Saturday, September 21, 2019

Solve This Wind Turbine Problem And Make Some BIG Money

With Ørsted's decision to use GE's world's-largest (12 MW) wind turbines:
...About the Haliade-X 12MW
GE Renewable Energy’s Haliade-X 12MW wind turbine has a rotor diameter of 220 meters. Each blade on the Haliade-X 12MW is 107 meters (351 feet) long sweeping a total area of 38.000 square meters (409,000 square feet).
It's probably time to take a look at this story from NPR, September 10, 2019:

Unfurling The Waste Problem Caused By Wind Energy
While most of a turbine can be recycled or find a second life on another wind farm, researchers estimate the U.S. will have more than 720,000 tons of blade material to dispose of over the next 20 years, a figure that doesn't include newer, taller higher-capacity versions.

There aren't many options to recycle or trash turbine blades, and what options do exist are expensive, partly because the U.S. wind industry is so young. It's a waste problem that runs counter to what the industry is held up to be: a perfect solution for environmentalists looking to combat climate change, an attractive investment for companies such as Budweiser and Hormel Foods, and a job creator across the Midwest and Great Plains.

At the end of a long gravel road on the southwest Nebraska prairie, the state's first wind farm, Kimball Wind Project, is caught in the breeze. But the turbine scrap area looks more like a sci-fi drama set. Rob Van Vleet climbed atop a 127-foot-long turbine blade and walked the length like a plank.

"These towers may be supporting as much as 150,000 pounds, 250 feet in the air," Van Vleet said. "The stands are an inch and a half thick steel ... so they're very strong."

Ninety percent of a turbine's parts can be recycled or sold, according to Van Vleet, but the blades, made of a tough but pliable mix of resin and fiberglass — similar to what spaceship parts are made from — are a different story.

"The blades are kind of a dud because they have no value," he said.

Decommissioned blades are also notoriously difficult and expensive to transport. They can be anywhere from 100 to 300 feet long and need to be cut up onsite before getting trucked away on specialized equipment — which costs money — to the landfill.

Once there, Van Vleet said, the size of the blades can put landfills in a tough spot.

"If you're a small utility or municipality and all of a sudden hundreds of blades start coming to your landfill, you don't want to use up your capacity for your local municipal trash for wind turbine blades," he said, adding that permits for more landfill space add another layer of expenses....

Moving blades and turbines on the water has been pretty much perfected by the Danes, Germans, Norwegians and British, but the blade refuse problem has not been addressed.

Moving blades on land has its own set of, ahhh...challenges:

Skill and innovation.
Think skill and innovation.

"Sotheby’s and Christie’s expand private sales"

Ha, Duveen lives!

From VoxEU, Sept. 21:
The auction market provides important information regarding prices to a host of players, including buyers, sellers, investors, students of art history, and even economists. Already dominating the high-end public auction system in art, Christie’s and Sotheby’s have recently been making a significant push into private sales. This column examines the potential implications of this move for the art market and whether it may decrease competition.

A recent development for Christie’s and Sotheby’s auction houses has been their significant push into private sales. In 2018, private sales at Sotheby’s increased by 37% to $1 billion, or over 15% of all sales at the auction house, and at Christie’s, private sales increased by 7% to $653.3 million (Schultz 2019). This increase at Sotheby’s is due to a concerted effort to expand revenue streams beyond those of traditional open-outcry auctions. 

Is this push into private sales by Sotheby’s and Christie’s good for the art market? After all, the auction market provides important information regarding prices that is used by a host of players, including buyers, sellers, investors, students of art history, and even, economists. Furthermore, Sotheby’s and Christie’s, with their dominance of the high-end public auction system in art, are in a unique position to use their understanding of the market and especially connections to customers, both buyers and sellers, as advantages in establishing themselves in private sales. 

The importance of the public auction system
Orley Ashenfelter’s seminal 1989 article, “How auctions work for wine and art”, begins with the story of a widow wishing to sell her late husband’s wine. A ‘helpful’ relative offers a very low price for the entire collection, but publicly available prices fetched at auction for identical wines indicate the collection is worth six times the amount offered.
Some of the most fascinating stories about auctions involve the surprising ‘discovery’ of a highly valued artwork in an auction where prices were expected to be very low. This kind of story illustrates one way that regular auctions confer information benefits that are typically not captured by the profits of the auctioneer....MUCH MORE
On Duveen, the King of private sales,
From the intro to September 2013's "Duveen: The Greatest Salesman Ever":

I've mentioned Joseph Duveen a few times, most recently in the intro to 2011's "Wildenstein: The Art World's Most Powerful Dealer Family".

Today his name came up because of a long form post at Quartz: "High-end art is one of the most manipulated markets in the world" that I'll link to again as tomorrow's weekend read.

Joe Duveen went from being one of thirteen children of a successful Jewish-Dutch importer to being
1st (and last) Baron Duveen, all because of a simple observation:
"Europe has a great deal of art, and America has a great deal of money."
On that "Great deal of money", his buy-side clients included  J.P. Morgan, Henry Clay Frick, William Randolph Hearst, Henry Huntington, Jules Bache , Andrew Mellon and John D. Rockefeller.
On the sell-side various European Aristos e.g. the seller of the painting below, the landlord known as the Duke of Westminster.

There have been two biographies of Duveen, the first by Behrman is better written but contained errors while the later one by Meryle Secrest is more accurate in the details, partly because she had access to the Getty Museum's hundreds of linear feet of business records and ephemera:
Duveen Brothers Resources

