"Grantham's Short Call Cost His Hedge Fund Over $2 Billion"

 Following up on June 5's ""It's Pretty Obvious This Will End Badly": In Historic Reversal, Grantham's GMO Goes Short US Stocks" which we intro'd with the teaser: If interested see "How Good (or bad) Are GMO and Jeremy Grantham's Market Calls?" after the jump.

And the headliner, from ZeroHedge, November 24:

Back in June, value investing legend Jeremy Grantham decided he had had enough, and in a historic reversal for his traditionally bullish GMO Benchmark-Free Allocation Fund, took down exposure to US equities from a net 3-4% to a net short position worth about 5% of the $7.5bn portfolio, "perhaps the first time the fund has turned net short US stocks since the crisis."

Grantham laid out the reasons for his bearish flip in a lengthy letter to GMO investors, writing that "we have never lived in a period where the future was so uncertain" and yet "the market is 10% below its previous high in January when, superficially at least, everything seemed fine in economics and finance. And if not “fine,” well, good enough. The future paths include many that could change corporate profitability, growth, and many aspects of capitalism, society, and the global political scene."

In short, the veteran value investor known for calling several of the biggest market turns of recent decades admitted he had lost his faith in an upside case and his sense of direction in a world of record uncertainty "which in some ways seems the highest in my experience" and as a result "in terms of risk and return – particularly of the worst possible outcomes compared to the best – the current market seems lost in one-sided optimism when prudence and patience seem much more appropriate."

Grantham also highlighted the obvious: that the market and the economy have never been more disconnected - a phenomenon which is now known as the K-shaped recovery, and pointed out that while "the current P/E on the U.S. market is in the top 10% of its history... the U.S. economy in contrast is in its worst 10%, perhaps even the worst 1%.... This is apparently one of the most impressive mismatches in history."

However, the value investing legend's most dire prediction was that "if you look back in two to three years and this market turns around and drops 50%, the history books will say ‘That looked like one of the great warnings of all time. It was pretty obvious it was destined to end badly," Grantham said, adding: "If it does end badly the history books are going to be very unkind to the bulls." (his full letter can be found here).

* * *

Perhaps Grantham will be proven correct and in the summer of 2022 the S&P will be a smouldering post-crash rubble of its former bull market glory, but a little over five months after Grantham made his fateful bearish call, his multi-billion fund is suffering unlike any time since the financial crisis.

According to Bloomberg, GMO’s flagship Benchmark-Free Allocation Fund, which as noted above turned net short in the early summer and which seeks returns of five percentage points above the rate of inflation, has badly underperformed risk assets so far this year. It trails the S&P 500 by 14%, and while its primary equity holdings are in emerging markets, it also lags behind MSCI’s main developing-market gauge.

And in a world where hedge fund clients demand returns here and now - especially with 13-year-old Robinhood daytraders generating triple digit returns - Grantham's dramatic underperformance has meant just one thing: a flood of redemption requests.
In just the past 10 months, clients have pulled $2.2 billion from the fund with assets dropping by more than half since 2015 to $6.6 billion as of the end of October....

....MORE

Among the links in that long-ago June post—at least it seems long-ago:
*****

Feb 2010
"Grantham’s ‘Horrifically Early’ Calls Challenge GMO"
March 2014
How Good Is Jeremy Grantham's Forecasting Record?  
His strong pessimism drives GMO managed funds toward the most stable (large capitalization) value stocks, and these funds have performed fairly well (reflecting perhaps a value premium rather than market timing)....
As noted in that October 2019 post

It would be horribly ironic if Mr. Grantham's most accurate call in the last decade turns out to be S&P 3300 but we are betting that is where the market goes before all is said-and-done (and one of the reasons we can maintain a façade of equanimity in the face of drawdowns such as the Oct. 3 - Dec. 24, 2018 unpleasantness)

CXO Advisory did an analysis of GMO's glory days, 1999 -2009 which caught two major bear markets, the dot.bombs and the Great Financial Crisis, here if you want to take a look.

CXO is also the source for 2014's "How Good Is Jeremy Grantham's Forecasting Record?" above....

...MORE 

The S&P 500 is at  3,633.15.

Black Friday Stuff

A repost from Friday, November 24, 2017.

First up, the two Thanksgiving Day pieces from the Paris Review are just so satisfying I had the brilliant thought to check what P.R. might have for Black Friday.
And was rewarded with:

Black Friday, the Poem

The Paris Review staff is off in a tryptophan-induced haze, so we’re reposting some of our favorite Thanksgiving pieces. Enjoy your holiday!

“The New York Gold Room on ‘Black Friday,’ September 24, 1869.” —E. Benjamin Andrews 1895

While most of us know Black Friday as the nightmarish commerce-fest following Thanksgiving—a term coined in Philadelphia in 1961—in fact the nom de guerre dates back to the nineteenth century. In 1869, the robber barons Jay Gould and James Fisk attempted to corner the gold market, resulting in financial crisis and scandal.

E. C. Stedman, a poet and broker(!), wrote the following:

One Hundred and Sixty! Can’t be true!
What will the bears-at-forty do?
How will the merchants pay their dues?
How will the country stand the news?...

 ...MORE

We too have referenced the doings on Sept 24, 1869. An example from 2013:

It May Have Been October 2008 When I Lost My Mind

....Here's a stock market oriented version of Steely Dan's "Black Friday"*, worth the watch:

*The song refers to Black Friday, September 24, 1869 when an attempted corner of the gold market by James Fisk and Jay Gould was broken by the Federales.

When Black Friday comes
I'll stand down by the door
And catch the gray men
When they dive from the fourteenth floor
When Black Friday comes
I'll collect everything I'm owed
And before my friends find out
I'll be on the road
When Black Friday falls you know it's got to be
Don't let it fall on me...

