"Why the world failed to bypass the Strait of Hormuz"

From Iran International, April 9: 

In 2019, while working on the energy desk at Reuters, I began reporting on a question that has shadowed global oil markets for decades: what would happen if the Strait of Hormuz were closed?

For me, the question was not abstract. I came from a country where, for more than half a century, leaders had repeatedly threatened to weaponize the Strait. As an energy correspondent, I wanted to understand whether the region had built credible alternatives, or the world was still exposed to a risk it preferred to ignore.

Routing oil supplies away from the Strait of Hormuz has been a recurring topic in the Middle East, especially since the “tanker wars” of the 1980s. Regional governments had long been reviewing and funding contingency plans to deal with a possible closure of the Strait and to reroute their oil and petroleum exports.

Yet most of these plans never moved beyond paper, even after cabinet approvals. Those that did remained underfunded, and the volumes they could carry were a drop in the bucket compared to the total flow through the Strait of Hormuz.

Analysts I spoke to at the time believed such plans were not economically feasible in the absence of a real disruption. The reality was that regional countries were reluctant to commit billions of dollars to precautionary infrastructure that might never be needed.

And even if disruption did occur, many of them believed it would be short-lived — that the United States would intervene militarily and reopen the waterway quickly.

The alternative routes

As a result, projects remained limited in scope. Saudi Arabia’s East-West Pipeline carried oil to the Red Sea, but its capacity increases remained modest relative to the scale of Hormuz. The UAE’s Fujairah terminal bypassed the Strait, but remained geographically too close to be fully secure.

Other routes were even more constrained. The Iraq–Turkey pipeline faced political disputes between Baghdad and the Kurdish region over oil rights and territory. The Iraqi Pipeline through Saudi Arabia (IPSA), built by Saddam Hussein in 1989 to bypass Hormuz, has been largely inactive since 1990. Plans for a pipeline to Jordan’s Aqaba port depended on fragile Iraqi-Jordanian relations....

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"Hedge Fund Money Is Reshaping a 180-Year-Old Insurance Model"

Though this has been going on for years the offloading of risk is starting to draw some serious attention. And with the simultaneous specter of lower and lower premiums caused by the flood of capacity the bag-holders will be, if not retail, then unsophisticated players.

This is the point in the cycle where Warren Buffett and Ajit Jain would decline to cover perils they can't get paid for.

As noted exiting January 12, 2026's ""How GE Vernova’s ‘Good Times’ Could Mean Bad Times for Its Stock" (GEV)": 

Warren Buffett ran into similar situations in Berkshire's reinsurance business. When re profits were good, everyone and his brother would flood into the market, writing policies at prices that Warren didn't think covered the risk. Rather than withdrawing completely he continued to offer policies at prices he thought were fair while telling the insurance companies that needed reinsurance cover that Berkshire would be there when the others had skedaddled.

The same is true for GE Vernova. They've been manufacturing and maintaining generators/turbines since Thomas Edison and J.P. Morgan formed the General Electric Company in 1889.

They'll be around to come make a service call when you think your turbine is making a funny sound....

From Bloomberg April 12:

Alternative investment managers are pouring unprecedented sums of money into the market for property cover, and reshaping a 180-year-old reinsurance model in the process.

Allocations to catastrophe bonds and other insurance-linked securities popular among hedge funds and institutional investors rose 18% to reach a record $136 billion last year, according to data provided by broker Aon Plc. That rise in alternative capital and “its influence in the broader reinsurance market is growing because of the record growth in catastrophe bonds,” Aon told Bloomberg.

The shift promises to alter the face of a market whose basic role is to provide stable property cover during periods of sustained losses. It also raises questions as to whether reinsurers will gradually play a smaller role as the ultimate backstop for covering catastrophe risk.

Reinsurers may end up becoming more like risk managers, “shifting the risk to the capital markets which have trillions of dollars to invest,” Brian Schneider, senior director of insurance at Fitch Ratings, said in an interview. And if “more and more of this business gets shifted to the capital markets, then maybe the traditional companies become less and less relevant.”

Reinsurers covered just over 10% of total insured catastrophe losses in 2024, well below the historical average of 20%, according to S&P Global Ratings. The industry’s biggest firms have more than halved their exposure to insured disaster losses in recent years, S&P also said.

Reinsurers are themselves the driving force behind the shift. That’s as urbanization, higher inflation and climate change combine in ways that mean natural catastrophes are both more frequent and more devastating when they hit. The industry’s response has been to look for ways to offload risk to capital markets.

They mainly do this by issuing cat bonds, an asset class that saw “breathtaking” growth in issuance last year, according to John Seo, managing director and co-founder of Fermat Capital Management, the biggest hedge fund investor specialized in such securities. Speaking in a February interview, Seo said he thinks “the issuance surge we’re seeing is far from over.”

Reinsurers are also attracting record levels of private capital into so-called sidecars. Such vehicles give third-party investors access to premiums, in exchange for which they must accept a slice of the risk associated with natural disasters. It’s a market that’s nearly tripled in size since 2023, reaching as much as $18 billion today, with much of the growth coming from property catastrophe coverage, according to AM Best, a rating agency that tracks the insurance industry. 

Germany’s Hannover Re recently set up a Bermuda-based insurance agent to create bespoke catastrophe-related portfolios for hedge funds, pensions and other professional money managers.

“As part of the overall ILS activities that we have, we felt this was the missing piece,” said Michael Eberhardt, chief executive of the new venture, Hannover Re Capital Partners. “It allows us to leverage our own underwriting expertise and partner with third-party capital investors.”

Fitch notes that investors in sidecars can face potentially bigger losses than holders of cat bonds, should a natural disaster result in a trigger event. That’s because sidecars tend to be exposed to losses from more common secondary perils such as hailstorms, wildfires and floods.

“There’s concern that maybe some naive capital is coming in,” and that “investors don’t really think they’re going to get hit by a lot of these secondary perils,” Schneider said....

....MUCH MORE

I may end up purloining "naive capital" rather than having to explain who the "dentist from Peoria" is.:

October 2023
"Weather derivative market activity soars on belief extremes to increase: Report"
Action, baby, action!

"Andy Jassy Bets $200B on A.I. to Cement Amazon’s Tech Dominance" (AMZN)

Among the hyperscalers, Amazon and Google seem to have the clearest vision of what they want out of AI, Meta the least and regarding Microsoft, they may have made a big mistake getting as involved with OpenAI as they have.

From Observer, April 9:

Andy Jassy commits $200 billion to A.I., betting Amazon’s growth will come from chips, data and AWS innovation. 

Amazon is going all in on A.I. and betting more money on it than anyone else in Silicon Valley. Under CEO Andy Jassy, the tech giant plans to pour a staggering $200 billion into A.I. infrastructure this year, the biggest corporate investment of its kind, as it races to seize what Jassy calls a “once-in-a-lifetime opportunity.” His next task? Convincing investors that the gamble will pay off.

