Energy rally back in play as shutdown end nears
Plus, airline emissions take back seat in airport travel chaos. And to all our readers who are military veterans on this special day, thank you for your service.
In today’s edition:
— Energy rally returns to center stage as new face of AI
— Airline emission problems take back seat in airport travel chaos
— Power hungry data centers force some states to withdraw carbon emission targets
— Shark-spotting drones prove better than nets on beaches in Australia
— Export controls concentrate critical mineral risks
On this Veterans Day — when the U.S. government is actually supposed to be closed — and as climate delegates debate the state of climate finance down in Brazil, Wall Street is working overtime to restart the global energy Al play after a harrowing correction last week during the U.S. shutdown.
Stocks from NextEra Energy (NEE) and Constellation Energy (CEG) to First Solar (FSLR) all rallied early this week as signs that the U.S. government shutdown could soon end had traders returning to the AI play that has consumed the stock market for most of this year.
But as we get to the traditional year-end run in stocks, with AI tech giants so clearly overvalued, the energy companies behind them are taking centerstage. The story has transformed from one of what AI technology can do, to who is going to power it all. Along with lower interest rates, that has been a tremendous lift for green energy stocks in the past few months.
The flip side of this optimism, of course, is that any sign of an energy crunch, or higher energy prices, could derail the trade quickly. This morning’s news that Softbank had divested its Nvidia (NVDA) shares illustrated just how frail the AI rally can be for Big Tech in the face of any sort of negative move.
Even the most optimistic tech booster can see that there is not going to be enough energy to power the data centers that the industry thinks it will need. At some point, tradeoffs will become necessary, and the politics of energy will get a lot more interesting than just “drill, baby, drill.”
For now though, the AI trade has entered a new period of its evolution with energy companies in charge in what looks like a somewhat more realistic assessment of where it is all going.
If you have ideas or suggestions for us, contact me directly at
dcallaway@callawayclimateinsights.com.
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