Over at ZeroHedge they will probably be doing the annual Tally of the Mayhem, although with coronavirus restrictions a lot of the shopping-from-home crowd are only at risk from friends and family. 

Here's hoping no one gets killed at Walmart. 

Or at their keyboard

"Google plans fiber-optic cable linking Israel and Saudi Arabia"

 From Middle East Eye

Project would mark the latest sign of warming relations between the two historical enemies

Google is planning to deploy a fiber-optic network that will run through Saudi Arabia and Israel to open a new global internet traffic corridor, according to a US newspaper.
The network, which will connect India and Europe, would be Google’s newest cross-world infrastructure project, the Wall Street Journal reported on Tuesday, citing people familiar with the plans.

The underwater cable project has been dubbed Blue Raman by Google, which names most of its internet cables after scientists, in this case the Indian physicist Chandrasekhara Venkata Raman.
It will be more than 8,000km long and is expected to cost $400m, according to calculations by Salience Consulting, a Dubai-based communications company, cited in the WSJ report.
The move is the latest sign of warming relations between Israel and Saudi Arabia, linking for the first time the two historical enemies that have no official diplomatic relations.

Bahrain, the UAE and Sudan have already agreed to establish ties with Israel, breaking with a decades-old demand among Arab states that recognising Palestine was a necessary precursor to any deal with Israel.

'Pariah' state

Israeli Prime Minister Benjamin Netanyahu secretly flew to Saudi Arabia on Sunday to meet Crown Prince Mohammed Bin Salman and US Secretary of State Mike Pompeo, according to Israeli media.
Sources told Haaretz that the overnight meeting took place in Neom, a flagship mega-project being built on the Red Sea, and that Mossad chief Yossi Cohen was also in attendance.

The visit marked the first known high-level meeting between an Israeli and a Saudi leader, though the two are reported to have met privately in the past....

....MUCH MORE

There are some western media relaying the Saudi Foreign Ministry's denial of the meeting between MBS and  Netanyahu but most of the folks in the area say it happened.

"Dead minks infected with a mutated form of COVID-19 rise from graves after mass culling"

 I thought mink were their own plural but apparently only sometimes.

From USA Today, November 25:

Minks infected with a mutated strain of COVID-19 in Denmark appear to be rising from the dead, igniting a national frenzy and calls from local officials to cremate mink carcasses.

While the sight itself is certainly terrifying for the residents of West Jutland, a region of the country grappling with confirmed COVID-19 cases connected to mink, there is likely a scientific explanation for the zombie-like reemergence from their graves.

A Danish police spokesman, Thomas Kristensen, told a state broadcaster that gases form while the body decays underground, according to the Guardian.

“In this way, in the worst cases, the mink get pushed out of the ground,” Kristensen said of the nightmarish sight....

....MORE 

Previously: 

Mutant Coronavirus in Mink Spreading To Humans

 

Now if it turns out that deer and moose are not their own plural I may have to go back to third grade. 'Zombie deer' brain disease spreads to 24 US states ...

Capital Markets: "Dollar Offered Ahead of the Weekend"

Dollar Index futures are still trading sub-92 despite a small bounce off 91.86.

 From Marc to Market:

Overview: Equities are finishing the week on a firm tone, while the US dollar remains heavy. In the Asia Pacific, only Australia and India did not end the week on a firm note. The MSCI Asia Pacific completed its fourth consecutive weekly gain, for around a 13% gain. Europe's Dow Jones Stoxx 600 is edging higher today, and it too is completing its fourth weekly advance for a cumulative gain of around 14%. US stocks are trading firmer as well. So far this month, both the S&P 500 and NASDAQ are up about 11%, while the Russell 2000 is up nearly 20%. Bond yields are a little changed, and the US 10-year yield is a couple basis points lows near 0.86%. Peripheral European bonds are making record lows, and Portugal's 10-year yield is hovering just above zero. The dollar is softer against nearly all the majors today, and for the week, only the yen has been unable to rise against the offered greenback. Emerging market currencies are more mixed, with the Russian, Indian, and Chinese currencies softer. An increase in Turkey's required reserve ratios for both lira and fx deposits and checking accounts appears to be offering the lira some support today. JP Morgan's Emerging Market Currency Index is closing out its fourth consecutive weekly advance. Gold is bouncing along its trough, holding above $1800 but unable to move above $1820. WTI is trimming this week's gains amid concerns that the recovery in prices (January WTI + 25% this month) will weaken OPEC+ resolve to postpone the planned increase in output at the start of next year.

Asia Pacific
The MOF report showed Japanese investors sold JPY1.43 trillion (~$13.7 bln) of foreign stocks last week, the most in four months. For their part, foreign investors sold almost JPY1.2 trillion (~$11.5 bln) in Japanese equities. It is the most in a couple of months. Foreign investors could not keep pace in the fixed income space. Japanese investors bought JPY1.96 trillion (~$18.9 bln) of foreign bonds, while foreign investors about JPY461 bln Japanese bonds. It is the fourth consecutive week that Japanese investors were buyers of foreign bonds, and over the run, they bought roughly JPY4.42 trillion, the most in a four-week period since March.

After being under consideration for several weeks, China formally announced that Australian wine imports will be slapped with more than 100% anti-dumping levy starting tomorrow. This is the latest incident of Beijing punishing Canberra through trade, one of its few levers of power to express its disapproval over Australia's political positions that have been critical of China and supportive of US efforts to check the rising power. Reports suggest that there are more than 50 ships carrying coal that are stranded off Chinese ports. Meanwhile, China reached a new agreement with Indonesia. Indonesia will supply China with $1.5 bln of coal over the next three years. Indonesia is the world's largest exporter of thermal coal and is the main commercial rival of Australia's coal....