Amazon’s skyrocketing capital expenditures weren’t made “on a hunch,” said Jassy in his annual shareholder letter published today (April 9). “A.I. is a once-in-a-lifetime opportunity where the current growth is unprecedented and the future growth even bigger.”

Already, those investments are beginning to pay dividends. A.I. services provided by AWS, Amazon’s cloud computing business, have helped push its quarterly revenue run rate past $15 billion in early 2026, Jassy revealed. “Amazon is smack in the middle of this land rush, and companies are choosing AWS,” he said.

Jassy, who succeeded Jeff Bezos as CEO in 2021, spent 24 years building AWS before taking the helm. His own path wasn’t linear. He once pursued sports broadcasting, coached high school soccer, and tried launching startups before joining Amazon....

....MUCH MORE 

Our antipathy toward OpenAI isn't anything to do with ChatGPT (though we don't think chatbots are where the future lies) but with the company CEO. Here's an intro from a year ago:

"Altman's eyeball-scanning biometric blockchain orbs officially come to America"
Sam Altman comes across as deeply untrustworthy, just sayin'.*

Related: "AI: "A brief history of Sam Altman’s hype" (MIT Technology Review's Hype Correction series)". 

Ethanol: U.S. Appeals Court "...Strikes Down Federal Law Banning Home Alcohol Distilleries"

From the lawyerly crew at the Volokh Conspiracy (hosted at Reason mag.) April 11:

The ruling holds the law exceeds Congress' authority under the tax power and the Necessary and Proper Clause. But it does not consider the Commerce Clause.

Yesterday, in McNutt v. US Department of Justice, the US Court of Appeals for the Fifth Circuit struck down an 1868 federal law banning home alcohol distilleries. The court ruled that the law exceeded Congress' authority under the taxing power, and also under the Necessary and Proper Clause. It's an important win for constitutional federalism - as well as for home alcohol distillers! But it's significance is limited by the fact that the court did not consider the possibility that the law is authorized by Congress' power to regulate interstate commerce.

The decision was written by prominent conservative Judge Edith Jones. But the unanimous ruling was joined by liberal Obama appointee Judge James Graves. It's an impressive, and somewhat unusual, cross-ideological agreement on the type of federalism issue that often splits jurists along ideological lines.

Judge Jones is, I think, undeniably right to argue that the tax power cannot justify this law:

[T]he power to "lay and collect Taxes" means Congress can charge or demand money from taxpayers. It is also obvious that the purpose of a tax is to raise revenue for the
government. Indeed, "the essential feature of any tax" is that "[i]t producesat least some revenue for the Government."NFIB v. Sebelius, 567 U.S. 519, 564 (2012)… (emphasis added)….

Section 5178(a)(1)(B) and Section 5601(a)(6) exceed these constitutional limits. Primarily, neither provision raises revenue. Not only do they prohibit at-home distilleries, but in so doing, they amount to an anti-revenue provision that prevents distilled spirits from coming into existence. Cf. 26 U.S.C. § 5001(b) (taxation begins "as soon as [the spirit] is in existence"). The provisions operate to reduce revenue instead of raising it. This violates the Supreme Court's explanation of how the federal power of taxation works: "[I]mposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice." NFIB, 567 U.S. at 574, 132 S. Ct. at 2600 (emphasis added). These plaintiffs have only the choice not to do as they wish or risk fines and imprisonment.

Exactly so....

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"Goldman Sachs’ chief Asia-Pacific economist says worst is over in terms of property slump’s impact on China’s economic growth"

From the South China Morning Post, April 6:

Andrew Tilton on China’s growth prospects, economic trajectory in wake of Iran war 

Andrew Tilton, chief Asia-Pacific economist at Goldman Sachs, speaks to the South China Morning Post about the long-term future of China’s economy after the “two sessions” in Beijing and ahead of an expected Xi-Trump summit – all during an oil crisis sparked by the US-Israel war against Iran.

For other interviews in the Open Questions series, click .

What impact will the oil shock arising from the Iran war have on the growth of Asian economies this year?

Asia is greatly affected by the war as the vast majority of oil and gas exported from the Persian Gulf in normal times goes to Asia. We’ve raised our inflation forecasts more than a percentage point on average since the start of the conflict and cut growth forecasts throughout Asia.

We think Japan, South Korea and China are relatively well insulated – they have significant strategic oil reserves and can afford to subsidise retail fuel prices. In these places we’ve made only small adjustments to our growth forecasts. This means the burden of adjustment to lower energy supply from the Middle East will fall more on other countries.

Several economies in South and Southeast Asia with lower incomes per capita – including but not limited to India, Thailand, the Philippines and Vietnam – rely significantly on foreign energy and are already taking measures to reduce demand or give some end users priority over others. A few have already had to narrow the focus of subsidy programmes to make them fiscally sustainable. In some cases central banks may have to raise interest rates to keep currencies from depreciating. Otherwise, the cost of imported goods could rise more generally. These actions will slow growth.

Will the impact of the Iran war impede China’s efforts to achieve its annual economic growth target? In that sense, do you think China needs more stimulus?

It’s too early to tell the full impact. China certainly had very robust trade leading up to the conflict, judging from the data recently released for January and February. President Xi Jinping has been focused for years on “self-reliance” – reducing China’s reliance on foreign suppliers and reducing its sensitivity to disturbances outside China – so this will be a test of sorts. Although it is a large oil importer, China gets most of its energy from domestic sources, especially coal. Part of its energy imports come from Russia via pipeline. It also has built up a strategic oil reserve and can leverage state-owned enterprises and the government budget to cushion the impact of higher energy prices on consumers.

Oil and natural gas prices are up very sharply, so there will still be some modest upwards pressure on inflation in China in the coming months. This makes rate cuts by the People’s Bank of China less likely than they seemed before the war.

Policymakers might also decide to increase government spending a little further if they see an impact on growth. Higher prices for imported energy will also reduce China’s trade surplus, other things being equal, though it is still likely to be very large.

What is your China gross domestic product growth forecast for 2026, and supported by what factors? Please share your view on the most important economic takeaways from last month’s – the annual meetings of the country’s legislature and top political advisory body.

We expect China to report 4.7 per cent GDP growth this year, with strong export performance the key driver – a similar pattern to last year. The housing sector is getting closer to a bottom, but is still a drag on the economy both in terms of investment and via its effects on consumer wealth, confidence and spending.

As expected, policymakers slightly lowered the official growth target this year, from around 5 per cent last year to a range of 4.5 to 5 per cent this year. Other targets were also broadly as expected, though Premier Li Qiang emphasised policy efforts to make sure the economy reflates, with both producer and consumer prices rising gradually.

Although real GDP growth may slow a little, we expect nominal growth – including inflation – to be higher this year than last.

The government’s budget suggests an intent to avoid excessive stimulus. Commentary from the various press conferences surrounding the two sessions implies a continued focus on technological progress and security issues, albeit also with gradually rising efforts to support consumption.

