"US FTC probing Deere over customers 'right to repair' equipment" (DE)

Talk about a long strange trip. Deere and Apple were front and center in denying that people who purchased their products had ownership rights including the right to repair. Apple saw the error of their ways, though it is still difficult to repair a problem with their equipment without running afoul of some fine print or other. Deere on the other hand said they would honor the principles of right-to-repair and ended up getting laughed at by their farmer customers.

From Reuters, October 17:

The U.S. Federal Trade Commission is probing farm equipment maker Deere (DE.N) over the company's repair policies, according to a filing made public on Thursday.

The investigation, authorized on Sept. 2, 2021, focuses on repair restrictions manufacturers place on hardware or software, often referred to by regulators as impeding customers' "right to repair" the goods they purchase.

 

The probe was made public through a filing by data analytics company Hargrove & Associates Inc, which sought to quash an FTC subpoena seeking market data submitted to it by members of the Association of Equipment Manufacturers.

 

Neither HAI nor AEM is a target of the FTC probe, according to the filing.

A spokesperson for the FTC declined to comment, and a representative for Deere did not immediately respond....

....MUCH MORE

 

Here's the latest, a filing from a third party with a lot of detail: "https://www.ftc.gov/system/files/ftc_gov/pdf/611970-HAI%27sPetitiontoQuashtheFTC%27sCID%28FTCFileNo.211-0191%29%28PUBLIC%29.pdf"

 

Shut them down, this has gone on far too long. Some of our early posts:

April 2015
John Deere Tells Patent Office That Purchasers Don't Actually Own the Machine They Paid For (DE)
 May 2015 
"John Deere Clarifies: It's Trying To Abuse Copyright Law To Stop You From Owning Your Own Tractor... Because It Cares About You" (DE)
November 2016 
For the Next Two Years Auto Manufacturers Can't Have You Arrested...
...for trying to repair or modify the software on your own car.

And in a tangential development:
Big Data Down On the Farm: "DuPont Joins Deere on Software in Challenge to Monsanto" (DE; DD; MON)

 

Here's the introduction to a March 2017 post:
"Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware" (DE)

John Deere says:

"When a customer buys John Deere equipment, he or she owns the equipment," ...

Their actions say they are full of manure.
As one critic puts it:

"They require buyers to accept an End User License Agreement that disallows all of the activities they say are allowed in their statement," she said. "Deere is a monopolist and has systematically taken over the role of equipment owner, despite having been paid fairly and fully for equipment. Their claims to control equipment post-purchase are inconsistent with all aspects of ownership including accounting, taxation, and transfer of products into the secondary market."

It's all about the intellectual property and unfortunately the Supreme Court has been wishy-washy on a couple decisions but there is hope. As we noted in the November '16 post below:

One of the heroes of this stuff was Thai native and U.S. student Supap Kirtsaeng who won his case, Kirtsaeng v. John Wiley & Sons, Inc., wherein he argued he should be able to re-sell textbooks he had lawfully purchased. The Supreme Court upheld the First Sale Doctrine that "you bought it, you own it".....

June 2021

"Microsoft and Apple Wage War on Gadget Right-to-Repair Laws"

July 2021

President Biden Sides With Farmers Over "Right to Repair", Deere Responds (DE; AAPL; MSFT)

It's bizarre that this is still an issue. I thought that with Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519, and the First Sale Doctrine, that it had been decided you own what you bought.

And though Apple isn't immediately affected by the coming Executive Order, they have been using Deere as a stalking horse on the issue and should be called to account as well,

January 2023
Right To Repair: One Down, Dozens More To Go (DE; AAPL)

It's about time.

From Reuters, January 8:

The American Farm Bureau Federation and machinery manufacturer Deere & Co signed a memorandum of understanding on Sunday that ensures farmers have the right to repair their own farm equipment or go to an independent technician.

As the agriculture sector accelerates its adoption of technology, the reliance on high-tech machinery such as GPS-guided combines and tractors has become more common-place.

But equipment makers such as Deere have generally required customers to use their parts and service divisions for repairs and until recently, only allowed authorized dealers the means and tools to access the complex computerized systems of their tractors and other machinery....

*****

.... The MOU aims to find a solution to the "right to repair" debate in the private sector, rather than through legislation or regulation, according to the document. It benefits farmers and independent repair facilities in the United States and Puerto Rico, for the "lawful operation and upkeep of Agricultural Equipment," the MOU states.....

And many, many more.

February 2024
Responding To The Fall In Farm Income, John Deere Introduces Farm Implements as a Service (DE; FIaaS)
I think the big green machine means well but it seems that every tweak to their business plan is a retrograde motion back towards sharecropping.

Reserves: "New NY Fed tools suggests balance sheet draw down has more room to run"

From Reuters via MSN, October 17:

The Federal Reserve faces no imminent pressure to stop the ongoing contraction of its balance sheet, according to a new tool launched Thursday by the Federal Reserve Bank of New York.

The new gauge, which the bank calls Reserve Demand Elasticity, seeks to measure how liquid bank reserves, a key aspect of financial sector liquidity, are. The bank said the new measure will help Fed officials better manage the uncertain process of cutting their holdings of bonds, in a process called quantitative tightening, or QT. 

The new tool is designed to serve as an early warning indicator of impending reserve scarcity. The bank said in a blog posting that the measure will help spot the transition point between abundant levels of liquidity, toward the “ample” but undefined level of reserves policymakers say they are aiming for.

As of data available on Oct. 11, the measure indicates “reserves remain abundant. These latest RDE estimates are indistinguishable from zero, meaning that the federal funds rate does not significantly respond to shifts in reserve supply.” For reference, negative RDE readings suggest tighter liquidity.....

....MORE

Here's the New York Fed - Reserve Demand Elasticity (RDE) 

Israel: "‘High likelihood’ Hamas leader Yahya Sinwar killed by troops in Gaza"

From the Times of Israel liveblog, October 17:

IDF, Shin Bet working to confirm ID * IDF says there were no hostages in building where body of architect of October 7 slaughter apparently found * PM: No hostages harmed in incident...

....MUCH MORE

"Super-light materials that help suppress EV battery fires just got a big boost"

From MIT's Technology Review, October 16:

The US Department of Energy has committed a $670.6 million loan to Aspen Aerogels for a new factory to produce materials that improve battery safety.

A company making fire-suppressing battery materials just got a $670.6 million loan commitment from the US Department of Energy.

Aspen Aerogels makes insulating materials that can be layered inside an EV’s battery to prevent or slow heat and fires from spreading within the pack. The company is building a new factory in Georgia to produce its materials, and the DOE’s Loan Programs Office will provide the massive loan to help it finish building the plant. 

As more EVs hit the roads, concern is growing about the relatively rare but dangerous problem of battery fires. While gas-powered cars catch fire at higher rates, battery fires can be harder to put out and are at greater risk of reigniting, creating dangerous situations for drivers and first responders. Materials like Aspen Aerogels’ thermal barriers can help improve battery safety.

“I think the goal is to really make sure that they’re helping to achieve critical battery safety goals that we all share,” says Jigar Shah, director of the Loan Programs Office.