We have been planning to serialize Behrman's six New Yorker articles on Duveen, here's a taste of the first one, from 1951:
S. N. Behrman
The New Yorker
 September 29, 1951: 33-61
When Joseph Duveen, the most spectacular art dealer of all time, travelled from one to another of his three galleries, in Paris, New York, and London, his business, including a certain amount of his stock in trade, travelled with him. His business was highly personal, and during his absence his establishments dozed. They jumped to attention only upon the kinetic arrival of the Master. Early in life, Duveen—who became Lord Duveen of Millbank before he died in 1939, at the age of sixty-nine—noticed that Europe had plenty of art and America had plenty of money, and his entire astonishing career was the product of that simple observation. Beginning in 1886, when he was seventeen, he was perpetually journeying between Europe, where he stocked up, and America, where he sold. In later years, his annual itinerary was relatively fixed: At the end of May, he would leave New York for London, where he spent June and July; then he would go to Paris for a week or two; from there he would go to Vittel, a health resort in the Vosges Mountains, where he took a three-week cure; from Vittel he would return to Paris for another fortnight; after that, he would go back to London; sometime in September, he would set sail for New York, where he stayed through the winter and early spring.
Occasionally, Duveen departed from his routine to help out a valuable customer. If, say, he was in Paris and Andrew Mellon or Jules Bache was coming there, he would considerately remain a bit longer than usual, to assist Mellon or Bache with his education in art. Although, according to some authorities, especially those in his native England, Duveen's knowledge of art was conspicuously exceeded by his enthusiasm for it, he was regarded by most of his wealthy American clients as little less than omniscient. "To the Caliph I may be dirt, but to dirt I am the Caliph!" says Hajj the beggar in Edward Knoblock's "Kismet." Hajj's estimate of his social position approximated Duveen's standing as a scholar. To his major pupils, Duveen extended extracurricular courtesies. He permitted Bache to store supplies of his favorite cigars in the vaults of the Duveen establishments in London and Paris. One day, as Bache was leaving his hotel in Paris for his boat train, he realized that he didn't have enough cigars to last him for the Atlantic crossing. He made a quick detour to Duveen's to replenish. Duveen was not in Paris, and Bache was greeted by Bertram Boggis, then Duveen's chief assistant and today one of the heads of the firm of Duveen Brothers. While Bache was waiting for the cigars to appear, Boggis showed him a Van Dyck and told him Duveen had earmarked it for him. Bache was so entranced with the picture that he bought it on the spot and almost forgot about the cigars; he finally went off to the train with both. There was no charge for storing the cigars, but the Van Dyck cost him two hundred and seventy-five thousand dollars.
 Probably never before had a merchant brought to such exquisite perfection the large-minded art of casting bread upon the waters. There was almost nothing Duveen wouldn't do for his important clients. Immensely rich Americans, shy and suspicious of casual contacts because of their wealth, often didn't know where to go or what to do with themselves when they were abroad. Duveen provided entrée to the great country homes of the nobility; the coincidence that their noble owners often had ancestral portraits to sell did not deter Duveen. He also wangled hotel accommodations and passage on sold-out ships. He got his clients houses, or he provided architects to build them houses, and then saw to it that the architects planned the interiors with wall space that demanded plenty of pictures. He even selected brides or bridegrooms for some of his clients, and presided over the weddings with avuncular benevolence. These selections had to meet the same refined standard that governed his choice of houses for his clients—a potential receptivity to expensive art....MUCH MORE
We'll have the second of the six articles next week, in the meantime here's one of the pictures that passed through Duveen's hands, Gainsborough's Blue Boy

Which was followed by
One of the paintings that passed through Duveen's hands, The Small Cowper Madonna by  Raphael which had come down through the Earls of Cowper until Duveen bought it and then sold it to Peter Widerner.
This was a fairly typical example of Duveen's observation that "Europeans have a lot of art and American's have a lot of money".
Widener ranks as the 27th richest American of all time while the Cowper clan held the Earldom for seven generations before it went extinct in 1905. Duveen sold the painting for a guesstimated $700,000 which was the highest price ever paid of a work of art (until he sold the Gainsborough in part I of the series)
RAFFAELLO Madonna and Child (The Small Cowper Madonna) - fine-art Photo
Here's the painting's provenance at the NGA. 
If interested see also: 

"Amazon doubles down on a ‘new’ payment method for online purchases: Cash" (AMZN)

From The Hustle:
Amazon — the e-commerce giant better known for patenting a way for customers to pay online with a single, frictionless click — is now investing in a different checkout option in the US: cold hard cash.

It’s called Amazon PayCode…
And the program, which is already available in 19 countries outside the US, allows customers to pay for their online orders at any Western Union location. According to Amazon, 80% of Americans live within 5 miles of one of the 15k participating Western Unions.

The payment process works like this: When customers select the PayCode option when checking out, they receive a QR code. Then, they have 24 hours to fork over some greenbacks at the local W. Union....MORE
So, between walking to WU to pay in cash; and the physical Amazon "Four Star" and book stores, we've pretty much come full circle.

Friday, September 20, 2019

"The Eponymous Mr. Ponzi"

From Damn Interesting:
Nobody knows who did it first. Swindlers have been pulling off the scam for centuries, paying existing investors with the deposits of new ones to create the illusion of an incredibly profitable investment opportunity. Before 1920, it was known as “robbing Peter to pay Paul” or “the Peter-to-Paul scheme.” For example, Sarah Howe, a fortune-teller and frequent guest of the State Lunatic Asylum in Massachusetts, employed it in 1880 to take in nearly $500,000 from her followers. In 1884, former president Ulysses S. Grant fell victim to such a scheme that left him penniless.
But it was Charles Ponzi who, in Boston in 1920, earned permanent naming rights to the scheme by dazzling the investing public and dumbfounding authorities like no other. That sweltering summer, Bostonians of every stripe were all but begging this diminutive investment banker to take their money for an unheard-of return: 100 percent in 90 days. In less than a year, Ponzi raked in nearly $7 million—more than $90 million in today’s dollars. His downfall came as swiftly as his meteoric rise.
Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi was born on 03 March 1882 in Lugo, Italy. His father, a postal worker, died when Carlo was ten, leaving the family without a breadwinner. His mother, Imelde, was descended from Italian aristocracy. She sent Carlo to the University of Rome with just enough money to earn a degree, and high hopes he would use it to prosper and restore the family to its erstwhile rank in society.

Carlo dashed any such hopes. He loved college, 500 miles from home, but not for the education. There he enjoyed the life of a bon vivant, skipping classes and befriending students from more privileged families. He spent much of his money on fine dining and equally fine clothing, and by picking up more bar tabs than books. He returned home penniless and diploma-less.

Determined to patch things up with his unhappy mother, Carlo vowed to sail to America, scoop up some of the gold rumored to line its streets, and become a very rich man. He left Naples on 03 November 1903 with $200 in his pocket. He arrived in Boston with $2.50, the balance in the pockets of cardsharps who earned their living from unsuspecting immigrants on ships.

Ponzi found making money in America rather harder than he’d expected. For nearly four years, he worked as a grocery clerk, factory hand, dishwasher, waiter, and painter. He did repair work, folded laundry, and anything else to keep food in his belly. He took the first name Charles and a variety of surnames other than his own, including Bianchi, Ponsi, Ponci, and Ponce.

Ponzi did not limit his job search to Boston. Willing to go anywhere for employment that exercised his mind and not just his back, he found it in Montreal in July 1907. There, a man by the name of Louis Zarossi hired him as a bank clerk after a 5-minute interview. He fit right in at Banco Zarossi, which did a booming business catering to the Italian immigrant community and paying 6 percent interest to depositors—three times the rate other banks offered. And he did so in a most unscrupulous manner.

