It's Official: Stocks Are the Most Expensive Ever

Finance U Public Finance U
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Originally published at: https://peakprosperity.com/its-official-stocks-are-the-most-expensive-ever/

Stocks are now officially the most expensive ever in history. Using a combination of measures (trailing/forward P/E, CAPE, P/B, P/S, EV/EBITDA, Q ratio, market cap-to-GDP) a Bloomberg chart shows that stocks are more expensive now than at the 1929 and 2000 peaks.

Yet stocks continue to power higher, lifted by a wall of cash courtesy of US government deficit spending, Treasury interest payments (now running at an annualized rate of $1.6 trillion), and Federal Reserve money printing (technically, the RBM program, but printing all the same).

Which makes this period of investing as risky as any before, if not riskier.

Planning and discipline are essential in times like these, and being able to do the opposite of current emotions is often the right long-term move.

And itā€™s not just an AI bubble. Housing remains at elevated prices and are as unaffordable as it was at the peak of the prior housing bubble. How did we get here again, and so quickly? Usually, bubbles only come along once in a generation.

On the oil front, we once again saw record U.S. crude draws last week, leading to critically low inventories (Cushing nearing operational floor), amid continued supply disruptions from the Iran conflict.

It remains unclear how and why oil prices continue to slide, unless we are willing to invoke the effects of an invisible hand helping them go down.

On the inflation front, the PPI came in blazing hot again, which means CPI will be inching higher over the coming months.

The new Fed Chair, Kevin Warsh, faces conflicting pressures. Trump wants interest rate cuts while the bond market is signaling hikes.

So which is it? An energy crisis as ā€˜evidencedā€™ by falling oil inventories, or a nothing burger, as indicated by falling oil prices? Is the economy about to soar as the stock market seems to be indicating, or is the economy actually weak as the falling oil prices would suggest?

Talk about difficult investing decisions!

 

 

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Here is my Mea Culpa. I absolutely though that the Iranians would never agree to giving up control of the Straits, giving up nuclear ambitions, accepting defeat. I also never thought that Trump could pull it offā€¦ even for a short period.
This is Mea Culpa does not involve anything else other than to offer congratulations and thank you to Trump for the moment regardless of how short it may be.

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Something we need to keep on our radar.

Last year:

They are on track to have this up and running.

Here is what we donā€™t know publicly.

What is the EROEI? My guess is this exceeds well over 50:1, and maybe even much higher. There will be heat losses in the electrical components and magnetic fields. They also need to produce their own fuel in a separate breeder reactor:

  • D + D ā†’ He-3 (0.82 MeV) + n (2.45 MeV) (~50% probability)
  • D + D ā†’ T (1.01 MeV) + p (3.02 MeV) (~50% probability)

Main reaction:
Fusion: D + He-3 ā†’ He-4 (3.6 MeV) + p (14.7 MeV)

The FRC (field reverse configuration) achieves over 90% direct energy coupling. So these reactors will not have cooling towers.

What is the lifecycle of the reactor components? This will be interesting. The main capacitor banks are very large and will be slammed with many mega Joules every second. They will probably require a dozen of these reactors in parallel so that several can be offline and under maintenance at any time.

They have already been running these reactors under lab conditions for years. So advancing to at-scale power production is on its way and will happen. This is a game changer and itā€™s coming.

-Travis

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What they will probably do is stop the SPR shipments leaving the country and send that into Cushing. That might buy us a few weeks.

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Fusion power, if that project means it is early days of commercializing it, would be like EV in 2002ā€¦ very short range, bad, inferior experience than ICE. Now Tesla is better in many ways if you can afford it.
Thus scientists have solved theory long ago, it is matter of engineering it betterā€¦ more use usually means more incentive to do so. Electric production this way is very competitive, self reinforcing business, direct motive to make it better to gain more profit.

Most countries have done that. US is among last to provide export oil/energyā€¦ making price action even more volatile when only last 5% is on free market.
Price gouging companies must have big temptation to use this against your local interests.

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I have never heard of even a break even prototype. I know that a break even was claimed a couple of years ago but it was a false story. So I donā€™t know how they are going to pull this off.

Parenthetically, it is getting common that grandiose schemes are pushed that have not shown the ability to make a profit. Space X, I am told, lost five billion last year. Then there are data centers, green revolution windmills farms and solar panels farms. That is just a few. I am sure there are others. But just those are wasting huge amounts of money and making no profit. So it would not surprise me if the fusion reactor project is the same.

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This has been coming for DECADES, and hasnā€™t yet achieve large scale commercial integration.

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To the point of just in time inventory and Paul telling about the insulation company, my wife has managed this well. She owns a waxing business. Her particular wax goes on sale twice a year. She generally has a year on hand and replenishes every sale. When Covid hit she knew she was getting closed down. Closed 2 weeks before the mandate. She also needed carpel tunnel surgery which she snuck in before those specialists closed down. She immediately went to work ordering everything she could anticipate that would be needed when she could eventually reopen. That being said we are evaluating every aspect of inventory she needs to stay open if supply shortages occur or if price shocks go through the roof. It could get tough, but if we are ahead of stock and price increases other businesses may not be able to weather the storm and while she may lose a percentage of clientele if other businesses close for lack of foresight, we may just do ok. And if none of this comes to pass she has product at last years prices and stays competitive.