Automakers including General Motors, Toyota, and Audi already buy Aspen Aerogels materials to use in their vehicles. If the new factory starts as planned and ramps to full capacity, it could supply material for over two million EVs annually.

When a lithium-ion battery is damaged or short-circuits, it can go into a process called thermal runaway, a feedback loop of heat and chemical reactions that can lead to a fire or explosion. Electric vehicles’ battery packs are made up of many small battery cells wired together—so there’s a risk that a problem in one cell can spread to the rest of the pack....

....MUCH MORE

Our first post on aerogels, 2007:

Scientists hail ‘frozen smoke’ as material that will change world

Seven years later:

....Aerogel: A synthetic porous ultralight material derived from a gel, in which the liquid component of the gel has been replaced with a gas. The result is a solid with extremely low density and thermal conductivity which feels like polystyrene (styrofoam) to the touch. Potential applications include improved thermal insulation, chemical absorber for cleaning up spills, electrochemical supercapacitors and shock absorption. Scientifically viable in 2015; mainstream in 2019; and financially viable in 2021.

Pretty close on the timeline.

"U.S. chip stocks rally as TSMC's AI-backed outlook impresses investors" (TSM; NVDA)

From Reuters, October 17:

U.S. chip stocks rose before the bell on Thursday after industry bellwether TSMC's strong sales forecast fanned investor optimism about demand for processors used to power artificial intelligence applications.

Taiwan Semiconductor Manufacturing Co (2330.TW), the world's largest contract chipmaker, raised its expectation for annual revenue growth and said sales from AI chips would account for mid-teen percentage of its full-year revenue.

 

The forecast from the leading producer of advanced AI chips reinforced investor confidence in the outlook for chipmakers whose market values have skyrocketed over the past two years due to a surge in chip spending by Big Tech.

 

U.S.-listed TSMC shares rose 7%, with the company's market capitalization set to cross $1 trillion if premarket gains hold....

....MUCH MORE

 

Nvidia is changing hands at $139.89 up $4.17 (+3.07%) in premarket trade and if it catches a tailwind will surpass the intraday all-time-high of $140.76 after setting an ATH closing price, $138.07 on October 14.

, opens ne

Some Counterintuitive Insights On AI (chatbot) Adoption

From the blog of the Oxford University Press, October 16:

A generational divide: differences in researcher attitudes to AI

As part of our interest in helping academic researchers harness AI, we surveyed 2,300 researchers to understand their use of AI, as well as their attitudes and worries. Our findings show that a quarter (25%) of those in the early stages of their careers have reported having sceptical or challenging views of AI. However, this proportion falls to 19% among respondents who are later in their careers. Early Career Researchers also have more divisive opinions on AI, with fewer expressing neutral views than Later Career Researchers.

In a roundtable discussion we asked Dr. Henry Shevlin (Associate Director at Leverhulme Centre for the Future of Intelligence, University of Cambridge) and Dr. Samantha-Kaye Johnston (Research Associate at the Department of Computer Science, University of Oxford) for their thoughts on why this might be:

Henry Shevlin
The survey findings were empirical evidence for something I have observed for some time. My dad is almost 80, and I introduced him to ChatGPT’s voice functionality. He absolutely loves it and uses it every day; he says he has had enough of typing on tiny buttons on a tiny phone screen. Now he just chats to ChatGPT every day.

So, it was really striking to me to see that the most enthusiasm (in terms of the largest number of “Pioneers”) was found in Boomers and Gen X, whilst younger generations were a lot more sceptical. 

There are all sorts of theories for why that could be, but one I will explore here is an analogy with cars and mechanical skills. When I think back to my parents’ generation who got their first cars in the 1950s and 1960s, they really needed to have mechanical skills to run a car because cars were really unreliable and broke down all the time. By contrast, I can just about change the oil in my car. My car is pretty reliable and so I haven’t ever needed any more skills than this. Also, if I wanted to do anything fancy or impressive, car mechanics are so advanced these days that I would probably need to plug in a computer to get the diagnostics information.  

I think we probably have seen something similar happen with the understanding of computers. For so many people these days (and particularly for young people), the primary way of accessing the internet is through a phone or a tablet. There’s far less need and far less opportunity for the kind of tinkering that my parents’ generation did in the 90s when you had to key in commands or use Boolean search. That kind of tinkering was crucial for building understanding of the fundamentals, and for giving people the confidence to experiment and learn....

....MUCH MORE

"BMW Says EU Ban on Gasoline Cars from 2035 Is 'No Longer Realistic'”

It never was realistic.*

From OilPrice, October 15:

Germany’s car manufacturing giant BMW is warning that an EU ban on the sale of gasoline and diesel cars from 2035 is “no longer realistic” amid slow EV sales as the European auto industry will see a “massive shrinking” with such a ban.

European carmakers are already struggling with their EV sales as subsidies in many countries are coming to an end and Chinese low-cost vehicle makers are gaining market share.

Last year, the EU member states approved an emissions regulation under which the bloc will end sales of new carbon dioxide-emitting cars and vans in 2035. 

The rules target 55% CO2 emission reductions for new cars and 50% for new vans from 2030 to 2034 compared to 2021 levels, as well as 100% CO2 emission reductions for both new cars and vans from 2035. 

Under the regulation, the European Commission will assess in 2026 the progress the EU has made in achieving the target. The Commission will decide whether the targets need to be reviewed.

But BMW’s chief executive Oliver Zipse said on Tuesday at the Paris Automotive Summit that the ban “could also threaten the European automotive industry in its heart.”

The current regulations will “with today’s assumptions, lead to a massive shrinking of the industry as a whole,” Zipse added, as carried by Bloomberg.

Electric vehicle sales in Europe have been suffering this year. Sales in Germany, for example, are plummeting as Berlin ended subsidies at the end of 2023....

....MORE

*December 8 2023's "Western Legacy Automakers Probably Won't Be Long-Term Survivors":

Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's. 

And they won't be able to compete.

It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate...

China: Housing Ministry Briefing Underwhelms, Equity Markets Droop

From Bloomberg, October 16:

China Boosts Support for Unfinished Properties to $562 Billion

• To widen credit support under “white list” program to 4 trillion yuan
• Aiming to renovate 1 million houses in “urban villages”
• Housing market measures have made an impact so far, Ni says
• Chinese property stocks, iron ore futures slide as briefing underwhelms 

Thank you for joining us. Here are the key takeaways from the briefing in China on the property market, by speakers including Housing Minister Ni Hong:

 

China is expanding a “white list” program that allows unfinished housing projects and developers to access credit. Loans approved under this program will reach 4 trillion yuan by the end of the year, almost double what they are now....

****

....Investors were largely underwhelmed by the briefing, partly due to a lack of fresh, bold steps, and the absence of a specific figure for stimulus. A gauge of developers tracked by Bloomberg had fallen 8.3% by 11:30 a.m. local time, while iron ore and steel futures were lower in the commodities market....

....MORE

 

For the last two years we have watched base and industrial metals jump on each Chinese stimulus announcement.

China can't allow new construction until the current oversupply is taken up. The situation is analogous to reconstructing bridges that fall down; a boost to GDP but a drag on actual wealth-building. 

