Q3 2025 Earnings Links

• RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today announced the acquisition of all the shares of RCI stock owned by ADW Capital Partners, L.P. The 821,000 shares were acquired for $30.0 million or $36.54 each for $8.0 million in cash and $22.0 million in two-year seller financing at 12%. The transaction closed today. [RCI Hospitality Holdings, Inc.]
• Tom Hill, Vulcan Materials' Chairman and Chief Executive Officer, said, "The combination of our aggregates-led business and our commercial and operational execution has resulted in strong earnings growth and margin expansion through the first nine months of 2025. Adjusted EBITDA has improved 20 percent over the prior year, and margin has expanded 290 basis points on a year-to-date basis. Aggregates cash gross profit per ton has improved 12 percent with widespread improvements across our footprint. These results demonstrate the compounding benefits of our strategic disciplines and reinforce our confidence in our ability to continue to deliver strong earnings growth and cash generation." [VMC]
• Commenting on the second quarter results, Michael Haack, President and CEO, said, "Eagle’s portfolio of businesses continued to perform well during the quarter, generating record revenue of $639 million, EPS of $4.23 and gross margins of 31.3%. We repurchased 395,500 shares of our common stock for approximately $89 million and ended the quarter with debt of $1.3 billion and a net leverage ratio (net debt to Adjusted EBITDA) of 1.6x, giving us substantial financial flexibility that supports disciplined capital allocation and long-term growth." [EXP]
• "With the completion of the Neches River Terminal next year, we are nearing the culmination of a significant capital deployment cycle that began in 2022. These investments included large scale pipeline and marine terminal facilities as well as gateway acquisitions that put Enterprise in a position to support production growth from the Permian and Haynesville basins for years to come. With this large wellhead to water build out cycle behind us, we believe 2026 will see an inflection point in the partnership’s free cash flow. Today, in connection with this expectation, we announced a $3.0 billion increase to Enterprise’s common unit buyback program." [EPD]
• Altria: "Smokeable products segment reported domestic cigarette shipment volume decreased 8.2%, primarily driven by the industry’s decline rate (impacted by the continued growth of flavored disposable e-vapor products, the majority of which we believe have evaded the regulatory process, and discretionary income pressures on ATCs) and retail share losses, partially offset by trade inventory movements." "[Smokeable] net revenues decreased 2.8%, primarily driven by lower shipment volume and higher promotional investments, partially offset by higher pricing. Revenues net of excise taxes decreased 1.3%." [MO]
• Genesis Energy L.P.: "Looking forward, the combination of growing total Segment Margin and lower absolute debt should produce a clear trajectory of significant and rapid improvement in our leverage ratio throughout 2026. Rather than focusing on what could have been this year, our attention is squarely focused on the future. We are well positioned to generate higher levels of Adjusted EBITDA and free cash flow in 2026 and beyond, giving us the financial flexibility to deliver meaningful long-term value for all our stakeholders." [GEL]

December 1st Links

• Without a meaningful drop in US crude oil production in 2026, the global oil market rebalancing will be stalled. The other way to think about it is that if the expected surplus is ~1.5 million b/d, then either global oil demand has to increase by that much or the supply side has to decrease by that much. In this case, if US crude oil production is flat at $60/bbl in 2026, then the only way to rebalance the market is for demand to increase. If there are any signs that demand does not keep pace and global oil inventory builds pile up, then you will see oil prices crash to push on the supply side. This is the asymmetric situation that we are running into. Inevitably, the supply side has to respond (via a decline). The global economy is not that healthy to pull us out of this incoming glut entirely, so without a material supply reduction, the incoming downturn is going to look very ugly. If history rhymes, then it will punish producers. That’s the situation we are going into now. To make matters worse for energy investors, Canadian oil stocks are priced for perfection today. [HFI Research]
• On the technology S-curve, we’re early. But that tells you almost nothing about the equity S-curve. You have to keep those two curves separate. If anything, history suggests the opposite: the earlier you are on the adoption curve, the more likely it is that markets have already tried to cram 30–40 years of expected impact into a 3–5 year price spike. The stock market is not patiently tracking real-world diffusion; it’s front-running the story. And then you have to ask what actually changes when a bubble peaks. Spoiler: it’s not the code, not the chips, and not even the next two quarters of P&L. What changes is the story in people’s heads, and once that flips, everything else (multiples, flows, “fundamentals”) gets reinterpreted through that new lens. Technologies diffuse on multi-decade S-curves. Stocks move in short, violent spikes. AI can be genuinely early on one and already mature on the other at the same time. [Early in AI, Late in the Trade]
  