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Weā€™re doing the same thing with my wifeā€™s lotion business. Also, taking a real hard look at pricing. Iā€™ve thought we are way under market prices for lesser quality products. Iā€™ve been after here to look at her pricing, but sheā€™s focusing on a new product development which is currently driving her crazy.

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Lets wait a while and see what the real result isā€¦ I recall the Swedish Health minister advising that, when he was under relentless attack for failing to ā€˜crack downā€™ in the early stages of covid ā€¦ lot of water to flow through the strait before we can truly assess whats going to happen.

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The Helion has been running their 6th and 7th generation reactor for years now. They have been net energy positive for quite some time. The science for FRC was figured out by the goverment back in the 70s, 80s, and 90s. This is actually a varient of the classified version. I suspect there was a hidden handshake behind closed doors on what they were permitted to do, but we wonā€™t know that for many years. All they had to do was figure out how to engineer the electrical systems and practice running it.

The other company doing FRC fusion (TAE Technologies) was bought The Helion has been running their 6th and 7th generation reactor for years now. They have been net energy positive for quite some time. The science for FRC was figured out by the goverment back in the 70s, 80s, and 90s. This is actually a varient of the classified version. I suspect there was a hidden handshake behind closed doors on what they were permitted to do, but we wonā€™t know that for many years. All they had to do was figure out how to engineer the electrical systems and practice running it.

The other company doing FRC fusion (TAE Technologies) was bought up by Trumpā€™s media company. TAE may have a better design as they can skip the plasma donut rings, but Helion is going to beat them to commercialization.
up by Trumpā€™s media company. TAE may have a better design as they can skip the plasma donut rings, but Helion is going to beat them to commercialization.

I suspect it will take a few years to ramp up production, but there is nothing to limit these reactors. They donā€™t need NRC licensing. The inputs are water. At worst they need copper for wiring, and probably some magnets. Within a decade a lot of data centers will be powered by fusion. Thus, meet your AI overlords. This is truly dystopian.

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SpaceX works this modern PPP paradigm for NASA/government. It seems to always demand NASA still does shuttle program on its own(akin to city councils constantly order expensive consultancy reports saying same thing as clerks already know). In soviet model they at least didnt waste resources like this, albeit they had hard time making anything work. Starlink is only profitable business segment despite, well Im not sure are DoD contracts in those public numbers as there is article to hide anything related to those. So I dont think those numbers are ā€œwholeā€ in that sense. Apart from starlink launches, I dont see commercial use that common to launch your very own corporate satellite to LEO to justify this service(aside from obvious DoD and NASA needs coming from taxmoney).

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Lex Friedman had a long-form interview podcast last year with the CEO of Helion: #485 ā€“ David Kirtley: Nuclear Fusion, Plasma Physics, and the Future of Energy | Lex Fridman Podcast

While I have not delved too far into it, their approach sounds at least plausible. As I understand it (and recalling from a listen seven months ago), to provide the densities and final pinch needed for ignition, a plasma beam is accelerated in one direction then suddenly accelerated in the opposite direction, causing a large number of head-on collisions. The key change in technology that may make things different this time (note sarcasm italics) is that when this approach was previously tried, power switching was done using electromechanical relays, but now it can be done with large transistors.

We shall see.

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I follow science pretty closely. I have never heard of that. I just did a search again and the main reference to meeting the breakeven point is the Lawrence Livermore ā€œbreaktrhoughā€ claim which was not really accurate. I found this reference to Helion:

While Helion has not publicly disclosed exact net energy gain figures for the 6thā€“7th generation systems, the company has stated that Polaris has been net energy positive for a significant period

Honestly, without public disclosure, I am suspicious about such claims. Exaggerated claims are often made in order to acquire funding. So I am more than a little suspicious.

I have a relative involved in advanced physics research. He checked out the Lawrence Livermore claim and he told me that the claims were simply not accurate. The next time I talk to him, Iā€™ll ask him if he knows of any recent developments.

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https://youtu.be/_bDXXWQxK38

Yes, it requires a little energy to form the plamaā€™s, but itā€™s relatively small for the energy produced. The inputs are all cheap and abundant.

One of the limiting factors will be how fast they can pulse the reactions. if they can only pulse one reaction every few seconds, then not thatā€™s not very much. But if they can pulse several reactions a second, then we are getting somewhere. Eventually they will reach physical limitations on the geometry of their system. I suspect consecutive future generations will get smaller and smaller. These are all standard engineering problems. The TAE design is even smaller.

Yes, this will take decades to play out. But energy production is not decades away. It is already happening. They are on track to have this current reactor running in 2028, which is less than 2 years away.

So weā€™ll have to wait and see. If they get this built and orders flood in the 100 more, only then will we know itā€™s the real deal. But currently it looks like a good bet this is coming soon.

-Travis

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Sabine Hossenfelder just published a 7+ minute video round-up of current fusion start-ups. It is not encouraging. The part about Helion is at the 5:30 mark, but watch the whole thing.

edit: and I forgot to post the link! https://www.youtube.com/watch?v=QVw5TKUil3o

How did this stock thread turn into the fusion power discussion thread?

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Forgive me the bad jokeā€¦ but staying passive can literally give you a pain in the ass!! :sweat_smile::rofl::rofl:

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Coal is cheap, same as iron, lumber, home builders so Iā€™m buying thoseā€¦ oil and gas are getting a pullback and Iā€™m hoping it will go down little more so Iā€™d add to my positionsā€¦ my two centsā€¦ what others buying.. if anythingā€¦ many people getting cash right nowā€¦

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