Among Zarossi’s customers were not just depositors but immigrants who gave him money to wire home to family in Italy. Some of these funds he simply stole, using it to pay his depositors their promised 6 percent. It could take months for wire customers to complain, and when they did he pleaded ignorance and laid blame on the receiving end. Nobody can say exactly how much Zarossi stole in this manner, but in July 1908, he filled a suitcase with cash and fled to Mexico.
Again out of work and tired of earning money in the conventional manner, Ponzi one day entered the office of the Canadian Warehousing Company, a former Banco Zarossi customer. The office staff knew and trusted Ponzi. While nobody was looking, he located their company checkbook, removed a check, and slipped it into a pocket. Later, he wrote it out to himself in the seemingly authentic amount of $423.58, then carefully forged the signature.

After cashing the check and visiting a number of clothiers to outfit himself in style, Ponzi found his buying spree short-lived. Bank officials suspected the authenticity of the check’s signature. They contacted the police, who had little trouble finding and arresting him. He feigned mental illness by chewing a towel to shreds, then wildly climbing a wall toward a barred window. Convincingly calmed by a straitjacket, he earned an upgrade to the infirmary by persuading his jailer he suffered from epilepsy. His insanity act only went so far. Ponzi was ultimately sentenced to a three-year term at the Saint-Vincent-de-Paul Penitentiary, his jailers settling on the name of Charles Ponsi.
At the penitentiary, he crushed stone, slept on a bed of corn cob husks, and shared a cell with an especially nasty convict named Louis Cassullo. Ponzi would later describe him as “one of those prowling, petty, sneaky thieves whose counterparts in the animal kingdom are the hyenas and the jackals.” After serving a term shortened to 20 months for good behavior, Ponzi was only too happy to bid farewell to his unpleasant cellmate....

"Early Victorian observers would have found our financial markets familiar, but would likely expect a crash"

We've visited the author of this piece, Professor Andrew Odlyzko a few times, he is something of a polymath. An MIT trained mathematician with an interest in financial history.
Some links after the jump.
From The Economic History Society's Long Run blog:

Market anomalies and market crashes: Historical perspectives on modern finance
Early Victorian observers would have found our financial markets familiar,
but would likely expect a crash, writes Andrew Odlyzko*


What would early Victorians make of today’s markets?  Such questions are more than just idle curiosities.  For example, the recent wide acceptance around the world of negative interest rates was a surprise. Why didn’t the money go into cash?  Yet observers should not have been startled by this development.  In Britain in the early 1850s, Exchequer Bills effectively offered negative rates.  The convenience of those paper instruments gave them higher value than stacks of gold coins, just as today the convenience of electronic ledger balances is worth something compared to having to handle containers full of banknotes.

The Exchequer Bills episode is just one minor finding from recent studies that integrate data from the ledgers in the Bank of England Archive with price reports, press coverage, and other sources. Previously unknown  statistics about completeness of price reports, turnover rates, and dealer activity have been obtained.  It has also been found that the London Stock Exchange was a key part of the “shadow banking system” of the time.

Aside from statistics, we can also obtain some qualitative insights about modern finance from these investigations.  Our basic laws and institutions are clear linear descendants of those created at that time. If some of those early Victorians were to come alive today, they would have no difficulty recognizing all the modern financial instruments and services, although they would surely marvel at such concoctions as CDO squareds.  Many current concerns would have been familiar to them as well.  While they did not talk about climate change, they did worry about natural resource depletion, and effects of globalization. Inequality was even greater than today.  Deflation and the analog of our “Great Savings Glut” were visible, and seemed natural.  Although the terms secular stagnation and liquidity trap had not yet been invented, they corresponded to widely held attitudes.

Although the financial system was far smaller than today, public opinions about it were not dissimilar.  Respect was often mixed with fear and loathing,  as in an 1850 magazine article that called the London Stock Exchange “an institution destitute of moral principle, but at the same time omnipotent in its influence upon the moral and social condition of nations.”....

Previously from the good Professor:

"Sir Isaac Newton: Scientific Genius, Investing Fool"
The Wall Street Journal's Jason Zweig leans heavily on Odlyzko's research
The Time Charles ('Popular Delusions...') MacKay Thought 'This Time it's Different'

"Isaac Newton, Daniel Defoe and the Dynamics of Financial Bubbles"

And in network theory he challenged the valuation of networks—he thought the theory gave valuations that were too low, something later important in valuing Facebook, Twitter etc.
Here he is as co-author of a paper on same, this version at IEEE Spectrum:

Communications networks increase in value as they add members
—but by how much? The devil is in the details

Icebreaking Research Vessel "Polarstern" To Depart Tromsø For One-Year Polar Expedition

Via gCaptain:

Arctic Expedition to Investigate ‘Epicenter of Climate Change”

Start of the Arctic research expedition in Norway
RV Polarstern ship is pictured during the farewell ceremony in Tromso, Norway, September 20, 2019. 
REUTERS/Ints Kalnins
For the first time ever, scientists will use a modern research icebreaker to drift in the ice for an entire year, allowing scientists to investigate the Arctic winter from the vicinity of the North Pole.
Scientists from 19 countries are preparing to embark on a year-long expedition to the Arctic, the longest project of its kind, to better understand global climate change.
The icebreaker Polarstern is preparing to set sail from Tromsoe in northern Norway, allowing hundreds of rotating researchers to spend the next year close to the north pole....MORE
It's a pretty big deal and I should take it seriously but I wish the reporter hadn't referred to the 'rotating researchers.'
And I wonder why Polarstern is heading out this year when the even more robust (looking) Russian science platform should be ready by next winter.

From the Barents Observer, December 28, 2018:

The "North Pole" research station will be able to autonomously drift through Arctic waters for 
periods of up to two years at a time. Illustration:

Researchers rejoice as construction starts of offshore Arctic station
The new installation will be crucial for our studies of the rapid ongoing changes in the region, Russian Arctic research leaders say....MUCH MORE.
Here's the Alfred Wegener Institut, Helmholtz Centre for Polar and Marine Research Polarstern page.
And the Polarstern blog

And finally, the AWI front page with the MOSAiC story 

EIA Natural Gas Weekly Update

Yesterday was a bad day to be long natty.
2.5180 last

From the U.S. Energy Information Administration:
for week ending September 18, 2019   |  Release date:  September 19, 2019

In the News:
China introduces new incentives for domestic production of tight and shale gas and coalbed methane
In June 2019, the Chinese government introduced a new subsidy program that, for the first time, offers incentives for domestic production of natural gas from tight formations. The program also extended subsidies for natural gas production from shale formations and from coalbed methane (CBM). The new subsidy program aims to stimulate further growth in domestic natural gas production and to reduce China’s increasing reliance on imports, which have grown from 15% of the total supply in 2010 to 45% in 2018.