• To me, it seems like the single most important quality in an investor is an ability to look for situations that are too good to be true, and then chase those down ruthlessly. It’s a strange combination of traits at the extremes of the explore/exploit dichotomy. Great ideas are rare, so you should turn over lots and lots of rocks. But they do exist, and you need to be able to recognize them and, when you really find one, put everything else aside to make sure you actually are exploiting it. If you optimize too much for the “explore” part of the equation, you will fail to follow up and execute on your best ideas as thoroughly as you should. But if you don’t explore enough, you will spend lots of time researching subpar ideas, eventually convince yourself they are great, and have mediocre performance. [Sardine Trader]
• The problem is simply how does one turn the complicated style of Thucydides into English. The two new translations take different approaches. W. Blanco writes, “I have tried to make a translation of Thucydides’ famously difficult text that would be accessible to students and general readers. To do so, I have relaxed the compressed, often crabbed, syntax of the speeches and have adopted a relatively colloquial vocabulary for them and for the narrative as a whole. I offer no apologies” [Bryn Mawr Classical Review]
• There are thousands of variations you could have used, each resulting in a similar-yet-slightly-different program. And that’s why prompt engineering is needed. There is no a-priori reason why your first, naive program key would result in the optimal program for the task. The LLM is not going to “understand” what you meant and then perform it in the best possible way — it’s merely going to fetch the program that your prompt points to, among many possible locations you could have landed on. Prompt engineering is the process of searching through program space to find the program that empirically seems to perform best on your target task. It's no different than trying different keywords when doing a Google search for a piece of software. If LLMs actually understood what you told them, there would be no need for this search process, since the amount of information conveyed about your target task does not change whether your prompt uses the word “rewrite” instead “rephrase”, or whether you prefix your prompt with “think steps by steps”. [François Chollet]
• In investing in emerging markets, Firebird often tries to divine the truth not from anything a company or brokerage analysts say – which frequently is misleading – but from what they don’t say, as well as other non-information that creates a mosaic. Just one example from hundreds I have: in the early days of the Ukrainian stock market an oleaginous broker came to New York pitching all the main exchange-listed stocks – except one, the one that to us seemed most interesting. He never mentioned the other one at all. Of course, it turned out that omitted stock was the only good one and the broker’s more important clients were already likely looking for shares, while the others were low-quality, with plenty of sellers. In reference to Sherlock Holmes’ Hound of the Baskervilles, I call that situation “The Dog that Didn’t Bark”. [Harvey Sawikin]
• Let's talk about something that will shape our future, but no one is yet considering or predicting: China will eventually open its borders to mass immigration. When it does it will absorb truly astounding numbers of immigrants, if proportional to say what the UK or Canada this will be 200-300 million or so people. This might sound almost physically impossible, but the surprising almost disturbing truth is that in the modern world it is easy move 200 million people. In 2023, 4.4 billion passengers were carried by the world's airlines. 200-300 million people in a graying ageing world of low fertility is enough to raise global labor costs. This will be completely distinct second China shock to Western companies hoping to offshore to places with cheap labor. The cheap labor good at working in factories will move to China. The West will get scraps of misplaced high end human capital and food app deliverymen. East Asian democracies such as Japan and South Korea are experimenting with mass immigration as their ageing population reaches true crisis. There is populist backlash in East Asia, but just as in Europe and America the people don't get a say when business owners speak. Unlike democracies authoritarian governments aren't picking the absolute most unassimilateable and unproductive immigrants they can find. But they are still importing massive numbers of workers. Look at Russia, Belarus, or countries such as Dubai and other Gulf monarchies. Authoritarian governments just want workers; they don't need welfare recipients to vote as instructed. No impactful elections, means there is no need to import political clients to socially engineer elections. This solves some but not all societal problems seen in the West. Neither China being an East Asian country nor it being an authoritarian country are therefore reasons to not expect eventual mass migration into China. When China exhausts its rural labor reserve, likely in the next decade, we can expect pressure to mount for either outsourcing or immigration. In the West we did both. I expect in China the CCP will after some nationalist grandstanding ironically come to the conclusion that mass immigration will be preferable to outsourcing. Marxist elites will prioritize maintaining the overall concentrated industrial base and cdemocracy. Mass immigration China will bitterly disappoint China doomers: China will not collapse due to low birth rates. It will do what bureaucrats do around the world. Human quantitative easing to make line go up. Mass immigration China will bitterly disappoint liberals: It will turn out it is much more economically efficient and politically sustainable to only import workers and not voters. We already saw 200-300 million people move to work in China's factories. It just all happened inside of China. The distances involved in these migrations are no less than say immigration from South or Southeast Asia would be. I also want to remind nationalists who might like China's nation state of the obvious point that the political institution that carried out the cultural revolution doesn't actually have any fundamental commitments to Chinese cultural continuity. I think the same kind of decision-making that interns the Uighurs for reeducation, imposes the one child policy, imposes internal border controls is actually exactly the kind of ruthless people as numbers technocratic decision-making that would import 100 million Indonesians to Shenzhen while policing them heavily to avoid demographic driven economic collapse. [Samo Burja] 

