Atlanta Fed: Work From Home Is Here To Stay

From the Federal Reserve Bank of Atlanta's MacroBlog, February 24: 

WFH Is Onstage and Here to Stay

Chances are you recognize the relatively new acronym WFH as "working from home." In less than a year, WFH has become a ubiquitous, inescapable facet of life for many people, so much so that newswires now ask which cities are best for WFH, and online job boards compile lists of companies that allow remote work on a full-time, permanent basis.

Many people are debating the pros and cons of WFH. For employees, gone are the long commutes and cramped cubicles, but other work-related stresses have emerged. As the pandemic drags on, some workers experience feelings of loneliness and isolation, health problems, and challenges related to work-life balance.

Back in May 2020, the Atlanta Fed's Survey of Business Uncertainty (SBU) elicited firms' views on WFH and found that, on average, firms anticipated that WFH would triple to 16.6 percent of paid workdays after the pandemic ends, up from 5.5 percent before it struck. Eight months later, we were curious to see whether and how plans had changed. So, in the January 2021 SBU, we asked two special questions very similar to ones we posed last May. Specifically, to gauge the extent of WFH, we asked, "Currently, how often do your full-time employees work from home?" To assess the future extent of WFH, we asked, "How often do you anticipate that your full-time employees will work from home after the coronavirus pandemic ends?" We asked firms to sort the fraction of their full-time workforce into six categories, ranging from five full days WFH per week to rarely or never.

It turns out that current plans are similar to those in May, with one important exception: firms increasingly favor a hybrid model for the postpandemic economy, walking back plans for the share of staff that will work exclusively from home. Chart 1 summarizes the responses to WFH questions posed in January's SBU and compares them to our May results. We also compare the results to statistics computed from the American Time Use Survey, conducted by the U.S. Bureau of Labor Statistics in 2017–18, which provides a useful benchmark. Aside from the striking similarity in pre-COVID levels of WFH across the surveys, several findings are worthy of note. 

First, according to the January SBU, more than 35 percent of employees currently WFH at least one day per week. This estimate is plausible in light of work by Jonathan Dingel and Brent Neiman of the University of Chicago's Booth School of Business, which indicates that nearly 40 percent of U.S. jobs can be done at home . Moreover, the current WFH configuration tilts toward multiple days at home. All told, 25 percent of paid workdays are currently performed at home.

Second, firms report surprisingly similar figures in May 2020 and January 2021 for the share of employees whom they expect to work from home at least one day per week after the pandemic. Given the unprecedented nature of the pandemic recession, eight months is a long time over which to hold such stable expectations, suggesting that firms are serious about their intentions.

However, expectations have adjusted in one key respect: last May, firms anticipated that 10 percent of the postpandemic workforce would be fully remote, as compared to just 6 percent as of January. While still double the pre-COVID share, the revised expectation suggests many firms are coalescing around hybrid arrangements, whereby employees split the workweek between home and employer premises....

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Also at MacroBlog: 

An In-Depth Look at Mortgage Forbearance Data

"9 Ways Franklin D. Roosevelt’s New Deal Purposely Excluded Black People"

Some years ago, as part of a wider investigation of expected returns, I was going through the literature on pension and retirement finance.  

Economist Zvi Bodie was one of the big dogs of the field and was secure enough in his position—comfy endowed chair at Boston University, bestselling textbook, editorial board of the Journal of Pension Economics and Finance, consultant to the World Bank, the love of his students etc.—secure enough to ask the "Emperor has no clothes" question:

"If the risk of negative returns decreases over time, why does the cost of long term puts increase?"

The second most profound statement I've ever heard on pension finance was from a black truck driver I met in a Reno truck stop as I was making the long drive down from Lake Tahoe to the Silver State Classic road race in Ely Nevada:

"Did you know that they set the Social Security retirement age for black men higher than the average life expectancy?"

No I did not know that. And it's a fact. In 1935 when the Social Security Act was passed the average life expectancy for black males was 51.1 years, vs. 61.0 for white males. In fact average life expectancy for black males would not reach 65 years until 1995 when it was 65.2 years.

And the majority of black women were initially excluded altogether because they worked as domestic servants, a class of workers that was not covered, another class being farmers.

This led to  Charles Houston, an NAACP official commenting on the New Deal programs, calling them:

"a sieve with holes just big enough for the majority of Negroes to fall through."

Thinking about it, the truck driver, his name was George, may have had the more profound observation.

Here's the headline story from Atlanta Black Star:

February 4, 2015:
Until the New Deal, Blacks had shown their traditional loyalty to the party of Abraham Lincoln by voting overwhelmingly Republican. By the end of President Franklin D. Roosevelt’s first administration, however, one of the most dramatic voter shifts in American history had occurred. In 1936, some 75 percent of Black voters supported the Democrats. But instead of using New Deal programs to promote civil rights, the administration consistently succumbed to discrimination — in order to pass major New Deal legislation, Roosevelt needed the support of Southern Democrats. In the end, while Franklin and Eleanor Roosevelt became beloved figures to millions of American Blacks, the New Deal did little to advance the cause of racial equality in America.

Authorizing Lower Pay Scales for Blacks
The National Recovery Administration, intended to reduce “destructive competition” and to help workers by setting minimum wages and maximum weekly hours, not only offered whites the first crack at jobs, but authorized separate and lower pay scales for Blacks, according to the site Digital History.

Keeping Blacks Out of White Neighborhoods
The Federal Housing Administration was created by Congress in 1934 to insure loans for construction and repairs of homes. White middle-class families could buy suburban homes with little or no down payments and extended 30-year amortization schedules and their monthly charges were often less than rents the families had previously paid to housing authorities or private landlords. But the FHA had an explicit policy of not insuring suburban mortgages for African-Americans, according to writer Richard Rothstein on the The American Prospect website. In suburban New York’s Nassau County, just east of Queens, Levittown was built in 1947 containing 17,500 mass-produced two-bedroom houses, requiring nothing down and monthly payments of about only $60. At the FHA’s insistence, developer William Levitt did not sell homes to Blacks, and each deed included a prohibition of such resales in the future.

Segregated Camps in the Civilian Conservation Corps
The CCC was created to employ young single men from ages 18 to 25 on outdoor conservation projects. Enrollees had to be physically fit and come from families that were on relief and to whom they were willing to send most of their pay. During its nine-year existence, the CCC distributed more than $2.4 billion in federal funds to employ more than 2.5 million jobless young men (up to 519,000 were enrolled at any one time) who worked in about 3,000 camps. According to the Texas Almanac, the CCC was of very limited assistance to Black families because of local bigotry and national CCC leaders’ political concerns. Though CCC rules forbade discrimination based on race, color or creed, the local relief boards often refused to enroll Blacks, particularly in the South. When they were enrolled, Blacks were almost always placed in segregated camps, not only in the South, but all over the country.

Social Security Excluded Most Blacks
The Social Security Act of 1935, which provided a safety net for millions of workers by guaranteeing them an income after retirement, excluded from coverage about half the workers in the American economy. Among the excluded groups were agricultural and domestic workers — job categories traditionally filled by Black workers.