 ....MUCH MORE

Thanksgiving and Beer

First posted November 27, 2013:

From a 2011 email to a friend:

So Thursday was beautiful and around 1:00 p.m. I said "I'd like a beer".
Rather than "Here, let me get one for you" my interlocutor says "You and Samoset".
Being quick-witted I respond "Huh?"
And receive "You remember Samoset?"
"Uh, sure. Samoset, Squanto and Massasoit, right?"
"Look it up"

So I do.

March 16, 1621
The Pilgrims made it through that first winter, spring is coming and lo-and-behold, so is one of the locals.

The Pilgrims grab their guns shouting "Indians, Indians" and he continues walking right into the middle of their camp and says:

"Welcome"

After the Pilgrim version of "WTF" they say "Welcome".

The big guy responds "I am Samoset".

Time for another quick "WTF" before he continues:

"Have you any beer?"

---------------------------------------------------------------------------------------------

"Friday, the 16th, a fair warm day towards; this morning we determined to conclude of the military orders, which we had begun to consider of before but were interrupted by the savages, as we mentioned formerly. 

And whilst we were busied hereabout, we were interrupted again, for there presented himself a savage, which caused an alarm. He very boldly came all alone and along the houses straight to the rendezvous, where we intercepted him, not suffering him to go in, as undoubtedly he would, out of his boldness. 

He saluted us in England [English], and bade us welcome, for he had learned some broken English among the Englishmen that came to fish at Monchiggon [Monhegan Island], and knew by name the most of the captains, commanders, and masters that usually came. He was a man free in speech, so far as he could express his mind, and of a seemly carriage. We questioned him of many things; he was the first savage we could meet withal. He said he was not of these parts, but of Morattiggon [Monhegan Island or Pemaquid, Maine], and one of the sagamores or lords thereof, and had been eight months in these parts, it lying hence a day's sail with a great wind, and five days by land. He discoursed of the whole country, and of every province, and of their sagamores, and their number of men, and strength. 

The wind being to rise a little, we cast a horseman's coat about him, for he was stark naked, only a leather about his waist, with a fringe about a span long, or little more; he had a bow and two arrows, the one headed, and the other unheaded. He was a tall straight man, the hair of his head black, long behind, only short before, none on his face at all; he asked some beer, but we gave him strong water and biscuit, and butter, and cheese, and pudding, and a piece of mallard, all which he liked well, and had been acquainted with such amongst the English."

— Mourt's Relations, Edward Winslow, 1622
(damn near contemporaneous, eh?)

There is no record of Samoset being at the harvest feast that Autumn of 1621 but he helped make it happen and because he did, 213 years later, in ca. 1934, Macy's could do this:

-The Macy's Thanksgiving Parade Balloons Used to Be Extremely Creepy
from Atlantic Cities

Thanksgiving Day Stories

And I am outta here.
Tomorrow we'll have our traditional Thanksgiving and beer post and back on Friday morning.

From the Paris Review, November 25, 2015:

The Nexus of All Despair
by Jane Stern

Our Winter 2015 issue features an interview with Jane and Michael Stern, who have written more than forty books; their Roadfood, first published in 1978 and now in its eighth edition, brought a new fervor and attention to regional American cuisine. To celebrate the new issue and the holiday, Jane Stern reflects here on Thanksgivings past. Happiness abounds. —D. P.

I’ve always thought that Thanksgiving was my favorite holiday, based solely on the fact that I adore turkey. But if I were to remove turkey from the equation, I would probably realize that this holiday, for me, has been nothing but one hideous thing after another.

Why Thanksgiving is the nexus of all despair is a mystery. But to prove that it is, here’s a short list of some of the things I remember.

1956, New Haven, Connecticut
The table is beautifully set in the dining room of the gracious colonial house on Trumbull Street, where my aunt and uncle live. I am ten years old, and my older cousins—Eric, seventeen, and his sister, Willa, thirteen—are my teen idols. After the family takes a few snapshots of all of us smiling, the food is spread out on the table and the shit hits the fan. Uncle Henry makes a snide remark about Elvis Presley, who has just been on The Ed Sullivan Show, and cousin Willa flings herself from the table in a histrionic fit. The whole table erupts into a pro- and anti-Elvis fight. The dinner is ruined, no one is hungry, and the gravy curdles as “All Shook Up” blasts from the phonograph in Willa’s room behind the slammed door.

1971, New Haven, Connecticut
A newlywed, I forgo seeing my family for Thanksgiving, and for a change of pace Michael and I invite two friends over. The only flaw in this plan is that I do not know how to cook. Undeterred, I take cookbooks out of the library, buy bags and bags of food, and at some point realize the twenty-eight-pound turkey (for four) will not fit in our apartment’s modest oven. I hack it into pieces.

By the time the two guests arrive, I’ve been cooking for four days, making unspeakably horrible and complicated dishes. I’ve also arranged flowers, cleaned the apartment, repainted the bathroom, and stocked up on Mateus and Boone’s Farm apple wine. I vaguely remember the guests arriving. I’m told that twenty minutes after they did, I excused myself and went to bed. I wake up the next day to a sink full of dirty dishes.

1977, Evanston, Illinois
My in-laws live in the Midwest, and every other Thanksgiving Michael and I travel to see them. This year we’re going to a close relative’s house a few miles away from where his parents live. These relatives are very pretentious. The house is Japanesque. We are instructed to remove our shoes when we enter. The floors are highly polished wood; the furniture is low, uncomfortable, and expensive. The host, a doctor, collects small, tortured bonsai trees.