 

Also at Bloomberg, October 16/17:

 

Iron Ore Slumps Below $100 as Sentiment on China Demand Worsens 

• Push to tackle property glut won’t help steel demand: analyst
• Base metals also fall as investors mull China stimulus plan

There's A New High-Buck Perfume On The Market

From Potato News Today, October 15:

‘Eau de Spud’: Perfumer creates luxury scent evoking smell of Polish potatoes, going viral in Poland and abroad

When life gives you potatoes, make perfume!… A Polish perfumer has unveiled a unique luxury fragrance that captures the earthy aroma of Polish potatoes, transforming the humble staple into an unexpected and sophisticated scent.

As Karolina Shapland reports in an article published by TVP World, few, if any, perfumers have been inspired to create a scent inspired by distant memories of trips to Polish vegetable markets in the 1980s, but Michał Gilbert Lach is one of them – or, more probably, the only one.

His memories of those long-gone trips with his grandparents have inspired him to create a perfume that he has called Polish Potato. The scent is the subject of a flurry of social media activity.

People, of course, are surprised that anyone would be so bold to create and market a perfume named after a humdrum and ubiquitous vegetable; hence the flurry.

But, as Lach tells TVP World, the scent is created to take people back to a certain moment in his life and the rich and evocative memories that surround it....

....MUCH MORE

Potato News Today home 

For some reason this story reminded me we haven't visited Modern Drunkard in a while.

Russia Is Considering Submarine LNG Carriers For The Northern Sea Route

Hmmmm....

From The Barents Observer, October 13:

Gazprom teams up with Kurchatov Institute
“Fantasy project,” Nikitin says about nuclear gas carrier submarine
Russia’s leading research institute for development of nuclear energy has reached an agreement with Gazprom to develop a submarine for transport of liquid natural gas along the Northern Sea Route.

Aleksandr Nikitin with the Bellona foundation is halfway laughing when asked about safety aspects on Russia's planned civilian nuclear-powered submarine for bringing gas to markets in Asia. He does not at all believe the project will surface. 

Design work has begun, said president of the the Kurchatov Institute, Mikhail Kovalchuk. He presented the news at the OMR 2024 forum devoted to development of shipping and high-tech equipment for the Arctic taking place in St. Petersburg this week. 

The idea to conquer difficult ice conditions by simply sailing under it is not new. Both the Kurchatov institute and Malachite Design Bureau have previously discussed the plan of creation of a reactor-powered submarine for transport of hydrocarbons from the Arctic shelf.

This, however, is the first time the designers announce an agreement of intent with Gazprom, the Kremlin mjority-owned energy corporation. 

Gazprom director Alexei Miller and Kurchatov Institute chief Kovalchuk had a working meeting on October 11 where the implementation of nuclear power project for Russia’s Arctic shelf was discussed, the energy-online Neftegaz reported. 

Gazprom is in deep financial crisis after sales more than halved following Russia’s all-out war on Ukraine. The energy giant lost pipeline gas sales to Europe and faced its first annual net loss in 2023 after decades of making big money. 

Gazprom is now ranked as Russia's most unprofitable company....

....MUCH MORE

In Q3 2008 Gazprom got to third place on the worldwide market cap league tables. 

And in 2010 it was the world's most profitable company (July Fortune Global 500 list),  though only 50th in revenues.

In the words of Viktor Chernomyrdin, former head of Gazprom (and Prime Minister of Russia '92 - '98):

"We meant to do better, but it came out as always"

Previously:
January 2019
Russia To Introduce Nuclear-Powered Ice-Breaking Submarines
December 2019
Russia Is Studying the Idea Of Nuclear-Powered LNG Carrier Submarines

"BYD Is Winning the Global Race to Make Cheaper EVs"

A deep dive into an astounding story, from Bloomberg Businessweek, October 16:

The Chinese company is flooding markets with its cars—while the US is doing everything it can to keep the booming brand out. 

Malta, a tiny archipelago in the Mediterranean Sea, might not seem worth the attention of a disruptive new car brand. The nation of just under 564,000 is known as a sunny tourist destination with limestone sea cliffs, ancient temples and lax regulation. About 7,200 new cars were registered in the country last year, approximately one-seventeenth the volume sold in a single day in the US. Yet the Maltese market isn’t too small for BYD Co., the Chinese electric-vehicle giant.

Last fall in Malta, BYD began selling the Atto 3, an all-electric compact crossover. Strip away the company’s futuristic logo, and it looks almost indistinguishable from other small, sporty SUVs. But inside it’s full of treats, including heated seats in vegan leather and a 360-degree rotating touchscreen. The 60-kilowatt-hour battery gives it a range of 260 miles, enough to circle Malta’s main island twice. And by European standards, it’s inexpensive, at about $28,000. It’s a novelty in Malta. But the real reason BYD is entering the European Union’s tiniest member state? The company’s happy place is emerging markets and countries with no domestic auto industry to defend: “You can basically describe them as a ‘chicken rib market,’ ” says Yu Zhang, the managing director of consulting firm AutoForesight in Shanghai. “All the chicken ribs added up together, it’s more than 10 million cars.”

After increasing its annual sales in China 15 times over, to 3 million cars in only three years, BYD is now exporting to roughly 95 markets, including 20 new ones this year. The company is building, has recently opened or has announced plans for assembly plants outside China in 10 countries on three continents. The speed and scope of this expansion have caught the global auto industry off guard and triggered protectionist tariffs in the US and EU, where policymakers fear Chinese players such as BYD will, in the words of Elon Musk, “demolish” their domestic automakers.

BYD, which stands for “Build Your Dreams,” is the brainchild of Wang Chuanfu, a 58-year-old battery scientist who in the 1990s saw an opportunity to start a rechargeable battery company to challenge Japan’s hold on the industry. It began by focusing on batteries for mobile phones and power tools, but in 2003 it decided to pursue cars. Wang’s battery and manufacturing innovations, cushioned by China’s EV-friendly government policies and the scale of its domestic auto market, have helped BYD do what Tesla Inc., Ford Motor Co. and the rest of the auto industry haven’t: build an affordable electric car for the masses and make money doing it. Since introducing a new battery technology in 2020, BYD has gone from being an also-ran in China’s crowded car market to cracking the top 10 automakers in the world. It’s unseated Volkswagen AG from its decade-plus perch at the top in China and briefly—in late 2023—surpassed Tesla to become the biggest seller of pure electric vehicles globally.

It’s a playbook reminiscent of those of Toyota Motor Corp. and Hyundai Motor Co., which grew out of Japan and Korea’s postwar industrialization; they exported for years before eventually setting up factories overseas. Like them, BYD started out with cheap cars but moved up the scale, leveraging muscular industrial policy, lower costs and more efficient manufacturing. As BYD makes its global push, it’s facing bipartisan anti-China sentiment in Washington that has echoes of the Japan Inc. hysteria of the 1980s, when the US feared being eclipsed as an economic superpower. The concern is that, as with solar panels and steel, electric cars are part of China’s larger economic strategy to amass political power through industrial and technological supremacy.