Monday Morning Links

• Titanium is the canonical process opportunity of the 21st Century, it sits well outside the economy for such an abundant material a clear sign that Kroll + chloride chemistry is the issue. Any viable electrolyte/plasma/FFC type route is a multi sigma unlock for humanity. Noble gases are on the floor, they are cheap to stockpile and tied to industrial air separation processes ie oxygen and nitrogen plants. Rare Earth sit tightly in the economically priced band, their pricing is separation process and demand mix dominated, not scarcity dominated. The kink/flattening at high abundance shows where scarcity stops mattering, beyond circa 10^3 ppm the economy hits the energy floor and energy / logistics drive price illustrating the Earth is well below its carrying capacity for humanity. [Object Zero]
• Half a century after the US and Soviet governments conjured a commercial titanium industry from scratch to feed their cold war machines, we’ve seen virtually no progress in making the metal cheap or abundant. Learning curves that manifested quickly for aluminum and stainless steel simply didn’t appear for Ti— its “idiot index”, the cost of Ti parts as a multiple of the cost of ore and embodied energy, remains >10x that of steel. At $25-$50/kg, titanium is just too expensive to be widely used. The total lack of progress keeps titanium in a reverse-Goldilocks zone where it loses to steel and aluminum on cost, and to composites on weight, and so is used only where its lightness and toughness are absolutely essential. Outside of aerospace, defense, corrosion-resistant process equipment, artificial joints and premium sporting goods, titanium is practically irrelevant. [Orca Sciences]
• The natural gas industry in unconventional fields has a similar supply structure to unconventional oil (supply can be adjusted fairly easily up and down). This already leads to a market that tends to be more oversupplied generally. In addition, two extra characteristics make natural gas bear markets even more prolonged and vicious than in oil. The first is that gas cannot be transported easily (LNG capacity is limited in many areas, and so is pipeline capacity, with trucking being cost-prohibitive), so demand is generally much more limited regionally. Second, gas can be a by-product of oil production (depending on the geology, a well will produce almost all oil, gas, or a mix), meaning that if oil is still profitable, its excess gas production will drive gas prices down. [Quipus Capital]
  
• On current trends, US coal demand will rise this year to about 465 million short tons, driven by higher electricity generation. From one perspective, that’s still down 60% from 2007’s record high and the third-lowest annual consumption in half a century. From another, the year-on-year increase of roughly 55 million tons would be the largest annual jump in 40 years. [Bloomberg]
• The Hyperion deal is a Frankenstein financing that combines elements of private-equity, project finance and investment-grade bonds. Meta needed such financial wizardry because it is already borrowing by the bucketload to build AI, issuing a $30 billion bond in October that roughly doubled its debt load overnight. Enter Morgan Stanley, with a plan to have someone else borrow the money for Hyperion. Blue Owl invested about $3 billion for an 80% private-equity stake in the data center, while Meta retained 20% for the $1.3 billion it had already spent. The joint venture, named Beignet Investor after the New Orleans pastry, got another $27 billion by issuing bonds that pay off in 2049, $18 billion of which Pimco purchased. That debt is on Beignet’s balance sheet, not Meta’s. The notes bear a 6.58% interest rate, much higher than the 5.5% yield on Meta’s comparable corporate bond, and have an A+ credit rating, one notch below Meta’s AA-. [WSJ]
• Would you believe me if I told you this supposed “coal-mining” company is rather capital-light as it doesn’t deploy much of its own capital in mining and has no direct exposure to coal prices? NACCO’s mining segments are really a collection of contracted mining operations in which customers provide capital, carry the mine-level debt, and reimburse nearly all operating costs. NACCO simply collects a cost-plus management fee per ton (or per MMBtu) with inflation-linked adjustments baked in. The accounting makes it look strange: most of the real economics don’t appear in gross profit or operating profit at all. They sit quietly below the operating line as “Earnings of unconsolidated operations”. Here’s where it gets better. NACCO is taking the cash flow from its coal-mining contracts and redeploying it into O&G royalties that don’t carry the same existential risk as coal. Management runs the company with a capital-allocation mindset and a strong balance sheet, choosing durability over leverage and short-term optics. [scavengersledger]
• My analysis of the truly great premium brands is that they are surprisingly indifferent to their shareholders’ near-term demands. Vail has moved away from this, and I have to believe the old way was better. Moreover, if the premium brand in question is also attempting to carry out an operational turnaround, I can’t help feeling that the capital structure and capital allocation policy that would best aid that operational turnaround is a conservative one. If nothing else, a conservative capital structure and capital allocation policy would give Katz some psychological breathing room, as well as some political breathing room when negotiating with Vail’s many constituents who feel the company’s shareholders have benefitted at their expense. [PIB Academy]
• A handful of proposed expansions to major pipelines in the country could noticeably increase the amount of oil that can be exported out of Western Canada. In total, they add up to the equivalent to constructing a large brand new pipeline. Enbridge is proposing four different expansions to its pipeline system, which is the largest in the country. The Calgary-based company announced a final investment decision on Friday to proceed with the first phase, which will cost $1.4 billion US to add 150,000 barrels per day of capacity on its Mainline system and an additional 100,000 barrels per day to its Flanagan South pipeline. The project should be completed in 2027. [CBC]

Suncor Energy (SU) - Q3 2025 Conference Call

Highlights from Suncor's Q3 2025 conference call:

• Upstream production, 870,000 bbl a day in the third quarter, far and away our best third quarter ever. In fact, 41,000 bbl a day higher than our previous best, which was achieved last year.
• Refining throughput, 492,000 bbl a day in the third quarter, our best quarter of any quarter ever, exceeded our previous best, the third quarter of last year. The third quarter is typically the highest throughput quarter each year.
• Recognizing all sales are not created equal, our highest margin retail sales are up 8% year-on-year, while lower margin export sales are down 11% year-on-year. 
• Operating costs, year-to-date OS&G, CAD 9.7 billion, essentially flat with year-to-date 2024. Despite 32,000 bbl a day higher upstream production, 14,000 bbl a day higher refining throughput, and 21,000 bbl a day higher product sales, higher volumes, lower unit costs. 
• Turnarounds, on our second quarter call, we shared second quarter turnarounds were completed at historically low cost and best-ever durations. Our third quarter turnarounds were completed equally well. A couple of examples: Montreal Refinery, our hydrocracker and hydrogen plants. Previously, 55 days to complete the work. We budgeted it at 50. We completed it in 40, going from industry fourth quartile to second quartile. Previously, it cost us CAD 80 million. We budgeted it at 71. We completed it for 62, again going from industry fourth to second quartile. I am really pleased to say it was completed without so much as a cut finger or a spilt barrel.
• We've dramatically reduced our WTI breakeven and at the same time reduced our net debt. We've materially grown free funds flow, fueling higher return of capital to shareholders.
• A few illustrations: third quarter 2025 AFFO, CAD 3.8 billion with WTI at CAD 65 a barrel. Last time we had CAD 3.8 billion AFFO was the third quarter of 2024, with WTI at CAD 75 a barrel.
• Third quarter free funds flow, CAD 2.3 billion, the highest operationally since fourth quarter of 2022 when WTI averaged CAD 83 a barrel, CAD 18 higher. Year-to-date free funds, CAD 5.2 billion, within CAD 200 million of 2024, despite oil prices being CAD 11 a barrel lower. Buybacks, CAD 250 million a month in 2025, every month. Independent of oil price, CAD 250 million when WTI was CAD 75 in January, CAD 250 million when WTI was CAD 61 in May. Year to date, we bought back more than 42 million shares, 3.4% of our float, at an average cost of CAD 53. Year-on-year, CAD 340 million more in buybacks, despite oil prices being down CAD 9 a barrel. At today's oil price, I strongly believe buying our stock is our best investment, and we intend to keep buying it month after month after month.
• Rich has previously described this as our ability to make craft cocktails for our customers. It is this competitive advantage, coupled with our strong logistics and trading capabilities, that enabled us to sell our oil sands barrels at 96% of average WTI over the quarter. Our downstream margin capture is consistently above industry benchmarks. This quarter was no exception, with margin capture at 92% of our custom 5221 index, an index which represents the margin power of our downstream business. LIFO gross margin was CAD 28.87 versus an average New York Harbor and Chicago 321 crack of CAD 26.39. Suncor is quite simply a margin machine, and this should be recognized as a core driver of this company's value proposition.

It would be hard to understand this quarter's oil results without the framework of cornucopianism. Producers are getting more efficient, increasing the supply and driving the price of oil down. ("Higher volumes, lower unit costs.") 

The most efficient, lowest cost producers' profit holds up reasonably well and so do the owners of low cost minerals. It is not great for owners of higher cost minerals! This may be why we are seeing a pronounced divergence between the share prices of Suncor and Dorchester, for example.

The current market capitalization of SU (at a $44.23 share price) is $53 billion and its enterprise value is $61 billion. (Net debt of $5.1 billion plus other liabilities.) Suncor returned $1.02 billion of value to shareholders in the third quarter with $490 million in share repurchases and $530 million in dividends, for an annualized shareholder yield of 7.7% on the current market capitalization. As of October 31 (not September 30) the number of shares outstanding is down 3.8% year-over-year. 

Suncor's adjusted funds from operations was $2.7 billion which was about the same as a year earlier. Capital expenditure was $1 billion which was also the same as the year earlier. The resulting free cash flow for the quarter was $1.7 billion (again, same as in 2024), which is an 11% yield (annualized) on the enterprise value. Capital expenditures were roughly flat while upstream production was up 6%, year-over-year. This was in an environment of $65/bbl WTI compared with $75 a year earlier. As mentioned in the conference call notes above, Suncor kept profits flat despite a $10/bbl oil price decline! (The WCS spread was $10.40/bbl vs $13.50 a year earlier.)

Suncor generated $2.1 billion of funds from operations from oil sands, $200 million from other upstream (e.g. offshore production) and $863 million from downstream (refining and marketing). The refining and marketing helped keep profits flat despite the oil price decline because they generated $366 million more funds from operations than the prior year. 

Suncor's proprietary 5-2-2-1 crack spread was $31.20 versus $26.05 the prior year and the company had higher refinery utilization/throughput, as was mentioned in the call note above. Suncor gets more diesel out of a barrel than a generic refinery refining lighter crude. Also, Suncor captures some of the retail margin via its fuel stations in Canada.

