Thursday, April 15, 2021

"Bond Yields Are Tumbling. Here's Why..."

Ummm, just spitballin' here but uh, is it because someone's buying bonds in size?

From ZeroHedge:

Despite soaring vaccination rates, surging economic data and spiking inflation prints, Treasury yields have been (unexpectedly) plunging in the last few days with 10Y, for example, down 15bps this week alone, to its lowest in five weeks...

Source: Bloomberg

Yields are tumbling across the entire curve as 30Y seemed to find resistance at the Nov 2019 highs just too much to break...

Source: Bloomberg

And it's not just bonds, the reflation trade (value over growth) has notably unwound in recent weeks...

Source: Bloomberg

The question is why?

Nomura's quant guru Masanri Takada has the answer - Short-term investors (global macro hedge funds, CTAs) have been conspicuously backing out of short positions in USTs.

Short-term investors trimming their short UST positions

Global equity markets, while holding at high levels (especially in the US), are now merely inching upwards. Major classes of investors appear to be adopting more of a wait-and-see attitude. That said, our own gauge of sentiment among equity market investors worldwide is still holding in positive territory, indicating a preference for risk-taking over risk avoidance. It looks as though the risk-on mood remains intact, with some psychological support from the recent upside surprises in the macroeconomic data....


Michael Mauboussin On P&L and Intangibles

But not, of course, ineffables or inexorables.

From FT Alphaville:

Capitalising intangibles and indeterminate losses
Michael Mauboussin takes a look at one of the most fraught talking points in investing.

Michael Mauboussin is one of the biggest brains in finance. Since this Alphavillain got hold of his book More Than You Know back when we were just beginning to learn the market ropes, we’ve always devoured his academic work, interviews and writing on the occasions it’s appeared in the public domain. So, of course, we were pleased to find Mauboussin’s latest for Morgan Stanley in our inbox this morning: Market-Expected Return on Investment Bridging Accounting and Valuation. (Catchy.) 

We won’t go into the meat of the report — which mainly focuses on the tools investors and corporate managers can use to understand market expectations for businesses better — because, to be quite frank, it is extremely technical. To the point even that even us boffins here at FT Alphaville took an hour or so to digest it. 

But what we will flag is this chart from the section on intangible assets (page five onwards)....


"Chinese Hedge Fund Jumps 258% After Dumping Ray Dalio’s Strategy"

 That is one brutal headline, the story not so much. And not nearly as harsh a judgement as "Marvell Technology Stock Jumps as CEO and President Resign"

From Bloomberg:

Shanghai hedge fund manager Li Bei says she learned quickly that the low-volatility approach to investing behind the rise of Bridgewater Associates was doomed in China for a startup like hers.

Steady returns did little to draw investors used to short-term rewards, so she put in her own money, cranked up leverage and produced an industry-leading 258% gain last year.

Li is a pioneer in macro hedge fund management in China, where homegrown firms are taking on foreign giants that are struggling to adapt in an industry where even low-fee mutual funds generate sizable returns. While her Shanghai Banxia Investment Management Center only manages about 500 million yuan ($76 million), she says firms like hers are best placed to assess how China is driving the global economy.

“We truly feel that Chinese funds have an obvious advantage judging corporate profits and commodity prices,” Li, 37, said in a phone interview from Shanghai. “For us, these are good times to make money.”

Chinese macro hedge funds made an average 41% return in 2020, four times the global level, according to data from Shenzhen PaiPaiWang Investment & Management Co. and Eurekahedge. The more than triple gain of Li’s Banxia Stable Fund put her firm at the top of rankings for such funds in China.

The stellar year promises to save Li from wounds inflicted by an exodus of investors in 2019 when her 9% return -- still beating an 8.9% global average of peers, according to Eurekahedge -- was dwarfed by local mutual funds during a bull market. The setback forced her to rethink her initial strategy of emulating Ray Dalio’s Bridgewater, an approach that she says included diversifying to limit volatility and providing free research to attract institutional clients.

‘Doesn’t Work’

“The Bridgewater route doesn’t work in China,” Li said. Offering two complimentary research reports a month didn’t help bring new money, and big institutions also balked at her fund’s small size.

When clients were pulling cash from Banxia Stable, Li put in some of her own, and added leverage of between 250% and 300%. The product, managing less than 200 million yuan, replicates asset allocations in her larger Banxia Macro Fund but increases exposure through margin-financed trades in instruments such as stock index and commodities futures.....


I retold my favorite "Doesn't Work" story in June 2018's "On This Day: 70 Years Ago the Berlin Airlift Began":

....During the summer the two million people that the Brits and Americans were trying to feed could get by with two tons of coal per day (over the course of the airlift 80% of the weight hauled was coal) but as the blockade went on, it was apparent that the Sov's. intended to starve the city and it became imperative that an efficient method of delivering coal be found.

During winter the absolute minimum requirement was 3100 tons of coal per day. The little C-47's could haul around three tons per flight. The first week of the airlift, deliveries averaged 90 tons per day. The second week, 1000 tons/day.

It was decided to experiment with a low-speed, low-level drop of coal onto an empty field, the idea being that if it worked, B-29 Superfortress' with a 105 mph stall speed and 22-25 ton capacity would solve the problem.

On the appointed day the senior commanders went to the field, the plane came over, low and slow, dropped the coal, packed 100 pounds to a bag, the bags landed, exploded open, the coal was pulverized and a great black cloud of coal dust covered everyone watching.

One of the Generals, I forget if it was LeMay, Tunner or Smith, said "Doesn't work" and that was that.

When I saw the ag stocks open this morning I thought
"Doesn't work".

The logistics geniuses figured out what needed to be done, took 300 of the 400 10-ton capacity C-54's in the U.S. fleet, developed flight rules so efficient that the Germans called it "die Luftbrücke" (Air Bridge) and on Easter Sunday 1949 in a move to crush the Soviet's spirit, they decided to show off with the "Easter Parade".

In the 1440 minutes of that day, they flew 1398 flights into Berlin delivering 12,940 tons of coal.
The Soviets gave up the blockade the next month, two million people didn't starve or be forced to live under Moscow masters and thousands of kids remembered the candy bars the pilots would tie to handkerchief parachutes and drop as they came into Tempelhof....

It is a real asset to be able to say "Doesn't Work" and then act accordingly.

"NFTs by mail? US Postal Service plans to support postage tokens"

 From CoinTelegraph:

The government agency reported $73.1 billion in revenue from postage and other services in the 2020 fiscal year. 

The United States Postal Service will soon be stepping into the nonfungible token market. Not to release artwork or music, but rather to help customers purchase postage.