BYD executives say the company is just trying to sell cars and fight climate change. But it also wants to do what no Chinese carmaker has ever done: become a globally recognized consumer brand. It’s hoping to transcend geopolitics through the appeal of a plug-in hybrid sedan that can go 1,200 miles without stopping at a pump or a charger. Stella Li, BYD’s executive vice president and the face of its global expansion, says she wants consumers to see BYD as “a technological pioneer in changing the world.” She adds, “Just like when you are using an iPhone, you may not think it’s from a particular country. It’s just part of your life.”

This past summer, President Joe Biden imposed a 100% tariff on EVs exported from China; in September his administration proposed a ban on the sale or import of connected cars with Chinese hardware or software, underscoring a fear in US national security circles that internet-connected cars could become tools of Chinese surveillance or cyber warfare. In October, the EU slapped a 17% tariff on BYD’s EV imports, part of a probe into government subsidies in the Chinese auto industry. According to a recent study by Germany’s Kiel Institute for the World Economy, BYD receives “particularly high subsidies,” and China as a whole spends anywhere from three to nine times more than other democratic, market-based economies on subsidies.

Like many Chinese executives, Li bristles at the notion that BYD owes its success to government largesse and calls subsidy accusations “completely groundless.” BYD is so formidable because it’s emerged victorious from China’s brand of state-led capitalism, which weeds out weak or inefficient players by forcing them to compete in a protected, carefully calibrated sandbox. For Li, that victory was hard won, the result of grit and determination. “They cannot beat us and can only attribute our success to other factors,” she says. “We’d rather just show our muscles than make explanations to them.”

“When everybody else is having a work-life balance, we only have work balance”

Still, BYD has benefited from government incentives, even if the full extent of it is opaque. “There is not a single major ‘private’ company that succeeds in China without the backing of the Party,” says Michael Dunne, a consultant and former General Motors Co. executive who spent more than two decades working in Asia. BYD is part of a wave of Chinese automakers fulfilling a government directive to combat a domestic economic slump by cranking up exports. But its bigger goal is localizing manufacturing around the world, so it can sidestep tariffs and become a household name in each market. “No company in recent memory has expanded globally at such a rapid clip as BYD,” Dunne says. “It sees a need to strike while the iron is hot, to move as fast as possible before others catch up.”....

....MUCH MORE

If interested see also: "Tariffs Backfire as China Outmaneuvers Rivals with Global EV Investments" and the outro from that post, a couple prior stories:

March 18
This Will Be A Bloodbath: "Biden Set to Crack Down on Auto Emissions to Accelerate EV Sales"
The net effect of this order will be to give the Chinese the auto industry.*

Bloodbath (partially) Averted: "A win for automakers as US softens EV mileage rule"
It's only partial because those BYD and other Chinese EV-maker plants to be built in Mexico that Trump was talking about with the "bloodbath" line are still going to destroy Detroit. It will just take a little longer.

Here's December 8 2023's "Western Legacy Automakers Probably Won't Be Long-Term Survivors":

Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's. 

And they won't be able to compete.

It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate.....MUCH MORE

Also:

December 6, 2023
Elon Musk suggests Tesla and 9 Chinese companies will be the top 10 carmakers

January 3, 2024
"China could be on track to dominate the world’s EV market, even if not in the U.S."

February 23 , 2024
Rystad: "China’s EV Growth Set To Explode in 2024"

"Oil company Phillips 66 says it will shut down Los Angeles-area refinery" (PSX)

From the Associated Press, October 16:

Oil company Phillips 66 announced Wednesday that it plans to shut down a Los Angeles-area refinery by the end of 2025, citing market concerns.

The refinery accounts for about 8% of California’s refining capacity, according to the state’s Energy Commission. The company indicated it will remain operating in the state.

“With the long-term sustainability of our Los Angeles Refinery uncertain and affected by market dynamics, we are working with leading land development firms to evaluate the future use of our unique and strategically located properties near the Port of Los Angeles,” CEO Mark Lashier said in a statement. “Phillips 66 remains committed to serving California and will continue to take the necessary steps to meet our commercial and customer demands.”

The closure will impact 600 employees and 300 contractors who help operate the refinery, the company said in a news release. The refinery consists of two facilities that were built more than a century ago.

The announcement comes days after Democratic Gov. Gavin Newsom signed a law aimed at preventing gas prices from spiking at the pump. The law authorizes energy regulators to require refineries to maintain a certain level of fuel on hand. The goal is to avoid sudden increases in gas prices when refineries go offline for maintenance....

....MUCH MORE

International Energy Agency—World Energy Outlook 2024

From the IEA, October 16, 2024:

Press Release -  Geopolitical tensions are laying bare fragilities in the global energy system, reinforcing need for faster expansion of clean energy

Overview - https://www.iea.org/reports/world-energy-outlook-2024

World Energy Outlook 2024 (398 page PDF) 

"Invisible text that AI chatbots understand and humans can’t? Yep, it’s a thing."

From Ars Technica, October 14:

A quirk in the Unicode standard harbors an ideal steganographic code channel. 

What if there was a way to sneak malicious instructions into Claude, Copilot, or other top-name AI chatbots and get confidential data out of them by using characters large language models can recognize and their human users can’t? As it turns out, there was—and in some cases still is.

The invisible characters, the result of a quirk in the Unicode text encoding standard, create an ideal covert channel that can make it easier for attackers to conceal malicious payloads fed into an LLM. The hidden text can similarly obfuscate the exfiltration of passwords, financial information, or other secrets out of the same AI-powered bots. Because the hidden text can be combined with normal text, users can unwittingly paste it into prompts. The secret content can also be appended to visible text in chatbot output.

The result is a steganographic framework built into the most widely used text encoding channel.

“Mind-blowing”
“The fact that GPT 4.0 and Claude Opus were able to really understand those invisible tags was really mind-blowing to me and made the whole AI security space much more interesting,” Joseph Thacker, an independent researcher and AI engineer at Appomni, said in an interview. “The idea that they can be completely invisible in all browsers but still readable by large language models makes [attacks] much more feasible in just about every area.”....

....MUCH MORE

Previously on the Steganography channel:

Steganography: Hidden In This Picture 

Elongate—"Tesla’s walking, talking Optimus robots were partly controlled by humans: report" (TSLA; ELON)

Finally, we get to use Elongate as scandal name. It’s kinda perfect. 🤣 https://t.co/qSNH7lsn72

— Elon Musk (@elonmusk) May 20, 2022

Yes Mr. Musk.

From The New York Post, October 15:

The walking, talking Optimus robots that stole the show during Elon Musk’s splashy “Cybercab” event in Hollywood last week were operated in part through remote control by humans, according to a report.

The faceless, nearly six-foot-tall figures served fruity cocktails, danced to techno music and chit-chatted with guests.

Although Optimus bots were able to walk using artificial intelligence, many of their actions were controlled remotely by Tesla employees, sources told Bloomberg.

After the event on Thursday, guests took to social media to speculate over the bots’ so-called autonomous capabilities.

While Musk didn’t discuss the limits of the technology behind the bots during the event, the Optimus bots appeared to be forthcoming under questioning from guests.