Goldman Sachs mentioned at a January news conference that the Chinese property sector may improve only from 2027 onwards. Why this timeline and how much improvement do you expect?

China’s in its fifth year of the housing downturn.

Other countries offer useful lessons for China in terms of how a large housing downturn typically plays out. Of course, China has its own special features. But the similarities are more important than the differences. In major housing busts, we typically see growth slow, inflation fall, monetary policy ease, the currency weaken and the trade balance improve. All of these things have happened in China too....

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It was Goldman that pointed out just how crazy China's property market had gotten with this factoid:

December 1, 2022 
What If Our Understanding Of China's "Zero Covid" Is 180 Degrees Wrong?

One story that has dropped from the headlines is China's property market, in part because the government has ordered the banks to open the nozzle on the liquidity fire hose. I think the official numbers are up to around $200 billion. But that's not even the amount of China Evergrande Group's debt ($300 billion), much less the rest of the sector, which itself is just a fraction of the total asset class which Goldman last year estimated to be the largest in the world at $62 trillion (but deflating fast)

What if the required rescue is 10 times the amount officially reported as being injected?

China would run into the same dilemma the U.S. faced when injecting $5 - 6 trillion into the American economy: If the powers-that-be allowed the economy to remain open as the liquidity poured in the resulting inflation would have been 40 -50% and would have hit the population within weeks. In China's case the rioting would have made the current protests look look like a convivial, collegial discussion group.

The lockdowns allowed the U.S. to bleed the inflation into the economy at a reduced rate, CPI is up 14% since January 2021, effectively deflating the Federal debt by a like amount or $4.2 trillion, equal to around 2/3 of the 2020 -2021 spending and liquidity injections.

The Chinese "zero covid" lockdowns make no sense from a public health standpoint and as one of my favorite China experts says, "Chinese are very smart people, there must be something else going on that you roundeyes don't see. And then he laughs when I tell him he is a racist....

That shaped our thinking for the next three years. Not as nuts as Japanese real estate in 1988 - 1989 but still crazy.

Japan in the 1980s: when Tokyo’s Imperial Palace was worth more than California and golf club membership could cost US$3 million – 5 crazy facts about the bubble economy 

note: here are the comparables that were used to get the "more than California" bit, via Northwestern University:

...Cleary, the Imperial Palace was never on the market so we have to look at prices from “comparable” property values. Two values commonly cited are in the Ginza district, which borders on the Chiyoda district that includes the Imperial Palace itself. The first was for a 3 square meter corner sold for $600,000 dollars. The second one is $1.5 million per square meter ($139,000 per square foot) for office space.

The Palace itself, including gardens, is 3.41 square km. Using the three square meter corner as the base, the estimate for the palace is $852,500,000,000, a gigantic price tag for a single property. Even more astonishing, if we take the Ginza office space a reference point, the price balloons to over $5.1 trillion. For comparison, Japan’s GDP in 1989 was about 5.3 trillion dollars.

There are no available data about California’s total real estate value during that period. However, a back of-the-envelope calculation, using current values and factoring inflation rate, puts the total value of California’s real estate in 2015 at $2.45 trillion. The US inflation rate from 1989 to 2015 is about 1.91%. This comes to a range in value for all of California real estate to be from $1.6 trillion to an upper bound of $9.77 trillion....

"Trump says US Hormuz blockade will 'take a little while'"

From Iran International's liveblog, April 12:

US President Donald Trump told Fox News on Sunday that a US blockade of the Strait of Hormuz would “take a little while,” adding that it “won’t take long to clean out the strait.”

He added that the United States was bringing in additional minesweepers and said other countries, including Britain, were also sending sending minesweepers.

Trump also said NATO now wants to help secure the Strait of Hormuz.

“We think that numerous countries are going to be helping us with this,” he added. 

Liveblog home.

Earlier: 

"Trump declares US Navy will begin blockading Strait of Hormuz ‘effective immediately’"

"Trump declares US Navy will begin blockading Strait of Hormuz ‘effective immediately’"

From the Times of Israel, April 12: 

US President Donald Trump says the US Navy will immediately start blockading the Strait of Hormuz and will also intercept by force every vessel in international waters that had paid a toll to Iran.

The move follows unsuccessful US-Iranian talks yesterday in Pakistan, where the two parties failed to reach an agreement to end the six-week war in the Middle East.

Trump, in a post on Truth Social, claims that the historic talks “went well” for the most part, but “the only point that really mattered, NUCLEAR, was not” agreed to by Iran.

“Effective immediately,” he says, the US Navy “will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz.”

Trump claims “other countries” will also be involved in his blockade, but does not identify them by name....

....MORE 

Also at the Times of Israel, April 12:

Iranian official denies Tehran collapsed talks over nuclear issue but insists on 'undeniable' right to nuclear energy 

"U.S.-Iran Talks End With No Deal..."

The full headline at Investor's Business Daily is "U.S.-Iran Talks End With No Deal; How Will Dow Jones Futures, Oil Prices React?", April 11: 

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, after lengthy U.S.-Iran talks ended with no deal. Vice President J.D. Vance said that Iranian officials "have chosen not to accept our terms." 

Goldman Sachs (GS), JPMorgan Chase (JPM) and Taiwan Semiconductor Manufacturing (TSM) headline big earnings this week.

The stock market rally had a game-changing week, with the major indexes powering past key levels and many leaders breaking out or flashing buy signals. Investors should be adding exposure, gradually but steadily, as long as the market continues to act well.

Three tech titans, Google-parent Alphabet (GOOGL,) Amazon.com (AMZN) and Nvidia (NVDA) are flashing early or aggressive entries. 

Taiwan Semiconductor stock is on the IBD 50 and IBD Sector Leaders. Google was Friday's IBD Stock Of The Day.

Dow Jones Futures Today 
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Dow futures were indicated solidly lower after U.S.-Iran peace talks ended without an agreement.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session. 

U.S.-Iran Talks End Without Deal

Vice President JD Vance and the U.S. delegation met face to face Saturday with their Iranian counterparts in Islamabad, Pakistan, for 21 hours, but failed to reach an accord.

Vance said, "The bad news is that we have not reached an agreement." He added, "They have chosen not to accept our terms." Vance did not say what might happen next.

Iranian state TV said that the U.S. was "demanding too much." The report said the Strait of Hormuz, Iran's uranium enrichment and other issues were key sticking points.

Hormuz remains largely closed, despite Tuesday night's ceasefire. Without an open Hormuz, global oil, natural gas and fertilizer shortages will increase.

Several U.S. Navy ships crossed the strait on Saturday to locate and clear mines.

What happens next? Will the two-week ceasefire hold while the U.S. and Iran continue diplomacy. Or could military attacks resume and even escalate?....

....MUCH MORE, they cover a lot of ground. 