In recent years, rapid growth in China’s natural gas consumption has outpaced the growth in its domestic production, which resulted in increased natural gas imports by both pipeline and liquefied natural gas (LNG), particularly in peak winter months. Between 2010 and 2018, China’s domestic natural gas production increased by 6.1 billion cubic feet per day (Bcf/d), accounting for 37% of total supply growth, while natural gas imports grew by 10.5 Bcf/d (63% of total supply growth) during the same period....MORE 
(For the week ending Wednesday, September 18, 2019)
  • Natural gas spot prices fell at most locations this report week (Wednesday, September 11 to Wednesday, September 18). Henry Hub spot prices rose from $2.59 per million British thermal units (MMBtu) last Wednesday to $2.68/MMBtu yesterday.
  • At the New York Mercantile Exchange (Nymex), the price of the October 2019 contract increased 9¢, from $2.552/MMBtu last Wednesday to $2.637/MMBtu yesterday. The price of the 12-month strip averaging October 2019 through September 2020 futures contracts increased by 3¢/MMBtu to $2.587/MMBtu.
  • Net injections to working gas totaled 84 billion cubic feet (Bcf) for the week ending September 13. Working natural gas stocks are 3,103 Bcf, which is 15% more than the year-ago level and 2% lower than the five-year (2014–18) average for this week.
  • The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 13¢/MMBtu, averaging $4.99/MMBtu for the week ending September 18. The price of ethane fell by 1%. The price of natural gasoline, propane, butane, and isobutane rose by 4%, 3%, 3%, and 6%, respectively.
  • According to Baker Hughes, for the week ending Tuesday, September 10, the natural gas rig count decreased by 7 to 153. The number of oil-directed rigs fell by 5 to 733. The total rig count decreased by 12, and it now stands at 886.

Prices fall across the country. This report week (Wednesday, September 11 to Wednesday, September 18), Henry Hub spot prices rose 9¢ from $2.59/MMBtu last Wednesday to $2.68/MMBtu yesterday after reaching a high of $2.75/MMBtu on Monday. Seasonal temperatures were moderate, averaging in the 70s (degrees Fahrenheit) across most of the country. At the Chicago Citygate, prices increased 2¢ from $2.37/MMBtu last Wednesday to $2.39/MMBtu yesterday.

California prices are down. Prices at PG&E Citygate in Northern California fell 12¢, down from $3.23/MMBtu last Wednesday to a low of $3.11/MMBtu yesterday. Prices at SoCal Citygate decreased 14¢ from $3.32/MMBtu last Wednesday to $3.18/MMBtu yesterday.

Northeast prices fall. At the Algonquin Citygate, which serves Boston-area consumers, prices decreased by 24¢ from a high of $2.38/MMBtu last Wednesday to $2.14/MMBtu yesterday with temperatures slightly cooler than normal. At the Transcontinental Pipeline Zone 6 trading point for New York City, prices decreased 29¢ from $2.30/MMBtu last Wednesday to a low of $2.01/MMBtu yesterday.
Tennessee Zone 4 Marcellus spot prices decreased 12¢ from $1.99/MMBtu last Wednesday to $1.87/MMBtu yesterday. Prices at Dominion South in southwest Pennsylvania fell 2¢ from $2.00/MMBtu last Wednesday to $1.98/MMBtu yesterday.

Permian Basin prices strengthen throughout the week as the Sur de Texas-Tuxpan pipeline enters service and flows on the Gulf Coast Express ramp up. Prices at the Waha Hub in West Texas, which is located near the Permian Basin production area, averaged $1.68/MMBtu last Wednesday, 91¢/MMBtu lower than Henry Hub prices. Yesterday, prices at the Waha Hub averaged $1.89/MMBtu, 79¢/MMBtu lower than Henry Hub prices. During the week, flows on the Gulf Coast Express have ramped up and averaged more than 1 Bcf/d as the pipeline prepares to enter full service by the end of this month, according to SP Global Platts. On Tuesday, IEnova and TC Energía announced the Sur de Texas-Tuxpan marine natural gas pipeline began commercial operations. The 2.6 Bcf/d pipeline will flow from Brownsville, Texas, to the Mexican coastal cities of Altamira in Tamaulipas and Tuxpan in Veracruz. The pipeline will supply power plants in Altamira and feed into Mexico’s national Sistrangas pipeline system. Flows in its first week ranged from 0.0 Bcf/d to 0.6 Bcf/d according to Genscape.

Supply is flat. According to data from IHS Markit, the average total supply of natural gas remained the same as in the previous report week, averaging 96.2 Bcf/d. Dry natural gas production remained constant week over week. Average net imports from Canada increased by 1% from last week.

Demand falls. Total U.S. consumption of natural gas fell by 4% compared with the previous report week with cooler temperatures across most of the country, according to data from IHS Markit. Natural gas consumed for power generation declined by 5% week over week. Industrial sector consumption decreased by 1% week over week. In the residential and commercial sectors, consumption declined by 1%. Natural gas exports to Mexico decreased 1%.

U.S. LNG exports increase week over week. Twelve LNG vessels (seven from Sabine Pass, two from Cove Point, two from Corpus Christi, and one from Freeport LNG export terminals) with a combined LNG-carrying capacity of 42 Bcf departed the United States between September 12 and September 18, according to shipping data compiled by Bloomberg. Four vessels (two at Sabine Pass, one at Corpus Christi and one at Cove Point terminals) were loading on Wednesday.....MUCH MORE

"EU Trade Deficit With China Destined To Grow "

Maybe the EU needs the capital account surplus, the flip side of the current account deficit?

From Bruce Wilds' Advancing Time blog, September 17:
While we read a great deal about the huge trade deficit America runs with China it is important to understand we are not the only one. Other countries also have this problem. Europe as a whole runs a solid trade deficit with China. In some ways, this is balanced by the EU having a surplus with America. Still, in many ways, a growing trade deficit with China bodes poorly for the EU as they look down the road.
 Europe Runs A Solid Trade Deficit With China
Reuters reports the European Union’s trade surplus in goods with the United States and its deficit with China both increased in the first seven months of 2019. Eurostat, the EU statistics office, reported the European Union’s surplus with the United States grew to 100.8 billion dollars in Jan-July 2019 from 88.6 billion in the same period of 2018. During that time the EU’s trade deficit with China expanded to 120.9 billion dollars from 109.2. This comes at a time that trade figures are adding extra strain to global tensions.

This brings up the importance of what countries buy and sell to each other. If a county's exports are not centered around products where they have a core advantage over time they can see them erode. I contend part of the problem the EU has going forward is that much of the EU is simply uncompetitive. This means unless it takes strong action to halt the importation of cheap Chinese consumer goods it will be flooded with them in coming years. Since Europe does not sell China much in the way of "raw goods" it has little to balance this trade....MUCH MORE

"Lenders Raise Collateral Concerns Over WeWork CEO's $500 Million Personal Credit Line" (JPM; UBS)

Ya think?
"Bob, we've been lending against the Emperor's personal wardrobe and it turns out there's actually nothing in the closet"
 From ZeroHedge:
And the hits keep coming for the 'trillionaire-to-be' CEO of WeWork as Bloomberg reports that the lenders are looking to revise terms on Adam Neumann's massive personal credit line amid collateral concerns as the real estate company's valuation plummets.

