Wednesday, April 2, 2025

"Tesla stock pops after report Musk will step back from government role 'in the coming weeks'" (TSLA)

I think that's enough Tesla for one day.

here's the story at Yahoo Finance.

The stock is up $14.48 at $282.94.

So far today: 

Michael Bloomberg: "America Is Headed for a Grim Fiscal Reckoning"

One of the few 'men of the left' to even broach the subject. 

From Bloomberg, April 2:

Congress should be alarmed by the CBO’s new debt projections. Instead, it’s aiming for bigger budget deficits.

Amid all the blaring headlines coming out of Washington, here’s a piece of news that is getting far too little attention: The US is on course for fiscal breakdown. That’s the unambiguous message from the Congressional Budget Office’s newly updated long-term projections. Unless Congress changes course, there’ll be a reckoning, and it will be grim.

As the CBO details, deficit spending is more out of control than ever. Both parties share the blame, as do both ends of Pennsylvania Avenue. And all should remember that investors’ appetite for US government debt isn’t limitless.

The federal government is currently spending roughly $7 trillion and collecting only $5 trillion in taxes annually. The resulting deficit is a little over 6% of gross domestic product, a disturbingly high number for an economy around full employment.

The CBO expects public borrowing to remain at this elevated level or higher for decades. Assuming no recessions, public debt will rise to 100% of GDP this year and 118% by 2035 — and it just keeps rising from there.

A responsible Congress would make deficit reduction its overriding priority. Instead, Republicans are discussing ways to borrow more — and not just a little more. New tax cuts are under consideration. And many want to extend provisions of the 2017 Tax Cuts and Jobs Act, which would otherwise expire at the end of this year.

Extending the law in full would increase the national debt by roughly $5 trillion over the next decade and $40 trillion over 30 years. The debt ratio in 30 years would soar to more than 200% of GDP.

Higher tariff revenues won’t come close to balancing the books. In fact, the impact on overall revenue is likely to be negative, because tariffs depress commercial activity and job creation....

....MUCH MORE

"Donald Trump tells cabinet Elon Musk will be stepping down from duties 'soon'"

From the Daily Mirror, April 2:

Donald Trump made the comments about Elon Musk's future to his cabinet - we'll be bringing you the very latest updates, pictures and video on this breaking news story....

....MORE

Rabobank: "T-Day"

From Rabobank's Michael Every via ZeroHedge, April 2:

"I have also to announce to Congress that during the night and the early hours of this morning the first of the series of tariffs in force upon the European Continent has taken place. In this case the liberating assault fell upon the coast of France. An immense armada of upwards of 4,000 tariffs, together with several thousand smaller tariffs, crossed the Channel. Massed airborne tariffs have been successfully effected behind the enemy lines, and tariff landings on the beaches are proceeding at various points at the present time... The Americans are sustained by about 11,000 first line tariffs, which can be drawn upon as may be needed for the purposes of the battle. I cannot, of course, commit myself to any particular details. Reports are coming in in rapid succession. So far, the Commanders who are engaged report that everything is proceeding according to plan. And what a plan! This vast operation is undoubtedly the most complicated and difficult that has ever taken place. It involves tides, wind, waves, visibility, both from the air and the sea standpoint, and the combined employment of land, air and sea tariffs in the highest degree of intimacy and in contact with conditions which could not and cannot be fully foreseen.”

Apologies to Winston Churchill for misusing his D-Day speech: “We shall tariff on the beaches, we shall tariff on the landing grounds, we shall tariff in the fields and in the streets, we shall tariff in the hills; we shall never surrender,” would have been snappier, but historically, the above is the correct one for today.

Because it’s T-day, or “Liberation Day”, or Make America Wealthy Again (MAWA) Day. That’s all we know so far. One rumor is we may get a 20% universal tariff, which would say a lot about ‘state’ and not so much about ‘craft’; or a targeted scheme; that may or may not then be negotiated down. We all still have to wait and see. (Of course tomorrow we start 25% US auto tariffs, on which please see our latest report.)

Ahead of that last-second US decision, last-minute countermoves are being made. Israel (where not much work was needed) and Vietnam (where more was) have both cut all their tariffs on US goods in the hope of a better outcome, and India is reportedly considering the same. Europe (and Canada and Mexico) are instead preparing to fight back, the former even floating escalation into new areas like services and tech that will surely guarantee a furious US response.

The Wall Street Journal hopes tariff clarity today will calm markets, and that’s the White House view too. However, then we all have to wait and see what happens re: counter-tariffs, which seem inevitable --Europe is talking in suitably Churchillian terms again-- and then what the US does in the trade space in response, and outside it to those who don’t see trade is now connected to things like US security umbrellas. In short, we need to quote Winnie again: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Yet while D-Day was a very brave and uncertain exercise, the underlying dynamic of US and Soviet military production vs. German and Japanese made the ultimate outcome of WW2 inevitable, just as the ideological split between the US and the Soviets would always then split the world in a different way afterwards. You can’t focus on just one front, no matter how dramatic, but always need to see the entire theatre of operations....

....MUCH MORE

"Stablecoin giant Circle files for IPO"

We don't have much interest in IPO shares, you can't get much of the ones you want, there's usually an opportunity to purchase the stock at a better risk-adjusted valuation somewhere down the road, etc.

We do however treasure the information, corporate, industry, and macro, contained in the offering documents.

From PitchBook, April 1:

Circle, the company behind the popular stablecoin USDC, has filed to go public on the New York Stock Exchange under “CRCL,” according to a regulatory filing on Tuesday.

Circle’s long-rumored IPO will be closely watched by the crypto industry as it hopes for a favorable listing environment.

“For VCs, strong demand for Circle’s listing could serve as a proof point that there is a viable exit path for crypto investments via traditional public markets—a shift that might encourage additional capital inflows into crypto startups,” said Robert Le, senior analyst at PitchBook. The company has raised $1.2 billion in total venture funding, according to PitchBook data.