In an announcement on Tuesday, communications-as-a-service platform CaseMail said the USPS had certified its postage nonfungible tokens, or NFTs, for use in the United States. The tokens are digitally stamped on the USPS’ ePostage labels and the physical item being mailed, creating a verifiable chain of custody for digital and physical assets, as all data is recorded on the blockchain.

"Using NFTs to help protect a process that's both familiar and important to everyone — mailing a letter or package — helps demystify this important new technology,” said CaseMail founder and CEO Joe Ruiz. “It is simply postage printed from the blockchain."

The company will first offer the postage tokens “exclusively for legal professionals and government agencies,” with a rollout planned for the second quarter to include partnerships with providers of consumer and business services. The government agency reported $73.1 billion in revenue from postage and other services in fiscal year 2020, meaning digital postage stamps could be tapping into a large market....MORE

They shoulda gone after the philatelist community. 

Capital Markets: "Data To Show Surging US Growth, but is that Enough to Lend the Dollar Support?"

 From Marc to Market:

Overview: Ahead of what is expected to be reports confirming the surging US economy, the dollar remains on its back foot, unable to sustain even modest upticks. The euro has drawn closer to $1.20, and the dollar is holding below JPY109 for the first session since March 24. The dollar-bloc currencies lead today's move against the greenback, but nearly all the emerging market currencies are participating too. The JP Morgan Emerging Market Currency Index is rising for the third consecutive session. The US threatened sanctions against Russia for cyberwarfare, and election interference has seen the ruble drop 1%. Turkey's rate decision is expected shortly, and the market expects no immediate reversal of the rate hike that cost the former governor of the central bank his job. Equities in the Asia Pacific region were mixed. Hong Kong, China slipped, but Taiwan's 1.25% gain, helped by strong earnings from TSMC, led the regional rally. Stocks are firmer in Europe, and the Dow Jones Stoxx 600 is a new record high. US shares are also trading higher after the S&P and NASDAQ faded yesterday. The US 10-year yield is softer at 1.61% and is now nearly flat over the past month. European bond yields are 1-2 bp lower, leaving the core up 6-7 bp over the past month, while Italy's 10-year yield has climbed 17 bp and Spanish Bono yields are 10 bp higher. Gold is first and continued to knock on $1750. Oil prices are consolidating after yesterday's surge. June WTI is in a roughly 50-cent range on either side of $63.

Asia Pacific
Australia's employment report was mostly better than expected as 70.7k jobs were filled last month, twice the median forecast from Bloomberg's survey.
The unemployment rate slipped to 5.6% from 5.8%, which was also a bit better than expected, especially given the unexpected rise in the participation rate (66.3% vs. 66.1%). However, the disappointment was in the loss of full-time positions (20.8k), which means the job growth was solely a function of part-time positions (91.5k). That said, we must acknowledge that Australia has recouped all the full-time jobs lost last year. The unemployment rate remains above the 5.2% averaged in Q1 20.

The Bank of Korea left the seven-day repo rate steady at 0.5%, as widely expected. It is a little more optimistic/confident in the economic recovery. It recognizes that its 3% GDP forecast made in February can be overshot, while price pressures remain modest (~2%). Separately, while the KOSPI reached a new record high market capitalization, South Koreans have been busy buying US shares. In Q1 21, South Korean investors $128.5 bln in foreign stocks, and the US accounted for more than 93% (or ~$120 bln).

The summer Olympics are supposed to start in 99 days. Public opinion in Japan is very much against holding the games. At the same time, Prime Minister Suga seems to be counting on a successful event to bolster his chances of being re-elected in the fall. The Secretary-General of the LDP acknowledged today that canceling the Olympics is still possible. Several parts of Japan where the contests would be held are in a formal emergency, and the vaccine rollout is lagging well behind Europe. Tokyo is reporting a two-month high in the number of cases, and Osaka is setting new record highs....


Wednesday, April 14, 2021

"Russian Central Bank Moves Closer To Digital Ruble"

Hey, if Central Bank Digital Currencies are good enough for Communist China and Putin's Russia, I for one say let us also partake!


The digital ruble is moving closer to becoming a reality as the Bank of Russia looks to develop a prototype by the end of 2021, CoinDesk and other news outlets reported.

The proposed central bank digital currency (CBDC) would be controlled by the Bank of Russia and built on a hybrid platform combined with distributed ledger technology (DLT), said Olga Skorobogatova, first deputy governor of the Russian central bank, according to CoinDesk.

Skorobogatova also added that the bank will probably make use of open-source code to develop a proprietary digital currency, which will be created by December. The news follows the publication of a consultation paper about the implementation process and research that was conducted with stakeholders, CoinDesk reported.

“The selected target model is a two-tier retail model which assumes that the Bank of Russia is both the issuer of digital rubles and the operator of the digital ruble platform,” the bank said in an announcement. “At the same time, financial institutions open electronic wallets for their clients and perform operations over these wallets on the digital ruble platform.”

The Russian bank said it is moving forward with its CBDC to “help reduce costs for households and businesses, increase the speed of payments, and develop innovative products and services in the financial industry and the economy in general,” the announcement stated.....


Calling the Top For The 2020 - 2021 Arctic Ice Formation Season

And I don't think enough formed to withstand what looks to be another warm summer above the Arctic Circle.

Although the circumpolar vortex recovered after all the cold air escaped and went to Texas, going back to doing its circling the pole thing and formed some good ice, the more recent cold waves coming down to Europe and now the U.S. pretty much put a cap on any more ice growth.

This can be seen in the volume measurement from the Danish Meteorological Institute which stalled a couple days ago and has now turned down:

If you click through that DMI link you will see that there is some thick multi-year ice that got even thicker this year but the area between Greenland and Svalbard did not fill in and that is a problem for the summer.

The general movement of the ice is out through the Fram Strait which is why it is nice to have a fat plug of 2 - 3 meter ice in that spot but this season it never got the chance to form.


February 5, 2021
Higher Temperatures Expected Through 2022
Despite the cold descending on Asia, Europe and North America—see Ventusky's map for a particularly good representation of The Beast From the East bearing down on Scandinavia—we are still in a warmer than average temperature regime and probably will be for at least a couple more years....


A Couple Reasons To Look For A Hot Summer, Maybe Even Drought In Central Europe This Year

Ever Given's Insurer Disappointed By the Arrest and Detention of the Ship. Also The $916 Million Ransom

The protection and indemnity insurer is the UK P&I Club. I've not seen a statement of the extent of the coverage they offered but it damn sure wasn't anywhere near what the Egyptians are demanding.  

From UK P&I:

Disappointed by arrest of “Ever Given” 

Updated 1500 UTC 13 April 2021

On 7 April, the owners of the container vessel “Ever Given” received a claim from the Suez Canal Authority (SCA) for the sum of US $916 million. Despite the magnitude of the claim which was largely unsupported, the owners and their insurers have been negotiating in good faith with the SCA. On 12 April, a carefully considered and generous offer was made to the SCA to settle their claim. We are disappointed by the SCA’s subsequent decision to arrest the vessel today.  We are also disappointed at comments by the SCA that the ship will be held in Egypt until compensation is paid, and that her crew will be unable to leave the vessel during this time.