In one video posted to X, a bartending bot at the event told a guest: “Today, I’m assisted by a human. I’m not yet fully autonomous.”

Tesla did not respond to requests for comment....

....MUCH MORE

"Ken Griffin, Amazon Invest in Next-Generation Nuclear Energy" (AMZN; GOOG)

Hot on the heels of Google's news* we see this.

From Bloomberg, October 16:

• Amazon latest tech company to back new breed of mini-reactors
• Company anchors $500 million in X-Energy to develop SMRs

Amazon.com Inc. and billionaire financier Ken Griffin are among the backers anchoring a $500 million investment in small nuclear reactors, a burgeoning technology heralded as the next era for atomic energy.

The Seattle-based company has signed agreements to develop the new breed of reactors — dubbed small modular reactors, or SMRs — in both Washington and Virginia, investing in in X-Energy, a privately-held advanced nuclear reactor developer.

The financing will help pay for the development of more than 5 gigawatts of new power projects coming online across the US by 2039, X-Energy said in a statement Wednesday.

“It’s going to allow us to build smaller, self-contained power generation near data centers, near where we want in a completely safe and scalable way,” Matt Garman, chief executive officer of Amazon Web Services, said during remarks at the company’s offices in Arlington, Virginia.

Amazon’s announcement comes as technology companies are searching for new energy supplies to power massive data centers needed to run artificial intelligence systems. Alphabet Inc.’s Google announced Monday it was backing the nuclear power and signed an agreement with Kairos Power to construct a series of SMRs that use molten-salt cooling technology.... 

....MUCH MORE

From the Company:

Amazon Invests in X-energy to Support Advanced Small Modular Nuclear Reactors and Expand Carbon-Free Power

• Amazon’s Climate Pledge Fund, Citadel Founder and CEO Ken Griffin, affiliates of Ares Management Corporation, NGP, and the University of Michigan, invest approximately $500 million in Series C-1 financing round for X-energy.
• Amazon, X-energy aim to bring more than 5 gigawatts online in the United States by 2039, the largest commercial deployment target of SMRs to date.
• Amazon commits to support initial 320-megawatt project with Energy Northwest in central Washington.
• Investment solidifies X-energy’s leading role in commercializing SMR technology to revolutionize the nuclear industry.

That is 10x the capacity that Google was looking at.

*Earlier: 

"Google will help build seven nuclear reactors to power its AI systems"

"Google will help build seven nuclear reactors to power its AI systems"

I did not realize the GOOG was talking multiple mini-nukes and thought "oh, that's nice" thinking the deal was for one reactor. For comparison a full-size nuke in the U.S. has a nameplate capacity of around 1000 megawatts (the 93 reactors had a capacity of 94,765 MW in 2022—EIA)

From Fortune magazine, October 15;

Google is adding nuclear plants to its seemingly ever-growing portfolio. The company has partnered with Kairos Power to back the construction of seven small nuclear reactors in the U.S. It’s the first agreement of its kind.

The first plant is expected to come online by 2030, the company announced in a blog post. Other reactors will be deployed by 2035. All totaled, the deal will funnel 500 megawatts of power to the company’s AI technologies—enough to power a midsize city.

“Nuclear solutions offer a clean, round-the-clock power source that can help us reliably meet electricity demands with carbon-free energy every hour of every day,” Google wrote in the blog post. “Advancing these power sources in close partnership with supportive local communities will rapidly drive the decarbonization of electricity grids around the world.”

The smaller reactors created by Kairos, a nuclear-energy startup, are different from the towers most people think of when they conjure up an image of a nuclear reactor. The company uses a molten salt cooling system (much like the one that will be used for the on-site reactor being built on the campus of Abilene Christian University), which operates at a lower pressure. The company broke ground on a demonstration reactor, which will be unpowered, earlier this year in Tennessee.

Google did not unveil the cost of the partnership. The project site (or sites) have not yet been determined.

Google’s announcement comes weeks after Microsoft announced a partnership with Constellation Energy that will see the undamaged reactor at Three Mile Island, the site of the worst nuclear accident in U.S. history, resume operations to power Microsoft’s AI data centers....

....MORE

"Tesla Moves 11,500 Bitcoins to Unknown Wallets: What’s Behind the Move?"

From CoinMarketCap, October 16:

Tesla’s Bitcoin holdings are on the move after two years of inactivity. On Tuesday, wallets associated with Elon Musk’s electric car company transferred over 11,500 Bitcoin (approximately $765 million) to wallets whose ownership remains unknown, according to crypto data firm Arkham Intelligence. As a result, the Tesla wallets now hold just about $6.65 worth of BTC—essentially negligible.

The new wallets do not appear to be linked to any crypto exchanges, so there’s no immediate indication that Tesla plans to sell the Bitcoin. While Musk’s companies, including Tesla and SpaceX, hold Bitcoin on their balance sheets, it’s unclear how much Musk personally believes in the cryptocurrency. In a July interview broadcast on YouTube, he stated that he thinks there is some merit in Bitcoin, and maybe some other crypto, but noted that his soft spot is for Dogecoin (DOGE).

Tesla is currently the fourth-largest holder of Bitcoin among publicly traded U.S. companies, following MicroStrategy and bitcoin mining firms Marathon Digital Holdings and Riot Platforms....

....MUCH MORE

Earlier at CoinDesk, October 15:

Is Elon Musk Selling Bitcoin? Tesla Transfers All $760M of Its BTC to Unknown Wallets.
On-chain data shows wallets associated with Elon Musk's electric car company have been emptied.

Beyond LIBOR and SOFR: "Adopting Credit-Sensitive Rates Could Pose Great Risks to Financial Markets"

About the author - Randy Priem

Randy Priem is a finance professor at UBI Business School (Middlesex University London) and Antwerp Management School, where he teaches financial management, financial law, and FinTech courses. He is also a guest professor at the Katholieke Universiteit Leuven, where he obtained his PhD. In addition, he is the coordinator of the markets and post-trading unit at the Belgian Financial Services and Markets Authority (FSMA), where he supervises the Belgian trading venues, multilateral trading facilities, and central securities depositories....

As the official title of the Autocrat of all the Russias used to wrap up:

"....and so forth, and so forth, and so forth." 

From the University of Chicago, Booth School of Business' Stigler Certer's ProMarket, October 9:

The financial market has moved from LIBOR to alternative interest-rate benchmarks, such as SOFR. Credit-sensitive rates, which are now becoming increasingly popular, carry greater risks than SOFR and other “risk-free rates” and must be used with great care. If not, United States legislators might need to step in to further stimulate the use of safter benchmark alternatives, writes Randy Priem.

---

Banks determine the interest rates, or interbank offered rates (IBORS), by which they borrow from one another. These benchmarks can be tethered to the demand and supply of different financial instruments, such as deposits, United States treasury bills, or commercial papers, which are short-term promises of repayment. In recent years, financial players have started to adopt credit-sensitive rates (CSRs), despite warnings from international finance organizations. Users should stick to alternative “risk-free rates” as much as possible or only use CSRs with great caution. If not, financial regulators might need to step in to protect markets against the shortcomings of CSRs and shift interest benchmarks to safer alternatives.

