Skew View is a new series that will cover all aspects of our markets, and prediction risks in general, with a skeptic's eye.
Here we are in the middle of an air fryer summer, watching a boring tape, Jay Powell singing the same song over and over. We’re paying $17 for laundry detergent and hoping for something that will spark up the investing environment in a fun way.
And here it is: LK-99. A lump of dirty lead… or a material that may enable superconductivity – which may, in turn, enable scientific advancements that transform not just economics and markets, but the lives of most everybody on the planet.
Last week, a research team in Korea reported superconductivity properties in a lead-based material at ambient temperature and pressure. Superconductivity hopes have been raised before and proved to be unverifiable. Research papers have been retracted.
But a few days later, Chinese researchers claimed to have reproduced superconductivity behavior in the substance dubbed LK-99 – and even had a video of it.
The whole scientific world came to attention.
What’s the market determinant?
The market resolves to YES if an eligible peer-reviewed journal publishes research that reports that a material is room-temperature superconductive before the end of 2024 (simplified, full rules here).
This basically means that researchers have to:
Acquire/make some LK-99 or another material that meets the requirements (Twitter recipe here!)...
Design an experiment that meets peer-review standards…
Demonstrate superconductivity of the material at room temperature to peer-review standards…
Write up the results…
Get the paper peer-reviewed and published in a journal that meets the standard…
Have the publication verified by the SJR…
And do it all before the last day of 2024.
Venturing into the market
At the very least, you will want to inform yourself on:
the claims regarding LK-99
the scientific publishing process and speed thereof.
Then you will want to think about your counterparty. Some market participants will be tech/science types. If you’re not – well, it’s quite the learning curve. But wait! This market is going to be full of sentiment (see disclosures at end) and that makes it trade-able. People want this to be true. Always warps the market.
Then there’s the implications for other markets. Superconductivity is the new thing, and there’s all the old things it has the possibility to transform. You’re already invested in those old things. The impact is so transformative (if real) that you’re on this ride if you’re in the market at all.
How big a deal is it, if it's real?
Electrical resistance is basically nature’s tax on the movement of energy, and we’ve been paying it since the invention of electricity. This video explainer estimates the energy loss on US transmission lines alone at $80-billion a year. Superconductivity is the tax dodge. Extrapolate from there…
That energy lost to resistance is emitted as light and heat – server farms devour energy not just to run the servers but also to cool them. Superconductivity has a double benefit in those sorts of applications–better performance AND less heat. MRI machines are so expensive because they have to be cooled with liquid nitrogen. Ambient temperature conductivity could solve that and many other things like that. Again, extrapolate…
…and you start to get economic impacts. Crypto? Metaverse? AI? All that stuff we’ve recently been revving the market about? Not in the same league.
Market manifestations
There will be obvious beneficiaries – indeed Bloomberg reported that several related stocks in Korea and China surged immediately: “Small caps including Duksung Co., Sunam Co. and Shinsung Delta Tech Co. jumped by their 30% daily limits for a second-straight day in Seoul. In China, Jiangsu Fasten Co. and Henan Zhongfu Industry Co. climbed by their 10% limits for a second session.”
There will be plenty of opportunities for the patient, detailed investor to sniff out how this advance will change the fortunes of companies that may not, at first glance, appear to be related to electrical cost benefits.
Oh, but let me not prattle on, Youtube already has plenty of advice on how to play this. DYODD!
The opinions and perspectives presented in this article belong solely to the author(s). Kalshi does not provide investment or trading advice or make any other claim to the veracity of the contents described herein and provides this article solely for the convenience of its members.