The SCA has not provided a detailed justification for this extraordinarily large claim. The grounding resulted in no pollution and no reported injuries. The vessel was re-floated after six days and the Suez Canal promptly resumed their commercial operations.  The claim presented by the SCA also does not include the professional salvor’s claim for their salvage services which owners and their hull underwriters expect to receive separately. The P&I aspects of the claim are relatively modest, with the exception of a claim for loss of reputation, which is disputed.

Owners have cooperated fully with the SCA throughout their investigation into the cause of the grounding, which we understand is now complete.  When the grounding occurred, the vessel was fully operational with no defects in her machinery and/or equipment and she was fully manned by a competent and professional Master and crew. Navigation was being conducted under the supervision of two SCA pilots, in accordance with the Suez Canal Rules of Navigation....


"GRAINS-U.S. cold snap fears fuel rally in wheat, corn, soy futures"

Two from Reuters via Successful Farming:

U.S. wheat, corn and soybean futures rallied on Wednesday, supported by concerns that a cold snap in the U.S. Midwest and Plains could hamper crop development, traders said.

Chicago Board of Trade corn gained 2.8% to hit its highest since June 2013.

Wheat futures posted the biggest increases, with CBOT soft red winter wheat futures jumping 3.2%, while K.C. hard red winter wheat rising 3.4%.

"Cold surge next week poses spotty wheat damage risk in southern one-third of the U.S. Plains; possible burn back to emerged Midwest corn," Commodity Weather Group said in a note to clients.

The weather also could cause some growers to delay their planting of corn and soybeans as crops seeded in the cold temperature could struggle to emerge from soils.

"U.S. temperatures aren't quite fitting into the 'severe' category but the current cold snap is plenty of keep enthusiasm for early corn and soybean seeding low, with conditions looking dry but cold for the next seven to 10 days or more as well," Matt Zeller, director of market information at StoneX, said in a note to clients....



Corn closes near the $6.00 level | Wednesday, April 14, 2021
Soybean and wheat markets trade double-digits higher, too.   

On Wednesday, the CME Group’s farm markets added to this week’s gains.

At the close, the May corn futures closed 14¢ higher at $5.94.

July corn futures settled 13¢ higher at $5.79½. New-crop December corn futures finished 7¢ higher at $5.11.
May soybean futures finished 20½¢ higher at $14.10. July soybean futures closed 17½¢ higher at $14.02½. New-crop November soybean futures ended 12¾¢ higher at $12.64¼.

July wheat futures closed 16¾¢ higher at $6.50¾. 

July soymeal futures ended $3.00 short term higher at $403.00.

July soy oil futures closed 1.07 higher at 52.22¢ per pound.

In the outside markets, the NYMEX crude oil market is +2.95 higher (+4.90%) at $63.13. The U.S. dollar is lower, and the Dow Jones Industrials are 118 points higher (+0.35%) at 33,795 points.

Al Kluis, Kluis Advisors, says that investors will be watching crop-weather in both North and South America for price direction. 

“On Tuesday, we had weather concerns – first in Brazil, where private trade estimates of corn yields on the double-crop corn continue to fall, and then in the U.S. where cool conditions may delay planting and emergence. These two factors combined to rally prices. Some of Monday’s losses were regained Tuesday and in the early trade today,” Kluis stated in a note to customers....


Coinbase: First Out Of The Gate Analyst Price Target $600 (COIN)

Via ZeroHedge:

....MoffettNathanson’s Lisa Ellis became the first analyst to initiate coverage of Coinbase with a buy rating and a $600 price target, calling the company a leader in the cryptocurrency ecosystem even as it sees 2021 as the peak year of the current cryptocurrency cycle, with COIN rev. $4.6b, up 260% y/y.

“We believe cryptocurrencies are one of the most innovative technologies in decades and will succeed, and Coinbase offers a pure expression of this trend,” Ellis wrote in a note titled “Be Bloody, Bold, and Resolute,” a quote from Shakespeare’s Macbeth.

According to Ellis, the COIN price target is justified because it is comparable to companies in “hyper-growth” stages like Adyen, Shopify, Afterpay, Square; is also tracking crypto ETFs, which may dampen retail demand for standalone cryptocurrency brokerages like COIN....


Ms. Ellis, a partner at MoffettNathanson, made the call yesterday.

"Coinbase stock opens at $381 per share amid record-setting Bitcoin rally" (COIN)

 From Yahoo Finance:

Coinbase Global (COIN) opened for trading at $381 per share on Wednesday, with the exchange platform hitting the public markets amid a record-setting rally in cryptocurrency prices and broadening adoption of digital assets. 

The price of Coinbase's first trade gave the stock a fully diluted valuation of about $99.5 billion and marked a jump of 52.4% over its reference price of $250 per share on the Nasdaq. Shares extended advances to top $429 per share in the minutes following the debut, before paring some gains. Coinbase's direct listing differed from a traditional initial public offering in that no new shares were issued in the process, with existing shareholders instead directly selling the stock to the public.

The public debut was one of the most highly anticipated in the U.S. this year, with public and institutional interest in cryptocurrencies swelling in recent months. Companies including Tesla (TSLA), Square (SQ), BNY Mellon (BNY) and PayPal (PYPL) have either added significant holdings of bitcoin to their balance sheets or begun facilitating transactions in cryptocurrencies, and legacy banks Morgan Stanley (MS) and Goldman Sachs (GS) recently announced they would begin offering bitcoin exposure to their wealth management clients. 

"Coinbase is a foundational piece of the crypto ecosystem and is a barometer for the growing mainstream adoption of bitcoin and crypto for the coming years in our opinion," Wedbush analyst Dan Ives wrote in a note. "Given the still nascent and volatile nature around Bitcoin we believe less than 5% of public companies will head down the Bitcoin investment path in some capacity over the next 12 to 18 months, but could move markedly higher as more regulation and acceptance of this currency takes hold further down the road." 

Bitcoin prices reached a record high of more than $64,000 on Wednesday, and comprise most of the total cryptocurrency market capitalization of over $2 trillion. The boom in demand for digitally native, non-interchangeable assets has been further underscored by the rise in non-fungible tokens (NFTs) in the digital art and collectibles world, most of which have been built on the ethereum blockchain. 

"Crypto has the potential to be as revolutionary and widely adopted as the internet. The unique properties of crypto assets naturally position them as digital alternatives to store of value analogs such as gold, enable the creation of an internet-based financial system, and provide a development platform for applications that are unimaginable today," Coinbase said in its prospectus. "These markets and asset classes collectively represent hundreds of trillions of dollars of value today." ....