The company had $155.7 million in net income on $1.7 billion in revenue in 2024. In 2023, Circle had $267.6 million in net income on $1.5 billion in revenue. Nearly all of its revenue (at least for the last three years) has come from its stablecoin-related reserves....

....MUCH MORE

"Nvidia thinks AI can solve electrical grid problems caused by AI"

From TechCrunch, March 20:

Nvidia announced Thursday it’s partnering with EPRI, a power industry R&D organization, to use AI to solve problems facing the electrical grid. Perhaps ironically, the issues are largely caused by rising power demand from AI itself.

The Open Power AI Consortium, which includes a number of electrical utilities and tech companies, says it will use what are known as domain-specific AI models to devise new ways to tackle problems that the power industry is predicted to face in the coming years. The models will be open sourced and available to researchers across academia and industry.

The power industry is facing surging demand from data centers in the United States and elsewhere as AI ramps up the need for computing power. Electricity demand is expected to grow by 4% annually in the coming years, according to the International Energy Agency, nearly double over 2023 figures. 

In addition to Nvidia and EPRI, the consortium includes PG&E, Con Edison, Constellation Energy, Duke Energy, the Tennessee Valley Authority, and ENOWA, NEOM’s energy and water company. On the tech side, Microsoft and Oracle are both members.

In an attempt to stay ahead of the trend, tech companies have been racing to secure generating capacity as power has transformed from a simple line item to a competitive advantage.

Over the last year or so, tech companies have been consistently inking new contracts. They’ve largely been spread across renewable energy projects, spurred mostly by solar’s low cost, modularity, and the speed at which it can be deployed.

Microsoft, for example, recently added 475 megawatts of solar power to its sizable renewable portfolio. Last year, it became an anchor investor in a $9 billion renewable development project run by Acadia, and earlier in the year it said it was working with Brookfield asset management to deploy 10.5 gigawatts of renewable power in the U.S. and Europe, all of which is expected to come online by 2030.

But even though new power sources may be the most obvious answer to losing power shortages, they aren’t the only one. 

One recent study found that by curtailing use when demand on the grid peaks, including shifting tasks that aren’t time sensitive to periods when demand is low, an additional 76 GB of capacity could be unlocked in the U.S. It’s a not insignificant amount, making up approximately 10% of peak demand in the U.S....

....MUCH MORE

"Tesla stock drops as Q1 deliveries miss Wall Street estimates" (TSLA)

From Yahoo Finance, April 2:

Tesla's first quarter delivery total was its lowest tally in nearly three years.

Tesla (TSLA) reported first quarter global deliveries that widely missed estimates, as demand issues clearly hit the EV-maker.

For the quarter, Tesla reported 336,681 deliveries vs. 390,342 estimated per Bloomberg consensus, making it the worst quarter for deliveries since the second quarter of 2022.

"While the changeover of Model Y lines across all four of our factories led to the loss of several weeks of production in Q1, the ramp of the New Model Y continues to go well," Tesla said in a statement. The refreshed Model Y went on sale globally in March, with some analysts citing the changeover as a reason for depressed demand for its top selling vehicle.

Tesla shares dropped nearly 5% in pre-market trading.

Tesla also said it produced 362,615 units globally for the quarter and deployed 10.4 GWh of energy storage products.

Tesla sales have been stalling across most of its global territories. Earlier this week, Tesla registration data in key European regions fell in March, another sign that sales are continuing to slide in one of its key markets....

....MUCH MORE

The stock is down $14.10 in early regular trade, $254.36 last.

"Who is behind the Tesla protests?"

Note: in the ActBlue list of funders, both Herb Sandler and Patricia Bauman are dead. The funding is being carried out by namesake (in Bauman's case it was set up by her father, she was President) foundations. As a side-note, the innovations in mortgage financing developed by Herb and Marion Sandler's Golden West Financial were a contributing factor of the Great Recession; and the sale of Golden West resulted in one of the greatest market calls of all time.*

From Asra Investigates, March 26:

Follow the timeline to see the cast of characters behind the scenes: Indivisible, the Democratic Party and its proxies 

Cast of Characters

Seattle
  1. Valerie Costa - protest “organizer,” founder of Aril Consulting, a NGO fundraising firm:

Organizations

Organizations

  1. ActBlue

    1. Funders include George Soros, Reid Hoffman, Herbert Sandler, Patricia Bauman, Leah Hunt-Hendrix

  2. Democratic Socialists of America, EIN 133109557

  3. The Disruption Project, 501(c)(4), based in Philadelphia

    1. Disruption-Project.org, EIN 85-1066939

    2. Jeffrey Ordower

  4. Indivisible Project, EIN 814944067,

  5. Oil and Gas Action Network

    1. Instagram: “Supporting grassroots & frontlines movements taking action to end the era of fossil fuels.”

    2. Instagram: @oilandgasactionnetwork

  6. Tesla Takedown

    1. Instagram @tesla.takedown

  7. Troublemakers

    1. Instagram @troublemakercommunity

    2. seattletroublemakers@gmail.com

    3. Background

  8. Rise & Resist

Tech platforms

  1. ActionNetwork.com

    1. https://actionnetwork.org/events/tesla-takedown-delray-beach-florida

  2. Wix.com — TeslaTakedown.com registered here

  3. Proxy Protection LLC — TeslaTakedown.com registered anonymously here

  4. SquareSpace — Disruption-Project.org registered here

Media supporters

  1. Democracy Now!

    1. Amy Goodman, host

  2. GreenRedPodcast

    1. Instagram @greenredpodcast

THE LAUNCH

Feb. 12, 2025 - TeslaTakedown.com registered anonymously...

....MUCH MORE
*
June 5, 2012
Wall Street Woman Who Sold Largest Sub-Prime Originator Just Before Crisis Dead at 81 (GDW; WB; WFC)
We've looked at the timing of the sale of Golden West Financial on two occasions, the first linking to the most prescient bit of analysis we've ever had on Climateer Investing.*
First some housekeeping.
This is Marion Sandler....