Seventy-seven is the year the Cuisinart hit the American food scene, and these relatives are nothing if not on trend. Their Thanksgiving menu: pureed capon, pureed creamed spinach, pureed potatoes, pureed carrots, and, for dessert, a pureed pumpkin puree with pureed chestnuts on top. When I am very old and in a nursing home, I will look back on this meal fondly. But now, not so much.

1981, New Haven, Connecticut
Much of my family has died, unexpectedly, from awful diseases and fateful occurrences: my mother from a brain tumor, my cousin Willa from breast cancer, another cousin from a car accident, my grandmother from a broken hip, my father from smoking five packs a day. Those of us who are still living are at my Uncle Henry’s house for the traditional Thanksgiving meal. My Aunt Liz is cooking from rote, undeterred by her galloping Alzheimer’s. We all sit around glumly forking at the stuffing and Uncle Henry begins reading the most ghastly poetry, stuff he’s written for the event. It is not so much poetry as a morbid recitation of terminal cancer symptoms in iambic pentameter. I want to go screaming into that good night.

1995 and 1996, Redding, Connecticut   
Michael is now devoted to AA.... 

...MORE

And speaking of J.M.W. Turner (for folks who don't obsessively remember every word that appears herein, it was November 21, 2016)...

Again from the Paris Review, this time November 24, 2014:

Sleep of the Just
by Sadie Stein

You know how J. M. W. Turner tried to exhibit his work at the Royal Academy and the Royal Academy was all, Wow, your work is way too innovative and interesting and we can’t show it because it would threaten all our hidebound, bourgeois ideas and force us to reevaluate everything and make important societal changes? Yeah, well, I totally see their point. Once a year, anyway.

Because every November, all the food magazines and blogs start trying to bully us into to reinventing the wheel. Don’t be a fogey! they scream. What, you’re still eating turkey? HAHAHA. Well, if you insist on being a “traditionalist,” stuff that turkey with linguica and kale! Baste it with ramen! Douse it in pomegranate molasses! (All this is said in a vaguely threatening, SportsCenter-style cadence.) This isn’t your mom’s green bean casserole! You’re not even seeing those losers, are you, with their stupid political views and opinions about your love life? Surely you’re having some awesome no-strings Friendsgiving celebrating the new family you’ve chosen! Right? RIGHT?! SRIRACHA. SRIRACHA. SRIRACHA. 

Look. I get the market demands of the newsstand. You can’t just recycle the same stuff year after year. Nor do I mean to advocate a slavish adherence to tradition. In my family’s case, that would mean cleaning the dining room table off in a panic at the last minute, barring entrance to the rooms where we’ve stuck all the mess, then watching my mother stand in front of the digital meat thermometer with tears rolling down her cheeks....MORE 

"...and the Royal Academy was all, Wow, your work is way too innovative and interesting and we can’t show it...."

Because that's just the way they spoke at the Royal Academy, back in the day.

The pic is from Christie's "Mr Turner: Recreating the Royal Academy Show of 1832"

Gone for the Holiday, back for the short day Friday, maybe some more Thanksgiving stories or a recipe or two.

Since The U.S. Election The Oil & Gas Exploration and Production Companies In the S&P 500 Have Seen Their Stocks Rise 42.6% (XOP)

That's based on the SPDR S&P Oil & Gas Exploration & Production ETF and compares with a 7.9% gain in the S&P itself.

FinViz

Over the same time period the Invesco Solar ETF (TAN) is up 20.0%

This makes marketing problematic for RIA's and fund managers who pitch both ESG and value investing as the E&P stocks were about as deep value as the market offered.

Don't even get me started on the poor confused souls who tout both low-cost passive investing and the inherently active ESG area. They are often reduced to incoherence and might be better off with a forthright "Just give me your money".

As to ourselves re: ESG, we lean toward a variation on John Wesley's Sermon 50, The Use of Money (1744) which contains the admonition:

"Earn all you can, Save all you can, Give all you can" 

"There Are No Short Sellers Left"

 Uh oh.

The lack of shorts doesn't itself mean the market is going down but it does mean that should something exogenous trigger selling, the decline will not be cushioned by traders closing their shorts with a buy order.

Here's an example: On June 6, 2008 oil staged it's largest dollar gain in history. Goldman had their pension and endowment customers loaded up with fancy prop products based off long positions in the Goldman Sachs Commodity Index, an index even more heavily skewed to oil then than it is now. The GS megaphones were pitching $200 per barrel for WTI.

As retold in a June 2, 2009 post looking back to the previous summer:

...After talking to some folks who had been mauled [cute -ed] I decided that the short-sellers had just given up. It is no fun to be selling into the buying of Goldman and their long-only index clients, CalPERS, the universiy endowments et al.
So they said to hell with it. Oil continued to rise for another 35 days before peaking on July 11.
On July 29 I had this comment at Environmental Capital:

• 5:37 pm July 29, 2008
• Climateer wrote:

Mike @ 4:13,
Two separate thoughts in that first post.
As best as I’ve can tell approx. 40% of the move from $80 to $147 (25-28 bucks) came from “speculation”. I use quote marks because of the terminology problems most of the talking heads have when the subject is commodities. Speculators in commodity parlance take the other side of a hedgers trade, thus performing a societal good.
The problem was, until last week, the shorts had been beaten up so bad by the relentless flow of “investor” money that were out of the game. The $10.75 uptick on June 6 was their capitulation.
They covered and said screw it.
.
I personally don’t see any reason to allow the “investors” in markets for consumables. If they want an inflation hedge, let them run gold to a bazillion per ounce....

