The day after and some other things
As we all try to figure out the micro and macro implications of the DeepSeek news, I believe that the one area that will remain well needed is power and energy. I'm sure you heard probably 10 times at least the concept of Jevons Paradox yesterday where the more efficient something gets, the more demand for it is created. The more we use any AI application, regardless of how much a model cost to initially create, the more power will be needed. By owning energy stocks, one doesn't care which model/tech company is going to win. We specifically remain long natural gas stocks/pipelines, also benefiting from global LNG needs, and nuclear names, particularly uranium as the renaissance there will continue on, especially with small modular reactors in the coming decade.
For a 2nd month, the post election optimism was reflected in the January Dallas manufacturing index seen yesterday. After 31 straight months of declines, this index rose to +4.5 in December and +14.1 in January. The six month business outlook also improved to 35.5, the highest since July 2021.
Here are some industry comments reflecting the positivity but with some caveats like expected tariffs:
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