"U.S. Forces Start Mine Clearance Mission in Strait of Hormuz"

 From The U.S. Central Command, April 11:

TAMPA, Fla. — U.S. Central Command (CENTCOM) forces began setting conditions for clearing mines in the Strait of Hormuz, April 11, as two U.S. Navy guided-missile destroyers conducted operations.

USS Frank E. Peterson (DDG 121) and USS Michael Murphy (DDG 112) transited the Strait of Hormuz and operated in the Arabian Gulf as part of a broader mission to ensure the strait is fully clear of sea mines previously laid by Iran’s Islamic Revolutionary Guards Corps.

“Today, we began the process of establishing a new passage and we will share this safe pathway with the maritime industry soon to encourage the free flow of commerce,” said Adm. Brad Cooper, commander of CENTCOM.

The Strait of Hormuz is an international sea passage and an essential trade corridor that supports regional and global economic prosperity. Additional U.S. forces, including underwater drones, will join the clearance effort in the coming days.  

https://t.co/v7ABGhPKr3

— U.S. Central Command (@CENTCOM) April 11, 2026

U.S. Crude Oil Exports Will Be Rising

Someone should tell Iran not to blockade the Strait of Hormuz.

Will the European navies be up to the task? 

Very cool seeing the wave of empty tankers heading to the US to pick up some desperately needed crude for Hormuz-starved markets.

All the tankers on the map below are empty VLCCs (~2 million barrel capacity each) currently heading for the US Gulf Coast. https://t.co/lU7GCy7olm pic.twitter.com/I7QidvD0Rz

— Rory Johnston (@Rory_Johnston) April 10, 2026

Science Advances

That's the name of the journal from the publishers of Science, 1 Apr 2026, Vol 12, Issue 14:

Complete biosynthesis of psychedelic tryptamines from three kingdoms in plants 

Abstract
Psychedelic indolethylamines with therapeutic potential are naturally produced in plants, fungi, and animals. Here, we elucidated the complete N,N-dimethyltryptamine (DMT) biosynthetic pathway in hallucinogenic plant species traditionally used in shamanic rituals for spiritual healing. Leveraging the similarities in their chemical structures, we reconstructed in one plant assay the full biosynthetic pathways of five renowned natural psychedelics; psilocin and psilocybin found in mushrooms, DMT from plants, and bufotenin and 5-methoxy-DMT secreted by the Sonoran Desert toad. We further engineered halogenated analogs of these molecules, which do not naturally occur in plants and exhibit prospective therapeutic potential for psychiatric conditions. Blending catalytic functions across the tree of life, coupled with metabolic engineering guided by rational protein design of mutant enzymes, enabled substantially more efficient in planta production of the indolethylamine components. This work establishes a versatile platform for concurrent biosynthesis and diversification of psychoactive indolethylamines, paving the way for their production in plants.

INTRODUCTION

For thousands of years, psychedelic substances have been used by indigenous cultures as entheogens in rituals intended to induce altered states of consciousness for spiritual and therapeutic purposes. Psilocybin-containing mushrooms were central to ancient Aztec ceremonies (1), while N,N-dimethyltryptamine (DMT), the primary psychoactive component of ayahuasca, has long been used in traditional Amazonian rituals. This ceremonial brew combines Psychotria viridis (a natural source of DMT) with Banisteriopsis caapi, which provides β-carboline monoamine oxidase (MAO) inhibitors that render DMT orally active (1, 2). Similarly, 5-methoxy-N,N-dimethyltryptamine (5-MeO-DMT), found in the secretion of the Sonoran Desert toad (Incilius alvarius) and in several plant species, is thought to have been used ceremonially by indigenous groups in northern Mexico (3). 5-MeO-DMT has been described as the most potent DMT analog, being about 4- to 10-fold more potent than DMT in humans and is known to induce psychedelic experiences that are distinct from those of DMT (4). Knowledge of the traditional use of these molecules has fueled contemporary therapeutic interest in psychedelics as treatments for neuropsychiatric conditions.... 

 

....MUCH MORE

This is either the trippiest paper you are likely to come across this month or an elaborate April Fools Day joke.

"Wall Street builds new tool to bet against private credit"

From the Wall Street Journal via MSN April 10:

Large banks including JPMorgan Chase are preparing to offer a new way for investors to bet against managers of private-credit funds.

The banks are working with S&P Global to launch an index of credit-default swaps that would protect buyers against defaults by companies included in the index, called CDX Financials. Private-credit funds managed by Apollo Global Management, Ares Management and Blackstone will make up 12% of the index, which also includes insurers, regional banks and credit-card companies.

 

The index would rise when the market sentiment on those firms turned negative. If it gains traction, the so-called FINDX would give debt investors and traders a fast way to hedge or short what is now a more than $3 trillion industry. Private credit increasingly touches banks, insurance companies and other parts of the financial system.

“Private credit has grown fast and there’s a lot of financial exposure arising in different ways so there is a real demand for this product,” said Dominique Toublan, head of credit strategy at Barclays.

Banks want the index both as a product to trade and as a tool to protect against potential losses from their own loans to private-credit fund managers.

Hedge funds are keen for a way to easily make bets on a downturn in private credit. Stress has been building, as a spate of defaults and losses, combined with fears about the fate of loans to software companies, caused a stampede of individual investors asking for their money back. Some hedge funds began trying to short individual stocks and bonds issued by firms that invest in private credit, but the process was cumbersome and costly, one hedge-fund manager said....

....MUCH MORE 

If a CDS purchaser does not own the underlying debt they are flat out gambling and we've been down this road before, 2008 and all that where the payoff comes if you can put the debtor into default or worse. Talk about perverse incentives. 

The problem is the same one gamed by Polymarket and Kalshi: if you can get regulation at the Federal level you sidestep any state-level enforcement due to the Supremacy Clause—Article VI, Clause 2—of the Constitution, Federal Preemption.

If interested see some of the posts that came out of The Great Recession and related events:

Perversity and Credit Default Swaps
It's Time to Regulate Credit Default Swaps Using State Gambling Laws 

*****

Side bets are a description of what bucket shops do and there are anti-bucket shop laws on the books of just about every state. Federal pre-emption you argue? Nothing a one-line tweak of the Commodity Futures Modernization Act wouldn't solve.

The ideas are not original to me. Former New York Insurance Superintendent Eric Dinallo said:

“It’s legalized gambling. It was illegal gambling. And we made it legal gambling…with absolutely no regulatory controls. Zero, as far as I can tell,”

And earlier posts:
July 2010 
Financial Reform: Enforce New York's 1908 Bucket Shop Law and trash the 2,319 Page Dodd-Frank Bill

It is time to dispense with this congressional foolishness and enforce the 1908 Bucket Shop law.
Throw in some state anti-gambling statutes and you would have prevented the financial meltdown....

November 2011
Are Derivatives Contracts Nothing More than Unenforceable Gambling Debts?
...Here's the U.S, Senate testimony of Eric Dinallo, then-Superintendent of the New York State Insurance Department on October 14, 2008 (8 page PDF).

