October at Lykeion

Well, that was an interesting month…

We had/have a globally spreading energy crisis, the long-awaited Bitcoin ETF approval leading to new all-time highs, record cash flow printing from the oil majors (which Tim might have correctly predicted two days before earnings season began), slower growth for big tech, TSLA at +$1 trillion, Facebook’s Meta (the verse is silent), and Tim’s best-ever pasta gastronomic experience at Trattoria Al Moro.

Charts

This month’s may have been our best to date, and probably some of the best content we’ve ever written (and stolen from our contributors). Tim covers everything from EV batteries supply chain to fertilizer prices, and he does so almost as efficiently as he books hotel rooms on credit card points. This Nuclear rant is a must-read:

They (Doomberg) put out an incredibly poignant line while simultaneously admitting they may lose subscribers by saying it. But it doesn’t matter, it needs to be said. So, we borrowed it:

"If you claim to be serious about reducing our carbon intensity but you are opposed to nuclear power, you aren’t actually serious about reducing our carbon intensity – you are a scientifically ignorant poseur."

He also covered interest rates swaps spreads, and whilst this may sound a little niche, it’s one of those under-reported yet incredibly important indicators that cuts through the noise and looks at how much risk appetite there is from financial institutions to lend out money. Spoiler alert: it’s not high.

Markets

This month’s Markets Update focused primarily on Energy (global supply shortages and increasing demand) and China (Evergrande anyone?), both of which have driven their fair share of market volatility recently. And whilst these two headliners have been covered all over the corporate/mainstream media, a big part of what we’re trying to achieve at Lykeion is curating, synthesizing, and explaining the key elements of the stories that really matter so that you can go back to living the other side of life.

Crypto

Our monthly piece on Crypto covered the launch of the first Bitcoin ETF, and we highlighted that whilst this is undoubtedly a positive development for the overall space, investors should be aware of the difference between investing in ETFs that hold futures instead of the actual underlying asset. The cost of rolling over Bitcoin futures contracts each month can be meaningful in the long term, weighing down the overall performance of the fund, which is why we still prefer, if possible, to have direct exposure to BTC.

Sustainability

Manuel’s Update highlighted how Europe’s energy transition efforts are forcing the Old Continent to increase its energy imports from outside the block, most of which comes from fossil fuels:

• The current expectation is that more European countries will move even further into a net importer position, driving prices to (sustained) higher levels than before given the lower internal energy generation capacity.

• This becomes a severe concern, as countries are focused on minimizing energy production emissions but are ignoring that an aggressive collective transition will lead to high levels of fossil fuel imports. This means that whilst our internal energy production profile is cleaner, our energy consumption (which includes the energy imported) will continue to have similar levels of fossil fuels dependency.

The reduction of our carbon footprint is a process that will take time and needs to be properly managed (it’s not just a matter of money, but also national security), and his article points out some of the most important shortcomings that need to be addressed.

For those of you who care, we hope you had a great Halloween. We spent it wandering around Rome, and the spookiest thing I experienced was watching Tim finish a plate of Porchetta and a bucket of gelato and then asking, “What should we do for dinner?”.

We’re always keen to know your thoughts on what we’re writing. Shoot me an email at [email protected] with your ideas on the above.

As always, thanks for being part of the journey.