"Coinbase gets reference price of $250 per share from Nasdaq ahead of Wednesday’s direct listing"

It's Probably Nothing: Infected Pig From China Washes Ashore On Taiwan

From PoAndPo Agrifish:

Taiwan tests hog herds after African swine fever pig washes ashore

Taiwan has begun testing hog herds and putting in place movement controls near where a dead pig infected with African swine fever washed ashore over the weekend, the government said on Tuesday.

In a statement, Council of Agriculture Minister Chen Chi-chung said a dead pig washed ashore in northern Taiwan on Sunday and was on Monday confirmed to have the virus, which he said was a perfect match for the strain circulating in China.

While pig herds in the nearby area are after initial inspections in good health, the government has already enacted steps to ensure no infection, Chen said.

Eleven piggeries with 2,719 head of animals within a 10 km (6.2 miles) radius of where the dead pig was discovered have had their movements restricted, which also goes for workers and vehicles at the farms, he added....


Reminiscent of the (possibly apocryphal) stories told about the Mongol siege of Caffa, with catapulting of the plague victims and all.

Chinese Farmers Dumping Pigs Ahead Of Swine Fever Recurrence

It's A Good Time To Be A Big Bank, A Really Good Time

"It's easy to make money in this market," 
"We'd better get in before they pass a law against it."
—Joseph P. Kennedy

Mr. Kennedy went on to become the first Chairman of the Securities and Exchange Commission 

From FT Alphaville:

Earnings season kicks off in the US today and, of course, that means numbers for us here at FT Alphaville (Virtual) Towers to digest. A welcome bit of action after a relatively quiet week in markets so far, both in terms of prices and news flow. Before the opening bell, we’ve already had two of America’s most prestigious banks reporting earnings: Goldman Sachs and JPMorgan. So let’s take a quick peek.

First up is up the vampire squid, or “squiddy” to its social media investors. You can find Goldman’s first quarter earnings release here.

The headline numbers are pretty astounding. Earnings per share came in at $18.60, a full eight bucks above analyst estimates of $10.22. Full revenues also beat analyst forecasts, thanks in-part to bumper numbers from the Investment Banking and Trading divisions. Annualised return-on-equity came in at 31 per cent which, according to data from S&P Global, is the highest that has been since the fourth quarter of 2006. Long live the squid....


"Tesla hikes solar roof price on contracts signed over a year ago"

This approach to their customers gives us some insight that may prove valuable in a few months.

TSLA up another $11.88 (+1.56%) at $774.20 in very late pre-market action after yesterday's $60.34 jump.

From the Tesla fanbois at Elektrek a refreshingly straightforward recitation of the story, April 11: 

Over the weekend, reports have come in of the recent massive Tesla solar roof price increase hitting several customers, some of whom have been waiting about a year with signed installation contracts. The price increase seems to apply to Tesla Powerwall installations, too, with the cost of those increasing by about 30%.

Some customers have even already spent thousands of dollars in preparation for the job, and yet are being told that their solar roof installation will cost tens of thousands of dollars more than anticipated.

The communication was sent out by Tesla yesterday, and it went to many customers. In addition to emails we’ve received on our tip line, a rapidly growing Tesla Motors Club forum thread details price increases for many longtime Tesla customers who have been waiting with signed contracts for up to a year or more. Some have brought up the possibility of legal action.

Here’s the text of the email that’s been sent out:

We have increased the price of Solar Roof and have added adjustments for individual roof complexity. Learn More

You will receive an email in the next 1-2 days when your new agreement is ready for your review and acceptance before moving forward. If you are no longer interested in moving forward with Solar Roof, you can cancel your order by logging into your Tesla Account and your deposit will automatically be refunded.

We will be prioritizing customers based on the order in which they accept their updated agreements.

Upon logging into their accounts, customers have found price increases often around 30% or more above the previous agreed-upon pricing. Some even claim to have been told explicitly that their price would not increase after our report about Tesla’s March price hike.

Adding insult to injury, Tesla also states that they “will be prioritizing customers based on the order in which they accept their updated agreements.” For customers who have already been waiting for months or a year for their new roof, they are now being told that they need to agree to spend tens of thousands more dollars, as quickly as possible, if they want to reduce their wait time.

One Tesla Solar Roof customer: Loans initiated, trees removed

One customer we spoke to placed their order nine months ago, and signed a revised contract in February. They have already signed a loan agreement for the original amount. The original “system price,” prior to credits and including Powerwalls, was $77,019.92:...


Tuesday, April 13, 2021

Russia Files Further Claims To Arctic Seabed, Past The North Pole To Miami

 Okay, maybe not all the way to Miami but as far as they think they can get away with.

As the headline at Eye on the Arctic says:

‘You cannot claim any more:’ Russia seeks bigger piece of Arctic 

Russia wants to stretch out imaginary lines on the ocean floor — and below it — and that has one northern security expert worried about consequences for other Arctic countries like Canada.

Last week, Russia filed a submission to the United Nations Commission on the Limits of the Continental Shelf to extend a claim to the Arctic Ocean seabed.

The UN still has to review the submission but, if it’s approved, Russia would have exclusive rights to resources in the seabed and below it, and not in the water.

The new submission would push Russia’s claim all the way up to Canada’s exclusive economic zone, an area 200 nautical miles from the coastline, in which Canadians have sole rights to fish, drill and pursue other economic activities.

Philip Steinberg, a political geography professor at the University of Durham in the United Kingdom, estimates Russia’s submission expands its original claim by about 705,000 square kilometres.

‘A maximalist submission’

Robert Huebert, a political science professor at the University of Calgary, said Russia’s request gets as close to Canada’s 200-mile limit as possible.

“This is a maximalist submission. You cannot claim any more,” said Huebert, an Arctic security and defence analyst with the Centre for Military and Strategic Studies....


From Durham University via Arctic Today (Miami is off to the left in this view):

A map from Durham University shows the extent of Russia’s enlarged claims to Arctic Ocean seabed submitted under the UN Convention on the Law of the Sea. The bright yellow shows Russia’s Exclusive Economic Zone, while the paler yellow shows its CLCS claims, with the dotted line demarcating areas added in the newly extended claim. (IBRU: Centre for Borders Research / Durham University)

Also via Eye on the Arctic, April 12: 

Heavily-armed frigate sails Norwegian Sea to “ensure safety of Russian fishermen”

Logistics: SoftBank Spends $2.8 Billion to Buy 40% Stake In Norwegian Warehouse Robotics Firm AutoStore

From ZD Net:

SoftBank claims AutoStore is making possible advances in logistics for companies around the world.

Japanese investment firm The SoftBank Group this afternoon announced it will spend $2.8 billion to buy a 40% stake in robotics company AutoStore System, which specializes in robotics for warehouses.