...I have argued that these naked credit default swaps should not be called swaps because

there is no transfer or swap of risk. Instead, risk is created by the transaction. Indeed, you

have no risk on the outcome of the day’s third race at Belmont until you place a bet on

horse number five to win....

...“Bucket shops” arose in the late nineteenth century. Customers “bought” securities or

commodities on these unauthorized exchanges, but in reality the bucket shop was simply

booking the customer’s order without executing on an exchange. In fact, they were

simply throwing the trade ticket in the bucket, which is where the name comes from, and

tearing it up when an opposite trade came in. The bucket shop would agree to take the

other side of the customer’s “bet” on the performance of the security or commodity.

Bucket shops sometimes survived for a time by balancing their books, but were wiped

out by extreme bull or bear markets. When their books failed, the bucketeers simply

closed up shop and left town, leaving the “investors” holding worthless tickets....

"Pope says credit default swaps are unethical"

"Here’s a look at the known damage to Gulf energy facilities as the U.S. and Iran meet for talks"

From MarketWatch, April 11:

Investors are eager to gain insights into the extend of the damage to energy infrastructure in the Middle East after six weeks of war

Following six weeks of war in Middle East, more than 60 energy facilities have been struck across the Persian Gulf. The damage spans at least nine countries, and can be easily counted in terms of shuttered crude-oil terminals and smoking natural-gas refineries.

What’s harder to measure is what comes next — and how long a recovery might take. That’s one of the key factors at play as a U.S. delegation is set to meet with Iranian counterparts in Pakistan over the weekend about their fragile cease-fire.

Drone and missile attacks by both U.S.-Israeli and Iranian forces have pushed the Middle East conflict beyond the Strait of Hormuz — hitting refineries, oil fields, ports and gas plants across Gulf states including Qatar, the UAE, Saudi Arabia and Oman, with different degrees of damage, according to data compiled by JPMorgan Commodities Research. 

“We expect most attacks will not cause long-lasting disruptions. Some facilities, however, will face lengthy repair timelines, with at least eight assets appearing severely impacted,” a team led by Natasha Kaneva, head of global commodities strategy at JPMorgan, said Thursday in a client note.

The table below shows the eight energy facilities with the highest levels of damage....

....MUCH MORE 

"Genomics Has Revealed An Age Undreamed Of"

This piece was published at Palladium magazine in 2023, so a few years after Nvidia's Jensen Huang started talking about AI and medicine and artificial biology*, but before the possibilities really started to become apparent. Now genomics looks to be very investable.**

From Palladium, November 17, 2023:

On June 26, 2000, President Bill Clinton announced the completion of the draft of the human genome at a press conference with the two project leads, Francis Collins and J. Craig Venter. A genome is all the genetic information of an organism. Scientists had conceived of the Human Genome Project in the 1980s, and, in the first half of the 1990s, expected it to be an endeavor that would go on for decades. But an unexpected technological revolution of faster computers and better chemistry accelerated the ten-year effort toward the finish line, just as the 20th century came to a close.

The American-led international effort cost more than $3 billion dollars and involved thousands of people. Since then, the last 23 years of the 21st century have seen a sea change in the landscape of genomics, from blue-sky basic science to mass-market consumer products. Companies like Nebula now provide entire genome sequences that are medical-grade quality for $200; down from a price point of $20,000 just 13 years ago. We’ve gone from a single mapped genome—that of humanity—to more than a million genomes. This is a case where quantity has a quality all its own; the commoditization of genomic sequencing has radically transformed how we do genetics.

Yet at the dawn of this brave new genomic era, it is not health and well-being outcomes that have been revolutionized. Rather, genomics as a window into the human past has vindicated Alfred Tennyson’s poetic assertion that nature is “red in tooth and claw.” Where a few decades ago archaeologists and historians had to cobble together inferences from pottery shards, slotting their data into theories that owed more to political fashions of the present than scientific facts of the past, today they can chart the rise and fall of peoples from the clear evidence of the genes.

Collins and Venter promised a shiny future of good health and a more enlightened understanding of humanity’s place in the world, but their invention has, instead, unleashed knowledge of a bygone age of brutality reminiscent of Conan the Barbarian’s Hyperborean Age. Historians can list Genghis Khan’s concubines, but it is genetics that tells us that 10% of Central Asian men are his direct paternal descendants, bringing home the magnitude of his conquests. But obviously, we aren’t fated to relive the brutality of the past; just as technology can open a window back in time, it can unlock the door to a brighter future. The question is what advances we as species wish to make.

The Book of Nature Has a Billion Pages 
A single human genome has two copies of each gene, of which there are 19,000. These 19,000 genes are distributed across three billion base pairs of adenine, cytosine, guanine, and thymine, or ACGT for short. Notably, the number of genes that humans have has been discovered only within the last twenty years, even though genetics as a scientific field is over 150 years old. The reason for this recent explosion in our knowledge is that, before the 1990s, genetics probed a digital process—the recombination of discrete units of heredity from the same and different individuals—with analog means. The correlation of characteristics between parents and offspring is intuitively obvious, but the mechanisms by which inheritance occurs are not self-evident.

Our naïve assumption is that the characteristics blend together, resulting in a child who is a synthesis of the traits of the parents e.g. a short parent and a tall parent will produce medium-height offspring. But the implication of this model is that, over the generations, all human variation should be blended away as each generation is the average of the previous one. That simply does not occur. Humans remain as variable as they have been in the past. The insight of Mendelian genetics is that inheritance does not proceed through blending, but through the rearrangement of discrete units of variation.

At about the same time that Charles Darwin was revolutionizing our understanding of the tree of life with his theory of evolutionary change through natural selection, an Austrian monk named Gregor Mendel stumbled upon the framework that would later be called genetics. Between 1856 and 1863, he realized that inheritance seemed to be mediated by particular units of inheritance he called “factors,” and would later be called genes. Mendel hypothesized complex organisms had two copies of many factors, discrete bundles of information that were rearranged every generation through the law of segregation—that you inherit one copy of a gene from each parent—and the law of independent assortment, that you inherit factors independently from each other.

Mendel came to these insights through a famous set of experiments where he crossed lines of peas with distinct characteristics and noted that some traits bred true and others did not. Two short pea plants always produced short pea plants. But two tall pea plants sometimes also produced short pea plants. A model of blending inheritance cannot explain recessive traits, but a Mendelian framework can. Whereas intuitive blendings of inheritance take the visible traits as the only variables of interest in understanding intergenerational change in characteristics, Mendelian genetics implies that phenotypes emerge from the interactions of underlying genotypes.