Bloomberg details that Neumann arranged a credit line of as much as $500 million from JPMorgan Chase & Co., UBS Group AG and Credit Suisse Group AG secured by some of his shares in WeWork, according to the company’s regulatory filings.

As of July 31, he had drawn $380 million of the principal amount available, the filings show.

The last few weeks of farce as WeWork's prospective valuation has collapsed along with the chances of it IPOing anytime soon, has raised concerns that the collateral value of the shares pledged to cover Neumann's massive personal line of credit may not cover the additional risks that are now evident to the once greedy consortium who were just weeks ago willing to fall over each other to lend him cash.
Additionally the cost of debt on the company itself has soared to almost 700bps over Treasuries as the IPO has fallen apart...MORE
Sure, Climateer Investing took "WeWork: 'Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.'" at face value:
Roger that, energy and spirituality. Over.... 
But we didn't lend a half-billion against it for Chrissakes

"2019 Monaco Yacht Show: Top 10 Largest Superyachts"

From Forbes:
When it comes to celebrating the end of the summer season in high style, it’s pretty hard to compete with the Monaco Yacht Show that takes place at the end of September. The superyachts on display will be some of the newest, largest and most expensive “portable private islands” on Earth.
Tis is the largest yacht at the 2019 Monaco Yacht Show Klaus Jordan
And all of the Monaco Yacht Show’s other attractions—impossibly sexy speedboats, helicopters, personal submarines, limousines and luxury cars—will impress even the most jaded billionaire. And don’t even get me started on the hotels, restaurants and of course, the Casino in this tiny principality on the French Riviera.

But the largest superyachts are always the star attractions. So without further ado, here’s a preview of the top 10 largest superyachts that will be at the Monaco Yacht Show later this month.
The opulent interior of Tis the largest yacht at the 2019 Monaco Yacht ShowWinch Media
The German superyacht craftsmen at Lürssen have a well-earned reputation for building some of the worlds largest private yachts in the world. The talented team at the London-based Winch Design have drawn the lines and imagined the interiors of with a long list of award winning superyachts....

Thursday, September 19, 2019

"Russia’s first sea-borne nuclear power plant arrives at its Arctic base"

These are isolated little communities.
The same area we were looking at in last Sunday's "Some Potentially Positive News For The Arctic Ice Cap This Winter", the Chukchi, East Siberian and Beaufort Seas.

And from Arctic Today, Sept. 16:
The plant could be providing power to Pevek by the end of the year.
Russia’s first-floating nuclear power plant has arrived to its permanent base near the isolated Russian town of Pevek, on the Chukchi Sea across the Bering Strait from Alaska, Russian state nuclear energy company Rosatom said on Saturday.

Developed by Rosatom, the plant, known as Akademik Lomonosov, set off on a 5,000-kilometer (3,100-mile) journey on Aug. 23 through Arctic waters to reach the Chukotka region.

Rosatom said it aims to make the floating station operational by the year-end. It would become the world’s northernmost nuclear power station.

The plant will replace a coal-fired power plant and an aging nuclear power plant supplying more than 50,000 people with electricity in Chukotka....

Shipping: "Global Container Fleet Tops 23 Million TEU as New Megaships Hit the Water"

From gCaptain:
A wave of ULCV deliveries this year has pushed the total containership fleet capacity over the 23m teu mark, with the last million slots added in a breath–taking 14 months, according to an Alphaliner report.
However, the newbuilds, mostly consisting of ULCVs, have arrived at a time of softening demand growth across the major tradelanes of the world, which is already forcing carriers to blank a significant amount of headhaul voyages.

In fact on Monday the 2M partners, Maersk and MSC advised that the “temporary suspension” of their AE2 / Swan Asia – North Europe loop would commence one week earlier than planned, with the final schedule sailing from Qingdao on 25 September also being cancelled.

While the new ULCVs will in most cases immediately be deployed on the Asia – Europe tradelane the cascading impact of the incumbent tonnage being reassigned to secondary routes will have negative consequences on freight rates in those markets....

"Next wave of U.S. LNG export projects to be ‘tougher’ -Blackstone Energy CEO" (LNG)

From Reuters, Sept. 18:
(Adds Wood Mackenzie comment)
The next wave of U.S. liquefied natural gas (LNG) export projects will be “tougher” to bring online, as companies with existing facilities take advantage of lower costs to expand capacity in coming years, the chief executive of Blackstone Energy Partners said on Wednesday.

Blackstone CEO David Foley said at the Gastech Energy Conference in Houston that only one or two new startup projects may reach a final investment decision (FID) in the next wave of U.S. LNG export projects.

“In terms of liquefaction capacity that gets FID from the U.S., the hit rate will be a lot higher on projects either sponsored by major oil companies or expansions of existing facilities,” Foley said.
The energy-focused private equity group, a unit of Blackstone Group, has owned a stake in Cheniere Energy, the nation’s biggest LNG exporter, since 2012. Cheniere was the first company to build a large LNG export terminal in the lower 48 states, which started shipping to other markets in February 2016....

Attn: Flight Attendants, Pilots, Frequent Flyers: Cosmic Rays Can Kill You

When I posted "The Fuzzy Logic of Fleeing for Your Life" with its outro story of Air France flight-358,  Paris to Toronto and how the flight attendants got all 309 passengers and crew off the plane in 125 seconds, despite 4 of 8 exits being unusable, I was thinking of one flight attendant in particular who used to tell me that even though I gave her a hard time, should the worst happen she would probably be the one to save my life.

She was an interesting woman. There was the time, back when there was an East Berlin, that she caused an international incident that required the U.S. State Department to intervene. After many years of flying international she got into investments and then real estate, quite the hustler and quite sharp.
I thought I'd look her up and tell her about the 'Fuzzy Logic' post and though I hadn't talked to her in years the contact information was still good and I was told she was dead.
Quite young.

And I remembered a study from last year in the journal Environmental Health:
Cancer prevalence among flight attendants compared to the general population
Here's the Harvard Gazette's blurb on the paper.

Back to the study, after adjusting for smoking and weight, a couple of the possible causes that were highlighted were disrupted circadian rhythms (shift work, time zones) and exposure to cosmic radiation.

Which ties into something that has been doing for a few years:
Cosmic Rays in the Atmosphere

SOMETHING NEW! We have developed a new predictive model of aviation radiation. It's called E-RAD--short for Empirical RADiation model. We are constantly flying radiation sensors onboard airplanes over the US and and around the world, so far collecting more than 22,000 gps-tagged radiation measurements. Using this unique dataset, we can predict the dosage on any flight over the USA with an error no worse than 15%.
E-RAD lets us do something new: Every day we monitor approximately 1400 flights criss-crossing the 10 busiest routes in the continental USA. Typically, this includes more than 80,000 passengers per day. E-RAD calculates the radiation exposure for every single flight.