Killing the Crops
The Agricultural Adjustment Administration reduced agricultural production by paying farmers subsidies not to plant on part of their land and to kill off excess livestock, which in turn reduced crop surplus and effectively raised the value of crops. But since 40 percent of all Black workers made their living as sharecroppers and tenant farmers, the (AAA) acreage reduction hit Blacks hard, according to Digital History. White landlords could make more money by leaving land untilled than by putting land back into production. As a result, the AAA’s policies forced more than 100,000 Blacks off the land in 1933 and 1934. The act initially required landowners to pay the tenant farmers and sharecroppers on their land a portion of the money, but after Southern Democrats in Congress complained, the secretary of agriculture surrendered and reinterpreted the act to no longer send checks to sharecroppers directly....

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Shipping: "US containerized imports from Asia show no slowdown as container squeeze continues"

 Proof, as if we needed it, that spending on imports is already running flat out,

Further to the point of "What If The 'Pent Up Demand' Isn't Real?", there doesn't seem to be much "pent-up" about it, people in the U.S. are buying a lot of stuff and it might just be that the next round of stimulus ends up parked at the Fed as bank excess reserves earning that risk-free IOER of 1/10% or the stimulus ends up in some SPAC or other speculation.

From IHS Markit:

London (18 February 2021) – US containerized imports from Asia are up 14 percent in January 2021 compared to a year ago, indicating no slowdown in the volume surge, the container squeeze and unprecedented shipping rates, according to new IHS Markit data.

Containerized imports from Asia, a key barometer of retailers’ expectations for US consumer demand, hit 1.59 million twenty-foot equivalent units (TEU) in January 2021, only a slight dip from 1.6 million in TEU imports in December 2020. Reflecting the shift towards physical goods during the pandemic in the six months to January 2021, US containerized imports from Asia are up 19 percent, at 9.7 million TEU compared to the same period a year ago.

“The most recent Asian import reading, retailers’ forward looking expectations and discussions with container lines and transportation intermediaries all suggest that the unprecedented import pressures on the US-to-Asia containerized supply chain aren’t letting up anytime soon.” – Mark Szakonyi, Executive Editor of The Journal of Commerce and JOC.com

The unrelenting volume pressures, sparking historic levels of US port congestion at gateways like Los Angeles-Long Beach, resulting in shipment delays and sending shipping rates rocketing, is set to continue well into 2021, as the industry gathers for TPM21the world’s largest container shipping conference. How to effectively respond to challenges, such as an historic backup of vessels at anchor outside major container gateways such as Los Angeles-Long Beach, will be major topic of discussions at the virtual TPM21 running from 25 February to 3 March.... 

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Vietnam Builds up Defences Against China in Spratly Islands

Although we've mentioned that China did not achieve their goal of ejecting Vietnam from Cambodia and restoring the génocidaire Kmer Rouge with their attack on Vietnam in 1979, five years earlier the Chinese did defeat the Vietnamese in the Battle of the Paracel Islands which established de facto Chinese control over that group of islands.

From the South China Morning Post:

Vietnam has been building up its defences in the Spratly Islands over the past two years to “ensure it can strike Chinese facilities” in the disputed archipelago, a report by a Washington-based think tank said.

Emplacements for air and coastal defence systems have been installed on most of Vietnam’s bases in the Spratlys, with the most significant upgrades at West Reef and Sin Cowe Island, according to the report released on Friday by the Centre for Strategic and International Studies’ Asia Maritime Transparency Initiative.

It said the recent building work underscored Vietnam’s efforts to make its facilities in the area more resilient against China, and to make sure Chinese bases were within striking range.

Both countries lay claim to the Spratlys in the South China Sea – claims that overlap with those of the Philippines, Malaysia, Brunei and Taiwan – and occupy outposts there. Beijing claims almost all of the South China Sea and tensions have escalated over its increasing assertiveness in the region, which has become a flashpoint with the United States....

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Both groups of islands are within China's ridiculous "Nine-Dash-Line" claim (here with many more dashes):

—the Philippines Star

If interested see also: 

"Vietnam’s omission from Chinese foreign minister’s Southeast Asia tour tells a story, observers say "

"Report: Chinese Vessel Rams Vietnamese Fishing Boat in S. China Sea"
I'm tellin' ya, China wants their military to get some battle experience before they do anything with Taiwan and Vietnam looks like a target.

Vietnam Rising: "US-China trade war pushing Vietnam’s manufacturing industry to capacity"

A major piece on the country The Diplomat says will be the testing ground for China's military, prior to an invasion of Taiwan. See last month's "China Will Attack Vietnam".

Throw in Vietnam's undeveloped rare earth resource base, tied with Brazil for #2 in the world (combined they match China) and the risk it poses to China's lock on prices and Vietnam has suddenly gotten very interesting.
Oh, and China is still smarting from being unable to achieve their goals during the 1979 invasion of Vietnam....

"Philippines President Duterte Threatened Beijing with Military Action":

When the Chinese stopped laughing they reflected and gave thanks it wasn't Vietnam* making the threat....

***

*...The Vietnam line is in reference to the fact that General Võ Nguyên Giáp, possibly the greatest general of the 20th century, defeated in turn, the French empire, the U.S.A. Cambodia and China in 1954, 1975, 1978 and 1979 respectively.

That last conflict was the result of China's invasion of Vietnam in an attempt to force Vietnam out of Cambodia which Vietnam had invaded in 1978, putting Pol Pot and the Kmer Rouge génocidaires out of business. It didn't work, Vietnam stayed in Cambodia until 1989.
The General died in 2013 age 102.

He outlived all his adversaries.

"Unorganized Crime: Elder Trackers and Cocaine Cornflakes"

From the Organized Crime and Corruption Reporting Project:

Celebrity cellphone hacking, international human hair-smugglers, counterfeit Shiraz and “lucky charm” necklaces used to monitor the aging victims of a lottery scam — our Daily News team rings in the weekend with some of the strangest criminal cases from the past few days.

Most people might prefer to accompany their breakfast with a cup of coffee, but Customs and Border Patrol agents in Ohio discovered this week the makings of an altogether different, far more stimulating version of the most important meal of the day.

Officials in Cincinnati seized a package containing a shipment of cornflakes frosted not with sugar, but 44 pounds of high-quality Peruvian cocaine. The consignment was reportedly en route to a private residence in Hong Kong when it was intercepted by the authorities.

Just a few days later, police in the United Kingdom seized more than two tons of the drug — one of the country’s largest ever single busts, valued at around £184 million (US$255 million) —concealed in an incoming shipment of bananas from Colombia.

Authorities later apprehended ten men allegedly connected with the scheme at two separate industrial estates in Tottenham, North London.

Also in the United Kingdom, authorities in both England and Scotland have arrested eight men accused of hacking into the phones of international sports stars, musicians and social media influencers.

The practice of “sim-swapping,” which allows hackers to take over another person’s phone by deactivating the victims sim card and transferring the number to another device, is reportedly often facilitated by “corrupt insiders” at mobile phone service providers.

This often gives scammers access to online banking, as well as other apps containing sensitive information that can be traded for profit.