These genotypes are the true factors through which variation is preserved from generation to generation; an organism’s visible characteristics are only pointers to the true underlying heritable variation present in the genes. Darwin’s Origin of Species was published in 1859 to great fanfare, but Darwin famously lacked a plausible mechanism of inheritance that could maintain the variation that was necessary for natural selection. Mendel provided the answer, but the Austrian monk’s single 1866 paper, “Experiments on Plant Hybridization,” was ignored by the scientific community of the time, only to be rediscovered around 1900, when the modern field of genetics was born.

But twentieth-century genetics very much worked within Gregor Mendel’s methodological framework. Genes were analytical units, abstractions necessary to explain the patterns of inheritance visible in breeding experiments, but not understood in physical terms. Genetics proceeded through analyses of patterns of inheritance in pedigrees and populations, a laborious matter of inspection and inference. The journey to where we are today, when we can read out the sequence of any organism that we choose, began in the 1940s when biologists realized nucleic acids were the medium through which genetic information was transmitted.

After James Watson and Francis Crick’s elucidation of the structure of DNA in 1953, the molecular biological revolution that it ushered in allowed geneticists to conceive of the idea of mapping genes in a direct physical manner, rather than inferring them through the transmission of phenotypes within pedigrees. But even as late as 1975 only one hundred genetic positions were mapped in the human genome across all populations. The first complete biophysical genetic map of an organism, Haemophilus influenzae, was published in 1995 with a1.83 million base pair length sequence. By 2020 there were tens of thousands of different species sequenced. The story of the mutation of genetics from a data-poor to a data-rich science is one of exponential technological change; it is very much a synergy between rapid advances in computing and novel innovations in chemistry.

But more interesting than the exponential growth in data are the surprising things we have inferred from the data. In the heady early days of the publication of the draft of the human genome over twenty years ago, co-author Francis Collins asserted that the combination of molecular biology and genomics would “make a significant impact” on our attempt to understand and cure cancer. Despite some early instances where genomic sequencing was performed on cancer patients, like Steve Jobs in 2009, the overall impact of the new science on healthcare has been modest at best. Instead, paleoanthropology, prehistory, and history were transformed as genetics surveyed the pedigrees of the human past with a power and precision that would have been unimaginable a generation ago.

Even though the Swedish geneticist Svante Pääbo published a paper in 1984 on the DNA of mummies, pioneering the field that would become paleogenomics, it is clear that much of his work in the 1980s and early 1990s was simply reporting sample contamination; the DNA detected was that of lab workers or people who had handled artifacts and specimens. But in 2022, Pääbo was awarded the Nobel Prize in Physiology and Medicine for the transformative work that began in the 2000s. He and his colleagues had learned from earlier errors, and taken to the new genomic technology with gusto.

The first modern human genetic map was published one hundred years after the founding of the field, but the first prehistoric human genetic map was published ten years after that, when Pääbo’s group released the draft of the Neanderthal genome in May 2010. The team then unveiled the genome of a new human species, Denisovans. Named after the Denisova cave in Siberia, where a broken finger bone and a single molar yielded their genome, they are a whole additional branch of humanity distinct from but closer to Neanderthals than modern humans. While Neanderthals are well-known from paleontology and archaeology, Denisovans were novel because they have been identified only from their distinct genetic markers. Genomics was resurrecting the DNA of literally vanished species of humans that were totally unknown to science. 

Humanity Was Once Not One Species, But Many....

....MUCH MORE 

*In 2021 Nvidia really, really wanted to buy Britain's ARM Holdings. Part of the diplomatic dance was gifting a really nifty computer:

NVIDIA Opens UK's Fastest Supercomputer To Outside Researchers, Academic and Commercial

NVIDIA Claims Install of UK’s Top Supercomputer, for Research in AI and Healthcare

Announced last October, NVIDIA today launched Cambridge-1, calling it the United Kingdom’s most powerful supercomputer. Enabling scientists and healthcare experts to use the combination of AI and simulation to accelerate the digital biology revolution, Cambridge-1 represents a $100 million investment by NVIDIA.....

November 16, 2023, we posted:

Britain's Most Powerful Supercomputer And The Butterfly Effect Of Weather Modeling In the Cloud
....That 'puter was the fastest in Britain. From Nvidia:

NVIDIA Launches UK’s Most Powerful Supercomputer, for Research in AI and Healthcare

NVIDIA CEO Unveils ‘First Big Bet’ on Digital Biology Revolution with UK-Based Cambridge-1

First Wave of Startups Harnesses UK’s Most Powerful Supercomputer to Power Digital Biology Breakthroughs

"Where do I think the next amazing revolution is going to come? And this is going to be flat out one of the biggest ones ever.

There's no question that digital biology is going to be it."

Jensen Huang, founder & CEO of NVIDIA.pic.twitter.com/7j4WrHKPok

— Seth Bannon (@sethbannon) December 6, 2023

In August 2024:
note: Google has put this post behind a "Sensitive Content" warning—"Nvidia Looks To Disrupt The Health Care Industry With AI" (NVDA)
This summary is not available. Please click here to view the post.  

In July 2025 a new "Britain's fastest supercomputer" was fired-up at the University of Bristol:

"UK’s Most Powerful Supercomputer, the Isambard-AI, Goes Live" (NVDA)

NVIDIA’s CEO says the Isambard-AI supercomputer is a "vital national asset” that will help “scientists and developers unlock new frontiers in science.”  

The UK’s most powerful supercomputer, Isambard-AI, is officially live at the University of Bristol. Clocking in at 100,000 times faster than a typical laptop, Isambard-AI has officially become the UK’s fastest supercomputer and is expected to rank 11th globally. 

NVIDIA has supplied the facility with 5,448 GH200 Grace Hopper Superchips, enabling it to deliver 21 exaFLOPs of AI performance. An exaFLOP represents a quintillion (10¹⁸) floating‑point operations per second, whereas a typical smartphone achieves merely trillions (10¹²) of operations per second....

....MUCH MORE 

With a slightly more emotional take here's The Sun (U.K.): 

MEGA MIND 

Monster supercomputer switched on to help cure cancer, slash NHS waits and keep OAPs independent longer

OAPs being Old Age Pensioners. 

And going back to Ventner in 2012:

J. CRAIG VENTER: THE BIOLOGICAL-DIGITAL CONVERTER, OR, BIOLOGY AT THE SPEED OF LIGHT @ THE EDGE DINNER IN TURIN

It's not just Mr. Huang. In March 2023 we posted:

"The Biorevolution: Its Implications for U.S. National Security, Economic Competitiveness, and National Power"
The author of this piece, Dr. Tara O'Toole is Senior Vice-President of the CIA's venture capital arm, In-Q-Tel.

**In many ways the vibe feels similar to the zeitgeist around chips and training AI a dozen years ago.

I don't know if it is going to work out as well as 2013's "Why Is Machine Learning (CS 229) The Most Popular Course At Stanford?"—which was followed by 2014's Deep Learning is VC Worthy—which was followed by 2015-to-date: "Saaaay, this Nvidia may be on to something."

But we shall see.

