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11 July 2020
Big Picture Long-Term video July 10th 2020
Eoin Treacy's view
A link to this week's Big Picture Long-Term video is posted in the Subscriber's Area.
Skai revises targets for its liquid-hydrogen, long-range eVTOL
This article by Loz Blain for NewAtlas may be of interest to subscribers. Here is a section:
One challenge for anyone who wants to work with liquid hydrogen is that you need to keep it extremely cold to keep it in its liquid state. At atmospheric pressure levels, we're talking just 20.28 kelvins above absolute zero (−252.87 °C, or −423.17 °F).
That temperature can rise a little if you're willing to pressurize as well as cool (using a cryogenic system running between 250 and 700 bar of pressure), but Gunter says that's not part of Skai's plans, as "even a moderately pressurized system has significant weight penalties."
So, super-cooling it'll be, and while that entails extra energy losses in the liquefaction stage, the cooling equipment, the conversion back into gas for use in the fuel cell and in boil-off in the tank itself, the net result will still be a much longer range aircraft than anyone dealing with gaseous hydrogen – or certainly lithium batteries – will be able to deliver.
It'll be interesting to see how Skai gets the job done, as really you've got to look to NASA and other space programs to find liquid hydrogen being used in serious volumes.
"The good thing in all of this," says Gunter, "is the notable developments that occur in this space on an increasing basis. The efficiencies we’ve seen in fuel cells and the same the industry is seeing regarding H2 production all point to increasing effectiveness of any form of H2 as a future focused solution."
"There's a number of naysayers about what we're doing with hydrogen," says Hanvey, "but we believe we've gone from the question to the possible, and it's now the probable. We know we can fly with hydrogen, and the question is just how quickly we can get it to the market. And based on our experience, we think we can get there a lot quicker than perhaps the market will give us credit for."
Eoin Treacy's view
Hydrogen’s energy density is orders of magnitude greater than any other fuel currently used in the global economy. The only reason we don’t already use it is because of the technological difficulty of containing what is a highly combustible material. The whole world knows about the Hindenburg accident 83 year ago, which put an end to transatlantic zeppelin travel. It did to the hydrogen industry what the Fukushima accident did to nuclear.
Record Lows Await for U.K. Money Market and Gilt Yields
This article by Richard Jones for Bloomberg may be of interest to subscribers. Here is a section:
U.K. yields’ march to record lows will gather momentum in the coming weeks as traders’ conviction in
negative BOE rates grows.
It’s happening today, with short-sterling contracts in 2022 printing 100 for the first time. This implied a 3-mo. GBP Libor fixing at 0%, with the March 2022 contract implying an unprecedented fix of -0.01%. Moreover, MPC-dated OIS rates currently have a cut to zero fully priced by the June 2021 meeting and 15bps of reductions priced by September 2021, which would take the rate negative.
In the gilt curve, 2-yr and 5-yr yields are already comfortably below zero and a negative yield in the 10-yr maturity is only a matter of time. The underwhelming fiscal package unveiled this week, with the furlough scheme unlikely to be extended, has spurred investors to bet the BOE will pick up the bulk of the stimulus slack. With that, new superlatives await for the depth of U.K. yields.
Eoin Treacy's view
The Bank of England is facing the same quandary as many other central banks. Do they push rates into negative territory or do they greatly increase monetary stimulus to offset the inability to cut rates? The first hamstrings the banking sector, because they will see margins on loans disappear or even go negative. The second risks debasing the currency and fueling asset price inflation.
Franco-Nevada Eyes $1 Billion Deals as Base Metals Lag Gold
This article by Danielle Bochove for Bloomberg may be of interest to subscribers. Here is a section:
“Right now, on the precious metals side, we’re entering a bull market even for the junior companies,” Harquail said. “People are doing financings and they’re upsizing the financings.”
Franco-Nevada’s investors want the company to focus on precious-metal deals, he said, as gold continues its ascent. The pandemic has created some headwinds, mainly around doing on-site due diligence for new investments. But Franco-Nevada has been able to work around that with “installment deals” that are subject to doing that work once it’s safe.
The company’s biggest investment, in First Quantum Minerals Ltd.’s Cobre Panama mine, was shut for most of the second quarter but is now reopening.
Harquail said the possibility of supply interruptions in Chile or Peru is serious but that so far governments have treated mining as an essential industry. The company has a stake in Lundin Mining Corp.’s Candelaria mine in Chile.
So far, miners have been able to take advantage of their ability to control sites to contain the virus, he said. While Franco-Nevada doesn’t expect full production this year, he’s comfortable if assets are performing at 85% to 90% of optimal volume.
”I think the industry is going to be able to manage this quite well,” he said.
Eoin Treacy's view
In the early stages of a commodity bull market investors are focused on dividends. They want the security of the payout to offer some form of compensation for the perception of risk. As prices improve, priorities change. A desire to buy at a discounted price to try and gain leverage to the rising price environment supersedes the desire for yield. By the time the bull market climaxes investors are willing to pay anything to capture supply for fear of missing out on future returns.
Weekend Reading, Listening and Viewing July 10th 2020
Eoin Treacy's view
WHO Acknowledges Possibility of Airborne Covid-19 Transmission
Eoin's personal portfolio: stock market index long initiated July 6th 2020
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided.
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