MacroVoices #414 Louis Vincent Gave: Party Like it’s 1999
Feb 8, 2024
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Louis-Vincent Gave, Founder of Gavekal, joins Erik Townsend & Patrick Ceresna on Macro Voices to discuss commodities, China, the Electric Vehicle Implosion, and why Louis says this feels like 1999 all over again.
China's dominance in the EV supply chain could have significant geopolitical implications and impact global market dynamics.
The US energy advantage is vulnerable, and China's progress in nuclear power could enable it to become a global leader in low-cost energy, potentially shifting market cap dominance.
The recent developments in the crude oil market, including US production and inventory data, indicate potential for a rally in oil prices.
Deep dives
China, Electric Vehicle Implosion, and 1999 Parallels
In this podcast episode, the interviewee Louis Vincent Gav discusses the current state of China's economy, the potential implosion of the electric vehicle market, and the similarities he sees between the current market conditions and the dot-com bubble of 1999. Gav highlights China's dominance in the EV supply chain and the potential geopolitical implications of China's control over the auto industry. He also suggests that the demand for electric cars may be overestimated due to issues such as repair costs, limited cold weather performance, and depreciation. Gav further discusses the impact of China's focus on green technology on global commodity markets, particularly battery metals like copper and nickel. He emphasizes the potential for a strong demand for commodities driven by infrastructure spending and consumption in emerging markets, particularly in the EMX China space. Lastly, Gav touches on China's role in the global energy transition and its ability to provide cheap energy to other countries, thus gaining geopolitical leverage.
US Energy Advantage at Risk and China's Geopolitical Strategy
The podcast delves into the vulnerability of the US energy advantage and its impact on global market dynamics. It highlights the potential consequences of China becoming the global leader in low-cost energy due to its dominance in the EV supply chain and nuclear energy capabilities. It proposes a scenario where China uses its energy infrastructure and offerings as a geopolitical tool, providing cheap energy to countries in exchange for political concessions. The discussion also touches on the implications such a shift would have on the US market cap dominance in relation to China's rising economic influence. It suggests that a reevaluation of market cap allocations may be warranted as China's energy advantage continues to evolve.
Crude Oil and Equity Market Analysis
The podcast provides an overview of the recent developments in the crude oil market, including the increase in US production, inventory data, and the potential for a rally in oil prices. It discusses the importance of breaching key levels such as the 50-day moving average and the 75-76 dollar range to indicate a bullish or bearish trend. The analysis also highlights the correlation between gasoline futures and oil, noting the recovery of gasoline futures and the potential implications for oil prices. In the equity market, the focus is on the S&P 500 reaching the 5,000 level and the presence of call and put walls at key levels. The implied move for the upcoming options expiration date is also mentioned.
China's advancements in nuclear power
China has made significant advancements in nuclear power, surpassing the West in embracing advanced generation technologies. They have built thorium-fueled molten salt reactors and ultra-high temperature gas-cooled reactors, demonstrating their commitment to nuclear energy. China's progress in developing these technologies is way ahead of the West, and they are on track to achieve 100% energy independence and the lowest cost of energy among industrialized nations.
The West's lag in nuclear power
In contrast to China's nuclear advancements, the West, particularly the United States, lags behind in embracing nuclear energy. Western countries have shifted their focus towards renewable energy sources, such as wind and solar, instead of recognizing the efficiency and potential of nuclear power. The lack of investment and interest in the nuclear sector has resulted in a shortage of nuclear engineers in the West. Without significant changes in attitude and investment, the West risks losing its comparative advantage in energy and falling behind China in terms of economic power and geopolitical influence.
MacroVoices Erik Townsend & Patrick Ceresna welcome back Gavekal Founder, Louis-Vincent Gave. Erik & Louis discuss commodities, China, the Electric Vehicle Implosion, and why Louis says this feels like 1999 all over again. https://bit.ly/3wgMjFA