Police declined to identify which celebrities had been targeted by the conspiracy, which the accused allegedly coordinated with the help of actors from several other European countries, although press have reported that the estimated damages may have exceeded $100 million.

Meanwhile, Chinese gangs are thought to have flooded convenience stores across the U.K. with counterfeit wine, specifically fake bottles of the Australian Yellow Tail brand....

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"Mining fuels Greenland dreams of independence – and political crisis"

 From Agence France-Presse and Euractiv, February 16:

The vandalized statue of Danish-Norwegian colonizer Hans Egede stands 

in Nuuk, Greenland, 21 June 2020. It is believed the vandalization 

of the statue is related to the Black Lives Matter moment.
[EPA-EFE/Christian Klindt Soelbeck]

A rare earth mining project in Greenland has reignited dreams of the autonomous Arctic territory’s full independence from Denmark one day, but environmentalists fear large-scale mining could harm the remote island’s pristine landscape.

The planned project has also wreaked political havoc. On Tuesday, Greenland’s parliament voted in favour of holding new elections at an as-yet undecided date in the spring, after a junior party quit the coalition government over disagreement about the mine.

Greenland, which obtained ownership of its mineral reserves when it gained self-rule in 2009, has long harboured hopes that the riches believed to be buried in the ground will help it cut its financial umbilical cord to Copenhagen one day.

Nuuk relies on annual Danish subsidies of around €526 million, or about a third of its national budget.

The proposed mine in Kvanefjeld, or Kuannersuit in Greenlandic, on the island’s southern edge could yield a massive windfall that would supplement its main industry, fishing....

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Probably related:

October 2020
"As the Arctic's attractions mount, Greenland is a security black hole"
December 2019
Denmark Puts Mineral-Rich Greenland Top of its National Security Agenda, Ahead of Terrorism and Cybercrime.
August 2019
"President Trump Eyes a New Real-Estate Purchase: Greenland" 

June 2019
Chinese Investment In Greenland and Iceland 

May 2019
"Commodity Traders Could Be a Key Beneficiary of Climate Change"
Greenland's sand barons as well.*

April 2019
"China’s Emerging Strategies in the Arctic"
September 2018
Greenland Passes On the Opportunity To Be Part Of China's One Belt, One Road

What If The 'Pent Up Demand' Isn't Real?

From Wolf Street, February 26:

Just Don’t Expect “Pent-up Demand” from Consumers. Here’s Why  

Free money whipped consumers into a rollicking eight-month splurge on goods. There’s nothing “pent up.” And services are not a shoo-in for “pent-up demand.”

Give Americans some free money, and tell them it’s their duty to buy some stuff with it, preferable stuff imported from other countries, and they’ll buy some stuff with it, big and expensive stuff too, and they did buy a lot of stuff with it, more than they’d ever bought before, and their homes are full of stuff they bought in this eight-month long record rollicking free-money spending spree.

And it happened again in January: Free money from the stimulus payments kicked in and consumers further boosted their spending on goods from already high levels.

In January, spending on durable goods spiked by a stunning 18.6% from a year ago, according the Bureau of Economic Analysis today, to a seasonally adjusted annual rate of $1.86 trillion. The spending spree has been going on since June:

And spending on nondurable goods – which includes food and gasoline whose prices have jumped recently – rose by 6.1% from a year ago to a record of $3.21 trillion (annual rate):

This is an entirely different scenario than what consumers went through in any prior crisis. During the Financial Crisis, consumers suddenly cut their purchases of durable goods and nondurable goods, which you can see in the charts above.

Spending on durable goods plunged by 19% from the peak in October 2007 to the trough in April 2009. This plunge in spending did create some pent-up demand during the recovery.

Nondurable goods during the Financial Crisis dropped by 10% from the peak in July 2008 to the trough in March 2009. Some of this drop in spending had to do with the collapse in the price of gasoline, and also the reduced driving because people were out of work. Prices of food and other items too fell for a few months during this time, which, though welcome by consumers, caused a dip in the dollars spent on these items. This kind of drop in spending on nondurable goods creates only moderate pent-up demand, if any.

But during the Pandemic, the opposite happened.

People got lots of free money from the stimulus and extra unemployment programs. The most recent $600 stimulus payments started showing up in consumers’ bank accounts at the end of December, and massively arrived in January....

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"The Richest Black Girl In America"

From Truly Adventurous via Medium: 

When an 11-year-old Black girl in Jim Crow America discovers a seemingly worthless plot of land she has inherited is worth millions, everything in her life changes — and the walls begin to close in. The untold story brought to life from thousands of pages of archival documents.

Sarah Rector, 11, stood up and wiped her hands on her sweat-soaked shift, a simple loose dress. She had to squint to block out the radiating sun. It was another hot August in rural Oklahoma — hot enough for her barefoot soles to grow numb from the scorching dirt. She wasn’t much taller than the cotton plants surrounding her.

Sarah, her siblings, dad Joe, and mom Rose would repeat this cycle day in and day out in the summer of 1913 until a sea of bulbous whiteness would stretch out before them. This was the Rector family’s life, and there was little exceptional about it for this time and place. They were Black farmers in the heart of Jim Crow America. They were relegated to the poorest parts of town, to the most menial lifestyle, and to degrading reminders of the long shadow of slavery. There were two mortgages on their property, putting it at risk of foreclosure. For a young girl like Sarah, her realistic prospects in life might be limited to backbreaking domestic work or agricultural labor. If she were lucky, she could become a teacher in a segregated and underfunded local school. Beyond these, most other professions were simply off-limits to poor and working-class Black women.

Like many other Black families from Oklahoma, the Rectors’ ancestors had been enslaved by the Creek tribe. That meant Sarah and her eldest siblings were eligible to be added to the Creek Nation’s Freedmen Roll, which under federal law entitled them to receive free land allotments.

For the most part, the program was a misplaced band-aid on centuries of mistreatment. Sarah’s allotment was almost 100 miles northwest of their town, too far away from the family’s farm to be practical. And that “free” land was hardly free. The properties given to Black residents tended to have uncultivable soil and a hefty annual tax bill. Sarah’s plot was called “a rocky piece of wasteland” by one observer. Joe Rector, a hard worker who protected the best interests of his family, wanted nothing to do with his children’s allotments. He petitioned the Muskogee County Court to authorize a sale of a few hundred dollars, but no buyer could be found. However hard Joe tried, it seemed that he was stuck with them.

Joe decided to lease Sarah’s land to an oil company. The lease offset some of the tax payments, and came with a royalty if a splash or two of oil happened to be found. The allotment might change from a dreadful burden to a tolerable inconvenience.

On this particular day, August 29, 1913, Sarah continued the demanding manual labor that helped support her family. She was too far away from her plot to see one of the countless sets of drilling equipment on the horizon twisting into the ground. She could not witness the oil start to bubble up. And then more. And more. If Sarah had found Aladdin’s lamp, as one newspaper later noted, she could hardly have commanded the genie to conjure a wilder scenario than this.

It was a gusher....

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"An 1887 painting of Montmartre in Paris by Vincent Van Gogh is appearing on the market for the first time"

My first thought was "That's not Montmartre".

Then, "Oh" Things change.

