending to funds, brokers, and insurers to buy Chinese stocks. Alibaba (BABA, +7.88%), JD.com (JD, 13.91%), and Nio (NIO, +11.55%) were some of the biggest beneficiaries.

Nvidia (NVDA) 3.97%

  • We knew Nvidia was a unique stock, but the firm has officially entered a bizarro world. Most companies fall on their CEO selling shares, but not this chipmaker.

  • CEO Jensen Huang just wrapped up his share sale plan enacted in March 2023, pulling $713mn out of his holdings in 2024. In 2023, he grossed $110mn.

  • The plan was meant to run through March 2025, but Huang has sold all shares that were on the block in this 2-year period. He still owns ~861.4mn shares, or $104bn.

What's Rotten

Visa (V) 5.49%

  • The Department of Justice is on a spree that is more lethal than the Zodiac Killer, wasting no time between antitrust cases as another one opens against Visa.

  • According to the DOJ, Visa has illegally monopolized the U.S. debit card market in a way that penalizes customers using alternative payment processors.

  • Analysts weren’t surprised. Citi’s Andrew Schmidt maintains a Buy rating but switched the firm’s sector preference to Mastercard out of concern over “incremental regulatory overhang for V.”

Starbucks (SBUX) 1.08%

  • It's gonna take more than pumpkin spice to get Starbucks moving back in the right direction for shareholders. At least, Jefferies thinks so.

  • The investment bank downgraded shares on anticipated elongations in the coffee maker's turnaround process after bringing in their new CEO, Brian Niccol.

  • It’s a “sell the pop” moment for Starbucks shares, according to Jefferies, leading to Tuesday’s downgrade.

Thought Banana

Nuclear Goes Nuclear

If you still don’t believe me when I say The Daily Peel is the single most popular and influential media source in this world, maybe this will convince you.

Barely a month after our Thought Banana section was spent pleading with actual important people to invest in nuclear energy, they’re starting to listen.

Let’s dive in.

What Happened?

On Monday, at the start of this year’s New York Climate Week, it quickly became clear that this climate conference would be different—we might actually get some tangible results.

14 of the world’s largest financial institutions made commitments to invest in short and long-term expansion of nuclear power generation with the goal of tripling global output by 2050.

Needless to say, banks like Goldman Sachs and Bank of America aren’t doing this out of the goodness of their hearts.

There’s one thing that AI requires in order to succeed more than it relies on college students cheating on essays—energy.

As AI queries and use cases require far more computing power than your last Google search, energy demand driven by this sector is on the verge of explosion.

According to Goldman, AI impacts could quintuple (5x) global energy demand in the decade from 2020 to 2030. Also, needless to say, these banks smell lending and profit opportunities.

In fact, Microsoft is already proving that investments in nuclear can be profitable, even if it involves a failed reactor.

Earlier this week, the tech giant and AI daddy announced a newly inked 20-year agreement with Constellation Energy to get the nuclear reactor at Three Mile Island back in action to supply energy for the firm’s AI demands.

Demonstrating how valuable access to this cheap, borderline limitless energy system is, Reuters is reporting that Microsoft will pay a hefty premium per unit of energy in its power purchase agreement.

The Takeaway?

Many countries have already committed to tripling nuclear power by X date, but that’s meaningless in comparison to commitments from banks that will actually provide the capital needed to do something besides flap their lips.

Now that there’s a tangible profit motive as well, it’s likely something these banks want to do for reasons beyond minimizing lectures from Greta Thunberg.

Let’s fire these babies up… just maybe leave Chornobyl out of it.

The Big Question: Is nuclear really the savior that I and many others think it is? Will the target of tripling nuclear production by 2050 come to fruition?

Banana Brain Teaser

Previous

If x - y = R and xy = S, then (x - 2) (y +2) = ?

Answer: 2R + S - 4

Today

The toll T, in dollars, for a truck using a certain bridge is given by the formula T = 1.50 + 0.50(x - 2), where x is the number of axles on the truck. What is the toll for an 18-wheel truck that has 2 wheels on its front axle and 4 wheels on each of its other axles?

Send your guesses to [email protected]

❝

Show me the incentive and I’ll show you the outcome.

Charlie Munger

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David, Vyom, Ankit & Patrick