The company develops a line of robots, including the "R5," a member of its Red Line series, for moving bins full of goods around a warehouse. 

Its software offerings, such as AutoStore's "The Router," optimize the movement of robotics systems around a warehouse.

SoftBank claims AutoStore can "redefine space," for "a range of markets as diverse as e-commerce, grocery, industrial, and healthcare in any warehouse, retail location or other facility."

AutoStore System is a subsidiary of Autostore AS, a Norwegian firm founded in 1996. 

SoftBank is buying the stake from existing stakeholders, private equity funds Thomas H. Lee Partners, L.P. and EQT Private Equity....


"Chinese Firms Position for an Energy Transition Copper Supercycle"

As commended to our attention by Neil Hume, the Financial Times' natural resources editor, not to be confused with Australia's DJ Neil Hume. This Neil Hume elicits pure rapture:

Mr. Hume is held in quite high esteem in certain quarters. Here's an example from 2017 when he dropped in to Bryce Elder's playhouse Market's Live:

....BE This is Markets Live, FT Alphaville's daily thing with the typing and etc.

BE And good news! I'm not solo today.

BE Because joining me is Neil Hume.

NH Hola

BE Neil's FT's commodities editor these days. Though you'll probably know him better as founding member of the AV team and the editor for two years through the sov debt crisis.
erlkin  neil hume rocks
  AAAA  bonjour les amis !
                               Boncoeur  crikey, Neil Hume is in da house!

NH Mining and Commodities - they gave me more work to do....

Thinking about it, I imagine DJ Neil Hume may have also garnered a "crikey, Neil Hume is in da house!" upon occasion. But not from the rabble.

Be all that as it may be, from the blog of Houston's Rice University Baker Institute blog, April 5:

If China’s dominance of rare earth element supplies is the global energy transition’s “elephant in the room”, then copper is the 800-pound gorilla.  China’s push for outbound investment, with attendant strategic nuances, are a hallmark of emerging concerns about raw materials supply chains. Chinese firms recognize copper’s value from at least four perspectives. First, relative to internal industrial demand, China’s domestic production is inadequate. Second, as Chinese outbound investment has evolved to procure supply, they also are positioning themselves to capture international commodity trading opportunities. Third, Chinese outbound investment does help to enlarge the supply pie for a key raw materials essential to ongoing economic growth and for new energy systems, including those within China aimed at reducing pollution. However, China’s rush to build “green energy” scale and global market heft have fostered expansion of industrial pollutants as well as greenhouse gas emissions. Fourth, strong positions in the copper value chain can facilitate China’s larger industrial policy goals of making China-based enterprises, often “locally” controlled, indispensable hardware and technology suppliers for new energy development worldwide. These dynamics constitute the driving force behind a likely copper supercycle, as global supply comes under significant pressure from green energy ambitions.

How Much Copper is Enough?

Alternative energy systems have a high—and often, unappreciated—materials intensity, of which copper is a major constituent. For instance, every thousand battery electric vehicles (BEVs) produced can require approximately 83 metric tonnes (MT) of copper (well more than triple conventional vehicles at 23 MT), while wind turbines incorporate 3.6 MT of copper per megawatt (MW) of output, photovoltaic cells 4-to-5 MT per MW, and flywheels for pumped hydropower 0.3-to-4 MT per MW.

To quantify the relationship, 30,000 BEVs can consume as much copper as a skyscraper, like the 600,000 square meter Yi Fang Center in Shenzhen (Chinese buildings are close to 50% of global building stock). To turn over just 1/3 of the global passenger vehicle fleet (China currently comprises about 1/3 of passenger vehicles in operation) would require placing into service more than 300 million BEVs. These could collectively contain 20 million tonnes of copper, almost equal to current annual total world consumption, or about a fifth of the entire copper metal stock that analysts estimate currently sits in Chinese buildings and vehicles.

With alternative energy systems five times more copper intensive on average than their conventional counterparts, the push away from fossil fuels could strain global copper supplies, perhaps significantly. Energy transition goods will have to compete with traditional demand sources precisely as the pipeline of new copper extraction projects reaches its lowest level in the last century and risks compressing supply....


Long time readers may remember the Baker Institute for their oil coverage, including such hits as 2008's "Linkfest from the James A. Baker Institute blog: "The U.S. Dollar and Oil Trading"".

Recently via Mr. Hume:
Wood Mackenzie: "Build Or Buy: Are The Copper Majors Rising To The Growth Challenge?""

The Question On Everyones Mind, Answered

From gCaptain:

Suez Canal Authority: Meme’d Digger Operator Will Get His Overtime Pay

The Suez Canal Authority is responding to online reports that the real star of the Ever Given’s salvage, the guy with the digger, has not been paid for his efforts.

We’ve seen this story in a few places now. But from what we can tell it was first reported by Business Insider that the 28-year-old operator of the little excavator that could worked 21-hour days to free the stuck ship and, as of April 8, he had still not been paid his overtime!

Surprisingly, the Insider article actually says the man, identified as Abdullah Abdel-Gawad, didn’t actually like the memes (ok, now I feel bad), but the publicity actually made him work extra-hard because of the added the pressure they brought to dig the ship free.

“The thing is, I was terrified that the ship might list too far to one side or the other,” he told Insider. “Because if it fell onto its side on me, then it’s goodbye me, and goodbye excavator.”....


"Coinbase gets reference price of $250 per share from Nasdaq ahead of Wednesday’s direct listing"

 From CNBC:

  • The Nasdaq said on Tuesday that Coinbase’s reference price for its direct listing is $250, which would value the company around $65.3 billion on a fully diluted basis.
  • The reference price reflects past transactions and input from the investment bankers, but it does not indicate where the stock will open on Wednesday.
  • Coinbase is the Nasdaq’s first significant direct listing, after Spotify, Slack, Palantir, Asana and Roblox all went public on the New York Stock Exchange.

Nasdaq gave Coinbase a reference price of $250 a share on Wednesday ahead of its planned direct listing, which would value the cryptocurrency exchange at about $65.3 billion on a fully diluted basis.

Coinbase is set to become the first major crypto business to go public in the U.S. and, should it reach a $100 billion market cap, will instantly be one of the country’s 85 most valuable companies. The company’s value has soared in the past year alongside bitcoin and ethereum, the primary currencies traded on the site.....


Coinbase: Research Shop New Constructs Says $100 Billion Valuation Should Be 80% Lower

Investment Hulk May Have Lost His Little Hulk Mind

 Three from Investment Hulk (Hulk Family Office):

I Said I Want "an Omlette," NOT "an Umlaut": "Ÿnsect acquires Protifarm to raise insects for human consumption"

Ÿnsect, the bug breeder with the gratuitous umlaut is really, really on board with the WEF's "Let them eat insects" pitch.