Via The Art Newspaper's Twitter feed:

An 1887 painting of Montmartre in Paris by Vincent Van Gogh is appearing on the market for the first time https://t.co/aZfLy9x9Ow

— The Art Newspaper (@TheArtNewspaper) February 24, 2021

If you find yourself spending more of your precious life's hours on the internet than you did in the before-time I highly recommend visiting Christie's and Sotheby's. 

Not so much for the art, which seems very nice but because the ads that follow you around the web will be a cut above those of other product purveyors.

Maybe Bonham's too, but in terms of karma, their San Francisco outpost installed sprinklers to soak the homeless on the sidewalk. 

Although there's maybe a soak the rich joke in there if you think about it.

 

Going Green: "The battle over raw materials will decide who rules the world"

Unless something changes very dramatically, the green movement will be an immense wealth transfer to China.

The government via "Capitalism with a Chinese face" has locked up the market for cobalt and as that element becomes less necessary for batteries the Chinese domination of the lithium supply chain will become more apparent.

The Chinese approach to rare earths is a slightly different example: twice in the last forty years they have flooded the market to bankrupt any other producer who tries to challenge the dominance of the Mongolian mines while at the same time accepting a level of pollution in the processing chain that would be unacceptable in the West, a very important cost advantage.

In end products the Chinese boast eight of the ten largest solar cell manufacturers and though I haven't done the comparison recently, back when the subsidies were really flowing the Chinese wind turbine manufacturers equaled the combined output of the Europeans:  Siemens Gamesa, Vestas, Nordex and Enercon.

Regarding that Capitalism with a Chinese face schtick, in 2018 we had the dénouement of a story that we first posted on in 2011, "Chinese Company Sinovel Wind Group Convicted of Theft of Trade Secrets" (AMSC)
AMSC got so screwed by the Chinese the damage may be irreparable....

"Clean Energy, China-Style: Sex, Cash and Stolen Technology" (AMSC)

For what it's worth Sinovel is now the largest wind turbine manufacturer in China and I think, #2 in the world.

So, no matter how this plays the money is going to flow to China.

And they will use it to buy Western politicians, and academics, and businesspeople.

From UnHerd, February 17:

The age of empire is back

Later this year, a Royal Navy carrier group centred on the fleet’s new flagship, HMS Queen Elizabeth, will leave Portsmouth for the Far East, on a mission to fly the flag in Britain’s new Indo-Pacific area of strategic focus and, we are told, to “confront” China. With its complement of new British-made F-35 jets, the Queen Elizabeth will be Britain’s most significant asset for projecting power overseas. It is darkly ironic then that, like the global economy more generally, the F-35 itself is dependent on Chinese manufacturing to function. 

Chiefly, the F-35 relies on rare earth elements, or REEs, to operate. Its jet engines are coated with yttrium-enhanced ceramic to achieve supersonic speeds, and it requires powerful magnets made from neodymium for its weapons systems to function. Each F-35 jet contains 417kg of rare earth elements, of which between 90% and 95% of the world’s supply is sourced from China. Between 60% and 75% of the world’s supply of finished rare earth magnets is also produced in Chinese factories. 

So fragile is this supply chain, and so dependent on continued free trade with China, that the Pentagon has begun to stockpile a six-month supply of rare earth magnets in case of an emergency, with experts urging the US to invest in domestic manufacturing capacity “so if we go to war with China, we’re not calling them up asking for supply”. America’s new “National Defense Authorization Act” now calls for urgent action from the Pentagon to ensure that the majority of its REEs are sourced from countries other than China within five years.

Rare earth elements are not especially rare — they are more common than gold, for example — but they are present in the earth in microscopic concentrations, making it laborious and costly to extract and refine them. It takes between ten and fifteen years to establish the infrastructure to mine and process them: left to the logic of the free market, there is no case to do so, as it is simply cheaper to import REEs from China. The Chinese government, thinking in strategic rather than narrowly economic terms, has ploughed huge sums into developing the country’s domestic REE production infrastructure, and in doing so has established a system of Western dependency. 

Surveying the global scene just a few years ago, any sensible observer would have noted that there were three potential stumbling blocks to the continued smooth functioning of the globalised economy: a global pandemic, the eruption of great power competition edging into conflict, and catastrophic climate change. The Covid crisis, as a worldwide but not especially lethal pandemic, has raised awareness of the fragility of global supply chains and the strategic necessity for domestic manufacturing capacity in multiple sectors. Yet it is the intersection of the two other risks, climate change and great power conflict, that will shape the world of our near future.

With the great industrialised power blocs now redirecting their economies towards the “green transition”, with some form of Green New Deal now the dominant medium-term economic model for Britain, the United States, China and the EU, the supply of rare earth elements and other minerals strategically vital to the new economy will become a new arena for global competition. Just as the wars of the 20th century saw wrangling for control of oil resources, the conflicts of the 21st century will seek to establish control of the elements necessary for the new technologies to function.

Green politics seems inextricably tied, in the popular imagination, with a form of utopian optimism derived from the unworldly idealism of the parties who promote it. Yet perhaps we are looking at the various Green New Deal proposals the wrong way: there is already a great deal of scepticism about their capacity to meaningfully arrest catastrophic climate change. But if we reinterpret the Green New Deal as primarily a means to restart a sluggish global economy after decades of stagnation, a gigantic form of Keynesian stimulus analogous to the New Deal after which it is named, or to the Trente Glorieuses during which a shattered post-war Europe rebuilt itself, its appeal to global policymakers compared to the alternatives of either degrowth or the status quo makes sense....

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Gentlemen's Grooming: "Unearthed figurine suggests ancient Britons favoured mullets"

From the Guardian:

Archaeologists say figure found in National Trust dig could represent 1st-century man or Celtic deity

A tiny figurine found by archaeologists on the proposed site of a car park may provide a unique insight into the popular hairstyles among the native men of Roman-era Britain, with moustaches and mullets – with a neat back and sides – being the cut of the day.

The 5cm-high copper alloy figure was found in 2018 during excavation work on the National Trust’s Wimpole Estate in Cambridgeshire, and experts say the discovery either gives us a rare glimpse into ordinary Britons’ appearance or their imagined gods.

Shannon Hogan, the National Trust archaeologist for the east of England, told the Guardian the figure was originally thought to be a Celtic deity but now experts believe it could “very well reflect the face of your average man”....

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And twenty centuries later, though he had to travel to Australia:

British man wins world’s best mullet at ‘Mulletfest’ 

As the mulletheads say, "Business up front, party in the back." 

Silver: Breakfast With Bunker

From the New York Sun. February 1, 2021:

Reddit might be “coming for silver,” Reuters reports this morning, but the wire reckons a short squeeze is “unlikely” — never mind Thursday’s headline on Reddit that blared silver could be the “biggest short squeeze in the world.” We’re not here to make any predictions. The news, though, certainly takes us back — to the early 1980s, when we found ourselves at breakfast with Nelson Bunker Hunt.

Hunt was the Texas billionaire who sought to corner silver in the 1970s. We were then just back from overseas and starting as an editorial writer of the Wall Street Journal. Whenever in a new city, we had a practice of inviting someone newsworthy for a meal. In Dallas, we extended an invitation to the oil baron. We didn’t — and don’t — trade or own silver. We were interested in the metal as the original constitutional money.