The Hot Flights Table is a daily summary of these calculations. It shows the 5 charter flights with the highest dose rates; the 5 commercial flights with the highest dose rates; 5 commercial flights with near-average dose rates; and the 5 commercial flights with the lowest dose rates. Passengers typically experience dose rates that are 20 to 70 times higher than natural radiation at sea level....
.... To measure radiation on airplanes, we use the same sensors we fly to the stratosphere onboard Earth to Sky Calculus cosmic ray balloons: neutron bubble chambers and X-ray/gamma-ray Geiger tubes sensitive to energies between 10 keV and 20 MeV. These energies span the range of medical X-ray machines and airport security scanners.

Column definitions: (1) The flight number; (2) The maximum dose rate during the flight, expressed in units of natural radiation at sea level; (3) The maximum altitude of the plane in feet above sea level; (4) Departure city; (5) Arrival city; (6) Duration of the flight.

SPACE WEATHER BALLOON DATA: Approximately once a week, and the students of Earth to Sky Calculus fly space weather balloons to the stratosphere over California. These balloons are equipped with radiation sensors that detect cosmic rays, a surprisingly "down to Earth" form of space weather. Cosmic rays can seed clouds, trigger lightning, and penetrate commercial airplanes. Furthermore, there are studies ( #1, #2, #3, #4) linking cosmic rays with cardiac arrhythmias and sudden cardiac death in the general population. Our latest measurements show that cosmic rays are intensifying, with an increase of more than 18% since 2015:
The data points in the graph above correspond to the peak of the Reneger-Pfotzer maximum, which lies about 67,000 feet above central California. When cosmic rays crash into Earth's atmosphere, they produce a spray of secondary particles that is most intense at the entrance to the stratosphere. Physicists Eric Reneger and Georg Pfotzer discovered the maximum using balloons in the 1930s and it is what we are measuring today....MORE
Science by anecdote isn't science (mine, above), there is no proven direct causation (yet)  and with cancer there are so many factors at work that it is difficult to isolate one "cause," but there are enough pointers to avoiding ionizing radiation that folks who fly a lot, especially when younger, should avail themselves of all the cancer screening they can get.

There's another, earlier (2006) study that cuts directly to the chase:

Cancer Incidence among Female Flight Attendants: A Meta-Analysis of Published Data
Background: Flight attendants are exposed to cosmic ionizing radiation and other potential cancer risk factors, but only recently have epidemiological studies been performed to assess the risk of cancer among these workers. The aim of the present work was to evaluate the incidence of various types of cancer among female cabin attendants by combining cancer incidence estimates reported in published studies....

Mechanization, Productivity and Inequality: It Was Ever Thus

From United Press International (also on blogroll at right):

Ox-drawn plows to blame for increased inequality in Eurasia beginning in 4,000 BC
The adoption of the ox-drawn plows, not the advent of agriculture, triggered an accelerating increase in inequality among Eurasian societies beginning around 4000 B.C.

"Ox-drawn plows were the robots of the late Neolithic," Samuel Bowles, an economist at the Santa Fe Institute, said in a news release.

Scientists likened the effects of the ox-drawn plow to the impact of modern mechanization.

"The effect was the same as today: growing economic disparities between those who owned the robots and those whose work the robots displaced," Bowles said.

Bowles and his research partners developed new methods for analyzing architectural data and comparing wealth inequality across different societies, in different places, at different times in history. Researchers used their statistical methods to survey 150 archeological sites, revealing a stark increase in inequality beginning around 4000 B.C. -- several thousand years after the spread of agriculture among Eurasian societies.

Researchers were surprised by how long inequality remained relatively low after the advent of agriculture. The new research, detailed in two papers published this week in the journal Antiquity, undermines the traditional explanation for Neolithic inequality....

Intensification of agriculture and social hierarchies evolve together, study finds

To Create A "1%" In A Social Hierarchy You Don't Need An Economic Surplus, Just A Storable Form Of Wealth 

So there I was, reading the abstract of "Hazelnut economy of early Holocene hunter–gatherers: a case study from Mesolithic Duvensee, northern Germany", thinking about Nutella and Frangelico when this grabbed my eye:
...High-resolution analyses of the excellently preserved and well-dated special task camps documented in detail at Duvensee, Northern Germany, offer an outstanding opportunity for case studies on Mesolithic subsistence and land use strategies. Quantification of the nut utilisation demonstrates the great importance of hazelnuts. These studies revealed very high return rates and allow for absolute assessments of the development of early Holocene economy. Stockpiling of the energy rich resource and an increased logistical capacity are innovations characterising an intensified early Mesolithic land use...
Stockpiling, storage, commodities, well that's right in our wheelhouse,* and if I can combine it with the last remnants of interest in Piketty's approach to inequality.....maybe I can synthesize something halfway original...

Yeah, it's already been done—Cereals, appropriability, and hierarchy... —....MORE

Following Up On "Commodity traders superior to chimpanzees": The Importance of Pockets
We left Thursday's "Commodity traders superior to chimpanzees, research shows" with the observation that any advantage commodity traders had over their simian cousins could probably be ascribed to pockets or other forms of storage:
...The report becomes particularly readable when it speculates on the reasons why [chimps are lousy traders]: because of their lack of property ownership norms...

...or, for that matter, pockets.... ...chimpanzees in nature do not store property and thus would have little opportunity to trade commodities...
And more dryly:
Move Over Industrial: On the Economics of the NEOLITHIC Revolution

Atlanta Fed GDP Now Q3 Growth Estimate: 1.9%, New York Fed Nowcast Growth +1.59%

From the Federal Reserve Bank of Atlanta:

Latest forecast: 1.9 percent — September 18, 2019

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 1.9 percent September 18, up from 1.8 percent on September 13. After yesterday's industrial production release from the Federal Reserve Board of Governors, and this morning's new residential construction report from the U.S. Census Bureau, increases in the nowcasts of third-quarter real consumer spending growth and third-quarter real private fixed investment growth were slightly offset by a decrease in the nowcast of third-quarter real net exports. 

And from the Federal Reserve Bank of New York:
Sep 13, 2019: New York Fed Staff Nowcast
  • The New York Fed Staff Nowcast stands at 1.6% for 2019:Q3 and 1.1% for 2019:Q4.
  • News from JOLTS, retail sales, CPI, PPI, and exports and imports prices releases were small, leaving the nowcast broadly unchanged.

Corn and Soybean Crops Move Towards the Finish Line

Although the focus here is Illinois the author writes what is both 1) a primer on the factors that end up as a price on one's monitors and 2) an overview of the 2019 growing season from Minnesota to Missouri and east to Ohio.

