The commodity wealth are being challenged.
A growing thesis on Wall Street suggests the next great global commodity is not pulled from the ground, but potentially electricity transformed into AI compute and he focuses on five companies racing to build the industry backbone.
While joining me to talk about the so-called new commodity cycle is Stephen Orr, the founder and CEO of Quasar Markets.
Stephen, great to have you here.
Thank you so much for joining me.
I love the show.
Well first and foremost, tell me what you think is the new global commodity trade.
You know, it's, I'm actually shorting oil because I think that this war is going to end soon and that pullback is going to happen very quickly as we know we have a glut of oil, right?
But the quick question has to As is electricity.
How are electricity prices happening?
How is it affecting local homes in areas that are pulling these data centers in, right?
And electricity is becoming a big question mark, right?
They want to put them nearer and closer to where oil is pumped and where those places where electricity is produced because the biggest loss in electricity is the actual lines themselves, right?
So they're trying to make them closer to where the electricity.
Yes, and speaking of electricity demand, we know there's been a surge across the globe and also in the US, so tell us what this is actually doing and what needs to actually happen here to meet that demand.
A couple of things going on.
Number one is I think that the consumers themselves, whether the institutions or the retail themselves, need to upgrade the machines because efficiency is not happening.
I just bought a new computer, Remy and I had to put two Nvidia chip cards into it, right, not one, and my room is not as hot as it had been in the past because of the efficiency.
So I think we're going to have to see a massive change in the usage of it.
I don't have one AI.
27 AIs running, so that's not normally from the past, right where you're looking at Google or a few other companies and Facebook and your social media today we're looking at hundreds of websites at the same time and so that needs is really pushing the envelope of your computer and desktop.
Yes, and speaking of which, we know that we're looking ahead to earnings season and we are looking for those big tech names in particular the AI trade.
So what Expectations and given what's happening on the geopolitical front, how is that going to actually affect AI?
Well, I think geopolitically, I think that the question there is a very hard one to answer because we don't really have guardrails around it yet.
There are no rules around it, so it's still a wild wild west.
But what's really cool about it is that people are using it, right?
They're using AI.
You ask somebody today, are you using AI?
You asked them 6 months ago.
No, today it's yeah, I'm using GP.
I'm using Gemini and as we're seeing more and more AIs come on board, we're also seeing them getting better and better.
Google Gemini has really kicked it up a notch here and Tropic has really done quite well.
Cloud is really good.
Perplexity is struggling now again.
OpenAI is really hurting right now.
They're not keeping up and you're seeing some of these companies that were going gang at the beginning are having problems right now.
So the thing you see now is the usage and as these companies become more and more adult shall we say, what are they going to be molding into?
Are they the company that's going to be the AI for coding?
Are they the AI for Grok for video?
Are they going to be the AI for just normal chat and chat GPT and how we use it?
And if we start to migrate to certain ones, that's where you're going to see where the pull of electricity is going to be pulled from.
And while I have you here, I do want to look at other asset classes as well, in particular crypto.
So we know that since last year we have seen a pullback in the crypto majors, including Bitcoin as well as ETH.
So given what we're seeing, the pivot from some of these crypto mining companies to AI, do you think that's a durable business model here?
Yes, actually it's one of my companies I like.
Right now I like HUT 8 HUT, the ticker symbol there.
They pivoted.
They pivoted from a Bitcoin mining to quantum computing as well as the AI side of it.
I do like that a lot, but no, I say buy the dip on Bitcoin.
I like it here, right?
You know you're not seeing institutions stopping buying Bitcoin just like everything else, it ran too fast, too far, and we've got to catch back up and we're going to go right back up.
I'm not scared of Bitcoin.
We're going back up to the moon.
And finally, I want to zoom out.
Speaking of the moon and take a look at what we saw in terms of sector performance in the S&P 500 in Q1.
So given the pullback we saw in 7 names, what are your expectations in terms of sectors within IT Sectors in IT have to have two things inside of them, and they're going to be around the space race.
We're seeing that with Artemis now.
So companies like Google are doing very well there.
Microsoft is struggling a little bit, but I think they may pull out of their situation.
But if you want to talk about the big names in space, I like ASTS here.
I do like them.
I do like Firefly FLY, and there's a lot of companies that are on the fringes that once we get on the bases on the moon and we start landing on the moon a little more often, those companies are going to take off, and I think that's part of it too.
Elon Musk has told us that as soon as that happens we're going to have bases on the moon and we're going to be producing electricity on the moon and we're going to be doing internet on the moon and it's crazines I love it.
And finally, before I let you go, last time you were here we were talking about precious metals within traditional commodities.
So where do you stand when it comes to gold as well as silver.
That's right.
The last time I was here I said silver go up and then I said we short it shorted it killed it, and then I'll tell you right now I'm not a big fan of the precious metals now, especially gold and silver and rhodium and platinum and platium.
Why?
Because government.
Sovereign government wealth funds are actually dumping their precious metals in order to raise money for certain things in case Russia is selling it to be able to produce money for their war.
We're also seeing it in France where they're selling a lot of gold and putting it back into the euro.
We're also seeing it in China dumping our gold here in the United States.
So there's a couple of issues that I don't like about gold.
Gold overran its thing and it was protection, but right now we're protected.
The only place right now that a lot of countries like is the Dixie, the dollar.
So the dollar has broken above the 100 handle once again.
So all those things are pertaining to why we don't have a lot of gold and precious metals on our balance books and less than 30 seconds here.
But do you expect to see gold maintained these current levels?
Yes, I do.
I think there are a lot of people who still love gold.
Look, I can't eat gold.
When it if the world was to fall apart, I mean, what can you do with it, right?
But at the same time, it's, it's a precious commodity that everybody likes, um, a metal, so I get it, and it's, it's an older person's kind of thing too, right?
So I'm OK with that.
But no, I don't think gold is going to run to 5000, 10,000 anytime soon.
Well, Steven, always great having you on the show.
Thank you so much for joining me and thank you so much for sharing all of your insights.
Thanks, Remy.
Thank you.