Banks have used IBORs since the late 1960s. These rates are set daily by a panel of banks, which provide the administrator of the benchmarks with data on transactions executed by them in the wholesale unsecured market, i.e. not secured by collateral (e.g. unsecured term deposits, commercial paper, certificates of deposits, and other short-term instruments). If no such eligible transactions are made, panels banks provide expert judgements based on real transactions in related markets, committed quotes, indicative quotes, or other market observations. The most popular of these IBORs was, until this year, the London Interbank Offered Rate (LIBOR). According to the Alternative Reference Rate Committee, it was estimated that the current outstanding contracts referencing USD LIBOR, including corporate loans, adjustable-rate mortgages, floating rate notes, securitized products and a wide range of derivative products, amounted to nearly $200 trillion in 2020, roughly equivalent to 10 times U.S. GDP.   

However, in July 2017, Andrew Bailey, at the time chief executive officer of the United Kingdom’s  financial regulator, raised serious concerns about LIBOR’s sustainability because it was not calculated based on submitted transactions from an active underlying market . Since the global financial crisis of 2007-2009, changes in bank regulation have led to a dramatic quantitative reduction in the volume of markets for wholesale funding deposits, commercial paper, and certificates of deposits, which have historically underpinned the IBORs, rendering them relatively inactive. If there is no incorporation of an active underlying market, it becomes challenging to establish a benchmark that accurately reflects financial movements, even if the IBOR administrator tries to use transaction data as much as possible instead of quotes or expert opinions. That is, in the case that a benchmark is based on a thin market with only a few transactions, panel banks can more easily steer or manipulate them, thereby influencing the resulting benchmark. Even more philosophically, if “something does not really exist,” how can it then be aggregated, reflected, and used by the market? Furthermore, there are financial stability risks if a benchmark is used in contracts worth trillions of dollars while only based on a very low volume of transactions (i.e. an inverse pyramid problem). As a consequence, the InterContinental Exchange (ICE) Benchmark Administration, which administers many of the world’s benchmarks, ceased all LIBOR settings by September 2024....

....MUCH MORE

Zelensky: "Once opponents understand he’s willing to give up territory to Russia, he won’t last much longer as president"

From Asia Times, October 16:

Zelensky Ukraine victory speech: Listen for the quiet parts 

Zelensky is going to give his “victory” speech on October 16 to Ukraine’s parliament, the Verkhovna Rada, but much of the speech will be secret. The secret part is about giving up territory to Russia.

Some parts will be open to the parliament and the public. He will again push for more weapons, especially ATACMS missiles. He will try to justify the Kursk operation that has already cost more than 20,000 lives and in which Ukraine’s army is being systematically pushed back. He will complain about North Korean troops in Ukraine, but not provide an iota of evidence there are any. And he will ask for NATO troops to come and help out.

It is no secret that Russia regards any troop operation by NATO as a declaration of war justifying Russian attacks on NATO bases and supply channels.  

Inspiring foreboding is Germany’s decision that it will no longer provide heavy weapons to Ukraine, mainly because Germany doesn’t have any. The German situation is more extreme than that of Poland, or France, but neither of those would be any more eager than Germany to see Russian missiles crashing down on their territory.

In the case of Britain, the British army – aside from capable special forces – is barely a shell of its former self. Britain has been wasting billions on aircraft carriers instead of bolstering its land forces.

The Rada has just passed new legislation that allows NATO officers to command Ukrainian units. So far, the Russians have been mostly quiet, probably because they do not believe NATO will supply field commanders for Ukraine’s military. But if it happens, and that is a big if, the Russians will see it as NATO sending combat troops and react accordingly.

Some speculate that Zelensky will hint at a desire to get some sort of ceasefire and establish a buffer zone patrolled by a kind of coalition of NATO-willing. This is being billed as a Zelensky “concession” to the reality of Russia occupying Ukrainian territory....

....MUCH MORE

Europe's 100 Hottest Startups: "Europe’s Innovation Ecosystem Can Make It the New Palo Alto"

From Wired, October 14:

A cluster of European cities within a five-hour train ride of London could become a unicorn factory to rival Silicon Valley, argues tech investor Saul Klein.

For over a decade, the tech industry has been chasing unicorns—those elusive startups valued at over $1 billion. The obsession began in 2013, when Aileen Lee—a VC based in Palo Alto—coined the term that captured the imaginations first of founders and investors, and then prime ministers and presidents. But these mythical beasts are also rare: only 1 percent of VC-backed startups ever reach this status.

s society enters the age of AI, and financial markets put renewed value on business fundamentals, our understanding of what makes a successful tech company is evolving. Promise alone doesn't make a national, regional, or global champion. Champions are those companies that combine both the promise of untapped growth and the fundamental metrics that demonstrate strong and sustainable customer demand.

Until recently, Silicon Valley has been seen as the world's undisputed unicorn factory. But Europe's innovation ecosystem has matured to a point where it is consistently producing companies with both the vision to change the world and the fundamentals to sustain that change. Leading the pack is a cohort of more than 507 “thoroughbreds”—startups with annual revenues of at least $100 million.

More than a third of these high-potential companies are headquartered in what we call New Palo Alto: not a singular location, but a network of interconnected ecosystems within a five-hour train ride of London. After the Bay Area, this is the world's second most productive innovation cluster and includes cities with industrial heritage like Glasgow, Eindhoven, and Manchester, as well as world-renowned capitals of culture, policy, and academia like Amsterdam, Cambridge, Edinburgh, London, Oxford, and Paris.

They’re home to companies such as low-cost computer maker Raspberry Pi, whose technology was invented and developed in Cambridge, manufactured in Pencoed, South Wales, and sold worldwide. Raspberry Pi recently crowned over a decade of growth with a listing on the London Stock Exchange. At the time of listing, it had revenue of $265 million and $66 million in gross operating profits....

....MUCH MORE

—Europe's 100 Hottest Startups

"SpaceX’s last ~40 hours"

From rocket geek/photographer John Kraus:

SpaceX’s last ~40 hours:

- launch of history’s largest and most powerful rocket, Starship, completing the first-ever midair catch of a rocket booster and an on-target ocean landing of the upper stage

- launch of Falcon Heavy with an interplanetary NASA spacecraft headed to one… pic.twitter.com/Xv9ZyBpkEG

— John Kraus (@johnkrausphotos) October 15, 2024

 SpaceX’s last ~40 hours:

- launch of history’s largest and most powerful rocket, Starship, completing the first-ever midair catch of a rocket booster and an on-target ocean landing of the upper stage

- launch of Falcon Heavy with an interplanetary NASA spacecraft headed to one of Jupiter’s moons, achieving a new Falcon vehicle velocity record

- two Falcon 9 launches of dozens of Starlink satellites; one from Florida, one from California

That’s four launches of three different rockets (Starship/FH/F9) from four unique launch sites in three U.S. states — in ~40 hours. Insanity.

Also, in yesterday's post "Best Footage Of SpaceX Catching The Super Heavy Booster" I forgot to mention that the booster that Mechazilla caught weighs 250 tons. 