From AgFunder, April 13:

French insect protein startup Ÿnsect announced this morning that it has acquired Netherlands counterpart Protifarm, which raises mealworms for human food applications. 

At the start of the year, the European Food Safety Authority announced its approval of mealworms for human consumption in the EU. The ruling opens the gateway for the growing startup industry around insect protein to tap into a new market.

With the acquisition of Protifarm, Ÿnsect is aiming to fast-track its manufacturing capacities to take advantage of the recently removed regulatory roadblock.

The Dutch startup was a natural match, according to Ÿnsect chairman and CEO Antoine Hubert.

“There are other smaller players [in mealworm farming] but they do not compare in terms of IP, plant, [and its] vertical farm running for more than four years giving real operational experience. They’ve also acquired a company doing traditional insect farming for 40 years,” he told AFN.

Protifarm holds 37 patents, bringing Ÿnsect’s total portfolio to nearly 300 patents, the companies said in a statement. It also brings a skilled workforce to the table, employing 50 people across production, R&D, and other areas. The Protifarm management team will remain in place and help integrate the business into Ÿnsect. 

The Dutch company’s most recent funding was a Series B round in December 2019 led by local development agency Oost NL. 

Are athletes the gateway to gaining consumer acceptance?

As insect protein has gained more traction and investor attention, the question remains whether society at large will ever be keen to add creepy-crawlies to the menu. Although many cultures around the world wouldn’t bat an eye at eating bugs, the prospect is taboo for others.

Aware of the potential roadblock, Ÿnsect has opted to start its foray into human food with sports nutrition....


Okay, maybe it's a diaeresis, not an umlaut, that doesn't change the fact that mealworms taste better if you run 'em through a hen first.

The World Economic Forum May Be Backing-Off Of The Whole "Okay Plebs, Eat Your Bugs and Weeds" Pitch
In November it was the weeds: "World Economic Forum: "5 reasons we need to start nurturing – and eating – weeds" (plus some thoughts on The Great Reset)" while previous trial balloons pitched bugs: "A psychologist explains why we find some food disgusting - and why it matters".Perhaps realizing those may be a step too far (along with "recycled" water [it's all recycled...but]), here's the latest:....

"The EU just approved mealworms for human consumption. Will Ÿnsect take the bait?"
No. No to worms.
Maybe termites, if the hydrogen biofactory experiments don't work out. Crunchy....

And you, Oatly! It's not milk. Any more than  "Cockroach milk" to wash down your "maggot sausages" is milk.

March "Consumer Price Index Summary"

 The monthly was a bit higher than expected, the YoY a bit lower.

From the Bureau of Labor Statistics:

Transmission of material in this release is embargoed until 8:30 a.m. (ET) April 13, 2021 USDL-21-0651 Technical information: (202) 691-7000 • • Media Contact: (202) 691-5902 • CONSUMER PRICE INDEX – MARCH 2021 The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in March on a seasonally adjusted basis after rising 0.4 percent in February, the U.S. Bureau of Labor Statistics reported today. The March 1-month increase was the largest rise since a 0.6-percent increase in August 2012. Over the last 12 months, the all items index increased 2.6 percent before seasonal adjustment. The gasoline index continued to increase, rising 9.1 percent in March and accounting for nearly half of the seasonally adjusted increase in the all items index. The natural gas index also rose, contributing to a 5.0-percent increase in the energy index over the month. The food index rose 0.1 percent in March, with the food at home index and the food away from home index both also rising 0.1 percent. The index for all items less food and energy rose 0.3 percent in March. The shelter index increased in March as did the motor vehicle insurance index, the recreation index, and the household furnishings and operations index. Indexes which decreased over the month include apparel and education. The all items index rose 2.6 percent for the 12 months ending March, a much larger increase than the 1.7-percent reported for the period ending in February. The index for all items less food and energy rose 1.6 percent over the last 12 months, after increasing 1.3 percent over the 12 month period ending in February. The food index rose 3.5 percent over the last 12 months, while the energy index increased 13.2 percent over that period.


And more to come

Chinese Farmers Dumping Pigs Ahead Of Swine Fever Recurrence

Well, we've seen this movie before.

First the deceased porkers stop eating hitting American grain exports. Then the Chinese preference for fresh vs frozen meat setting up price differential until the herds are depleted then the big drawdown from inventory begins.

From Bloomberg, April 12:

China Pork Price Hits 2019 Low as Swine Fever Spurs Selloff

  • Wholesale pork prices had worst quarter since at least 2006
  • Slide in costs may help curb inflationary pressures in China

China’s pork prices have slumped to the weakest in 19 months amid panic selling by farmers after fresh outbreaks of African swine fever and bans on the transport of live hogs in some parts of the world’s biggest consumer and producer.

Wholesale pork prices plunged 19% in the first quarter, the most since at least 2006, and touched 34 yuan ($5.20) a kilogram in early April, the lowest since August 2019. The selloff started in mid-January amid new outbreaks of African swine fever in some northern provinces and on bans by the south on live hogs from the north, said Zhu Liang, analyst with Chaos Ternary Futures.

The slide in pork costs may help curb inflationary pressures in the country. The producer price index climbed 4.4% from a year earlier in March, the most since July 2018, according to the National Bureau of Statistics. The consumer price index increased 0.4% after falling for two straight months.

Selloff on swine fever fears pushes pork prices to 2019 low

The slump in domestic prices damps the outlook for more overseas purchases because some buyers are selling at a loss, said Lin Guofa, a senior analyst at Bric Agriculture Group. Imported meat stockpiled in cold storage and at ports has been gradually released into the domestic market in recent months as authorities decided to speed up clearance of shipments....


Have I mentioned the hog cycle recently?

Here's the ten second tutorial on Ag cycles:

April 23, 2008
The Hog Cycle
No not Harley-Davidson, although I imagine some econ grad student has written the paper.
Wheat and hogs are two commodities with long price series. We mentioned the hog cycle back in January:

The hog price series is one of the longest we have records for, back to the 1200's. The cycle is:
slaughter begets scarcity begets higher prices begets breeding begets over-supply begets slaughter. It's been going on for a while....

Ahead Of Today's CPI Inflation Report The New York Fed Is Estimating Q1 GDP At +6.05%

 Do I hear 3% year-over-year CPI? 4%. 5%

From The Federal Reserve Bank of New York:

Apr 09, 2021: New York Fed Staff Nowcast
  • The New York Fed Staff Nowcast stands at 6.0% for 2021:Q1 and 1.5% for 2021:Q2.
  • News from this week’s data releases decreased the nowcast for 2021:Q1 by 0.2 percentage point and decreased the nowcast for 2021:Q2 by 0.1 percentage point.
  • A negative surprise from international trade data accounted for most of the decrease in both quarters.