Our breakfast, the two of us, turned out to be a memorable meal. It took place at a hotel called the Mansion on Turtle Creek, which was owned by Hunt’s sister Caroline Rose Hunt. It laid a worthy repast. We don’t have a clear recollection of the exact date of the meal. We do have clear recollection that every time we asked Hunt about his journalistic critics, he growled: “They’re just shilling for the shorts.”

We felt a pang of sympathy for him, though that’s not uncommon with us. We view the corner that Hunt and his brothers were attempting on silver in the context of what had been done by another Texan 15 years earlier. That was when President Lyndon Baines Johnson signed the Coinage Act of 1965, which, in the first fundamental change in our coinage since 1792, stripped most of our coins of their silver.

Before signing the law in the Rose Garden, LBJ signaled our descent into fiat money. “The new dimes and the new quarters will contain no silver,” he confessed. “They will be composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper. They will show a copper edge. Our new half dollar will continue our silver tradition. Eighty percent silver on the outside and 19 percent silver inside.”

Huh? A quarter of a dollar would have no silver but a half-dollar coin would have some silver? So how would one compute a dollar’s value in the specie in which Congress originally defined our unit of account? “If anybody has any idea of hoarding our silver coins, let me say this,” LBJ warned, “Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin.”

It was a vain boast. When LBJ signed the 1965 act, silver was at $1.29 an ounce, meaning the dollar was valued 77 hundredths of an ounce of silver — roughly what it was in 1792...

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The writer goes on to say "Soon, the commodities exchange tightened its margin rules." but, as our readers know, that is not quite correct. What the exchanges did was "go liquidation only" a situation where accounts could not add to positions, the only transactions permitted being the closing of an existing position.

But I like the story about breakfast.

At 5:38 pm PST on Wednesday, January 27, 2021 we warned:

A Heads-Up To The Gamestop, AMC etc. Crowd: They Are Going to Change The Rules On You

Market structure is the most important and least understood factor in the entire short-squeeze game.

And if you don't understand every dependent clause and every comma versus period in the rules and regs you are in for a shock.

That's what the homely little story in "Discord has shut down the /r/WallStreetBets server (GME)" is all about....

At 7:21 am PST January 28 our headline was:

Interactive Brokers Goes "Liquidation Only" On AMC, BB, EXPR, GME, and KOSS Options

For Sale: Private Island, Bahamas, Upper Bracket

 From American Luxury:

Tim McGraw and Faith Hill List Private Island and Compound in the Bahamas for $35M

Tim McGraw and Faith Hill listed their private island in the Bahamas recently. The couple is asking $35 million for the 20-acre escape known as Goat Cay, which is part of the Exumas archipelago.

The trade wind-sculpted island features palm tree-dotted beaches and a small inlet for swimming. The island’s main residence is nestled in a small palm forest, and positioned on a small hilltop overlooking two white sand beaches. The home’s architecture borrows from Mediterranean styles, incorporating an observation tower into the build....

....MUCH MORE

"Famed Climatologist Charlie Munger" (DJCO; BRK)

The recent hubbub around Mr. Munger's thoughts* on investing, shared at the Daily Journal Corporation where he serves as Chairman brought to mind this story by Bill and Cole Smead of Smead Capital Management, writing at Advisor Perspectives, December 23, 2020:

....This reminds us of the summit held in 1898 by the city managers of London, New York and Paris. The biggest environmental problem was horse manure expelled from the animals. Here is how the writer, Eric Morris, explained this in his piece, From Horse Power to Horsepower:

In 1 8 9 8 , D E L E G A T E S F R O M A C R O S S T H E G L O B E gathered in New York City for the world’s first international urban planning conference. One topic dominated the discussion. It was not housing, land use, economic development, or infrastructure. The delegates were driven to desperation by horse manure. The horse was no newcomer on the urban scene. But by the late 1800s, the problem of horse pollution had reached unprecedented heights. The growth in the horse population was outstripping even the rapid rise in the number of human city dwellers. American cities were drowning in horse manure as well as other unpleasant byproducts of the era’s predominant mode of transportation: urine, flies, congestion, carcasses, and traffic accidents. Widespread cruelty to horses was a form of environmental degradation as well. The situation seemed dire. In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. One New York prognosticator of the 1890s concluded that by 1930 the horse droppings would rise to Manhattan’s third-story windows. A public health and sanitation crisis of almost unimaginable dimensions loomed.

The technology which solved that great environmental problem in the early 1900s is the one which created today’s environmental problem, the internal combustion engine. Munger would argue that something in new technology will come along by virtue of a profit seeking capitalist (think Henry Ford or Elon Musk) and solve the problem. Charlie said the academics “think more and more about less and less”, and must realize that electricity is created from something and most of the ways it was created in the past have been rejected (hydro, nuclear, coal)...

One of the most profound observations made by historian Frederick Lewis Allen in Only Yesterday was the change in the sound of cities, specifically that we no longer hear horses clip-clopping along.

*e.g.  Reuters, February 24:

Charlie Munger discusses many issues at Daily Journal annual meeting

Back in 2009 Charlie shared his thoughts on Cap-and-trade as a policy approach to controlling carbon dioxide emissions:

Berkshire Hathaway's Munger on Cap-and-Trade ("Monstrously Stupid Right Now...Almost Demented"); Warren and Charlie on Wind and Solar (BRK.A) 

And I'd have to agree but for reasons that differ from Charlie's. The most efficient policy in terms of transparency and equitable distribution of the pain of higher prices is Tax-and-100% rebate, with no siphoning off of money to traders or politicians.

But of course there is no one in Brussels or Washington lobbying for such a thing.

The Economist: "When civilisation collapses, will you be ready?"

This is a repost from 2014 but evergreen.

The Economist: "When civilisation collapses, will you be ready?"

"In a post-apocalyptic world, which task would you assign the highest priority? Locating a sustainable food source, re-establishing a functioning government, procreating, or preserving the knowledge of mankind?" *

Pearson's flagship magazine appears to be listening to Gloria Gaynor.
From The Economist:
Preparing for the apocalypse

I will survive
AFTER “the Crunch”—the total collapse of the global economy—trade seized up, the power grid shut down and paper money became worthless. Riots gutted city centres. Looters picked them clean. Americans went back to growing their own food and bartering with their neighbours. Those who had failed to stockpile beans and bullets were soon hungry and defenceless. The “Great Die-Off” hit Florida especially hard. Millions of suntanned retirees died of starvation or chronic diseases after the government stopped paying for their pensions and pills.

Jake and Janelle Altmiller survived. They were practical people, who knew how to clean a rifle and install solar panels on the roof. But even for them, life was stressful. Janelle’s sister Rhiannon was working as a missionary in the Philippines, which was being invaded by Islamist radicals from Indonesia. Neither telephones nor the internet worked properly any more. How could Janelle find out whether her sister was alive? And how would any of them survive in a world that was falling apart?