Don't try this at home.

The Companies That Want To Harvest Your Brainwaves

"You'll get nothing from me, copper..." 

—The Mentalist: Blood Feud

From MIT's Technology Review:

A new law in California protects consumers’ brain data. Some think it doesn’t go far enough.
Tech companies collect brain data that could be used to infer our thoughts—so it’s vital we get legal protections right.

This article first appeared in The Checkup, MIT Technology Review’s weekly biotech newsletter. To receive it in your inbox every Thursday, and read articles like this first, sign up here.

On September 28, California became the second US state to officially recognize the importance of mental privacy in state law. That pink, jelly-like, throbbing mass under your skull—a.k.a. your brain—contains all your thoughts, memories, and ideas. It controls your feelings and actions. Measuring brain activity can reveal a lot about a person—and that’s why neural data needs to be protected.

Regular Checkup readers will be familiar with some of the burgeoning uses of “mind-reading” technologies. We can track brain activity with all sorts of devices, some of which measure brain waves while others track electrical activity or blood flow. Scientists have been able to translate this data into signals to help paralyzed people move their limbs or even communicate by thought alone.

But this data also has uses beyond health care. Today, consumers can buy headsets that allow them to learn more about how their brains work and help them feel calm. Employers use devices to monitor how alert their employees are, and schools use them to check if students are paying attention.

Brain data is precious. It’s not the same as thought, but it can be used to work out how we’re thinking and feeling, and reveal our innermost preferences and desires. So let’s look at how California’s law might protect mental privacy—and how far we still have to go.

The new bill amends the California Consumer Privacy Act of 2018, which grants consumers rights over personal information that is collected by businesses. The term “personal information” already included biometric data (such as your face, voice, or fingerprints). Now it also explicitly includes neural data.

The bill defines neural data as “information that is generated by measuring the activity of a consumer’s central or peripheral nervous system, and that is not inferred from nonneural information.” In other words, data collected from a person’s brain or nerves....

....MUCH MORE

Also from the famous trade school down the river from Harvard:

MIT: "On the Effectiveness of Tin-Foil Helmets: An Empirical Study"
Being MIT they called them helmets rather than hats.
And since no-one seems to manufacture tin-foil for consumer use they use aluminum foil despite the accepted tin-foil nomenclature.

A repost from July 2011.
I was just told that the post immediately below, "Uh oh: The DJIA's Highest Priced Components Are the Ones That Are Up (IBM; DIA)" sounded "a little tin-foil hat-ish".
Ha!

From MIT via Moses Moore:

 Ali Rahimi¹, Ben Recht ², Jason Taylor ², Noah Vawter ²
17 Feb 2005
1: Electrical Engineering and Computer Science department, MIT.
2: Media Laboratory, MIT. 

[scientist - note electronicy looking stuff]

Abstract

Among a fringe community of paranoids, aluminum helmets serve as the protective measure of choice against invasive radio signals. We investigate the efficacy of three aluminum helmet designs on a sample group of four individuals. Using a $250,000 network analyser, we find that although on average all helmets attenuate invasive radio frequencies in either directions (either emanating from an outside source, or emanating from the cranium of the subject), certain frequencies are in fact greatly amplified. These amplified frequencies coincide with radio bands reserved for government use according to the Federal Communication Commission (FCC). Statistical evidence suggests the use of helmets may in fact enhance the government's invasive abilities. We speculate that the government may in fact have started the helmet craze for this reason.

Introduction
It has long been suspected that the government has been using satellites to read and control the minds of certain citizens. The use of aluminum helmets has been a common guerrilla tactic against the government's invasive tactics [1]. Surprisingly, these helmets can in fact help the government spy on citizens by amplifying certain key frequency ranges reserved for government use. In addition, none of the three helmets we analyzed provided significant attenuation to most frequency bands. We describe our experimental setup, report our results, and conclude with a few design guidelines for constructing more effective helmets.

Experimental Setup
We evaluated the performance of three different helmet designs, commonly referred to as the Classical, the Fez, and the Centurion. These designs are portrayed in Figure 1. The helmets were made of Reynolds aluminium foil. As per best practices, all three designs were constructed with the double layering technique described elsewhere [2].

A radio-frequency test signal sweeping the ranges from 10 Khz to 3 Ghz was generated using an omnidirectional antenna attached to the Agilent 8714ET's signal generator....

...Results

For all helmets, we noticed a 30 db amplification at 2.6 Ghz and a 20 db amplification at 1.2 Ghz, regardless of the position of the antenna on the cranium. In addition, all helmets exhibited a marked 20 db attenuation at around 1.5 Ghz, with no significant attenuation beyond 10 db anywhere else.

Conclusion

The helmets amplify frequency bands that coincide with those allocated to the US government between 1.2 Ghz and 1.4 Ghz. According to the FCC, These bands are supposedly reserved for ''radio location'' (ie, GPS), and other communications with satellites (see, for example, [3]). The 2.6 Ghz band coincides with mobile phone technology. Though not affiliated by government, these bands are at the hands of multinational corporations.

It requires no stretch of the imagination to conclude that the current helmet craze is likely to have been propagated by the Government, possibly with the involvement of the FCC. We hope this report will encourage the paranoid community to develop improved helmet designs to avoid falling prey to these shortcomings....MORE

Rebuttal From ZPi:

A recent MIT study [1] calls into question the effectiveness of Aluminum Foil Deflector Beanies. However, there are serious flaws in this study, not the least of which is a complete mischaracterization of the process of psychotronic mind control. I theorize that the study is, in fact, NWO propaganda designed to spread FUD against deflector beanie technology, and aluminum shielding in general, in order to disembeanie paranoids, leaving them open to mind control.

First and foremost, Rahimi et al. only considered simple radio frequencies. As I explained in detail in chapter 4 ("Psychotronic and AFDB Theory") of my book [2], only psychotronic energy can affect the brain in any coherent manner. Simple EM fields have only trivial effects -- such as causing indistinct sensations of a supernatural presence [3] -- over short distances. Only by converting electromagnetic energy into psychotronic energy using a psychotron-based device can the forces of mind control access from afar the neural network of a brain to both implant and extract thought complexes.

FIGURE 1: An AFDB-covered brain (A) is shielded by a repulsive resonance buffer (B), which deflects psychotronic fields (C). Coherent psychotronic rays (D) are defected at the aluminum surface (E) and decoherently scattered (F). The resonance buffer encapsulates the brain (G), providing basal protection against fields and glancing rays.

As illustrated in Figure 1, unlike with the mere attenuation of EM fields, aluminum deflects psychotronic fields and coherent psychotronic rays. The operational modalities of AFDBs for EM and psychotronic energies are completely different, and thus the experiment conducted by Rahimi et al. is inappropriate to test the effectiveness of deflector beanie technology in stopping mind control.

Besides the experiment's unsuitability, the experimental procedures themselves appear flawed. The measuring of the signal was described by Rahimi et al. as follows:

The receiver antenna was placed at various places on the cranium of 4 different subjects: the frontal, occipital and parietal lobes. Once with the helmet off and once with the helmet on.

