“A day without sunshine is like, you know, night.” – Steve Martin
Chart of the Day
Good morning!
Proponents of traditional fossil fuel-generated power are doubtless pleased that despite decades of environmental activism, demand for natural gas, oil, and coal continues to rise – much to the consternation of green advocates. Global coal demand rose to a record high 8.79 billion tons in 2024. Oil consumption is expected to continue climbing until 2032 by some estimates, and similar trends are forecast for worldwide and U.S. demand for natural gas.
Yet conversely, those determined, for whatever reason, to suppress the development of sustainable energy are likely unhappy to learn that not only is the trend not going away, it’s continuing to climb – with or without the U.S. Coal demand rose in 2024, but its share of power generation shrank, and more energy is now generated by renewable energy than by coal. Yes, in the U.S. as well.
As followers of our work likely suspect, this has to do with the growing development of AI, which has led to a hunger for power expanding at such a rate that just about any source of power is going to be welcomed. A vegan isn’t in a position to turn down a chicken leg if he’s literally starving, and even the most committed devotee of the carnivore diet will wolf down some veggies during a famine.
A recent Goldman Sachs report estimates that nearly 60% of the growth in data-center demand for power will require that new capacity be built. It further projects that roughly 27.5% of this new capacity will come from solar energy, and 12.5% from wind energy.
There’s arguably no real way around it. As Goldman notes, with long lead times required to build natural-gas and nuclear power plants, “renewables remain the fastest and most efficient method for securing incremental power supply.” And speed obviously matters for AI. This is arguably a major reason why clean energy stocks (ICLN 2.25% ) have outperformed in 2025, up 49.1% YTD. Solaredge Technologies (SEDG 1.37% ) is up 137.1% YTD, while First Solar (FSLR 4.55% ) has climbed 43.2% over the same period.
Does this mean that full potential for solar and wind energy are already priced in, with no more potential upside? Maybe – and maybe not. It is already impressive that such stocks have managed to thrive despite the White House’s apparent antipathy toward sustainable energy. The Trump administration seems fond of reminding us that sometimes the sun doesn’t shine, and sometimes the wind doesn’t blow.
Yet advances in the field of power storage could arguably make the technology even more viable and add tailwinds to the industry. It might not be a surprise that California is building mega batteries, hoping to triple its storage capacity by 2027. But so is Texas – perhaps unsurprising given not just how much potential there is for solar and wind energy in the Lone Star state, but also the state’s unenviable presence on the leadership board for power outages (alongside California). Even Nvidia is investing in battery-capacity technology.
Globally, Australia has plans to increase its current battery storage capacity by eight to 11 times, while Chile is working to increase its capacity six-fold. The UK is not far behind, and even Saudi Arabia is getting in on the action. (It hardly needs to be said that China is aggressively pursuing battery storage projects as well.)
It’s said that a rising tide lifts all boats. It seems that AI might just be the tide that also lifts all forms of energy.
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📧✍️Here’s what a reader commented📧✍️
Q: What are your thoughts on the prospects for global luxury companies?
A: It is my hope that we are entering an age where we celebrate our different cultures without being threatened. No one wants to travel the world and see what we have back home. I just returned from Rome where huge numbers of people from all over the world come to learn and experience the unique Italian history and culture. The global brands are there as well, trying out their ideas. I see value in that as humanity marches forward out of the past and into our future.
Catch up with FS Insight
The S&P 500 is on track to close up 2% for October, so some understandable “chop” to digest those gains might be ahead. But we see multiple reasons for S&P 500 to gain in November.
Technical
It remains difficult to call for any sort of meaningful correction for stocks right now, but I think that we will likely face a choppy November. However, there is the likelihood that we begin the month this week with push to the upside this week.
Crypto
Crypto and equities both sold off yesterday, with digital assets showing an outsized reaction. However, the VIX, high-yield credit, and bond markets painted a more measured picture.
News We’re Following
Breaking News
- Kimberly-Clark to buy Kenvue in $48.7 billion deal REU
Markets and economy
- Businesses press Supreme Court to strike down Donald Trump’s emergency tariff power FT
- China to suspend some rare-earth curbs and US chip firm probes BBG
- Auto giants rally as China says it will consider exemptions for Nexperia chip exports CNBC
Business
- Microsoft to invest over $15 billion in UAE, secures US export licenses for AI chips REU
- Merger deal creates $13bn oil and gas player focused on Permian Basin FT
- Beyond Meat delays quarterly earnings report to November 11 REU
Politics
- Government must use emergency funds for SNAP benefits, judges rule WSJ
- ‘No idea who he is,’ says Trump after pardoning Binance’s CZ BBC
- FDA official steps down, sued by drugmaker WSJ
Overseas
- Canadian PM Carney apologises to Trump over anti-tariff advert BBC
- Trump’s university backlash drives US researchers towards Europe FT
- South Korea halts state asset sales after discount allegations BBG
Of Interest
- Egypt’s Grand Museum opens, displaying Tutankhamun tomb in full for first time BBC
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| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 11/3 | 9:45 AM | Oct F Oct S&P Manu PMI | 52.2 | 52.2 |
| 11/4 | 8:30 AM | Sep Aug Trade Balance | n/a | -78.311 |
| 11/4 | 10:00 AM | Sep JOLTS | 7177.5 | 7227 |
| 11/4 | 10:00 AM | Sep F Sep P Durable Gds Orders | n/a | 2.9 |
| 11/5 | 9:45 AM | Oct F Sep F S&P Srvcs PMI | 55.2 | 55.2 |
| 11/5 | 10:00 AM | Oct Sep ISM Srvcs PMI | 50.8 | 50 |
| 11/6 | 8:30 AM | 3Q P Nonfarm Productivity | 3.3 | 3.3 |
| 11/6 | 8:30 AM | 3Q P Unit Labor Costs | 0.95 | 1 |
| 11/7 | 8:30 AM | Oct AHE m/m | n/a | 0.3 |
| 11/7 | 8:30 AM | Oct Unemployment Rate | n/a | 4.3 |
| 11/7 | 8:30 AM | Oct Non-farm Payrolls | n/a | 22 |
| 11/7 | 10:00 AM | Nov P Oct P UMich 1yr Inf Exp | 4.6 | 4.6 |
| 11/7 | 10:00 AM | Nov P Oct P UMich Sentiment | 53 | 53.6 |
| 11/7 | 11:00 AM | Oct Sep NYFed 1yr Inf Exp | n/a | 3.38 |