*****

....On August 10, 2007, you may remember it as the week about which Goldman's David Viniar said:
“We were seeing things that were 25-standard deviation moves, several days in a row” 
which caused some jollity among the cognescenti, see: "How Unlucky is 25 Sigma", we posted:

The Day the Music Died--The Mortgage Business
 which referred back to the May 6, 2006 sale of Golden West to Wachovia.
The post also contained this bit from some guy in India:

On May 10, 2006 India Daily said:
Sell of Golden West Financial to Wachovia signifies burst of housing bubble
Not a bad call.
Four days after the sale and two months before John Paulson started his first sub-prime fund.
The second look was in 2010:
"Happy Anniversary, Wells Fargo and Wachovia!" (WFC; WB)

"Our goal is to bankrupt Elon Musk" (TSLA)

From Fortune magazine, March 21:

Organizers behind ‘Tesla Takedown’ protests aren’t backing down despite pressure from Trump: ‘Our goal is to bankrupt Elon Musk’ 

  • Early organizers of some of the “Tesla Takedown” protests say the organization’s goal is to hit Elon Musk where it hurts: his wealth. As protests surge and Tesla’s stock plummets, even loyal investors are turning against the CEO, blaming his political ties for the company’s decline.

Fred McKinney loved his Tesla. He bought his first car—a Tesla Model 3—in November 2018 and describes himself as a Tesla evangelist. Over the last few months, he’s come to regret it.

“It was a great car,” McKinney, co-founder of the economic consulting company BJM Solutions, told Fortune. “And I wasn’t just a casual Tesla owner, I was an evangelist for the vehicle and the company, and quite frankly, for Musk.”

“I have remorse now about that because he’s proven to be someone that doesn’t deserve my support.”

McKinney sold his Tesla in February, swapping it out for an alternative electric vehicle. He cites Musk’s role in the Trump administration, especially his connection to the cost-cutting team DOGE, as the reason. “It was a political decision but also a moral decision,” he said. “I see the damage that [DOGE] is doing to the fabric of our society.”

McKinney didn’t know he was part of a wider movement when he ditched the car.

“When I sold my car, the uprising that is now taking place around the world was probably in its infancy, and I didn’t know anything about it, but I was comforted to see that others felt the same way,” he said.

Over the last few months, protests against Tesla have erupted worldwide—some peaceful, while others have involved vandalism and arson. The efforts have caused the EV maker’s stock to plummet, tanked car sales, and angered investors.

Early organizers told Fortune the aim is to hit Musk where it hurts: his wealth.

Who are the ‘Tesla Takedown Movement’?

The action against Tesla has impacted Musk’s personal wealth, wiping around $175 billion off his December peak of $486 billion, per Bloomberg’s billionaire index.

One of the early coordinators of the “Tesla Takedown” movement, Edward Niedermeyer, told Fortune that this wealth drop is exactly the aim.

“The goal, I would say, is to bankrupt Elon Musk—bring down his empire,” he told Fortune.

Musk is still the richest person in the world despite his recent losses, but Tesla is paying the price for some of his unpopular activities outside of the company. “Hopefully it does spiral on Tesla stock,” Niedermeyer said. “If we don’t bankrupt him, but we exert enough financial pressure to materially change a political situation, that’s fine, too.”

Unlike McKinney, Niedermeyer is not new to his anti-Musk sentiment.

He has been a critic of Tesla and the company’s CEO for years, publishing a book in 2019 providing a highly skeptical view of the electric car company’s history. Musk has, in turn, publicly criticized Niedermeyer in the past. He puts the recent rise of organized objection to Musk and Tesla down to a “perfect storm” of “outrage about the political situation and the lack of other outlets.”

“It’s much harder to target Donald Trump’s financial wealth,” he said.

The protests and the violence associated with the movement have, however, prompted threats from Trump, who vowed to label vandalism and attacks against the carmaker as domestic terrorism.

But Niedermeyer is relatively unbothered by this, saying he also disapproves of the violent acts and vandalism.

“I don’t have a problem in theory of people being prosecuted for this,” he said. “The only thing that worries me about it is if there’s some effort to take what is clearly a peaceful movement—as the only organized part is peaceful—and deem something like Tesla Takedown a terrorist organization.”

“As far as I can tell, this has all been individuals acting alone … whereas protesters all show up in the daytime with our faces uncovered. So there’s a clear, a clear distinction there,” he said. “These people are not domestic terrorists in any sense.”....

....MUCH MORE

"Tesla Stock Drops on Delivery Day. Watch for This Number as Markets Brace for the Worst." (TSLA)

 From Barron's, April 2:

Tesla's stock was down in premarket trading early Wednesday, just ahead of the company’s release of first-quarter delivery data.

Shares of the electric vehicle maker run by CEO Elon Musk were down 2.5% at $261.78, while S&P 500 and Dow Jones Industrial Average futures were down 0.4% and 0.5%, respectively.

On weekdays, Tesla typically releases results before the start of regular trading at 9:30 a.m. Eastern time. Investors can look for the news between 8 a.m. and 9 a.m.

When news arrives, investors will want a delivery number north of 360,000 vehicles. The company-compiled consensus is closer to 380,000 cars, but investors are already braced for the worst.

Coming into Wednesday trading, Tesla stock was down 34% so far this year and off 45% from a record high of just under $489 a share reached in mid-December.

Delivery expectations contributed to the declines. Since mid-December, Wall Street’s estimates for first-quarter deliveries have fallen from an average of about 470,000 vehicles to 380,000. Two issues explain why estimates have fallen.

For a start, investors fear Musk’s political activities are turning off some core Tesla buyers—politically left-leaning people looking to go green.

Tesla also updated its most popular vehicle. The Model Y. Model updates can create a sales air pocket with buyers waiting for the new versions with updated features and styling.

Any number above 360,000 should be enough to keep shares stable. A number below 350,000 could have investors facing more pain....

....MUCH MORE

Tuesday, April 1, 2025

"How Is SoftBank Funding Its Mega Investment in OpenAI? A Lot of Debt"

Leveraged beta, baby!