The decline was from that July 11, 2008 top-tick of  $147.27 to its December 2008 low of $32.40 for the front month contract and $30.28 spot. That's what can happen when there are no shorts to slow the decline.

Enough history, on to Upfina, Nov 24, 2020:

Short sellers protect the market which sounds weird because many blame them for weakness. The reality is shorts mainly go after weak companies that have fundamental flaws. It’s not the messenger’s fault the flaws exist. Of course, some short on valuation, but those are trades that don’t get talked about as much. The ones that are discussed are the ones that cause stocks to crater. It’s healthier if the flaws are pointed out earlier by shorts rather than later when the problem becomes enormous. Obviously, shorts are trying to make a profit, but calling out bad practices makes a market heathier just like a controlled forest fire makes the forest healthier even though it is a painful process....

There are no shorts left! pic.twitter.com/PUReDuXTa7

— jeroen blokland (@jsblokland) November 21, 2020

....MUCH MORE

Creighton University's Rural Mainstreet Index Retreats for First Time Since April: Bankers Expect 3.1% Decline in Holiday Sales

 From Creighton's Heider College of Business:

November Survey Results at a Glance:

• Moving below growth neutral, the overall index fell for the first time since April of this year.
• For the first time since 2013, Creighton’s survey recorded back-to-back increases in monthly farmland prices.
• Compared to 2019, bankers expect 2020 retail sales to be down by 3.1%.
• Approximately, 54.8 % anticipate a reduction from 2019, and 16.1% project an upturn from last year’s holiday sales.
• The November loan volume reported record lows as the index fell to its lowest since the initiation of the survey in 2006.
• Bankers project 9.2% of grain farmers will experience negative cash flows for 2021, down from 12.4% expected from the November 2019 survey.

OMAHA, Neb. (Nov. 19, 2020) - For the first time since April of this year, the Creighton University Rural Mainstreet Index (RMI) declined. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index fell to its lowest level since August of this year.

Overall: The overall index for November sank below growth neutral to 46.8 from October’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy. Still, only 6.5% of bankers reported economic improvements from October, while 12.9% detailed economic pullbacks for the month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Farming and ranching: For a second straight month, the farmland-price index advanced above growth neutral. The November reading jumped to 55.0 from October’s 50.6. This is first time since 2013 that Creighton’s survey has recorded back-to-back above growth neutral readings in farmland prices.

The November farm equipment-sales index increased to 42.9, its highest level since December 2013, and up from 37.9 in October. However, this marks the 86th straight month the reading has remained below growth neutral 50.0.

Banking: Bankers reported record low loan volumes for November. The November loan volume index fell to its lowest since the initiation of the survey in 2006. The lending index slumped to 25.8 from October’s 46.8. The checking-deposit index soared to 87.1, a record high, from 66.1 in October, while the index for certificates of deposit, and other savings instruments rose to 46.8 from 38.7 in October.

This month bankers were asked to project the share of grain farmers likely to experience negative cash flow for 2021. Bankers expect 9.2% of grain farmers’ cash expenses to exceed cash revenue. This is an improvement from 2019 when bankers projected 12.4% of farmers to experience negative cash flows for 2020....

....MUCH MORE

El Niño/Southern Oscillation: Decisive Shift From La Niña To ENSO Neutral By 2021 North Atlantic Hurricane Season

 Meaning that insurers/reinsurers putting through premium increases based on 2020 may be looking at superior underwriting profitability next year.

Of course there are a myriad of other factors, and one that bears watching is the tendency over the last two years of tropical cyclones to intensify as they approach landfall.

For a first pass look at what we might see in 2021 here's Columbia University/IRI's chart of the various models:

IRI ENSO Forecast

IRI/CPC ENSO Predictions Plume
Published: November 19, 2020
Note on interpreting model forecasts

The following graph and table show forecasts made by dynamical and statistical models for SST in the Nino 3.4 region for nine overlapping 3-month periods. Note that the expected skills of the models, based on historical performance, are not equal to one another. The skills also generally decrease as the lead time increases. Thirdly, forecasts made at some times of the year generally have higher skill than forecasts made at other times of the year--namely, they are better when made between June and December than when they are made between February and May. Differences among the forecasts of the models reflect both differences in model design, and actual uncertainty in the forecast of the possible future SST scenario.....MUCH MORE

---

Whatever Happened To 3D Printing? Relativity Space Closes a $500 Million Series D To 3D Print Rockets

Additive manufacturing of metal: very important. We learned that during the great 3D bubble of 2012 with Sweden's Arcam:

Despite my concern about the share price the company itself is a little gem, one of the leaders in 3D metalworking as opposed to the plastic tchotchkes that you get out of a MakerBot.
And not just any kind of metalworking either, this is bleeding edge. 

The company was purchased by General Electric after a $10 to $175 run.

And from TechStartups, November 23:

Relativity Space raises $0.5 billion in Series D funding to 3D print an entire space rocket and build the largest metal 3D printers in the world

We first covered Relativity Space back in 2018 after the Los Angeles-based orbital launch startup raised $35 million in funding. A lot has changed since then. Relativity Space (Relativity) is disrupting 60 years of aerospace tradition by creating an entirely new process to build and fly rockets. Its 3-D print technology enables rockets to be built and flown in days instead of years. Its 3-D printed rocket contains 100 times fewer parts than the conventional rockets.

Relativity deploys and resupplies satellite constellations, is the first company to 3D print an entire rocket, and build the largest metal 3D printers in the world. Its new process to build and fly rockets is redefining how we access to space to connect our planet.

Today, Relativity announced it closed a $500 million Series D equity funding round to accelerate its planned initiatives, including its factory of the future, launch vehicle development, and 3D printing technologies as it builds toward humanity’s multi-planetary future.