At first I was afraid

Readers have always enjoyed scaring themselves with post-apocalyptic yarns, from Mary Shelley’s “The Last Man” to Cormac McCarthy’s “The Road”. What makes “Expatriates: a Novel of the Coming Global Collapse” different is that its author is not just telling a story. James Wesley, Rawles (he insists on the comma, for some reason) thinks modern society really is likely to collapse. He wants readers to take his novels seriously, and to be prepared.

No one knows how many survivalists (also known as “preppers”) there are in America. Mr Rawles claims that his “SurvivalBlog”, which offers practical tips for remaining alive after The End Of The World As We Know It (TEOTWAWKI) has 320,000 readers a week. The American Preppers Network, an umbrella group for those who see storm clouds everywhere, claims 52,000 members; it is anyone’s guess what fraction of the total that represents. The movement is decentralised and full of people who value their privacy.

“You don’t want to be known as the guy who has 3-4 years’ supply of food in the basement. Because one day you could see it confiscated by the government or stolen by neighbours like hungry locusts,” says Mr Rawles. “In the event of a disaster, I don’t want to wake up and see my yard full of teepees and yurts.”
If your neighbour is a prepper, therefore, you may not know it. Yet the stereotypical image of a survivalist as a loner in combat fatigues who hunkers down in a remote bunker is plainly inaccurate. Some do indeed live in rural cabins, but most have jobs, which means many live in cities or suburbs. Survivalists—a group that is at once characteristically American yet marginal and unloved—are much more diverse than you might imagine.

I was petrified

Jason Charles, an affable African-American fireman in New York, leads a group of avid preppers who meet at weekends to practise survival skills and debate impending threats: as well as being more varied, survivalists are much more sociable than they are thought to be. Mr Charles started reading SurvivalBlog several years ago and quickly realised that “these guys don’t live in New York.” For example, Mr Rawles has a ranch; Mr Charles lives in a flat in Harlem. That rules out self-sufficiency: where would he plant corn or raise pigs?

A few weeks before the first Ebola victim in America died, Mr Charles and two dozen others met in a room above a church to discuss how to prepare for an epidemic. Mr Charles has done his homework: he talks of different strains of Ebola, of transmission modes and fatality rates. He takes it for granted that no one in the room trusts the media or the government to be of much help. He warns people to prepare for the worst. If Ebola hits New York, “at some point you’re going to want to bug in [ie, take refuge in your apartment] or bug out [ie, flee].” Practically everyone in the audience has ideas and questions. If millions of New Yorkers are dying of Ebola and you need to escape from the city, don’t go to Harriman State Park. “Every hiker and their mother will be there.” Better to have a bug-out truck packed, fuelled and ready, so you can drive to a pre-prepared refuge in the countryside.

If you have nowhere to go, you should stay at home. And if so, you’ll need food, water, duct tape, garbage bags and sand (for using as a makeshift toilet). Have a blackout at night, so you don’t give your position away to prowling looters. Get plenty of entertainment—“I guarantee you’ll be bored out of your mind,” says Mr Charles. If a friend comes round, put him in your quarantine room. (Don’t seal if off completely or he’ll find it hard to breathe.)

Gruesome practicalities are confronted frankly. If you need to dispose of a corpse, for example, put plastic sheeting on the bed, wrap the body up, seal it with duct tape, and, if you have nowhere to bury it, leave it on the kerb with the deceased’s name and date of birth written on the bag. (Not his social-security number; that would allow someone to steal the dead man’s identity.)

Mr Charles’s group talks a lot about equipment. Should you buy a solar panel that straps to your back so you can charge your phone as you flee the city? Or a “waterbob”: a plastic bag that sits in your bath and can store 100 gallons of water? Should the group club together to buy gas masks more cheaply?

But I grew strong

Preppers love this sort of debate. Mr Rawles’s blog carries endless discussions of the merits of different ham radios or types of body armour, and the best way to build a safe room or smoke a fish over an open fire. It runs ads from GunMagWarehouse.com (“the largest selection of in-stock magazines anywhere”) and from SafeCastle.com (“Get ready seriously with a steel-plate Safecastle shelter”). His novels carry nearly as much advice as his instruction manuals, and similar disclaimers, such as: “some of the devices ...described in this novel are possibly illegal in some jurisdictions.”

Many American cities have strict gun-control laws, which is frustrating. And urban preppers face other difficulties. “You have to adapt,” says Mr Charles. In the corners and cupboards of his apartment he has stacked tins of beans and sausages, bags of sugar, rice and ramen noodles and a variety of useful equipment. He has a tank of drinking water in the corridor, a first-aid kit, a portable stove and a crossbow he has not yet got round to assembling. He has more food in a storage unit nearby, and an inflatable raft in case he needs to escape across the river when the bridges are blocked or burning. His “bug-out bag” is always ready.

Mr Charles has written a short fold-out guide of his own: “Emergency Bag Essentials: Everything You Need to Bug Out”. His publishers had one complaint—the bag was too heavy. Mr Charles does not think it was, but this is perhaps because he is, even by the standards of iron-pumping firemen, enormous. Your correspondent tried to help him move a rucksack to his car. It felt like there was a piano inside. It turned out to be full of wet sandbags, which Mr Charles likes to carry up and down stairs....MORE

*The second of Sheldon's three barriers, 'Each more daunting than the last.'
  Big Bang Theory-Series 3 Episode 22 – The Staircase Implementation

If you're into the recreating civilization thing see Open Source Ecology's Global Village Construction Set:
Machines: Global Village Construction Set

The Global Village Construction Set (GVCS) is a modular, DIY, low-cost, high-performance platform that allows for the easy fabrication of the 50 different Industrial Machines that it takes to build a small, sustainable civilization with modern comforts. We’re developing open source industrial machines that can be made at a fraction of commercial costs, and sharing our designs online for free.

We are developing a lifesize, scalable, modular LEGO construction set.

The GVCS in itself consists of many other Construction Sets – as we build not individual machines, but construction sets of machines. As an example, the Fabrication Construction Set component can be used to build any of the other machines. Our goal is lifetime design, and low maintenance so only a few hours of maintenance per year are required to keep any machine alive.

We have built the first machine in 2007 – the Compressed Earth Brick Press. Since then, we have been moving forward steadily, improving the performance and production efficiencies of our machines. We have achieved a landmark One Day production time of the Compressed Earth Brick Press in 2012, and we intend to bring down the production time down to 1 day for each of the other machines. In 2013, we used our tractor, brick press, and soil pulverizer to build a comfortable home – the Microhouse. We continue to dogfood our tools in agriculture, construction, and fabrication – as we build our facility up to a world-class research center for open source, libre technology and decentralized production. In 2014, we will be moving to a replicable workshop model of production – integrating immersion education and production – where we intend to scale by distributing our open enterprise models far and wide. Our goal is to demonstrate how these machines contribute to creating a world beyond artificial material scarcity – by creating an open documentation, development, and production platform – towards the open source economy....MUCH MORE

   

 

The information provided in GVCS (and Climateer Group) webinars and accompanying material is for informational purposes only. It should not be considered civilizational or societal advice. You should consult with a technologist or other qualified professional to determine what may be best for your individual needs.
Past success in not a guide for future civilization performance
GVCS (and Climateer Group) do not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any survival decision without first consulting his or her own survival advisor and/or deity and conducting his or her own research and due diligence. To the maximum extent permitted by law, GVCS (and Climateer Group) disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any deaths or other losses. Your mileage may vary, close cover before striking, not all civilizations thrive, good luck.
—News You Can Use: "How to Predict An Alien Invasion" (and how to rebuild the world from scratch)

EIA Natural Gas Weekly Update

 We did not post yesterday's storage report, getting caught up in the equities - interest rates interplay instead. If interested here are the expectations going in from FX Empire and the report itself, from the EIA. With withdrawals of 338 Bcf gas in storage fell below the five year average for the first time since 2019. The fear at the moment is that with WTI prices over $60 the folks drilling for oil are going to bring up a lot of 'associated' gas.  The usual CME futures chart is presented after the jump.