And somewhat surprisingly, the Atlanta Fed's GDPNow, which usually runs "hotter" than the Nowcast (they tend to converge as the GDP report date approaches) is a bit cooler than New York.

From the Federal Reserve Bank Of Atlanta 

Latest estimate: 6.0 percent — April 9, 2021

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2021 is 6.0 percent on April 9, down from 6.2 percent on April 7. After this morning’s wholesale trade release from the U.S. Census Bureau and this morning’s report on producer prices from the U.S. Bureau of Labor Statistics, the nowcast of the contribution of inventory investment to first-quarter real GDP growth decreased from -0.90 percentage points to -1.04 percentage points....


The 10-year note is getting closer to a 1.75% yield which might be an interesting number.

Stay tuned. 

Monday, April 12, 2021

"Solar-to-Hydrogen Tech Sees "Remarkable" Efficiency Jump"

The Holy Grail is cost-competitive "green hydrogen" with "blue hydrogen", produced with natural gas via steam reformation and carbon capture being the second choice and "gray hydrogen" fossil fuel reformation without capturing the CO2 not making a lot of sense at this point.

There is still a long way to go on this quest for the green. The European majors are focusing on the "blue" as a stepping stone and as a reason to build out the hydrogen infrastructure while awaiting some fancy materials science to manifest in somebody's lab.

From IEEE Spectrum, April 9:

Researchers in Japan reported a 100-fold improvement in their solar energy conversion method

Converting sunlight into hydrogen is a seemingly ideal way to address the world’s energy challenges. The process doesn’t directly involve fossil fuels or create any greenhouse gas emissions. The resulting hydrogen can power fuel-cell systems in vehicles, ships, and trains; it can feed into the electrical grid or be used to make chemicals and steel. For now, though, that clean energy vision mainly exists in the lab. 

Recently, Japanese researchers said they’ve made an important step toward making vast amounts of hydrogen using solar energy. The team from Shinshu University in Nagano studies light-absorbing materials to split the hydrogen and oxygen molecules in water. Now they’ve developed a two-step method that is dramatically more efficient at generating hydrogen from a photocatalytic reaction. 

The researchers began with barium tantalum oxynitride (BaTaO2N), a semiconductor material that can absorb light at up to 650 nanometers (a visible wavelength at the orange end of red). The powdery substance serves as the photocatalyst, harnessing solar energy needed to drive the reaction. They also used an aqueous methanol solution instead of water, which allowed them to focus only on the hydrogen component and reduce the complexity of the reaction.

By itself, BaTaO2N can hardly “evolve” hydrogen gas from the solution. So, using their new method, the Shinshu team “loaded” the powder granules with a platinum-based co-catalyst to improve the chemical activity.

As a result, the materials evolved hydrogen much more efficiently—about 100 times more efficiently—than BaTaO2N that’s been loaded with platinum using conventional methods, according to their paper in the journal Nature Communications....


Platts' "Commodity Tracker: 4 charts to watch this week"

You end up with all sorts of odd distortions when you burn food for fuel.  If interested see 2007's "Making Ethanol from Wheat is Stupid"

...Last May it was two of the most politically connected investors in the world, Carlyle Group* and Riverstone Holdings** building a wheat-to-ethanol plant in the same area, Teesside, that the poster boy of political connections, Enron, built their giant co-gen plant:....

From S&P Global Platts, April 12:

Increased retail fuel prices and fears of a COVID-19 resurgence have prompted refiners in India to slow crude runs. This week's tracker also looks at the impact of maintenance on US LNG terminal utilization and possible reductions in biodiesel blending mandates in some countries due to rising vegetable oil prices.

....3. Rising global vegetable oil prices could lead to reduced biodiesel blending mandates

Brazil soybean oil prices

What's happening? Global vegetable oil prices have increased sharply, mainly reflecting global low stocks, strong demand for food and energy, and also a slow output recovery, especially for palm oil. In Brazil, despite seasonally low stocks in January and an expected bumper 2021 crop, soybean oil prices have jumped over 28% from the lows in mid-January to record high prices in mid-March. CBOT futures reached a record in March, but the higher levels were not entirely offset by weaker FOB premiums.

What´s next? There are some factors that could limit the soybean oil price hike in the near term. Palm oil production in Malaysia and Indonesia is recovering and is expected to rebound in the next few months, providing additional supply to international markets. As vegetable oil prices rise, some biodiesel blending mandates could be temporarily lowered. Market participants reported possible mandate reductions in Argentina and Brazil in the next months....


The Teesside plant shut down in 2011 and was sold for a song to CropEnergies AG.
CropEnergies had to shut down again but reopened (again) in 2019 and seem to be making a go of it at reduced production and good prices for the Distillers Dried Grains mit Solubles used as animal feed.

"The great Australian credit crisis of 2025"

From The Market Herald:October 2, 2020:

In this feature:

  • A credit explosion down under is setting the country up for a heavy correction in the years to come
  • To combat economic shock, the Federal Government wants to bring in Chapter 11-style bankruptcy laws and roll back responsible lending legislation
  • It comes as the country's debt continues to grow, overshadowed by rising global arrears
  • Meanwhile, mounting deferrals and a jump in lending are setting the country up for another credit crisis
  • It's something we experienced when we saw thousands of loans go sour
  • While they dodged the bullet then, banks and fintechs will come under fire when the bubble bursts this time around
  • But there are companies within the debt collection and technology space which are poised to grow amid the crunch

A credit explosion down under is setting the country up for a heavy correction in the years to come.

On our home turf, new policy reform is being ushered through to stimulate the economy and get Australians spending again.

While only time will tell if this has the intended effect, one thing is clear: the move will see mum and dad investors saddled with extra debt amid one of the worst recessions on record.

And while much of the focus is on the now, those looking ahead will see there's clear winners and losers when the great Australian credit crisis hits.

And while much of the focus is on the now, those looking ahead will see there's clear winners and losers when the great Australian credit crisis hits.

Policy reform

The credit explosion will be fuelled by a wave of policy changes, tabled by the Federal Government in recent weeks.

First, changes to Australia's bankruptcy laws to mirror the U.S.'s Chapter 11 filings will throw a life raft to small businesses. Under the alterations, business owners have 20 days to come up with a plan to restructure debt and trade out of insolvency.

Then, news that responsible lending laws were being stripped back was welcomed by the banks. The switch is a win for them — it places extra onus on the customer to make sure they can pay back their debts.

"We can’t have a world in which, if a borrower can’t repay the loan, it’s always the bank’s fault,” RBA Chief Philip Lowe said in August.

“On a portfolio basis, we want the banks to make some loans that actually go bad because if a bank never makes a loan that goes bad, it means it’s not extending enough credit.”