The round, which further validates Relativity’s sector-leading momentum across commercial execution, technical milestones, and talent growth, was led by Tiger Global Management with participation from new investors Fidelity Management & Research Company LLC, Baillie Gifford, ICONIQ Capital, General Catalyst, XN, Senator Investment Group, and Elad Gil. Existing investors participating in the round include BOND, Tribe Capital, K5 Global, 3L, Playground Global, Mark Cuban, Spencer Rascoff, and Allen & Company LLC, among others....

....MUCH MORE

 

"An heiress, a judge and a job: France's Sarkozy goes on trial for corruption"

This has got to be hurting Chancellor Merkel, she and the little guy were close. See below for some early twenty-teens coverage.

From Reuters:

Former French president Nicolas Sarkozy goes on trial on Monday accused of trying to bribe a judge and of influence-peddling, one of several criminal investigations that threaten to cast an ignominious pall over his decades-long political career.

Prosecutors allege Sarkozy offered to secure a plum job in Monaco for judge Gilbert Azibert in return for confidential information about an inquiry into claims that Sarkozy had accepted illegal payments from L’Oreal heiress Liliane Bettencourt for his 2007 presidential campaign.

Sarkozy, who led France from 2007-2012 and has remained influential among conservatives, has denied any wrongdoing in all the investigations against him and fought vigorously to have the cases dismissed.

Investigators had from 2013 been wiretapping conversations between Sarkozy and his lawyer Thierry Herzog as they delved into allegations of Libyan financing in Sarkozy’s 2007 campaign.

As they did, they learned that Sarkozy and his lawyer were communicating using mobile phones registered under false names. Sarkozy’s phone was registered to a Paul Bismuth....

....MUCH MORE

So sad. 
Merkozy Memories

Memories, light the corners of my mind 

Misty watercolor memories of the way we were.

 

Scattered pictures of the smiles we left behind  

Smiles we give to one another

For the way we were

Memories, may be beautiful and yet  

What's too painful to remember 

We simply choose to forget

 Mutti attempted to fly in to be by his side but when the customs agent asked "Occupation?" and she answered "Non, just a day trip" it all went downhill.

(I am so sorry and apologize to our German readers but there aren't many opportunities to tell this very old joke, it probably dates back to Adenauer and de Gaulle and coach said when you see the shot, take it)

 

As a possible peace offering here's a 2011 post that put the German on top:

 

Sarkozy, Merkel Announce Plans to Wed, Restore Holy Roman Empire

Don't email, I know about Herr Professor Doktor Sauer and Carla Bruni, Just roll with me on this.
Europe has not been the same since the HRE folded its tent in 1806 after Napolean beat Francis II and forced him to abdicate on August 6.
Now 205 years to the day later....
I'm sorry, I can't continue.

The HR Emperor was the German top dog and that's not how I want to refer to Angela.
On the other hand as I mentioned in 2008's "European Politicians Think They are Rulers; Need Energy Wasting Palace":

..the EU rulers (alas, they think of themselves as rulers, not servants of the people) are masters of the "Camel's nose under the tent" school of government. They know that if they told the populace the truth they might be treated rougher than Louis XVI was.

When MEP's dream, are they Capetian or Carolingian?
Capetian, methinks.

I've always liked the Carolingians better,
they seemed more human-

Charles II, the Bald
Louis II, the Stammerer
Charles, the Fat
Charles III, the Simple
Along the lines of the Brit's Aethelred II, the Unready
(my fav. royal nickname)

Anyhoo, from the Economic Times (India):...

Sarkozy, as President of the Republic, is already co-Prince of Andorra, he could take on any of the Carolingian nicknames although he may shy away from the name of the founder of the dynasty, Pippen the Short.*

Here's the story that I blame for this ramble:

Sarkozy and Merkel Stress Commitment to Sweet Bailout Moves

PARIS—French President Nicolas Sarkozy and German Chancellor Angela Merkel moved to reassure jittery investors Sunday, reaffirming their commitment to measures recently agreed by European leaders to quell the euro-zone debt crisis as financial markets continued to bet that the region's debt woes could ensnare some of its largest economies.

In a joint statement, the leaders of the euro zone's two biggest economies stressed the importance of the French and German parliaments approving by the end of September the new measures aimed at boosting the scope of the euro zone's current rescue fund, together with a second bailout package for Greece.

The Franco-German statement came as finance ministers of the Group of Seven major industrialized nations planned to hold a telephone conference late Sunday, while the European Central Bank was holding a video emergency conference. Both were aimed at quelling the crisis surrounding the euro zone, which in recent days has increasingly engulfed Italy and Spain, the currency area's third- and fourth-biggest economies....MORE 

Sweet wasn't in the WSJ version but my rather fevered brain kept inserting it and picturing the two of them dancing 'til dawn.

*See: "How Nicolas Sarkozy can walk tall"

And don't get me started on whether or not it would be a morganatic marriage.

Shipping: Container Industry Swings From Forecasted $23bn loss to a $14bn profit

Speaking of doomsday dodged.

From Splash 24/7, November 23:

Container shipping has gone from doomsday to payday in the space of a few months. Sea-Intelligence has revised for the fourth time this year its EBIT profit forecast for the liner industry as carrier results for Q3 trickle in.

Having initially predicted significant red ink for the container shipping pack at the start of the pandemic in April, the Danish consultancy is now forecasting the liner industry will chalk up a $14bn profit this year, marking one of the greatest turnaround in fortunes in the 64-year history of containerisation.

Back in April, when many countries entered lockdown Sea-Intelligence’s worst case scenario was for liners to register a combined $23bn loss.

