2 Sept

Uranium

Kuppy is pumping uranium, here. He’s keeping to his theme of sticking to investing in Ponzi-like schemes. One sure sign of one is an ATM (at the money) offering.

To be fair, Kuppy’s main point is that the above-ground stockpile of uranium is being used up at a hell of a lick. The other thing, not sure he focusses on it, is that uranium is an energy material that is zero carbon. Traditionally, the Greenpeaces of this world have been against nuclear power. It has a lot of problems, not least of which is that excessive risk aversion has lead to unaffordable energy. But the rest of the energy production scene is catching up with this, so maybe U’s day in the sun is here.

As a commodity, though, uranium is a reflation play. All such plays have been crushed recently, so my guess is that the time is not yet ripe. A few more months of high CPI, though, and it may be.

Wrap

Fairly risk on again. Initial jobless claims below expectations, exports up, imports down, labour costs up, all in the USA. Treasury yields holding the line (1.3% for the 10Y), but commodities, especially U, oil complex, and coal going up. Even copper started to catch a bid. Kuppy was prescient: uranium was up 3% on the day, but some producers were up by much more.

Japanification

Robin Harding wrote in the FT the other day about why it was that Japan had not experienced any inflation, in spite of a rapidly aging population, which should have given rise to labour shortages. He quoted some academic literature which suggested that the reason was that increasing inequality had created an excess pool of liquidity, which had driven down interest rates. Basically, all the wealth was held by very rich people who had a very low propensity to spend, and that this had offset the labour market tightness. Read more here (sorry, paywalled). Based on a paper by Sufi et al., What explains the decline in r*? Rising inequality vs demographic shifts, prepared for the Jackson Hole Symposium, 2021.

Image of the day