RBA Chief Philip Lowe, August 2017

Coupled with the RBA's record-low cash rate, which, in turn, fuelled modest interest rates, there's a growing pool of cheap money readily available for consumers.

It's a theme amplified by the booming buy now, pay later space, which encouraged a new generation of consumers to enter interest-free debt and pay it off in bite-sized instalments....


Completely Unrelated:

"Australia’s Lesser Known Commodities Booms"

It sounds like the set-up to a Monty Python bit but its not.
From Winton's The Longer View:
The typical Australian analogy for the China-fuelled expansion in commodities trading would probably be the mid-19th century gold rush.
But there are many more commodities booms and busts in the mid-20th century from which to choose. From wool and uranium to nickel and diamonds, Winton brings you some of the highlights and lowlights of Australian financial markets in the post-war period.....

"Loans that hijack your phone are coming to India"

This sounds nasty. 

But much worse, it sounds like a precursor to phones that cut off your access to everything except, maybe, emergency services should your social credit score fall too low.

From rest of world

Lenders are turning to coercive loan apps that shut down smartphones if customers fall behind on payments.

Last December, 28-year-old Roshan Zameer was gripped with panic. His phone had suddenly stopped working. As an electrical repairman in the outskirts of Bangalore, Zameer needed to make a call to check if the main electricity line was turned off before he started work at a building: information crucial to his safety. A message appeared on his screen: “Pls pay the amt via online through our website to unlock your device.” His Samsung Galaxy A71 phone was then blocked by a pre-installed app, restricting access to all of his phone’s functions, including the ability to make phone calls. 

Zameer had bought the cellphone secondhand online in August. The original owner, it turns out, purchased it with the promise of paying off the device through equated monthly installments (EMI), a fixed payment schedule. Zameer didn’t know the phone was on a payment plan until the day after he bought it. 15 days after he purchased it, the device automatically locked and alerted him that he was roughly $40 behind. He’s been stuck paying monthly installments ever since. 

Despite widespread access to low-cost smartphones (the cheapest costing $78), the average Indian still needs to work 63 days to afford one. It is why financing phones has become an important driver of sales. An estimated 40%–60% of all high-end smartphones — in the $100–$400 range — are sold on installment-based plans, according to the market intelligence company International Data Corporation.....


It sounds like an escalation of this, from May 2020: 

Meanwhile In Kenya: "This lending app publicly shames you when you’re late on loan payment"

Folks, Time To Keep An Eye Open For Real Live Mussolini-Style Fascism

 A subject any serious political scientist is familiar with.

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power. "
—B. Mussolini via BrainyQuote

Here's a mish-mash of some of our blather on what real fascism is all about:

From the Political Capital website:

Political capitalism is a private-property, market-oriented system that is compromised by business-sponsored government intervention. It is a socioeconomic system in which many or most regulations, subsidies, and tax-code provisions result from the lobbying efforts of directly affected businesses and their allies.

Today in the United States, there is greater political transparency and competition between political elites than was evident in the business-dominated past (the 19th and most of the 20th centuries). Interventions routinely result from non-business special interests representing education, the environment, labor, minorities, religion, retirees, science, and taxpayers, among others. Still, business interests—unified or in opposition—are arguably the most important of the elites that compete for special government favor in American politics today.

There are two avenues to business success under a private-property, profit-and-loss system. When using the economic means, or free-market means, businessmen provide goods or services in an open market and rely on voluntary consumer patronage. When using the political means, businessmen obtain a governmental restriction or favor that provides the margin of success beyond what consumer preference alone would give. Market entrepreneurship is the way of capitalism; political entrepreneurship, or rent-seeking as it is known in the economics literature, is the way of political capitalism.

Business interests welcome competition for the things they buy (to minimize costs) far more than for things they sell. They may profess support for free enterprise in general but not in their particular area. There, competition is disparaged as "unbridled," "cut-throat," "excessive," or "unfair," and calls are made to constrain the free market.
Historian Gabriel Kolko has defined political capitalism as "the utilization of political outlets to attain conditions of stability, predictability, and security—to attain rationalization—in the economy." Much of the intervention that he and other historians documented in U.S. history was for business, by business to "allow corporations to function in a predictable and secure environment permitting reasonable profits over the long run."...MORE

From our March 2013 post "Copyright Infringement Now Seen As Terrorism":

As Political Capitalism becomes indistinguishable from Mussolini's Corporatism it's getting close to the time where the West has to decide just what it wants to be when it grows up.

"The rich and powerful too often bend the acts of government to their selfish purposes, many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress."
Andrew Jackson (1830) Cited by Charles Sellers, The Market Revolution: Jacksonian America 1815-1846. New York: Oxford University Press, 1991, p. 62

"Capitalism's biggest political enemies are not the firebrand trade unionists spewing vitriol against the system but the executives in pin-striped suits extolling the virtues of competitive markets with every breath while attempting to extinguish them with every action."
Raghuram Rajan and Luigi Zingales, Saving Capitalism from the Capitalists. New York: Crown Business, 2003, p. 276. 
And yes, I know the distinction between Fascism and vertical syndicalist corporatism based on guilds. I'm just using a shorthand, readily understandable usage....
Phrases such as "...the distinction between Fascism and vertical syndicalist corporatism based on guilds" make me the hit of any party.

We've been circling this kind of stuff for years. In 2008's "Hank Paulson, George Washington and Benito Mussolini Walk Into a Bar: Part I" we looked at Machiavelli's Discourses on the First 10 Books of Titus Livy
2009 saw "Newsweek: Goldman Supplied 9 Pages of Proposed Changes to Derivatives Legislation (GS)".
2010 had "The Left Right Paradigm is Over: Its You vs. [Big] Corporations"
"President Obama Examines John Boehner’s New Tanning Bed at General Electric Factory" (GE)

Here's a gentle poke at the Speaker.
Because at Climateer Investing we're nothing if not equal opportunity,
We'll be back with more on the new chairman of the President's Council on Jobs and Competitiveness.
His record at GE, the destruction of shareholder wealth, the shipping jobs to China programs, the bailouts and guarantees, crony capitalism, Mussolini style corporatism and power elites, the 3.6% tax rate, subsidies and Davos, all in good fun, of course
"Blaming Capitalism for Corporatism"
...One of the authors has some of those Nobel tchotchkes. 
2013's "Blueprint For America: 'Fascist Italy's Experiment With Economic Corporatism'" had links to the above and to:
There's Pollution and There's: Führer Flatus
Scent of a Führer
Hitler wanted to control the world. But he couldn't even control his flatulence.
Guests at the Berghof, Hitler’s private chalet in the Bavarian Alps, must have endured some unpleasant odors in the otherwise healthful mountain air. 

Mussolini and Hitler
The dictator who smelt it, dealt it