Oil Supply & Demand Links

Supply Curve for Oil: Shale, Canadian, Venezuela

• By and large, US E&P companies keep beating their own oil quarterly production targets, and are guiding investors to expect flat-to-small growth in 2006. Empirically, current WTI oil prices hovering at ~$60 a barrel aren’t enough to send production down. [Javier Blas]
• Record quarterly liquids production of 1,175,604 bbl/d was achieved, an increase of approximately 154,000 bbl/d or 15% from Q3/24 levels. [Canadian Natural Resources Limited] 
• Simply put, gravity causes some percentage of the sand pumped during a frac treatment to settle out of the fracturing fluid before entering the fracture network. Testing shows that as little as 12% of induced fractures are propped by sand. Even achieving a propped volume on the order of 25%-30% of the fractured area still allows most of the fracture network to close. By mixing near neutrally buoyant proppant with sand, operators can produce 80%-90% of created fractures. Because it is made of an extremely light thermoset nanocomposite bead, ULWP has a specific gravity that is approximately half that of sand. Instead of sinking and settling, it enters the fracture network and stays suspended until closure sets in and locks it in place. [The American Oil & Gas Reporter]
• Spring-based industry major ExxonMobil reportedly is using a proprietary lightweight proppant made from petroleum coke in wells in the Permian Basin to improve production and lower costs.  The proppant is designed to be transported further into fractures than traditional sand to keep more fracture area open and increase overall resource recovery by up to 15 percent.  The technology is seeing “wide use” across the basin with hundreds of wells already completed using the proppant.  And ExxonMobil plans to deploy this proppant on more than 200 Permian wells in the next 12 months. “Our work in the Permian Basin will play a key role in meeting the world’s growing energy demand for years to come,” ExxonMobil said on its website.  The company said it will double production in Permian Basin by 2030 to about 2.3 million barrels per day with “the largest contiguous acreage position in the Permian with double the number of low-cost net drilling locations compared to our next closest competitor.” [PB Oil & Gas]
• Our proprietary lightweight proppant technology enhances production rates and reduces costs. Derived from refinery-coke, it opens greater fracture areas than traditional sand. Leveraging it has improved our resource recovery by up to 15%, making it crucial for boosting efficiency and lowering drilling and completion costs. [Exxon Mobil] 
• In the Midland region of the Permian Basin, the average length of laterals, the horizontal portion of a well, has increased by 58% since 2015. More than 50% of Midland wells completed in 2025 have spanned over 10,500 ft (2 miles) laterally, with the longest reaching 21,276 ft (4 miles), according to Rystad. Advances in technology have enabled producers to drill longer laterals, which can help improve well productivity and capital efficiency. Lateral lengths can vary within and across shale basins. The optimal well design can be influenced by many factors, including geology, other well spacings, and whether a company holds contiguous leases. [American Petroleum Institute] 
• If President Trump normalizes oil trade with Venezuela—even partially—Canada’s exposure is bigger than it looks. Gulf Coast refineries are built to run heavy sour barrels. When Venezuela was sanctioned off the slate, Alberta bitumen became the backfill. Undo that, and the first barrels displaced are likely Canadian—with knock-ons for Alberta’s revenues and the equalization-era fiscal balance across Canada. [drjennifericonsidine]
• The proven oil reserves in Venezuela are recognized as the largest in the world, totaling 300 billion barrels as of 1 January 2014. The 2019 edition of the BP Statistical Review of World Energy reports the total proved reserves of 303.3 billion barrels for Venezuela (slightly more than Saudi Arabia's 297.7 billion barrels). Venezuela's crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries. [Oil reserves in Venezuela] 