From the Energy Information Administration:

In the News:

Near-record cold temperatures drive near-record withdrawals from working natural gas stocks in the Lower 48 states

Working natural gas storage operators reported the second-largest weekly total net withdrawals ever reported for the Lower 48 states following a week characterized by widespread extreme cold throughout most of the country, which increased heating demand for natural gas. Net withdrawals from underground natural gas storage facilities totaled 338 billion cubic feet (Bcf) for the week ending February 19, 2021, exceeding the historical five-year average net withdrawals for the week by 218 Bcf (182%). Last week’s withdrawals were 21 Bcf lower than the all-time weekly record withdrawal of 359 Bcf, which was reported for the week ending January 5, 2018. As a result, working gas stocks fell to less than the five-year average by 161 Bcf.

Natural gas consumption in each of the main demand sectors increased during the report week, according to IHS Markit. Residential and commercial consumption averaged 62 billion cubic feet per day (Bcf/d) during the report week—the second-highest level in history after the record level of 64 Bcf/day reported for the week ending January 5, 2018. Electric power consumption of natural gas surpassed 33 Bcf/d, setting a new record winter high. In addition, industrial sector demand set a new record high of 28 Bcf/d.

Declines in production during the report week as a result of freeze-offs and shut-ins at natural gas wells in the Permian Basin also contributed to the increased withdrawals. Dry gas production in the Lower 48 states fell 12 Bcf/day to 77 Bcf/day for the week ending February 19, according to IHS Markit. Exports—both liquefied natural gas (LNG) and pipeline exports— declined 6.7 Bcf/day during the week, which lessened some of the need to withdraw natural gas from storage. Pipeline imports from Canada increased by 1.5 Bcf/day over the previous week to their highest levels since January 2010, which offset some of the declines in U.S. natural gas production.

Net withdrawals from natural gas storage facilities tend to be highly correlated with cold temperatures, which increase heating demand and, by extension, demand for natural gas. The first graph depicts this historical correlation between the weekly net change in working gas stocks and heating degree days (HDD)—a temperature-based measure of heating demand— during the heating season months (November 1–March 31) from January 2010 through last week.

Net changes in working gas stocks during the 2020–21 heating season (shown as red in the first graph) followed the general historical pattern, with higher HDDs generally leading to larger net withdrawals from working gas. During the first three months of the 2020–21 heating season weekly HDDs did not exceed 188 HDDs and the weekly net withdrawals also remained relatively small, with the largest weekly net withdrawal during this period totaling 187 Bcf. However, a period of sustained colder temperatures following the week ending January 28 resulted in a significant increase in HDDs and increased withdrawal activity. This increase peaked with the most recent report week, when significantly colder-than-normal temperatures resulted in 254 HDDs for the Lower 48 states—the third largest weekly total in history. Similarly, the largest weekly net withdrawals (359 Bcf) reported in the Lower 48 states coincided with the record-level 273 HDDs reported for the week ending January 5, 2018 (shown as green in the first graph).

The colder winter temperatures since late January prompted some of the largest natural gas storage withdrawal activity since the 2017–18 heating season. Total net withdrawals from underground natural gas storage facilities totaled 938 Bcf in the past four weeks (January 22—February 19). The cumulative withdrawals made up the third-largest four-week total reported since 2010, exceeded only by the record-setting 2013–14 and the 2017–18 heating seasons. In fact, two of the 15 largest weekly net withdrawals from storage occurred in the past two weeks.

The surplus to the five-year average natural gas inventory level has fallen in recent weeks because of higher natural gas storage withdrawals. The surplus to the five-year average last peaked at 244 Bcf on January 22. However, since then, net withdrawals have exceeded the five-year average. Working gas stocks are now 161 Bcf lower than the five-year average—the first deficit since December 2019....

....MUCH MORE

From the CME the last week's price action in 30 minute candles:

 

Capital Markets: "Fed Hike Ideas Give the Beleaguered Greenback Support"

 From Marc to Market:

Overview: A poor seven-year note auction and ideas that the first Fed hike can come as early as the end of next year spurred a steep sell-off in bonds and equities. Technical factors like the triggering of stops losses, large selling in the futures market, which some also link to hedging of mortgage exposure (convexity hedging), also play a role. The abrupt shift in view helped gave the greenback support. Its recovery was especially pronounced against the high-flying dollar-bloc currencies and sterling. Even though US yields pulled back, the carnage spilled over into Asia Pacific trading, where most large markets were off 2%-4%. At the same time, some of the smaller bourses, such as Singapore, Malaysia, and Indonesia, held up considerably better. Europe's Dow Jones Stoxx 600 is off around 0.65% in late morning turnover, and it is set to snap a three-week advance. US shares have stabilized at lower levels. The US 10-year yield, which hit 1.60% yesterday, is at 1.48%, and European benchmark yields are mostly 1-2 bp lower, though 10-year Gilt yields at 0.81% at new higher for the week. Follow-through dollar buying is evident today against most of the majors, and the Antipodeans, Scandis, and sterling are off 0.3%-0.5%, while the Swiss franc and yen are little changed. Emerging market currencies are mostly lower. This week's loss in the JP Morgan Emerging Currency Index (2%) would the largest in more than four months. Gold fell to almost $1755, its lowest level since last July, and is around $1760 near midday in Europe. It is off about 1.4% this week. April WTI has consolidating below yesterday's $63.80 high. It is in roughly a 50-cent range on either side of $63.00. It settled last week near $59.25, making it about a 6.25% advance this week.

Asia Pacific
Japan reported better than expected January industrial production and retail sales figures. Industrial output rose 4.2% in the month. Bloomberg's survey median was for a 3.8% gain. It appears exports may be playing a decisive role as domestic demand seems soft. It was the first gain in three months. Retail sales fell by 0.5%, less than half the decline expected. Tokyo's February CPI ticked up, but both the headline and core rates stand at -0.3%. Separately, Japanese yields jumped, with the five-year yield rising to its highest level in 3 1/2 years (minus 2 bp) before slipping back to minus 6 bp. Japan's 10-year yield reached 18 bp, its highest since 2016 and just shy of the 20 bp cap under the yield curve control program. It slipped back to 16 bp at the close. There is some speculation that the BOJ could widen the target band for the 10-year yield at next month's meeting.

