South Shore Consulting

These reports keep coming in ... 4th industrial revolution advances require embracing a strategy of #energy_abudance. Laila Kearney reporting here what South Shore Consulting Paratrade Corporation Adrian Gvosdev Kranz discussed with The National Interest this past July ... "data centers require access to evermore quantities of reliable energy to power them. A quick glance at the electrical generation capacity of North America, much of Europe, and Asia leads you to a simple conclusion: more generation capacity—and cleaner generation capacity at that—is needed." https://lnkd.in/gidu76Mj

Highlights from this week's Asia Times #Global_Risk_Reward_Monitor: --Despite deteriorating geopolitical situations around the world--Ukraine, Syria, Western Europe, South Korea, etc. -- no one has any clear idea what the incoming Trump administration is planning to do "about the Ukraine war, tariffs, Syria, or any number of critical issues ..." This is leading to a disconnect between a relatively subdued price of risk across all major options markets versus the seriousness of the geopolitical situation. --why the #middle_corridor matters. China needs new export markets; Turkey wants to access the youth bulge of the Turkic states of Central Asia. "To link the Turkish state to Turkish peoples requires hundreds of billions of dollars of investments in infrastructure, which only China is able to provide. That joins the future of Turkey inextricably to that of China. China’s economic future is also linked to Turkey’s. Chinese exports to Central Asia have tripled in the past four years, the fastest growth rate to any region." 

Managing partner Adrian Gvosdev Kranz has been focusing on the power needs of data centers and their importance for economic development. We have been charting likely growth in demand for nuclear power and natural gas. Scott Strazik, CEO of GE Vernova noting that need for consistent power generation favors use of natural gas over renewables for data centers. This will be an added driver for natural gas sales. (Per reporting Josh Saul at Bloomberg News) https://lnkd.in/gnzC-3G3

The outgoing Biden administration taking the first steps towards shifting towards an incoming Trump #energy_dominance approach. Proceeding with the next tranche of oil/gas leases in the Alaskan Arctic (albeit in a much more limited capacity than Trump had envisioned) and likely new sanctions directed against Russian energy exports.

From this week's Asia Times #Global_Risk_Reward_Monitor: --most critically, in the aftermath of events in Syria, "We again emphasize that geopolitical risk is rising. The market has not yet discounted this risk." This also includes the unknowns of renewed factional fighting as well as the presence of foreign fighters. --as reported previously, Europe remains vulnerable to energy-related economic shocks. "With energy costs to industry at EUR .40 per kilowatt hour (vs. about 7 cents in the US and China), Germany’s energy-intensive industry output has fallen by 20% during the past two years." German elections are likely to result in another coalition government where parties have widely divergent perspectives on energy and economics. --Interesting reporting here: "The collapse of the status quo in Syria is being leveraged by anti-negotiation factions to bolster their arguments against potential peace talks regarding Ukraine. These factions have quietly criticized President Putin for believing that a settlement in Syria could be sustainable in the long term. They argue that the ceasefire and "pause" in hostilities merely provided groups like Hayat Tahrir al-Sham (HTS) with the opportunity to rearm and regroup, ultimately undermining Russian objectives. These critics contend that the core of General Kellogg’s proposed plan for US mediation in Ukraine would achieve a similar effect – granting Ukraine time to rearm and strengthen its defenses. As a result, they argue that the plan must be outrightly rejected to avoid repeating the perceived mistakes of the Syria agreement." --On latest round of US and Chinese trade actions: "A tit-for-tat confrontation has begun, with companies on both sides likely to suffer damage."

In the aftermath of the collapse of the Syrian regime and the flight of Bashar Assad, pursuing two possible natural gas related items ... First, was some sort of accommodation reached with Russia whereby the Russian position in Syria was traded for guarantees about the continued operation of the Turkish Stream gas network and Turkey's guarantees that its trade links with Russia will remain intact? Second, can Turkey and Gulf partners take the lead in postconflict reconstruction and stabilization in Syria, and will this pave the way for an overland Qatar to Turkey natural gas pipeline? This could be a major gamechanger by further cementing Turkey's ambitions to become a regional gas hub for Europe and to create an LNG export route that would bypass the chokepoints at the Red Sea and Suez Canal.

From this week's Asia Times #Global_Risk_Reward_Monitor ... **Key point on possible U.S. tariffs: "the gravest risk is not to China, which has reduced direct exports to the United States to just 2.3% of GDP, but to Europe ... Germany's exports to the U.S. are 4% of GDP." **"If we are correct that the Ukraine conflict has no easy resolution, gold should reach new heights in 2025." **"If Germany's industrial slowdown persists, the lagged impact on these interconnected economies could exacerbate broader European economic challenges. Reduced German demand for imports and fewer opportunities for European suppliers to its industries could lead to a contraction in industrial output across the region, potentially triggering a wider European recession." On possible Ukraine talks, Moscow is signaling it wants direct U.S.-Russia talks, and that the U.S. guarantees that if any settlement is reached, Washington (e.g. the Trump administration) will guarantee Ukrainian and European execution. Observations from the Nvidia AI summit--China may deploy more industrial robots, but still imports the majority--Japan still manufactures and is in a good position to spearhead the AI revolution for industrial robotics, in partnership with Western firms.

Combining this with comments made by incoming NSA-designate Waltz, as reported by Ken Moriyasu (森安健) in Nikkei Asia ... which suggests that key to solving problems in Gaza and Ukraine is to diminish incentive for China to buy Iranian energy (and by extension Russian energy). Get China to buy less Iranian energy--while U.S. ramps up production--Iran has less funds. Diminished Iran lessens coordination with Russia. Also suggests that the new team embraces an #energy_abundance strategy for forging ties with partners and incentivizing others. https://lnkd.in/gUQxiU_P

Outline of a proposed Trump energy agenda for the second term includes lifting any holds on new natural gas projects, clearing regulatory bottlenecks for expanding and building new LNG facilities. A second term Trump administration is in a stronger position to further reorient European consumption away from Russia and to ensure that Russian firms do not regain market share.

Natural gas is emerging as the compromise fuel of the near future--cleaner than coal, but still able to generate the power needed for economic growth and development. This paves the way for greater adoption of nuclear power in the mid-term range.