"Southeast Asia’s AI Dilemma"

From The Diplomat, April 10:

The region faces the modern iteration of a question that has plagued every industrial revolution: who owns the machine, who works it, who extracts the surplus, and who bears the cost? 

The structure of the new AI world is being designed and built today yet large parts of the global south are not among its architects. Along with the rest of the Global South, Southeast Asia finds itself positioned in the global AI economy as a consumer, a reservoir of natural resources and cheap labor, and the primary supplier of the data powering the Fourth Industrial Revolution.

Beyond recent, progressive data regulation efforts, the crafting of national AI strategies, ministerial declarations, and local “unicorns” built on foreign cloud infrastructure, lies a foundational question: are these digital instruments of technological sovereignty and economic productivity, or rather symptoms of intensifying dependency, democratic erosion, and foreclosure of the region’s techno-scientific future?

Like Dante’s descent into successive circles of hell, this article moves through layers of increasing structural depth, each darker and more unsparing than the last. Guided by history and political economy, I travel downward from the surface layer of policy, compliance frameworks, and AI adoption, through AI’s physical infrastructure, and the deep tectonic plates of the stratified and unequal world-system.

This epistemic movement reveals a historical pattern. From the colonial plantation to the data center, from the steam engine to the GPU cluster, every industrial revolution returns to an unresolved techno-societal puzzle: how does technology shape the relation between society, labor, productivity and surplus, and how does surplus shape the social body and its institutions?

For Southeast Asia’s 700 million population, the dilemma brought about by this AI wave is the latest iteration of the perennial question that has haunted humanity since the first industrial revolution in the 18th century.

AI’s Transformative Potential?

The sociotechnical infrastructure of Southeast Asia is increasingly anchored to a rapidly expanding ensemble of digital and AI technologies. Large language models (LLMs), computer vision systems, facial recognition tools, and embedded predictive recommendation engines, and so on are now deployed at scale. These technologies are increasingly employed and operationalized across e-commerce platforms, public service delivery, financial systems, border control, education, policing, and surveillance networks. Their cumulative effect is a fundamental reorganization of the state apparatus, social relations, urban infrastructure, and the economics of the region. 

The dominant interpretation of this transformation is one of techno-progressivism and “charting paths into a brave new world.” Techno-optimists have been quick to announce that Southeast Asia will be “a burgeoning hub for AI innovation” one that has already attracted $30 billion in AI infrastructure and $50 billion investment in AI. The ASEAN ministerial meeting on Science, Technology and Innovation (AMMSTI) released a statement in June 2024 declaring that AI has “significant transformative potential,” and is a “key driver of technological advancement and innovation.” The meeting noted that AI may possibly result “in a 10 to 18% GDP uplift, valued at approximately USD1 trillion by the year 2030.” The market appears to share this worldview, with a report in The Business Times in March 2026 announcing that “81 per cent of South-east Asian companies [are] already piloting and scaling AI-powered projects.”....

....MUCH MORE 

News you can use should you be sailing the Strait of Hormuz (this weekend)

These are the new corridors that Iran wants you to use rather than going right down the middle:

 

Via The Sun: "Mullah's Minefield," April 9 

The easier to to toll you. 

"SpaceX Is Going Public. Why a Tesla Merger Could Be Musk’s Real Endgame." (TSLA)

From Barron's, April 10, 2026, 1:00 am EDT:

From the biggest IPO on record to the largest M&A deal in history? 

SpaceX’s initial public offering may be the largest IPO ever, but it might just be a prelude to the largest merger ever—a combination of Tesla TSLA with Elon Musk’s space venture.  

On April 1, SpaceX reportedly filed confidentially for an IPO. It’s likely to raise $75 billion, more than double the $29 billion Saudi Aramco raised in 2019, and three times the $25 billion Alibaba Group Holding raised in 2014. Its valuation could come in close to $2 trillion, immediately making the company the sixth-most valuable in the U.S. Not bad for a venture that was worth only $350 billion a year ago and was founded by a 30-year-old who thought it was dumb to dispose of rockets as if they were plastic straws.

SpaceX’s IPO would be remarkable on its own, but it might only be the first step in a process Musk calls “convergence,” the act of combining all his companies into one. That process is well under way. Just two months ago, SpaceX merged with Musk’s xAI in a deal that valued the X parent at $250 billion. A combination of Tesla and SpaceX, to create a $3.5 trillion behemoth, would yield an AI-infused industrial megaconglomerate that would instantly become one of the most valuable companies in the world—and the premier manufacturing company on the planet.

“I think it’s probable,” says Baird analyst Ben Kallo. “It looks like that’s going to happen.”

No matter what happens, the SpaceX IPO is coming first, and it’s the better business. Yes, it could help rescue Tesla—whose shares have fallen almost 30% after hitting a record high in December—from its current stagnation. But for now, investors may be better off focusing on SpaceX and holding off on buying both stocks.

SpaceX is already staggeringly successful—and has a knack for making others in the industry look a little foolish. It took only six years from its founding in 2002 for SpaceX to become the first privately funded organization to put a liquid-fueled rocket into orbit. Few understood exactly what was happening. In 2015, SpaceX President Gwynne Shotwell was chided in Congress about how her company could afford to offer launches at a price far below the $400 million of America’s dominant commercial launch provider, ULA, a 50/50 joint venture between Boeing and Lockheed Martin.

“It is hard for me to say,” she replied. “I don’t know how to build a $400 million rocket.” By 2017, SpaceX was reusing rockets, dramatically lowering the cost to reach orbit.

More recently, SpaceX posted a picture of its improved Raptor rocket engines, leading Tory Bruno, at the time the head of ULA, to comment that there was “no need to exaggerate” SpaceX’s tech by showing “partially assembled” engines. SpaceX responded by posting a video of the engine running. “Works pretty good for a ‘partially assembled’ engine,” said Shotwell. The tech, which integrated cooling and sensors inside components, appeared almost magical—even to industry insiders.

Investors have to put a multiple on that magic when SpaceX goes public. Currently worth $1.25 trillion after the xAI merger, SpaceX will be aiming for a valuation of up to $2 trillion, or roughly 75 times estimated 2026 sales and 160 times estimated earnings before interest, taxes, depreciation, and amortization, or Ebitda.

It’s an eye-popping valuation, and not one that lends itself to comparison—not even to Tesla, which trades for closer to 100 times estimated Ebitda. But SpaceX is unique. It handles more than half of the world’s orbital launches, helped by its massive cost advantage from reusable rockets. It also built Starlink, a profitable space-based broadband product, which had more than nine million subscribers at the end of 2025, up roughly 100% year over year, each paying at least $600 a year for the service. SpaceX is “a cash machine,” says Rainmaker Securities managing director Greg Martin, who believes SpaceX’s Ebitda profit margins were as high as 50% before the xAI merger.