From the University of Illinois' FarmDoc Daily:
After the worst start to a cropping season in decades due to the wet spring, lack of rain in parts of Illinois  since early July , and season-long low crop ratings, it’s time to take a look at what comes next as the 2019 cropping season moves into its final stages.

Corn The September 1 crop production report, released on September 12 by USDA-NASS, dropped the projected 2019 US corn yield slightly, from 169.0 to 168.2 bushels per acre, and dropped the Illinois yield by 1 bushel, from 181 to 180 bushels per acre. The Illinois crop does look a little better than we thought it would by now, given that more than half of it was planted after June 1. Canopy cover and color in early July were mostly good, but lack of rainfall and a less vigorous root system on late-planted corn meant that water stress began to show up in parts of Illinois. In areas where the dryness continued through August and into September, some later-planted fields have little green leaf area left, and ear tips have dropped in drier parts of fields, signaling an end to grainfilling.

The driest part of the state has shifted south a little with some rain in September in the area near the Quad Cities; the driest band is a few counties wide on both sides of an east-west line through about Peoria, all across the state. This area shows up as being abnormally dry or in moderate drought on the current (September 12) U.S. drought map. The northern few tiers of Illinois counties are mostly wet, and southern Illinois ranges from good moisture (from August rainfall) in the region east of St. Louis, to areas that are drying out farther south. Although late planting has gotten most of the attention, rain amounts, including lack of rain in some areas and more than needed in others, will be a big part of the 2019 cropping story. Late planting made the lack of adequate water a bigger problem.

Many late-planted fields showed signs of water stress before soil moisture was depleted, and some ended up with shorter-than-normal plants. These both point to soil compaction as an issue: the smaller root systems and drying surface soils showed that access to water deeper in the soil was restricted. Earlier-planted fields showed less of this, even if they were planted into compacted soils, because their root systems were able to get deeper and develop more extensively before soils dried out. Some soil compaction is always present after tillage and planting using heavy equipment, but roots of early-planted corn can usually make connections to tap water from deeper in the soil, and so suffers less from  compaction.

Temperatures this season have tracked very close to normal: from May 1 through September 15, the statewide GDD accumulation is about 2,880, which is 45 GDDs above normal. This total ranges from about 2,550 in northern Illinois, to 2,800 in central Illinois, to more than 3,000 GDD in the southern part of Illinois. Had the crop been planted by early May, nearly all fields in central and southern Illinois would be mature by now. According to September 15 NASS report, only 14% of the state’s crop is mature, and 1% has been harvested. Corn of mid-maturity (110 days RM) planted in mid-May in the Champaign area this year has gotten enough GDDs (about 2,750) to reach maturity by September 15. Corn planted on June 1 instead of May 1 in northern and central Illinois lost about 350 and 450 GDDs, respectively, from late planting, but above-normal temperatures most days since early September have helped to recoup some of that: by September 15, June 1-planted corn in northern and central Illinois had accumulated about 2,230 and 2,380 GDDs, respectively. Corn planted on June 15 lost an additional 250 GDDs or so, and so accumulated about 1,980 and 2,130 GDDs by September 15 in northern and central Illinois.

If we assume for simplicity that hybrids grown in northern and central Illinois require 2,550 and 2,700 GDDs from planting to maturity, corn planted on June 1 stills needs about 325 GDD after September 15 in order to reach maturity. With above-normal temperatures forecast for this week and near-normal temperatures for the last week of this month, GDD accumulation during the last half of September should be close to 250 GDDs—about 50 more than normal—this year, bringing June 1 to September 30 totals to about 2,500 in northern Illinois and to about 2,625 in central Illinois. That doesn’t sound much different than normal, but with GDD accumulations slowing to a crawl in October, getting to within only 100-150 GDDs still needed to reach maturity by the end of September is a real positive for the late-planted crop this year. Corn planted on or after June 10 is still likely to need more GDDs to mature than it will get by mid-October, but the extra GDDs in September will help.

What if corn doesn’t get enough GDDs to mature fully before its leaf area is gone due to drought, disease, or frost? According to the Iowa State University publication Corn Growth and Development (PMR 1009), dry matter accumulation slows considerably near the end of the grainfilling period: it takes 380 GDDs to accumulate the last 10% of kernel dry weight, and 205 GDDs to accumulate the last 3% of kernel dry weight. So having the corn stop filling with 200 GDD yet to go should not cost a lot of yield. That depends somewhat on how grainfill ends: a hard freeze (28 degrees or less) stops grainfill and starch formation in the kernels quickly, while slow deterioration of the leaf area before grainfill ends allows more sugar to move into the kernels and be converted to starch to add dry weight. Kernels that don’t fill completely tend to have a constricted base where they attach to the cob, and that can mean lower test weight. If frost stops the conversion of sugars to starch, kernels remain unfilled to the tip and also accumulate sugar there, which can slow field drying and can make kernels discolor more easily during heated-air drying.

In the drier areas of Illinois we’re seeing plants even in late-planted fields starting to die in patches, with ear tips dropping and leaves drying up. Such patches are typically where soils hold less water, and in some fields also in low areas where there was damage from standing water early or perhaps more compaction at planting. If other areas in the field are still green, we expect patches where the crop died early to show lower kernel weights and yields. Such fields will likely show considerable variability in kernel moisture at harvest as well.

High harvest moisture and the need to dry the crop will be major themes as we head into harvest this year, especially if October turns out to be cool and wet. Fields that are approaching maturity now are showing good loosening of the husks, which means faster drying in the field. Late-planted corn with several more weeks to go before maturity is likely to dry much more slowly, and this could mean some difficult decisions about whether to let the crop dry longer in the field or to harvest it and pay more for drying. How well the crop is standing may influence this decision. We don’t have any indication that stalks are weaker than usual, and we’ll cross out fingers and hope we don’t get strong winds over the coming weeks that could break even sturdy stalks.

With 80 percent of the 2019 Illinois soybean crop planted after June 1 and some 10% planted after July 1, we set a new record for late planting of soybean in Illinois....

The Most Important Thing To Know About Commodities Is...

First posted in February 2015, this is something that should be internalized by by practitioners and theorists alike.
You must remember this
A kiss is still a kiss
A sigh is still (just) a sigh
The fundamental things apply
As time goes by...

The darn things are mean reverting. It's not rocket surgery.

See, for example:
Société Générale's Dylan Grice-"Commodities: ‘Their Expected Long-Run Real Return is 0%’"
Commodities: "The Case for Human Ingenuity"
Commodity Prices Tend to be Mean-Reverting (cotton)

Or see FT Alphaville:
Time to start treating commodities as currencies?
A few weeks ago, Michael Masters, of the eponymous US investment firm, made the point to FT Alphaville that bad things can happen whenever investors mistake the fruits of production for the means of production, and apply long-standing “long only” strategies (more suited to equity index markets) to assets like commodities.