FIGURE 2: (A) Excessively pointy omnidirectional antenna. (B) Chef's Pride brand foil (photo enhanced).

But the antenna shown in Figure 2 on their site would not possibly be able to fit under the helmets while on a head, at least not without awk­wardly balancing the helmet counter to best practices or punc­turing the foil. If the antenna was instead placed on the outside of the helmets, as seems most likely from the description, then that calls into question the entire conclusion: If the amp­lifi­cation effect is measured only on the helmet outside, then that suggests that the helmet is reflecting the EM radiation away from the wearer's brain.

Oddly, Rahimi et al. make a great deal about the price of their equipment, noting the US$250,000 price tag of their Agilent 8714ET network analyser three times in their short paper. What relevance is this to the conclusion? I believe its a subtle way of discouraging people from replicating the experiment at home....MORE

"Rise of Zombie VCs that stick around collecting fees as their startups run out of cash and die. The AI boom is the exception"

What's not to love? (as long as you are the General Partner) 

From Wolf Street, October 14:

Venture Capital Slammed by Fed Tightening: Exits Blocked after IPOs & SPACs Collapsed, Distributions at Financial Crisis Lows 

Outside of the boom in anything with AI or Machine Learning (ML) in its name or description, a lot of hot air has come out of the Venture Capital industry from the steamy levels during the free-money era of the pandemic.

Since the Fed started hiking rates and switched from QE to QT, marking the end of free money, VC funds experienced large-scale write-downs of their portfolio companies. They now cannot exit those startups by selling them because the market has tightened, after many hundreds of companies that VCs sold to the public during the free-money era via IPO or SPAC merger collapsed and entered into our pantheon of Imploded Stocks.

Exits in dollar terms amounted to only $10 billion in Q3, according to the Venture Capital Monitor for Q3 from PitchBook. VC funds sold only 14 portfolio companies via public listings. For the year through Q3, VCs booked only $69 billion in exits, down by 91% from the full-year 2021 of $780 billion in exits, which was the steamy and final year of free money. In 2024 so far, compared to 2021:

• Exits via IPOs or SPACs: -95% (red)
• Exits via buyouts by PE firms: -91% (yellow)
• Exits via acquisition by Corporations: -64.5% (purple)

Successful exits are what makes the VC industry work. VC funds have to be able to sell their portfolio companies, at least some of them, at a huge profit, and then distribute the proceeds from the sale to the limited partners (LPs) in their funds so that these investors can re-invest their VC allocations in new VC funds that invest in the next cycle of startups.

The exit is when everyone makes money – except, as we learned over the past three years when these newly public IPO and SPAC stocks collapsed, the buyers; they ended up holding the bag. But now the whole system of exits, fundraising, and dealmaking has gotten clogged up because the pipeline of exits is blocked....

...MUCH MORE

And there's private equity. If the Fed doesn't bring rates down, fast, we'll probably be referring back to this May 2024 post - Private Equity, The Refi Crunch

I'm guessing we will be seeing more bankruptcies among the 2009 - 2022 cohorts,

"Disaster, Inc. The weather is bad but the profits are good"

From Sherwood News:

Natural disasters are making a mess of America. Private equity wants the cleanup cash
The global remediation industry is forecast to grow from $70 billion this year to $92 billion by 2029, and investors are clamoring to get a piece of it

The $200 billion US disaster-restoration industry, which runs the gamut from mold-remediation services to fire-damage repair, has traditionally been run by small, local, independent businesses. It’s how the giants in the industry got started: New York-based Belfor USA bought into the industry when it acquired a small family company founded in 1946 as Quality Awnings & Construction, while cleanup titan Servpro began as an independent painting company in 1967 in Sacramento, California. 

Restoration businesses became private-equity targets with the successive disasters of Hurricane Katrina in 2005 and the financial crisis in 2008. Katrina demonstrated the scale and potential addressable market of modern disaster cleanup; two years later, the financial crisis nudged private equity into seeking out businesses with stable cash flows in fragmented industries. The restoration industry is an investor’s dream: it’s replete with mom-and-pop operators who are guaranteed business by the ever-increasing stream of natural disasters. 

“This industry is recession-proof and keeps growing,” said JT Kraai, CEO and founder of Exit Strategies 360, which brokers merger-and-acquisition deals between private equity and restoration and remediation firms.

Restoration businesses became private-equity targets with the successive 

disasters of Hurricane Katrina in 2005 and the financial crisis in 2008.

To such investors, hurricanes are not just a disaster but also an opportunity. Post-storm remediation (removing below-the-surface issues like mold or water damage) and reconstruction (repairing walls, replacing carpets, fixing roofs) have attracted growing financing. The cadence of storms like Hurricane Helene, whose “biblical devastation” last week caused up to $5 billion in commercial-property damage, and Hurricane Milton, which has wreaked havoc across Florida, is why the global-remediation industry is forecast to grow from $70 billion this year to $92 billion by 2029. 

With the uptick in powerful hurricanes, mold remediation alone is now a billion-dollar business. American homes have become more, not less, likely to grow mold. The widespread switch from plaster to drywall during the post-World War II homebuilding boom gave toxic black mold a petri dish for growth — panels of gypsum sandwiched between two layers of paper offer a better place to incubate than stone and brick — and in the ’70s, the push for energy efficiency and sealing homes meant less air exchange, only making it easier for mold to bloom. Stories of mold toxicity abound, like that of Melinda Ballard, whose Texas mansion became riddled with spores that made her family sick and spawned a multimillion-dollar lawsuit. That and other instances raised awareness of the dangers of mold, and the industry flourished. 

Today’s weather patterns will only accelerate this growth. Within 24 hours, waterlogged homes can grow enough fungi to cause coughing, watery eyes, and itchy throats. After Katrina, 46% of homes showed mold contamination. Unlike the sizable home-repair and maintenance industry, there’s not a lot of do-it-yourself enthusiasm for breaking down a waterlogged ranch home. Done by experts, a typical mold-remediation job can cost upwards of $3,000, and the cost of clearing an entire house can go up to $30,000. And private equity is taking notice: Threshold Brands, launched by private-equity firm Riverside, purchased the Pennsylvania-based Mold Medics franchise last year and aims for expansion across the continental US. Tim Swackhammer, the former CEO of Mold Medics, told the Franchise Times that the brand’s original store did $1.45 million in revenue in 2022, a 200% increase from 2018, the year it opened. 

Even four years ago, the remediation industry was less consolidated. Last year’s mild winter meant there was a down year for profits, which pulled down valuations and owners’ willingness to sell. Winter is the industry’s busiest season, and fewer cold days meant fewer burst pipes, a common service request, and fewer storms to send tree limbs through windows. But with 2024 shaping up to be busy on the disaster-recovery front — on top of the deadly hurricanes, a colder winter is being predicted — that will likely change. Already this year, a number of investments, like Point 41 Capital Partners’ acquisition of Georgia Water & Fire and Summit Partners’ investment in remediation company Insurcomm, are being discussed as ways to “enter a new and expanded era of growth.”....

....MUCH MORE

Related, October 13 - "Slash and burn: is private equity out of control?"