For SpaceX’s valuation to make any kind of sense, the company will have to keep those margins high as it grows—and that means making it even cheaper to go to space. SpaceX’s partially reusable Falcon 9 costs an estimated $2,000 to $3,000 per kilogram to reach low Earth orbit, 1/20th the cost relative to the Space Shuttle. SpaceX’s huge, fully reusable Starship could cut costs relative to Falcon by another 80% to 90%....

....MUCH MORE, so far he's just clearing his throat. 

Trade: "The rise and fall of the Hanseatic League"

From Works in Progress, March 13, 2025:

The Hanseatic League united merchants to bargain with kings, blockade cities, and even win wars. But when technology changed, defections began and the coalition fell apart.

Today, we typically think of coalitions in the context of modern electoral politics. So it might be surprising that one of the greatest case studies in the history of coalitions is a community of medieval German merchants known as the Hansa.

Starting as individual traveling traders, the Hansa built up coalitions for collective bargaining, collective action, and collective security. Through this process, they formed Northern Europe’s first ever long-distance trade network.

Without corporate structures, they built supply chains that distributed goods between Northern Europe’s major ports, with capillaries that spread into each city’s hinterlands. Without formal territory, their laws governed trading hubs spanning thousands of miles, from London all the way to Western Russia. And, despite being composed of hundreds of member cities, the Hanseatic League had no head of state. Yet the Hansa still managed to sign treaty after treaty with foreign rulers and, a few times, even fought (and won!) wars.

The Hanseatic system lasted for nearly 500 years. Like any governing system, it struggled with division, factionalism, and defection – and eventually, it would succumb to these forces. While Hansa alliances proved impermanent, their impact was enduring. They made Northern Europe’s trade routes secure and grew European state capacity to support commerce.

The birth of long distance trade

Europe during the Dark Ages was in a state of dire subsistence. Europe’s population declined for several centuries after the collapse of the Roman system due to low crop yields. Historians and archaeologists have not yet reached a consensus on the causes, but there are a few suspects. The collapse of Roman state capacity made it harder to collect taxes, which meant that irrigation infrastructure like aqueducts fell into disrepair, and the yields of the surrounding farms fell with them. A volcanic eruption in 536, likely in Iceland or North America, triggered the Late Antique Ice Age, which chilled the climate of the northern hemisphere for approximately 200 years.

While the causal story is hazy, its impact on European life is painfully clear. The Roman system of smallholder farms collapsed, which dragged previously independent farmers into serfdom on large manors controlled by landowners. Without significant agricultural surpluses, Europe could no longer support a large population of craftsmen and artisans. As the artisan class vanished, so too did urban markets, and even money. Copper and silver coins, which Romans had used in day-to-day transactions, fully disappeared. Some kingdoms still minted gold coins, but these were primarily stores of value to pay administrative fees and rarely used in trade. Europe’s population by the 600s, reduced to subsistence, serfdom, and barter, was just 14–18 million people. But shortly after hitting rock bottom, its fortunes began to reverse.

Starting in the 800s, the flow of goods and people – especially in Northern Europe – began to pick up tempo. Temperatures recovered during what is known as the Medieval Warm Period (900–1300) which improved agricultural yields by making more regions arable for longer stretches of the year. Simultaneously, medieval farmers advanced their agricultural processes in a period that archaeologist Helena Hamerow describes as a Medieval Agricultural Revolution. Northern European farmers adopted the moldboard plow, an oxen-driven heavy plow that significantly increased the amount of highly arable land available for farming by making it possible to plow nutrient-rich but badly drained river silt....

....MUCH MORE

Previously:

Shipping: So What's New In the Hanseatic League?
First up, a bit of backstory, November 24, 2017:

A Tale of Two Cities: Hamburg and Lübeck—Lessons in Trade, Geography and Urbanism 
Sorry Lübeck, the umlaut might not print correctly on this platform....

A Look At The Chevron Refinery Built To Process Venezuelan Crude Oil (plus a look at Venezuela's economic uptick)

From the BBC, April 9: 

The US refinery now processing Venezuelan oil 

The Minerva Gloria is docked at a wharf in the Mississippi Sound, not far from the US's vast oil reserves in the Gulf of Mexico.

The ship, 820ft (250m) long, painted navy and burgundy, is carrying precious cargo from Venezuela that, just six months ago, would have been impossible to bring to the US - 400,000 barrels of crude oil.

Venezuela has the world's largest oil reserves. Under Venezuela's former president Nicholas Maduro oil exports had dropped significantly, due to a lack of investment. Then came US sanctions against any imports from the Latin American country.

But US President Donald Trump vowed to tap those reserves after the US military captured Maduro in a surprise, night-time raid in January.

Now the oil is flowing again in Venezuela. In March, the country's monthly crude exports surpassed one million barrels per day. The first time since September.

As the world reels from the impact on global energy prices caused by Iran blocking the Strait of Hormuz, big oil and gas companies like Chevron are now importing Venezuelan crude oil by the shipload.

"It's a big deal not only for Chevron but the entire Gulf region," says Tim Potter. He is the director for Chevron's oil refinery in Pascagoula, Mississippi, the company's largest operation in the US. It is also the only major US oil company currently operating in Venezuela.

Together this means that Chevron can extract its own Venezuelan oil, process it itself, and get it directly to the US consumer.

"It's a pretty big incentive for us to run it," Potter says. "The refinery was really designed, and we invested in the refinery, to run heavy oils like from Venezuela."

Venezuelan crude oil is relatively cheap to buy because it is much more difficult to process. It is very heavy, thick, dark and high in sulfur, often called a sour oil. It is used to make diesel, gasoline (petrol), jet fuel and other products.

Chevron now imports the equivalent of 250,000 barrels of Venezuelan crude oil per day, on average, says Andy Walz, president of downstream, midstream and chemicals at Chevron.

"We think we can take that up another 50% so call it somewhere around 350,000 to 400,000 barrels a day of just the Chevron share of our position in Venezuela."

What Walz means by the US's "position in Venezuela" is that while Chevron is the only US company that has extracting capabilities in the country, others are buying Venezuelan oil from domestic producers.

Chevron is also not the only player when it comes to oil refining in the US. There are 132 refineries in the US that run on a mix of crude oils. And nearly 70% of US refining capacity runs most efficiently with heavier crude.....

....MUCH MORE 

The Venezuelan oil won't translate into cheaper gasoline prices until the supply from the Middle East is regularized but then, because it is an addition at the margin it should clip a few pennies off the pump price.

As for Venezuela, here's the journal Americas Quarterly, April 6:

Venezuela’s Economy Is Accelerating, But Will Depend on More Than Oil 
Pending reforms will determine whether momentum is sustainable under interim President Delcy Rodríguez. 

CARACAS—After 19 consecutive quarters of moderate growth, Venezuela’s economy is showing signs of a remarkable breakthrough, with an expansion of some 12% now possible this year. The open question is whether this truly marks the start of a new era—or another short-lived rebound tied to oil and external conditions....

....MUCH MORE