From the Wall Street Journal, April Fools Day, 2025:

Global tech investor SoftBank Group is turning to a familiar tool to fund its $40 billion investment in ChatGPT maker OpenAI announced late Monday: debt.

The Tokyo-based company, led by billionaire Masayoshi Son, said it expected its first $10 billion chunk of the deal would be financed by borrowing from Japanese bank Mizuho and other lenders and be completed in April. The remaining $30 billion would come by early 2026.

The deal, by far the largest-ever investment in a startup, values OpenAI at $300 billion if all the money is invested.

The bet
Together with SoftBank’s pledge to lead the $100 billion Stargate cloud-computing initiative with OpenAI, the investment marks a massive bet on the artificial-intelligence startup. It entwines the fortunes of SoftBank with a company that expects to lose billions of dollars for years to come.

The hope is that OpenAI emerges as the leader of the pack in a race to spread artificial intelligence throughout society and commerce—a market that many believe could be worth trillions of dollars a year.

The information revolution “has now entered a new phase led by artificial intelligence,” SoftBank said in a statement that called OpenAI its “partner closest to achieving Artificial General Intelligence,” in which computers operate on the level of humans.

(News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.)

The risks
SoftBank is taking on a lot of risks for a piece of OpenAI.

Ratings agency S&P Global said Tuesday that SoftBank’s “financial condition will likely deteriorate” as a result of the OpenAI investment and that its plans to add debt could lead the agency to consider downgrading SoftBank’s ratings.

None of the startups with early leads in generative AI have shown they can operate profitably, and the sector is pouring tens of billions of dollars into data centers based on assumptions, not yet proven, of a future in which AI rapidly permeates the globe.

Early tech leaders often falter—a point SoftBank learned when it made a dot-com era bet that Yahoo would be the dominant force in search.

The background...

....MUCH MORE

As we noted introducing last week's "OpenAI Close to Finalizing A $40 Billion SoftBank-Led Funding At A $300 Billion Valuation"

SoftBank's Mr. Son's entire history, going back to the dot.com bust is leveraged beta.

He was very fortunate that the British didn't allow Nvidia to buy ARM Holdings, thus clearing the way for his bid. Otherwise his claim to fame would  be being the largest investor in WeWork....

And from November 2019:

SoftBank’s problems aren’t so surprising if you understand this one thing about the company

Throughout the manic phase of SoftBank and the Vision fund there was almost no mention of the fact that at the start of this century Masayoshi Son was the richest person in the word:
"But Son’s fairytale didn’t last long. After the dot-com bubble burst, his company Softbank’s shares plunged 75 percent in two months and was 93 percent lower by the end of 2000.
The business almost went bankrupt and Son ended up losing USD 70 billion, the highest ever recorded financial loss for a person in history."
MoneyControl, October 13, 2017
We had a couple posts around the time of the above that touched on the craziness but not the past history:
SoftBank In Talks To Acquire U.S. Treasury
Sprint, T-Mobile Plunge: SoftBank Calling Off Merger, Will Use Cash to Buy Canada

See also semi-variance, after the jump....
**** 
When the swings are as big as Son's are you need a bankroll that is gigantic. Even if you are right and have an edge, the natural variation can kill you and the last downturn will be the last downturn.
Some related links:....
And October 2024:
 
 SoftBank’s Masayoshi Son Sees AI Evolving To A Point Where Your Happiness Will Be its Greatest Reward

Having observed Mr. Son and his position in the parade—from Drum Majorette leading the way, to being the guy cleaning up after the elephants, and then back to the front— we had this introduction in February 2024:

Since the time he almost went broke after the dot.bomb bubble burst (he had briefly been the richest person in the world) I've come to realize this guy isn't some great visionary/grand strategist; he's just leveraged beta. Making big bets, all geared up, on whatever is at the head of the passing parade.

That said, he owns 90% of ARM Holdings and I don't.

Bastard.
 
Shades of another disruptor, Sam Insull, leverage at the holding company level, leverage at the operating company level, leverage all the way down

"JPMorgan Just Beat Big Tech to a Quantum Breakthrough" (JPM)

Randomness, very important.*

From Observer, March 27:

A JPMorgan-backed experiment used quantum hardware to generate certified randomness—yes, really—which could one day power cryptography, simulations and whatever comes after the blockchain gold rush.

Pulling numbered balls out of a mixing machine. Tracking the twitch of a mouse cursor. Converting lava lamp motion into data. These are just a few ways real-world randomness is generated—essential for things like lotteries and Internet encryption, where unpredictability equals security.

Transmitting that randomness over the Internet, however, is a different story. Physically random processes are hard to verify remotely, and by design, traditional computers can’t generate true randomness. But a new quantum breakthrough may have solved the problem.

Published yesterday (May 26) in Nature, a study from JPMorgan Chase researchers—alongside collaborators at Argonne and Oak Ridge national labs and the University of Texas at Austin—demonstrates how a quantum computer generates “certified” randomness....

....MUCH MORE
*
If interested see: 

That last piece of research was awarded Harvard's own Ig Nobel prize in 2010. 
Ya see, ya got your complex systems and ya got your chaotic systems and then ya got your complex-chaotic systems like weather or the economy or the stock market and when you endeavor at those levels of sophistication you realize:...

There may be issues.

Dilbert random number generator

Turley: "Capping Carbon Admissions: The Biden Administration is Accused of Burying Conflicting Climate Change Report"

The good Professor (law, George Washington Uni.) takes a break from his First Amendment/freedom of speech chores to highlight a bit of duplicity.

From Jonathan Turley, March 30:

There is a major story developing on Capitol Hill after House Committee on Oversight and Government Reform Chairman James Comer, R-Ky, revealed that a long-withheld report from the Biden Administration directly contradicted the claims of climate change used to limit increased U.S. liquefied natural gas (LNG) exports. The suggestion is that this was an knowing effort to cap carbon admissions rather than carbon emissions.