Supply Curve for Oil Substitutes: Batteries     

• Battery sales are growing exponentially up classic S-curves that characterize the growth of disruptive new technologies. For thirty years, sales have been doubling every two to three years, enjoying a 33 percent average growth rate. In the past decade, as electric cars have taken off, it has been closer to 40 percent. As volumes increased, battery costs plummeted and energy density — a key metric of a battery’s quality — rose steadily. Over the past 30 years, battery costs have fallen by a dramatic 99 percent; meanwhile, the density of top-tier cells has risen fivefold. As is the case for many modular technologies, the more batteries we deploy, the cheaper they get, which in turn fuels more deployment. For every doubling of deployment, battery costs have fallen by 19 percent. Couple these cost declines with density gains of 7 percent for every deployment doubling and batteries are the fastest-improving clean energy technology. [RMI]
• Batteries are a lot like explosives. Like explosives, batteries contain both reducing chemicals and oxidizing chemicals bundled tightly together, ready to react with one another. Like explosives, we engineer our batteries to pack these chemicals together as tightly as possible to speed reaction rates. Like explosives, we like our batteries as powerful as possible… But the way we put batteries together is a bit like how we made gunpowder in the 1700s. Even though all of the salient reactions and transport phenomena occur on the angstrom-scale, we build batteries in mechanically separated layers—100μm anode, 30μm separator, 100μm cathode etc. Tiny as that seems, that’s as enormous in chemical terms as grains of charcoal and saltpeter in a musket. Even 20 microns leaves tens of thousands of separator molecules for each ion to crawl through before it can cough up an electron into your favorite circuit. So slow! So here’s the obvious question: what if we could make batteries more like TNT, and assemble them at the molecular scale, with anode and cathode only angstroms apart? [Orca Sciences]
• Lithium–sulfur batteries may displace lithium-ion cells because of their higher energy density and reduced cost. This is due to two factors. The first factor is that sulfur is more energy dense and less expensive than the cobalt and/or iron compounds found in lithium-ion batteries. Secondly, the use of metallic lithium instead of intercalating lithium ions allows for much higher energy density, as less substances are needed to hold "lithium" and lithium is directly oxidized. Li–S batteries offer specific energies on the order of 550 Wh/kg, while lithium-ion batteries are in the range of 150–260 Wh/kg. Li–S batteries with up to 1,500 charge and discharge cycles were demonstrated in 2017, but cycle life tests at commercial scale and with lean electrolyte have not been completed. [Lithium-sulfur battery]
• Reducing the cost of batteries is amongst the biggest challenges facing manufacturers. Much of the cost of current batteries is due to the expense of metals including nickel and cobalt. In contrast, the materials used in the electrodes of Li-S cells are comparatively low cost, with sulfur being amongst the most abundant element on earth. The benefits of economies of scale for Li-S cells will be realised upon wider commercialisation, in particular in the production of the electrolyte. Forecasts suggest this may lead to Li-S cells with comparable performance to Li-ion cells, but at less than half the price. The removal of transition metals such as cobalt from batteries is also an important consideration due to environmental and ethical concerns with mining and uncertainties around security of supply. [The Faraday Institution]
• Each cell has a theoretical limit based on the chemistry of the cathode and the anode. There is also a practical limit, which includes the mass of electrochemically inactive components such as current collectors, separators, electrolyte, additives, tabs, and packaging. A percentage of the theoretical limit can give an insight into how mature a chemistry is, or how close to maturity a chemistry may be. Lithium-ion is difficult to measure maturity due to the mixture of different cathode and anode chemistries. [NASA Glenn Research Center]

Demand Curve for Oil: Electric Vehicles

• Electric vehicles currently account for about half of car sales in China, undercutting 3.5% of new fuel demand in 2024, while the use of compressed and liquified natural gas in road freight displaced another 2%. China has been providing subsidy support to purchases of so-called “new energy vehicles” (NEVs) since 2009, promoting its automotive manufacturing industry, and reducing air pollution. A trade-in policy, introduced in April 2024 and expanded in 2025, continues to drive growth in China’s EV sales. Meanwhile, highly competitive Chinese automakers are also making gains in international markets. [IEA] 
• The continued growth in charging will impact transportation fuel demand in China in the coming years, and may have global implications if China’s electric cars and trucks can find growing markets abroad. Public charging demand growth has averaged 62% year on year over the past 12 months, only slightly slower than the 63% growth over the past 24 months. If that rate of growth continues over the next year, annual displacement would rise by 670,000 barrels per day, bringing the total implied destruction of oil demand to 1.76 million barrels per day. The likely impact will be weaker Chinese crude imports over the longer term, declining from last year’s average levels of 11.1 million barrels per day. [Rhodium Group]
• The SCALE of the renewables revolution in China is almost too vast for the human mind to grasp. By the end of last year, the country had installed 887 gigawatts of solar-power capacity—close to double Europe’s and America’s combined total. The 22m tonnes of steel used to build new wind turbines and solar panels in 2024 would have been enough to build a Golden Gate Bridge on every working day of every week that year. [The Economist]
• BYD is currently building a factory in Brazil, its biggest market outside China, although the development was hit last year by allegations of labour abuses. The carmaker is also building factories in Thailand, Hungary and Turkiye. In addition, Wang said that BYD had no plans to sell into Canada and the United States in the short term due to geopolitical developments. The Trump administration has maintained duties of 100pct on Chinese-made EVs, as has Canada. Wang told the analysts he was confident BYD's profitability per vehicle would exceed Toyota's when it reached the scale of the Japanese manufacturer, saying BYD's cost control was better. Toyota, the world's top automaker by sales, sold 10.8 million vehicles in 2024, while BYD sold 4.27 million. BYD, which is targeting sales of 5.5 million units this year, has roiled the Chinese auto market by rolling out more affordable models, including its entry-level Seagull electric hatchback that sells for less than US$10,000. It also offers smart driving features at no extra charge on most of its lineup. [New Straits Times]
• The true business of oil majors is fuels. Gasoline, the most important of those fuels, and used primarily for regular cars, represents 50% of oil demand today. The problem for oil majors is that most projections agree on peak light vehicle fuel consumption within this decade. Mind the wording there: not peak oil, not peak fuels, but peak light vehicle fuel (basically passenger cars). The driver of that trend is EVs. In no country is this more true than in China, the largest EV market in the world. Last year, China’s light vehicle fuel consumption already fell, and it is still falling in 2025, despite the economy expanding. To aggravate the problem, China has the second-largest refinery capacity in the world. It has a lot of refineries, for which it has no (perspective of) vehicles. [Quipus Capital]
• Far from a peak, China's gasoline demand is estimated to have fallen 9% in October on the year to 12.5 million tons, with average daily use roughly flat with September, according to Chinese consultancy Sublime China Information (SCI). The sagging holiday demand is symptomatic of the broader decline in Chinese fuel use stemming from wider EV adoption, heralding the approaching end of its decades-long role as the main driving force of new global oil demand. Gasoline consumption in the world's biggest importer of crude peaked in 2023 and the research unit of state oil company Sinopec expects demand to fall more than 4% this year from 2024. During the first nine months of the year, EVs and hybrids made up almost half of all new car sales. A fifth of the 63.5 million car trips during the eight-day holiday break were in electric or hybrid vehicles, the transport ministry says. Daily use of electricity by charging stations, a proxy for EV use, rose 45.73% during Golden Week this year, versus 2024. EV adoption has benefited from China's push to build charging infrastructure, with some 18 million charging ports by the end of September, up 54.5% on the year. [Reuters]  

