Publications

- May 1, 2022: Vol. 9, Number 5

Death to the petrostate

by Mike Consol

As the folly of relying on Russia and other petrostates for energy needs become apparent in the throes of Vladimir Putin’s invasion of Ukraine, nuclear power is back in fashion. France plans to construct six new plants and is aiming for “total energy independence.” Britain announced March 21 it would build a new generation of reactors at “warp speed.” A redesigned energy system that turns to alternative fuels and belches out less carbon also promises to emasculate despotic regimes funded by fossil-fuel reservoirs. (The Economist)

Packages on high: Drone delivery continues to be rolled out by major technology and logistics companies. There will be a projected 1.5 million drone deliveries this year, meaning 2022 could mark a turning point in ecommerce and package delivery. Alphabet, Amazon and others are preparing to launch drone-delivery pilot projects in Texas, delivering everything from pet medications to food orders. While those trials are largely based on short “last mile” fulfilments, FedEx is working on deploying larger UAVs for “middle mile” journeys between sorting hubs, opening up a market for industrial-scale drones with hundreds of pounds of capacity and the mileage to match. (McKinsey)

Space-based broadband: Amazon is purchasing as many as 83 rocket launches from three different providers to deploy the majority of its planned Project Kuiper satellite constellation for high-speed internet service. The deals with Arianespace, Blue Origin and United Launch Alliance represent the largest commercial procurement of launch vehicles in history. Amazon’s FCC license requires Project Kuiper to launch at least half of its planned 3,236-satellite constellation by July 2026, and at least 90 percent of its constellation by July 2029. (Bloomberg)

EVs get a fresh charge: Hertz, which is aiming to increase the number of battery-
powered vehicles in its fleet, has struck a roughly $3 billion deal with Swedish electric automaker Polestar to provide the rental-car company with 65,000 electric vehicles over the next five years. The deal is similar to one Hertz signed with Tesla in October 2021 to provide 100,000 vehicles. In a related trend, electric car sales surpassed diesel sales in Europe during 2021. In Scandinavia, 80 percent of new cars sold in Norway are battery powered. (Financial Times, New York Times)

The Golden State’s big bet: Daniel Wallach, a Florida-based attorney who has advised various constituencies in burgeoning sports-wagering states, says, “California is the holy grail of U.S. sports betting markets. This is going to be a half-a-billion-dollar battle for control of the most lucrative betting market in the world.” California voters will get a chance in November to unleash a massive new industry in the Golden State and, if approved, is expected to provide a jolt to other states that have been holding out. Already, 33 states and Washington, D.C., have authorized sports betting, giving birth to a sector expected to generate tens of billions of dollars in revenue once those markets are fully operative. (Politico)

Crypto’s pull: Investors are taking a less wary stance toward digital currencies, and that has even BlackRock, one of the world’s largest asset managers, considering crypto options for its clients, CEO Larry Fink wrote in his annual letter to shareholders. “As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients,” Fink wrote. (Barron’s, Trusted Insight)

ETF or see you in court: Crypto asset manager Grayscale Investments is threatening to sue the SEC if the agency turns down its long-running proposal to convert its bitcoin trust to an ETF. The firm filed to convert its Grayscale Bitcoin Trust (GBTC) to an ETF last year. The investment vehicle, which launched in 2013, has $25.6 billion in assets. More than 800,000 U.S. accounts invest in GBTC, according to CEO Michael Sonnenshein, noting it’s held by individuals, retirement accounts, mutual funds and ETFs. “When you think about the opportunity that [the SEC] has, it’s really to be the voice of further protecting investors and bringing an already existing product into a more stringent regulatory framework that will give investors more protection,” he said. The SEC’s ruling on the conversion is expected in July. (Blockworks)

The vanishing IPO: Initial public offerings in the United States plummeted 72 percent during the first quarter, compared with the same period of 2021, with total proceeds shrinking by 95 percent to only $2.4 billion. The number of IPOs worldwide shrunk 37 percent and proceeds slumped 51 percent during the first three months of 2022, compared with the same period last year. (CFO Dive, EY)

 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Read his latest postings on Twitter (@mikeconsol) and LinkedIn (linkedIn.com/in/mikeconsol). He is also producer and host of the podcast Novelist Spotlight.

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