The impact that new U.S. LNG exports have on the environment and the economy was reviewed by U.S. Energy Department scientists and completed by September 2023. It appears that neither President Biden nor Secretary Jennifer Granholm liked the science or the conclusions. Rather than “follow the science,” they buried the report while allegedly making claims directly refuted by their own experts.

The report was finished while Biden was still running for reelection and would have likely enraged environmentalists. The draft study, “Energy, Economic, and Environmental Assessment of U.S. LNG Exports,” found that, under all modeled scenarios, an increase in U.S. LNG exports and natural gas production would not change global or U.S. greenhouse gas emissions. It further found that it would not increase energy prices for consumers....

....MUCH MORE 

Also at JonathanTurley.org (among hundreds):

“A New World Order With European Values”: The Unholy Union of Globalism and Anti-Free Speech Measures

"US Chip Grants in Limbo as Lutnick Pushes Bigger Investments"

A deep dive on the state of play from Bloomberg via MSN, April 1:

Commerce Secretary Howard Lutnick has signaled he could withhold promised Chips Act grants as he pushes companies in line for federal semiconductor subsidies to substantially expand their US projects, according to eight people familiar with the matter.

The Commerce chief wants firms that won awards from the 2022 Chips and Science Act to follow in the footsteps of Taiwan Semiconductor Manufacturing Co., which recently announced it will invest another $100 billion in US plants on top of a previous $65 billion pledge, the people said. Lutnick’s goal is to generate tens of billions of dollars in additional semiconductor investment commitments without increasing the size of federal grants, said the people, who asked not to be named discussing private conversations.

As he negotiates, Lutnick’s team has suggested that he could scrap disbursement of subsidies that have already been agreed upon, according to some of the people. At the same time, Lutnick has expressed interest in expanding a separate 25% tax credit from the Chips Act, some of the people said. That’s worth more to most companies than the direct funding awards. Major changes to the tax credit would require an act of Congress....

....MUCH MORE

Monday, March 31, 2025

"White House weighs executive order to fast-track deep-sea mining, sources say"

From Reuters, March 31:

  • Executive order under review would bypass UN-backed body
  • International Seabed Authority has yet to set rules
  • NOAA would oversee permitting for deep-sea mining
March 31 (Reuters) - The White House is weighing an executive order that would fast-track permitting for deep-sea mining in international waters and let mining companies bypass a United Nations-backed review process, according to two sources with direct knowledge of the deliberations.
 
If signed, the order would mark U.S. President Donald Trump's latest attempt to tap international deposits of nickel, copper and other critical minerals used widely across the economy after recent efforts in Greenland and Ukraine. Trump earlier this month also invoked emergency powers to boost domestic minerals production.
 
The International Seabed Authority - created by the United Nations Convention on the Law of the Sea, which the U.S. has not ratified - has for years been considering standards for deep-sea mining in international waters, although it has yet to formalize them due to unresolved differences over acceptable levels of dust, noise and other factors from the practice.
 
Trump's deep-sea mining order is likely to stipulate that the U.S. aims to exercise its rights to extract critical minerals on the ocean's floor and let miners bypass the ISA and seek permitting through the U.S. Department of Commerce's National Oceanic and Atmospheric Administration's mining code, according to the sources.
 
Such a step could give mining companies a formal permitting process to complete and avoid the potential perception that they aim to mine the ocean's floors without any oversight.
 
The plans are under discussion and could change before Trump signs the order, the sources said.
The White House did not respond to requests for comment.
 
Companies that aim to mine the seabed say they consider the practice's environmental impacts to be significantly smaller than mining on land, although multiple environmental groups say the practice should not be allowed to begin given the potential risks to marine life.
 
Any country can allow deep-sea mining in its own territorial waters, roughly 200 nautical miles from shore. Governments most interested in developing deep-sea mining industries in their waters include the Cook Islands, Norway and Japan....
....MUCH MORE

Flashback: That Time Just Stop Oil's Banquet Was Gatecrashed (plus Cockney barrow boy spivs)

Following on Sunday's "Britain's 'Just Stop Oil' Declares Victory".

Originally posted July 25, 2023:

Meanwhile in Britain: "Just Stop Oil" Banquet Crashed, Rape Alarms Ascend On High

They have banquets?

From The Telegraph, July 24:

Just Stop Oil get 'taste of their own medicine' as banquet is crashed by YouTube pranksters
Joshua Pieters and Archie Manners hired actors to infiltrate the meal and set off panic alarms attached to orange balloons

    Two YouTube pranksters disrupted a vegan banquet hosted by Just Stop Oil and unmasked themselves as the masterminds behind a counter-protest movement against the eco-activists.

    Joshua Pieters and Archie Manners have claimed responsibility for the stunt at the Heritage and Arts Centre [formerly Holy Trinity Church] in Bow, east London, where Just Stop Oil threw a meal for its supporters on Sunday.

    In a plot designed to sabotage the event, actors infiltrated the venue before setting off panic alarms, attached to helium-filled balloons, which blared out noise as they rose to the roof.

The incident was the second perpetrated by an emerging counter-protest movement, known as “Just Stop P---ing People Off”.

Counter-protesters first struck on Thursday when Just Stop Oil activists planning to protest in Elephant and Castle were blocked by rebel demonstrators who formed a human chain around them to stop them from slow marching.

Mr Pieters and Mr Manners, whose Josh & Archie YouTube channel has amassed 1.4 million subscribers, confirmed that they co-ordinated both stunts in response to Just Stop Oil’s disruptive tactics on roads, sporting events and at major public occasions....

As for the banquets, they can afford them. One of JSO funders is oil heiress Aileen Getty, (link goes to The Art Newspaper for double triple the irony considering the Getty Museum) another is Ecotricity's Dale Vince

Oh does the rape alarm chorus bring back memories, not personal, but of this story, November 23, 2022:
Great Moments In Oil Protest History

I thought we had posted this account but a search of the blog says no.

I failed you.

And though it reads like an Onion parody, this is exactly how it was published. Kudos to the writers.