Friday Night Links

• The true business of oil majors is fuels. Gasoline, the most important of those fuels, and used primarily for regular cars, represents 50% of oil demand today. The problem for oil majors is that most projections agree on peak light vehicle fuel consumption within this decade. Mind the wording there: not peak oil, not peak fuels, but peak light vehicle fuel (basically passenger cars). The driver of that trend is EVs. In no country is this more true than in China, the largest EV market in the world. Last year, China’s light vehicle fuel consumption already fell, and it is still falling in 2025, despite the economy expanding. To aggravate the problem, China has the second-largest refinery capacity in the world. It has a lot of refineries, for which it has no (perspective of) vehicles. [Quipus Capital]
• If President Trump normalizes oil trade with Venezuela—even partially—Canada’s exposure is bigger than it looks. Gulf Coast refineries are built to run heavy sour barrels. When Venezuela was sanctioned off the slate, Alberta bitumen became the backfill. Undo that, and the first barrels displaced are likely Canadian—with knock-ons for Alberta’s revenues and the equalization-era fiscal balance across Canada. [drjennifericonsidine] 
• The impoverished environments of early America looked like a genetic problem despite being an environmental problem, which is why so many elites focused on heredity as the primary culprit of poverty. Grinding multi-generational poverty leading to successive predetermined outcomes of inadequate prenatal and childhood nutrition, along with parasite and infectious disease burden, looked a lot like genetic determinism, but it was fundamentally wrong. Similarly, today, with these basic needs almost universally provided, any remaining inequality is likely to be a residue of primarily genetic influence, or else cultural patterns so deeply ingrained they are impossible to address. Yet we assume, despite having harvested all of the low-hanging fruit of improved environments, that outcomes are determined by environment. [The Tom File]
• In contrast with a general trend of declining trading frictions, over the last several decades the cost of borrowing securities for short-selling has increased dramatically. Using a portfolio approach, we show that as the borrow costs have increased so has the mispricing associated with portfolios of high-borrow-cost names. This decline in market efficiency has resulted from a lack of competition in the intermediation chain that links share lenders with borrowers, and a growing and rational unwillingness among institutional investors to hold and lend high-borrow-cost names. [Kent Daniel]
• I think the marginal seller will remain in tight supply (outside of forced liquidation events) because the bull case has been widely-circulated among many skilled small cap investors, who are likely to have high conviction if they did not already sell on recent weakness in soda ash; i.e., I believe recent quarter(s) were sufficiently weak to flush out weaker hands in a strong shareholder base. Specifically, I’ve been anticipating the recent soda ash-related flush. I think the marginal buyer analysis is more straightforward: I take it for granted, from experience, that the market loves enormous dividend increases almost every time. Lower interest rates would likely bolster this effect as the yield would become relatively more attractive for income-based investors. [scalpavelli]
  
• The winners of the contest are never the same from year to year. The one constant is that the overconfident do poorly. Having extremely confident predictions (e.g. 90% or 10%) on any event that is contentious among participants (has a high standard deviation) is associated with poor performance in the contest. The better performing contestants seem to have an easier time intuitively feeling the range of outcomes that a trip through life's quincunx can deliver. What seems to happen specifically is that a very rigid set of expectations, a very definite view, a simple narrative, crashes on the rocks of reality. In fact, I am learning to avoid any kind of simple narrative for thinking about the future. Consider predictions such as, "there's going to be hyperinflation / a crash / a civil war" next year. Reality is a lot more complicated. Bitcoin hit an all time high and oil hit an all time low in 2020. What probability would anyone have given that? And does it fit a simple label like "hyperinflation"? Since we can't predict, what can we do? The only investing strategy that I can think of for coping with the utter impossibility of prediction is diversification among that which is cheap. [CBS]