Earlier this month, Nomura put out a note that observed much the same point.

Specifically, they argued that commodities should be treated like currencies and valued with macro-trading tools that incorporate the concepts of carry, value and momentum.

Just like currencies, they said, commodities are a relative value play that come along with risk premia that is neither constant nor random. What’s more, when factors like momentum, carry and value are applied into commodity models these assets become time-varying and semi-predictable.

The strategy has certainly paid off for Nomura over the last five years, as the following chart shows:
Nomura explains the strategy as follows (our emphasis):
This strategy is based on the view that commodities are more like currencies than equities. Rather than hold long-only positions in liquid commodity futures, the strategy is based on indicators used for macro assets, such as momentum, carry, and slope. The past five years have been turbulent for long-only commodities and many commodity hedge funds. However, MaCS has delivered robust and consistent outperformance over these benchmarks (Fig. 1). The Sharpe ratio of MaCS has been materially higher than that of long-only commodities and commodity hedge funds as shown in Fig. 2. Furthermore, this outperformance has come with lower drawdowns and positive skew.
The best way to understand this is that commodities — just like currencies — represent the value of society’s surplus float of goods, services and resource. These are the reserves kept on standby to ensure liquid and efficient distribution that matches the wants and needs of all economic participants....MORE
You cannot be a permabull in currencies or commodities. That luxury is reserved for equities hucksters.
The history of  U.S. stocks has been a very slight daily average skew to the upside over the history of the S&P/Cowles Commission indices.

That slight skew has added up to a compound average real return of 6.8%, more than enough to make anyone who figured out that "long ain't wrong" very wealthy.

That is, until long is wrong.

More to come.

Capital Markets: "Investors Looking for New Focus"

From Marc to Market:
Overview: Central bank activity is still very much the flavor of the day, but investors are looking for the next focus. The Bank of Japan and the Swiss National Bank stood pat, while Indonesia cut for the third consecutive time and the Hong Kong Monetary Authority and Saudi Arabia quickly followed the Fed. Brazil cut its Selic rate yesterday by 50 bp as widely expected. Norway's Norges Bank hiked rates and signaled a near-term pause. Decisions by the Bank of England and the South African Reserve Bank are awaited. Several of the larger market in Asia Pacific, including Japan, China, South Korea, and Australian markets advanced, while Taiwan, India, and most of the small markets eased. Europe's Dow Jones Stoxx 600 is edging higher after eking out a marginal gain yesterday. US stocks rallied to new session highs after the FOMC rate cut and Powell's press conference but are trading heavier now. Benchmark bond yields eased in Asia Pacific, but are firmer 1-2 bp firmer in Europe. The rise in US 10-year yields to 1.90% last week continue to unwind and are now a couple of basis points lower on the day near 1.77%. The dollar has not seen much follow-through buying after yesterday's post-Fed gains and is lower against all the majors but the Australian and New Zealand dollars. The Swiss franc and the Norwegian krone are the strongest, gaining about 0.4% against the dollar in late morning European turnover. Oil prices are firm within yesterday's ranges.

Asia Pacific
The Bank of Japan left policy on hold but unmistakably left the door ajar to lower rates.
It indicated it was re-examining economic and price developments amid increasing downside risks emanating from abroad. It sees these foreign risks as the latest deterrent of stronger price pressures. The sales tax is to be hiked on October 1, and by the next BOJ meeting on October 31, the impact is likely clearer. A lower depo rate may be complemented with a wider range for the 10-year yield under Yield Curve Control.

Australia's jobs data will keep investors looking for a rate cut. The headline growth of nearly 35k jobs, more than twice the increase forecast, is misleading. Full-time positions fell by 15.5k, meaning that part-time positions rose 50k. The participation rate ticked up to 66.2%, but the new entries did not find work and the unemployment rate rose to 5.3% from 5.2%. The Reserve Bank of Australia meets next on October 1. The market is discounting about an 80% chance of a cut, which would bring the cash rate to 75 bp. In New Zealand, Q2 GDP (0.5% for the quarter and 2.1% year-over-year) was a little better than expected, but still slower sequentially ( 0.6% and 2.5% respectively in Q1). The RBNZ meets next week few expect a rate cut. However, a move in November that would bring the cash rate to 75 bp is mostly discounted.

More reports are playing up the likelihood of an interim agreement between the US and China. As evident by the recent surge in food prices in China, the world's second-largest economy is short grains and animal protein. The deal that is rumored is for China to buy more US agriculture products (pork and soy especially) and the US would postpone further tariffs and ease restrictions on Huawei. Recall that the US has delayed the increase of the 25% tariffs to 30% until mid-October from October 1. There is another round of tariffs are due mid-December. These next rounds or tariffs were expected to hit consumer goods, a delay would do more for the US than Chinese households. Such an interim agreement seems more like not harming oneself more rather than material steps that reflect some underling de-escalation. Separately, some market participants were disappointed that the PBOC did not cut its reverse repo rate earlier today, but this keeps the focus on the prime lending rate that will be announced tomorrow. If this rate does not ease, then the disappointment would be reasonable....

Wednesday, September 18, 2019

"Bloom Energy stock tanks as short seller calls for its demise" (BE)

Bloom was last seen in April 19's  "Checking in with The Fly—'New Plan of Attack: Buy All the IPOs'":
We usually visit Le Fly during market breaks to observe unmedicated bipolar disturbance in its natural habitat, markets.
Today however we wanted to see how he was reacting to the eerie calm we've seen this week.
And after the jumps an old nemesis, Bloom Energy.....
....And then the one that got my attention: 
Fly Buy: $BE

Hey, that's Bloom Energy! We know Bloom Energy. We don't care for Bloom Energy.
The company came public last July at $15.00, popped 30% on the first day and went higher from there:  
And then collapsed.
However, we're no (anti) Bloomies come lately, no sirree. Our dislike goes back years. 
Here's a post from 2016:
More Silicon Valley Bullshit: Bloom Energy May Be Worth Less Than The VC Cash It Has Raised

And a few more:
Anyone keeping tabs would have been tipped as early as 2008 and definitely by the time we posted:
May, 2010
The Company you Keep: "Bloom, Fisker and Serious Materials Raising Cash from Advanced Equities"
November 2012 
Phi Scamma Jamma: Late Stage VC Investor Advanced Equities Shutting Down (Bloom; Fisker etc.)
Bloom Energy on 60 Minutes: "Can You Believe the Hype" (BLDP; FCEL; PLUG; GE; SI)
Is the Bloom Energy Payback Period 15 Years?
Fortune Exclusive: Bloom Energy's Earnings
Things have changed since Kleiner Perkins Orchestrated the hype machine back in February 2010....
And many more, use the 'search blog' box if interested.