From The Times, February17, 2005:

By Laura Peek and Liz Chong

Kyoto protest beaten back by inflamed petrol traders

WHEN 35 Greenpeace protesters stormed the International Petroleum Exchange (IPE) yesterday they had planned the operation in great detail.

What they were not prepared for was the post-prandial aggression of oil traders who kicked and punched them back on to the pavement. 

“We bit off more than we could chew. They were just Cockney barrow boy spivs. Total thugs,” one protester said, rubbing his bruised skull. “I’ve never seen anyone less amenable to listening to our point of view.”

Another said: “I took on a Texan Swat team at Esso last year and they were angels compared with this lot.” Behind him, on the balcony of the pub opposite the IPE, a bleary-eyed trader, pint in hand, yelled: “Sod off, Swampy.”

Greenpeace had hoped to paralyse oil trading at the exchange in the City near Tower Bridge on the day that the Kyoto Protocol came into force. “The Kyoto Protocol has modest aims to improve the climate and we need huge aims,” a spokesman said.

Protesters conceded that mounting the operation after lunch may not have been the best plan. “The violence was instant,” Jon Beresford, 39, an electrical engineer from Nottingham, said.

“They grabbed us and started kicking and punching. Then when we were on the floor they tried to push huge filing cabinets on top of us to crush us.” When a trader left the building shortly before 2pm, using a security swipe card, a protester dropped some coins on the floor and, as he bent down to pick them up, put his boot in the door to keep it open.

Two minutes later, three Greenpeace vans pulled up and another 30 protesters leapt out and were let in by the others.

They made their way to the trading floor, blowing whistles and sounding fog horns, encountering little resistance from security guards. Rape alarms were tied to helium balloons to float to the ceiling and create noise out of reach. The IPE conducts “open outcry” trading where deals are shouted across the pit. By making so much noise, the protesters hoped to paralyse trading.

But they were set upon by traders, most of whom were under the age of 25. “They were kicking and punching men and women indiscriminately,” a photographer said. “It was really ugly, but Greenpeace did not fight back.”

Mr Beresford said: “They followed the guys into the lobby and kept kicking and punching them there. They literally kicked them on to the pavement.”

Last night Greenpeace said two protesters were in hospital, one with a suspected broken jaw, the other with concussion.

A spokeswoman from IPE said the trading floor reopened at 3.10pm. “The floor was invaded by a small group of protesters,” she said. “Open outcry trading was suspended but electronic trading carried on.”....

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As we've said regarding the tactics used by Just Stop Oil and Extinction Rebellion:

"Is that a man-bun? I haven't seen a man-bun in years?" , wait, sorry, that was a comment on the vandals in Vienna. From the same post:

As with any behavior, if the consequences become painful enough the behavior will stop.

"Trump Can’t “Win” Trade War Without A Severe Recession"

Following on "Tariffs have a Laffer curve, too".

From Japan Economy Watch, March 28:

His Goal Is A Zero Trade Deficit 


Source: Bureau of Economic Analysis https://tinyurl.com/46434kvn Note: See explanation below

Donald Trump and his acolytes may not be smoking something. But they are certainly living in a pipedream. In their fevered visions, America has eliminated its trade deficit, and this has doubled factory jobs. The real problem is that they’re forcing everyone else to live in the same dream. Their efforts to make their futile dream come true could cause a severe recession.

Trump’s goal is to double the number of factory jobs to 20% of all jobs, because this is the share in Germany. He thinks he can do this by bringing the trade deficit to zero. He imagines that, if America cuts its imports of cars, machinery, semiconductors, consumer goods, and so forth, then manufacturers will make these things in the US. In reality, even if the trade deficit disappeared, there is no way factory jobs will double. I’ll explain the reasons in the next post, but the short answer is that manufacturing already suffers a big shortage of skilled labor, including indispensable engineers. But first, let’s see why Trump cannot bring the trade deficit to zero without causing a very serious recession.

Trade Deficit Shrinks Most When US Growth Slows or Goes Into Recession

Trump believes that the bigger America’s trade deficit, the slower American growth, particularly manufacturing growth. Actually, the reverse is true. America’s trade deficit is highest when America is growing rapidly and is smallest when America is in recession. When the US is at full employment and growing well, its imports grow faster than its exports, causing the trade deficit to expand. Conversely, the deficit shrinks when the economy slows and unemployment rises. That’s because, when both consumer spending and business capital investment slow down, the country needs fewer imports, and they fall faster than exports.

A look at the data for the past 60 years proves the point (see chart at the top of this post.) Between 1965 and 2024. GDP grew fastest in the eight years when the trade deficit worsened by at least 0.5% of GDP, e.g., expanding from 2% of GDP to 2.5%. In those years, GDP growth averaged 4.5% per year. Of course, the worsening trade deficit did not cause the economy to grow faster. Rather, faster GDP growth led to more rapid import growth. The second fastest growth came in the 30 years when the trade deficit worsened between 0% and 0.5% of GDP. In those years, GDP growth averaged 2.9%. Conversely, the trade deficit shrank when GDP growth slowed. The deficit shrank between 0% and 0.5% of GDP when growth averaged only 2.2% per year. And the slowest growth was in the eight years when the trade deficit shrank by more than 0.5%: average GDP growth of just 1.5%.

Today, the trade deficit stands at 4.5% of GDP (see chart below)....

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He won't get the trade deficit to zero but we are already seeing foreign manufacturers coming to the U.S. to avoid tariffs.

Maybe $100 billion so far and a couple hundred billion to follow.

"On This Day In History: Army Of Tsar Alexander I Of Russia Enters Paris – On March 31, 1814"

From Ancient Pages, March 31, 2016:

Tsar Alexander I of Russia, at the head of the Coalition Army, triumphantly marched into Paris, forcing Napoleon to abdicate a few days later.

The Coalition armies, including Russian, Prussian, and Austrian, entered France earlier that year and, after several battles, reached Paris's gates. By this time, Napoleon's army was weakened.