The Reserve Banks of Australia and New Zealand are being challenged as well. The RBA bought government bonds in an unscheduled operation, and still, the 3-year yield still finished the week above the 10 bp target. The RBNZ Governor Orr said that including house prices into the central bank's remit, which he had opposed, will not impact monetary policy. He reiterated that the central bank will provide a stimulus for a long-time. On the week, Australia's 10-year yield surged 30 bp to 1.9%, while New Zealand's 10-year yield rose 28 bp and is also near 1.90%. The two-year yields tell a different story. Australia's two-year yield slipped 1.5 bp this week to 0.10%, while the New Zealand two-year yield rose 10 bp to 0.35%....

....MUCH MORE

Saudi Arabia To Import Wheat From Saudi-Owned Farms In Australia, Canada, and Ukraine

And they said I was mad contemplating farmland in Ukraine.*

From Reuters via Al-Arabiya, February 22:

Saudi Arabia to import wheat from Saudi farms abroad for delivery later this year 

Saudi Arabia’s state grain buyer SAGO said on Monday it has agreed to import 355,000 tonnes of wheat at an average price of $330.04 per tonne from Saudi Arabian-owned farms in Australia, Canada and Ukraine for delivery from May to December 2021.

SAGO had not issued an international tender for wheat.

SAGO governor Ahmad A. Al Fares said in a statement that the Saudi Agricultural and Livestock investment company (SALIC) won a tender to supply hard wheat of 12.5 percent from Saudi investments abroad.

The purchase “comes within the framework of the state’s trend to benefit from these investments, and it is also in line with the kingdom’s agricultural
investment program abroad, representing one of the multiple food security programs, aimed at diversifying sources of foreign food supplies,” SAGO said.

SALIC was formed to secure food supplies for the desert kingdom through mass production and foreign investments....

....MORE

HT: Farmlandgrab

*Previously on Ukraine farmland: 

Okay Kids: Here's One Of The Reasons We Had That Whole Ukraine Maidan 2014 Revolution Thingy 

Who Owns Ukraine's Farmland? 

Why Was The American Government Training Neo-Nazis In Ukraine? 

"Fields of Gold: Financing the Global Land Rush"

Société Générale's Albert Edwards: "We Are At The Breaking Point"

From ZeroHedge:

In the past month we have been inundated with analyst reports warning that a sharp spike in yields, especially above 1.50%, would be a trigger for a broader equity selloff (and as noted earlier, we were less than 1 basis point away from 1.50%). So amid this bearish orgy we would be remiss to not point out that this morning none other than SocGen's resident inhouse permabear, Albert Edwards, writes that he recently predicted that forecasts of US 10y yields rising back to 1½% "would prove too bearish as the equity market, and especially US tech stocks, would implode before we got there. At the time of writing despite the US 10y yield approaching 1½%, tech stocks, although certainly not yet imploding, have begun to look decidedly squishy."

Edwards first makes some observations on the recent sharp move lower in bond prices, which he puts in context by noting that while "it’s been a bad start to the year for government bond investors" the recent losses come only "after the stunning gains made at the height of the pandemic that saw 10y yields collapse to an intra-day low of 0.3% in March from 1.6% only a month before! Prices may have fallen 4% over the last 3 months, but that is not unusual over the past 15 years, especially in the context of the huge price rises last year."

Another way of looking at the recent moves is from their previous 12-month peak, where "even the larger 20% price decline seen in the 30y bond is not an infrequent sight."

As he next adds, "the recent rotation out of ‘growth’ stocks into value stocks" is also not particularly noticeable in a longer-term context. "Maybe equity investors aren’t quite as convinced about a brave new reflationary world lying immediately ahead as most commentators seem to be?"

All of that is, of course, in the past. But what about the future?

Here, Edwards echoes what we said earlier, and says that the bullish case is "if bond yields continue to rise and there is a smooth rotation out of growth and defensive stocks into value and cyclical stocks, the Fed will remain sanguine." But the risk is growing that "with so many bubbles blown by the Fed something will burst soon. And despite the widespread certainty that the Fed can micro-manage the equity market, and levitate it at will, the real shocker would be if the Fed lost control in any impending equity riot."....

....MORE

In afterhours trade the thirty, ten and five year treasuries are all down again and unless someone with a lot of money comes in as a buyer very soon this could get out of hand. The 10-year yield got over 1.61% on Thursday and I swear you could hear a moan rising above the political noise.

"Banking on Bird Shit"

No, not happening.

As mentioned in the intro to "Are We Entering a New Golden Age of Guano?":

One can dream but there's not all that much of the stuff left.
As with whale oil, it is a natural resource we came closest to running out of.
And as with whale oil, substitutions save the day.

From Hakai Magazine: 

 

Bird feces contribute nutrient-rich fertilizer to ecosystems. Harvesting them has also been a big business for centuries.

Almost everyone, at some point in their life, has had a bird poop on their head. It’s gross. But it can also be taken as good luck, particularly if it’s a seabird splat—that shit is worth serious money.

Farmers in South America and a few other places have long used the nutrient-rich substance, called guano, as fertilizer. And it turns out that seabirds excrete up to almost US $474-million worth of the stuff per year worldwide, according to a new study. The authors see this finding as a perfect public relations opportunity for seabird services.

“We wanted to inform the general public about the importance of seabirds and the value they provide for humans,” says Daniel Plazas Jimenez, a PhD candidate at the Federal University of Goiás in Brazil who studies food chains and coauthored the paper, published in Trends in Ecology & Evolution. But the value that seabirds provide to world ecosystems is much greater, Jimenez adds—a powerful argument for seabird preservation.

Species like gulls and pelicans nest on islands along the Peruvian and Chilean coasts, mounding the rocks with their droppings. A lot of this guano stays in place due to the region’s extremely arid climate, so the droppings attract local harvesters who scrape it off with shovels and sell it as organic fertilizer to farmers. But some guano flushes into the sea, depositing phosphorus and nitrogen. These chemical elements fuel the growth of phytoplankton, which feeds a variety of marine species, from snails to fish that humans eat.

When this guano deposition occurs near coral reefs, it can boost the reefs’ fish stocks by up to 48 percent. According to a 2016 estimate from the United Nations World Ocean Assessment, the annual net global economic return of commercial fisheries on coral reefs is $6.8-billion. If just 10 percent of coral reefs’ fish stocks depend on guano nutrients—a conservative estimate, according to the Brazilian team—that’s $650-million a year. Combined with seabirds’ annual fertilizer output, that adds up to over a billion dollars.

The Goiás scientists are only the latest in a long line of people who have prized bird poop. The ancient civilizations that lived along the South American Pacific coast used guano for agriculture for over 4,000 years, says ornithologist Pedro Rodrigues, who wrote a paper on the subject. The Inca, for example, harvested guano with boats, then carried it up to farmlands in the Andes on llama caravans—all the way up to Machu Picchu. One of the Inca’s much-venerated goddesses was Urpi Huachac, “the Lady of Guano.”....

....MUCH MORE

 For I too have experienced the siren call of the guano islands:
The Allure of Guano

New York Guano

"Guano Mania"

Today In Guano
We have an odd fascination with guano.
Let me rephrase that.
From Law 360:
Judge Kills Suit Seeking $213M On 140-Year-Old Guano Notes