Friday Night Links

• One day, everything in the world economy will be priced in Bitcoin. Or, one day, Bitcoin will be regarded as the biggest bubble that ever was. There are stable equilibria between these outcomes, but they are unusual and structurally exotic. There are three major ways in which Bitcoin could still fail. A: it could be actively killed by its enemies. B: it could lose its energy source. C: it could be outcompeted by another candidate monetary standard. [Curtis Yarvin]
• Meta is signing an “operating lease” with an initial term of only four years. They have the option to extend the lease every four years, but they are not obligated to. To persuade the JV to accept the short four-year leases, Meta provided a “Residual Value Guarantee” (RVG) covering the first 16 years of operations. If Meta decides to leave (by not renewing or terminating the lease) within the first 16 years, they guarantee the campus will still be worth a certain amount of money (undisclosed). This payment is “capped” i.e. there is a pre-agreed maximum limit to how much Meta would have to pay. Again, we don’t know the exact capped limit in this deal. [MBI Deep Dives]
• If you have considered an idea from a conference, you did not buy it, and then it does well, you will feel bad. I heard Bill Ackman pitch General Growth Properties at the 2009 Ira Sohn Conference, thought it was a great idea, checked the stock price and then did nothing about it. As it 10x-ed over two years, I felt sad inside, and apparently still do. This feeling is much less painful than a loss from a bad purchase, and unless you’re insane like me you might not even remember, so I’ll assign only 0.25 sad points per occurrence. If you have considered an idea, did not buy it, and it went down, you may experience a little satisfaction from your discernment. This will be a faint emotion and you’re even less likely to remember the stock than one in the “interested-not purchased-went up” basket, so I’ll only give this situation 0.05 happy points. [Harvey Sawikin]
• But there’s a catch: had we tried to do that, we may never have survived to enjoy all the ultimate gains on Lukoil and Norilsk. Between 1995-2021, the period under examination, Russian stocks experienced two major crashes (1998, 2008) and three large corrections (2000, 2011, 2014). Firebird Fund entered all of these with reasonably diversified portfolios (in 1998 and 2014, partially hedged with derivatives and cash); though we were down, the vast majority of our investors rode out the turbulence. We communicated frequently with them and what they saw was a stable management team, calmly assessing events and determined to recover the fund’s recent losses. They may have been disappointed with us but had no reason to doubt our sanity. If, on the other hand, we had entered any of these crashes or corrections with a 75% weighting to just two stocks, Lukoil and Norilsk — which likely would’ve been the case had we kept the 1995 portfolio static — we may have looked like excessive risk-takers to our limited partners. [Harvey Sawikin]
• "With the completion of the Neches River Terminal next year, we are nearing the culmination of a significant capital deployment cycle that began in 2022. These investments included large scale pipeline and marine terminal facilities as well as gateway acquisitions that put Enterprise in a position to support production growth from the Permian and Haynesville basins for years to come. With this large wellhead to water build out cycle behind us, we believe 2026 will see an inflection point in the partnership’s free cash flow. Today, in connection with this expectation, we announced a $3.0 billion increase to Enterprise’s common unit buyback program." [Enterprise Products Partners L.P.]
• Terraform's nominal design size for its kits is one megawatt. For context, one megawatt can power a few hundred homes in Europe, or about 20 to 30 large, air-conditioned homes in America. The company sells a kit that captures solar power and produces hydrocarbons, essentially creating instant oil. The goal is to have the first paying customer for these hydrocarbons, who isn't just part of a demo, as early as next year. [Casey Handmer]
• Piłsudski was aware that the Bolsheviks would not ally with an independent Poland and predicted that war with them was inevitable. He viewed their advance west as a major problem, but he also considered the Bolsheviks less dangerous for Poland than their White opponents. The "White Russians", representatives of the old Russian Empire, were willing to accept limited independence for Poland, probably within borders similar to those of the former Congress Poland. They objected to Polish control of Ukraine, which was crucial for Piłsudski's Intermarium project. This contrasted with the Bolsheviks, who proclaimed the partitions of Poland null and void. Piłsudski speculated that Poland would be better off with the Bolsheviks, alienated from the Western powers, than with a restored Russian Empire. By ignoring the strong pressures from the Entente Cordiale to join the attack on Lenin's struggling Bolshevik government, Piłsudski probably saved it in the summer and the fall of 1919. [Józef Piłsudski]
• Pick a target lifestyle number that you can comfortably live on. Call it $100-200K a year after tax all-in spend for your family. That’s housing, food, childcare, insurance, travel, everything. Then you lock that number. Tattoo it. That number is now your “max lifestyle.” You do not let it scale linearly with income. When your income jumps from $300K to $450K? You do not *deserve* to scale lifestyle 1:1. You siphon the marginal(~$80K-$90K post tax) straight into buying time and leverage: taxable brokerage, second cash-flowing asset, equity in something you own, principal paydown on a mortgage, or building/purchasing a side income stream that is not tied to a boss. Again. You use it to invest in things that earn or you control. [BowTied Bull]
• The articles published by the Annals of Eugenics (1925–1954) have been made available online as an historical archive intended for scholarly use. The work of eugenicists was often pervaded by prejudice against racial, ethnic and disabled groups. The online publication of this material for scholarly research purposes is not an endorsement of those views nor a promotion of eugenics in any way. [Wiley]