Previous battles caused massive casualties, and the nation was tired and discouraged. After 25 years of Napoleonic wars, only older men and children remained in some departments, and resources to support the war were scarce.

Russian and Prussian armies were the driving and decisive force behind the Coalition. The King of Prussia and Alexander I supported each other in the war against Napoleon. Alexander was determined; he wished to enter Paris just as Napoleon had entered Moscow on his failed invasion of Russia in 1813. Alexander promised, 'I shall not make peace as long as Napoleon is on the throne.'

It was a great move by Alexander, who deceived Napoleon.

During the battles on the outskirts of Paris, Alexander directed the main Coalition armies to march on to Paris. At the same time, a Russian general with a vast mass of 10,000 cavalrymen rode towards Saint Pizier, where Napoleon was in battle with the Austrian allies. Napoleon realized too late that a divisionary detachment was sent, not the main army. By this time, Russian and Prussian troops were nearing Paris....

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Former New York Fed Head Bill Dudley: "Why the Fed Wants to Keep More US Government Debt"

Sometimes the man sounds like a political hack and sometimes he sounds like a judicious and trustworthy counselor. The trick is to figure out which hat he's wearing on any given day.

From Bloomberg Opinion, March 26:

Why the Fed Wants to Keep More US Government Debt
It’s just making sure Congressional wrangling over the debt limit doesn’t destabilize interest rates. 

The Federal Reserve has raised some questions with its recent decision to slow the pace at which it’s shrinking its more-than-$4-trillion pile of Treasury securities. For example: Is it merely preparing for an adjustment to the federal debt limit, or is it trying to avert a crisis in the US government bond market?

With apologies for dampening the drama, I’m going with the mundane explanation.

Over the past couple decades, the Fed’s holdings of Treasury and mortgage securities have played a crucial role in monetary policy. After the 2008 financial crisis, and during the global pandemic, its asset purchases — known as quantitative easing — pushed down long-term interest rates and increased the reserves that banks held at the Fed. Since March 2022, it has been unwinding that stimulus, allowing its holdings to run off gradually with the aim of reaching the level of reserves banks need to satisfy their liquidity needs, with a buffer above that for safety.

Now, though, the impending Congressional fight over raising the federal debt limit is complicating things. When the government hits the limit, it can’t borrow to finance deficit spending. To make payments, the Treasury will have to draw down its balance at the Fed, potentially adding hundreds of billions of dollars in reserves to the banking system. Later, when Congress agrees to increase the limit as it always has, the Treasury will replenish its Fed account, depleting reserves at a rapid pace that — if the level drops too low — could force banks to scramble for cash.

The Fed doesn’t want a repeat of September 2019, when a shortage of reserves caused interest rates to spike. It considers the current supply to be well above “ample,” the level required to ensure that short-term fluctuations in reserves don’t destabilize rates, but it can’t know precisely how much banks will need. Hence, out of an abundance of caution, to ensure that reserves remain plentiful as the Treasury rebuilds its cash balance, it’s adjusting the pace of quantitative tightening. Beginning next month, it’ll reduce the cap on the monthly runoff of its Treasury securities, to $5 billion from $25 billion. The cap on mortgage securities will remain the same, at $35 billion (though the actual runoff has been slower, at about $15 billion a month).

Granted, the Fed’s move will have a small marginal impact on the US government’s borrowing needs. Once the debt limit is raised, the Treasury will have to issue slightly less debt to replace the smaller run-off from the central bank. But it’s a pittance in the context of a budget deficit running at roughly $2 trillion annually. It should have no bearing on whether bond investors will freak out about America’s fiscal outlook, which I agree is dire. The implications for monetary policy are also negligible....

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Calm, judicious, well-reasoned.

Advice From Nvidia's CEO: Everyone Should Use This Free Type Of AI

News you can use. Or not. Your call.

From CNBC, February 26:

Nvidia CEO: ‘I would encourage everybody’ to use this type of AI—it’s free and can teach you ‘anything you like’

Nvidia CEO Jensen Huang has some advice, and he says that nearly everyone would benefit by following it: Get an AI tutor.

“I have a personal [artificial intelligence] tutor with me all of the time. And I think that feeling should be universal,” Huang told journalist Cleo Abram’s YouTube interview show “Huge Conversations,” in an episode that aired last month.

That’s a virtual tutor powered by AI, not a human who can teach you how to use AI more effectively. “If there’s one thing I would encourage everybody to do, [it’s] to go get yourself an AI tutor right away,” said Huang, whose company makes computer chips that have helped power recent AI tech advances.

Huang’s preferred tutor is Perplexity’s AI-powered search engine, which he called a “really helpful” tool in an interview with the Bipartisan Policy Center last year. He uses it daily to learn about a multitude of subjects, including digital biology, he added. The search engine, like many other generative AI tools, offers users both free and paid subscription options.

Other AI platforms are designed to act more specifically as tutors, like free tutoring service Sizzle and Khan Academy’s Khanmigo AI tutor, which costs $4 per month....

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"Tariffs have a Laffer curve, too"

A lot of smart people, including the author of this piece, David Goldman, seem to be treating the Trump tariffs as old-school protectionist and/or old-school revenue-raising measures. As best as I can tell the current administration is using them and the threat of more as a blunt instrument to force a lower trade deficit. From Politico February 5:

....U.S. goods imports in 2024 totaled $3.3 trillion, a record high, while exports were nearly $2.1 trillion, producing a 14 percent jump in the trade gap to $1.2 trillion.

The United States still runs a surplus in services trade, such as banking, travel and transportation. When that is included, the combined goods and services trade deficit totaled $918 billion in 2024, up 17 percent from 2023 and the second highest on record.

The report showed the U.S. trade deficit with China increased to $295 billion in 2024, but remained well below the record level of $418 billion set in 2018....

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And the headliner from Asia Times, March 30:

Tariffs in the 10%-15% range likely will generate significant amounts of new revenue without much damage to economic activity 

Legend has it that the supply-side revolution – Ronald Reagan’s 1981 cut in the US top income tax rate to 40% from 70%– began in a Washington restaurant, when economist Arthur Laffer drew his eponymous curve on a cocktail napkin for then White House Deputy Chief of Staff Dick Cheney.