In fairness to the consultancy, most business sectors – not just shipping – have failed to get profit projections correct during the pandemic....MORE

And In Other News, Nabisco Has Constructed A Doomsday Vault For Oreos

From c|net, October 23:

Oreo stashed its cookies in an asteroid-proof doomsday vault

The cookies are prepared for the extremely slim chance the "Election Day asteroid" reaches Earth's atmosphere.

Oreo, maker of the legendary chocolate-and-creme sandwich cookies, may be overreacting a little. 

Asteroid 2018 VP1 is scheduled to graze Earth on Nov. 2, the day before the US elections. It has a real but exceedingly slim (0.41%) possibility of entering our planet's atmosphere, at which point it would harmlessly disintegrate. But Oreo isn't taking any chances. The company has built a concrete doomsday vault in Norway to house its cookies....

....MORE

The Oreo vault is a little south of the seed vault which is at 78°14'17.40" N 15°26'50.05" E.

"UK’s Richest Man Partners With Hyundai To Make Hydrogen Happen"

For some reason this story was getting play in Indian media.

So, from Bloomberg via Live Mint, November 23:

• Ratcliffe’s Ineos Group will explore opportunities to produce and supply hydrogen to Hyundai
• Makers of cars and chemicals are finding common ground in their pursuit of hydrogen projects

Jim Ratcliffe, Britain’s richest man, is joining forces with Hyundai Motor Co. in a bid to give hydrogen fuel cell vehicles the boost they need to become more mainstream.

Ratcliffe’s Ineos Group will explore opportunities to produce and supply hydrogen to Hyundai, which has been making fuel cell vehicles in low volumes since 2013. Ratcliffe may also use Hyundai’s fuel cell system in the Grenadier, the Land Rover-like sport utility vehicle Ineos plans to bring to market next year.

Makers of cars and chemicals are finding common ground in their pursuit of hydrogen projects. Targets are being set globally to phase out the combustion engine and decarbonize industrial production. Ineos, which makes 300,000 tons of hydrogen annually, could play an instrumental role in helping set up the infrastructure Hyundai needs for models like the Nexo SUV to catch on in Europe.

“There’s verbiage and there’s getting on and doing stuff," Ineos Chief Technology Officer Peter Williams said in an interview. “We would like to do something of serious scale in the next five years."

For Ratcliffe, 68, helping to kick-start the hydrogen economy would open up more attractive uses for his company’s output of the gas, a byproduct from the electrolysis of brine to make chlorine. Ineos currently uses it for fuel and desulfurization at refineries. It also has underground gas-storage caverns that could be employed for hydrogen....

....MORE 

It's Complicated: "How the Race for a COVID-19 Vaccine Jeopardizes East Coast Shorebirds"

 From Audubon Magazine, November 20:

Vaccine production requires the blood of horseshoe crabs, whose eggs are a vital food source for several species, including Red Knots. A synthetic replacement for the blood exists, but the United States is stuck in the past. 

In the past few weeks, a couple of updates from the pharmaceutical industry provided some highly anticipated good news about the COVID-19 pandemic. First, on November 9, the drug company Pfizer announced that it had seen exceptional results in early clinical trials of a potential COVID-19 vaccine. The vaccine candidate, which Pfizer developed with the German company BioNTech, has proven effective in 95 percent of trial participants, with no significant safety concerns. And on November 16, Moderna announced that its own vaccine candidate had achieved 94.5 percent efficacy in early trials.

Both vaccines have the potential to be crucial tools for fighting COVID-19, which has so far killed more than a quarter of a million Americans and is poised to kill thousands more with U.S. infection rates currently on the rise. But while they could save millions of human lives, Pfizer’s and Moderna’s vaccines may end up having consequences few people realize; the surge in vaccine production and testing could affect migrating shorebirds, especially the threatened rufa Red Knot. That’s because both the birds and the pharmaceutical companies depend on the same animal: the horseshoe crabs of the Delaware Bay. Horseshoe crab eggs are vital fuel during the Red Knots’ annual 9,000-mile migration from Tierra del Fuego, at the southern tip of South America, to the Canadian Arctic every spring. For the drugmakers, horseshoe crab blood is a vital component in vaccine production.

As things currently stand in the United States, producing vaccines and other treatments that need to be injected into the bloodstream requires sticking needles into the hearts of horseshoe crabs and draining them of around a third of their blood, which is the only natural source of limulus amebocyte lysate, or LAL. Pharmaceutical companies use LAL to test their injectables for a bacterial contaminant called endotoxin, which can be deadly if even minuscule quantities make their way into the bloodstream. In a normal year, pharmaceutical companies conduct an estimated 70 million endotoxin tests. 2020, however, is by no means a normal year. “There are so many vaccines and therapies in development all at once for COVID-19,” says Jay Bolden, senior consultant biologist at the pharmaceutical company Eli Lilly. “I don’t see how it wouldn’t lead to an increase in the need for endotoxin testing.”...

....MUCH MORE

"For Asia’s super-rich, Singapore family offices keep the wealth churning – but Hong Kong wants a piece of the pie too"

From the South China Morning Post, November 21:

James Dyson and the couple behind hotpot chain Haidilao are among those who have set up units in the city state to safeguard their family fortunes

Hong Kong also aims to become a hub for family offices, eyeing the almost US$2 trillion in wealth set to change hands in Asia over the next decade

Singapore is popularly known as an Asian financial hub where companies set up regional headquarters and rich individuals park their wealth. In recent years, it has also been attracting another sort of investment through a vehicle that is just gaining popularity in the region: corporate entities called family offices that moneyed families use to structure the way they invest and preserve their riches.