At a tax rate of zero, the government has no tax revenues, but it also has no revenues at a tax rate of 100%, because the economy would shut down. Somewhere in between, there’s a tax rate that generates the maximum revenue.

The US can’t continue to run trillion-dollar trade deficits without dire consequences. The US net international investment position has sunk to negative $25 trillion, about equal to the sum of US deficits over the past 30 years. During the past decade, foreigners poured into US tech stocks. If the tech boom fades, for example, the US will have to persuade foreigners to buy bonds, and that implies higher interest rates to attract funds.

Tariffs are a tax, and Laffer’s simple illustration applies to the impact of tariffs as well, although more variables are in play. A reasonable guess is that tariffs in the 10% to 15% range would yield a meaningful amount of revenue without undue disruption of economic activity.

Tariffs have multiple effects: Domestic production will replace some imports, but some consumers and businesses will have to absorb higher import prices. Some exporters will build plants in the US to avoid tariffs, as US President Trump proposes....

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Our boilerplate mini-bio for Mr. Goldman:

...The author of this piece, David Goldman, is Deputy Editor (Business) at Asia Times.
Prior to taking that position he was:

  • Global head of credit strategy at Credit Suisse
  • Global Head of Fixed Income Research for Bank of America
  • Global Head of Fixed Income Research at Cantor Fitzgerald

In addition to apparently not being able to hold onto a job I think one of his requirements for moving on was a "Global Head" title. (JK, young Master. G.)

He's pretty sharp. From February 11, 2022:

"Worse to come from worst US inflation in 40 years"

The author of this piece, David Goldman has been quite vocal (and quite accurate) about inflation not being "transitory." (I think the word deserves the scare quotes by this point, don't you?)

He has also been among the voices pointing out that the shelter component of the CPI, rent and owners equivalent rent, is not reflecting the real-time high-frequency data that we get on rent increases and house price appreciation. 

Although he does not go this far, saying instead that shelter inflation will show up later this year, I am starting to wonder if there isn't a methodological flaw in the CPI....

***** 

Previously:

January 22
"More inflation shoes to drop on NASDAQ by end-2022"
Soaring rent increases will hit the Consumer Price Index with a lag of up to eight months
January 20
David Goldman Looks At The Housing Component Of Official Inflation Statistics
October 2021
"Inflation depresses – later will clobber – stocks"
September 2021
Prices: "Rent blowout mysteriously missing from US report"
August 2021
"Home rents set to turbocharge US inflation"
Its almost as though he's trying to tell us something.

“Energy transition is the strongest commercial trend since the beginning of industrialization” ”There is an estimated $275 trillion capital need over the next 25 years"—Sweden's EQT

From Bloomberg via Advisor Perspectives, March 29:

EQT Raises €21.5 Billion for Its Latest Infrastructure Fund 

EQT AB has raised €21.5 billion ($23.2 billion) for its latest infrastructure fund — a sum a top executive for the Swedish investment firm says underscores how the energy sector’s funding needs trump an uncertain market for deals.

“The capital need for the next 20 to 25 years to transform energy and digital systems is so large, and there are only about five competitors that are as substantial and large as us, so we don’t see any roadblocks to dealmaking,” Lennart Blecher, head of real assets at EQT, said in an interview.

“Energy transition is the strongest commercial trend since the beginning of industrialization,” he said. There is an estimated $275 trillion capital need over the next 25 years, he said.

EQT Infrastructure VI, which had targeted €20 billion, met its hard cap, according to a statement Friday. It includes €21.3 billion in fee-generating assets under management. The vehicle is about 35% larger than its predecessor, which closed at €15.7 billion in 2021.

Bullish dealmaking predictions have been rare with global activity slowing in the wake of sweeping policy changes in the US. Infrastructure should buck the tend, according to Blecher.

“Most of the infrastructure services we provide are to domestic populations, so we don’t currently expect to see a large impact from tariffs,” Blecher said in the interview. “People need energy and connectivity in good and bad times.”

While fundraising for infrastructure strategies has been relatively easier than raising money for buyouts, challenges are emerging as contributions from institutional investors are flatlining after years of large commitments.

EQT, which has €75 billion of global infrastructure assets under management, has been raising money for its latest fund since 2022 and has already closed 10 investments....

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Capital Markets: "Equities and Rates: Look Out Below"

From Marc Chandler at Bannockburn Global Forex: 

Overview:  The US dollar begins the new week mostly firmer. The dollar-bloc currencies and Scandis are the weakest. Sterling and the euro are little changed, while the continued drop in the US 10-year yield has helped lift the yen by nearly 0.5%. Emerging market currencies are mixed as well. A handful of Asian currencies, including the Chinese yuan, are higher. The Turkish lira is also firmer, after falling nearly 4% over the past two weeks. Russia, which apparently has disappointed US President Trump, who has threatened secondary tariffs its oil if it does not accept the cease fire with Ukraine, has seen the ruble soften today.

The knock-on impact from the US tariff offensive is taking a toll on equities. Japan's Nikkei 225 stumbled by 4%, as did Taiwan's Taiex. South Korea's Kospi dropped 3%. Australia's ASX 200 was off 1.75%. The Hang Seng lost 1.3% and China's CSI 300 fell 0.7%. India is off less than 0.5%. Europe's Stoxx 600 is down for its fourth consecutive session and its nearly 1.3% loss is greater than the loss of the past two sessions put together. It gapped lower today and US index futures are poised to do so too. Some of the flows out of equities is finding a haven in the government bond markets. The 10-year JGB yields fell five basis points to 1.48%, while European benchmark rates are mostly 2-4 bp lower. The 10-year yield Treasury is below 4.20%. It settled only once since last December below 4.20%, and that was on March 3. Gold jumped to a new record near $3128. It settled around $3011 a week ago. May WTI is firm slightly below $70 but has been in a $68.80-$70.15 range today....

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