 

From 2017 to 2019, the number of family offices in Singapore grew by five times as the region got wealthier. Some of these offices were set up by Singaporean families who want to manage their assets better, but many were set up by foreign millionaires and billionaires lured by the city state’s financial reputation, its tax incentives, and the safe environment with a stellar education system it offers their children.

There are about 200 single-family offices in Singapore, according to a written answer to a parliamentary question in October. Tharman Shanmugaratnam, minister in charge of the Monetary Authority of Singapore, estimated that these 200 offices manage a staggering US$20 billion in total.

Hong Kong has also been rolling out the red carpet for wealthy families to set up such offices. The Securities and Futures Commission issued the first licensing guidelines for the industry in September and, in two months, 50 family offices had signed up for licences. Five major family offices have also come together to set up a guild called the Family Office Association of Hong Kong to represent the industry’s interests.

Family offices are attracted to Singapore because of Asia’s growth potential, and they see the city state as a gateway to the region, said Lee Woon Shiu, the regional head of the wealth planning, family office and insurance solutions department at DBS Private Bank.

 

“Family offices putting their money to work in Singapore are looking for investment opportunities across Asean – not just in regional financial markets and real estate, but also in opportunities with local business owners from business lines that are similar to theirs,” Lee said.

 

And Asia’s wealth is growing. In a June report, Boston Consulting Group said its modelling suggested that wealth across Asia excluding Japan would grow at between 5.1 and 7.4 per cent annually over the next five years, and overtake western Europe as the second-wealthiest region in the world by 2022.

Family offices are common in Europe and the United States, where some rich, established families trace their wealth back more than 10 generations, but they are new to Asia, where family wealth usually only reaches back a few generations. A report by DBS and the Economist Intelligence Unit released on November 19 noted that of the billionaires in China today, 95 per cent are self-made and acquired their wealth within the past two or three decades....

....MUCH MORE

 The single-family family offices, whether licensed as such or not, are running a lot more than $20 billion.

Meanwhile In Philadelphia: Fifteen Mobsters Indicted On Racketeering, Other Charges

From the U.S. Department of Justice:

U.S. Attorney’s Office

Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE

Monday, November 23, 2020

 

Fifteen Members and Associates of the Philadelphia Mafia Indicted on Federal Racketeering and Related Charges

PHILADELPHIA – United States Attorney William M. McSwain announced that a Superseding Indictment was unsealed today against 15 defendants, including alleged members and associates of the South Philadelphia and Southern New Jersey-based criminal organization La Cosa Nostra (LCN), known as the “mafia” or the “mob.” The Superseding Indictment charges various crimes including racketeering conspiracy, illegal gambling, loansharking, extortion, and drug trafficking.

The defendants charged in the seven-count Superseding Indictment are Steven Mazzone, aka “Stevie,” age 56; Domenic Grande, aka “Dom,” aka “Mr. Hopkins,” aka “Mr. Brown,” aka “Dom14,” age 41; Joseph Servidio, aka “Joey Electric,” age 60; Salvatore Mazzone, aka “Sonny,” age 55; Joseph Malone, age 70; Louis Barretta, aka “Louie Sheep,” age 56; Victor DeLuca, aka “Big Vic,” age 56; Kenneth Arabia, aka “Kenny,” age 67; Daniel Castelli, aka “Danny,” aka “Cozzy,” aka “Butch,” aka “Harry,” age 67; Carl Chianese, age 81; Anthony Gifoli, aka “Tony Meatballs,” age 73; John Romeo, age 58; Daniel Malatesta, age 75; Daniel Bucceroni, age 66; and John Michael Payne, age 34.

....MUCH MORE

HT: NJ.com

"World's biggest manufacturer of surgical gloves will close over half of its factories after a surge in coronavirus cases among workers"

 And Bryce Elder can't get back to work soon enough for my tastes.*

From AFP via Yahoo Finance:

World's top surgical glove maker shuts factories due to coronavirus

A Malaysian company that is the world's biggest manufacturer of surgical gloves will close over half of its factories after a surge in coronavirus cases among workers, authorities said Monday.

Top Glove has seen a huge jump in demand since the start of the pandemic as countries scrambled to stock up on protective equipment, pushing up both its profits and share price.

But there has been a cluster of virus outbreaks among Top Glove employees -- many of whom are low-paid migrant workers -- at factories in an industrial area near the capital, Kuala Lumpur....

....MUCH MORE

*For all things Malaysian and/or latex, March 2020's:  

Attention Hoarders: "Condom shortage looms after coronavirus lockdown shuts world's top producer"

Thanks to FT Alphaville's Bryce Elder we were able to bring up in a casual conversation the Malaysian latex glove situation:
So, Did You Buy Your Malaysian Latex Glove Stocks Last Week?

...Following up on January 22's "FT Alphaville's Bryce Elder Is a Genius: Pandemic Coronavirus Edition".
From FT Alphaville's Markets Not Live column, January 27:

....To the wider market, and Wuhan’s got us all in check. Nearly everything (except the Malaysian latex glove sector) is down after the advance of the coronavirus, or 2019-nCoV, failed to slow through an extended Chinese New Year. The outbreak has reached “a grave and complicated stage”, Beijing officials said at a presser on Sunday. Most worryingly the virus appears to be contagious during the incubation period, when there are no visible symptoms, which means the Sars comparisons we’ve been using over the past few weeks may be optimistic.

To which our interlocutor, a Malaysian gentleman of Chinese extraction responded, also casually, yet proudly:

"Malaysia is also home to the largest condom manufacturer in the world."

Which prompted first the quick-on-the-uptake "Saaaay" reaction and then the placement of an order that (hopefully) may have raised some eyebrows at our favorite purveyor.
And today's story from Reuters:....