"Elon Musk’s SpaceX accelerates timeline for blockbuster Nasdaq IPO "

That giant sucking sound? It's liquidity leaving currently tradable stocks to fund this season's IPOs.*  

From Reuters via the New York Post, May 15:

Elon Musk’s rocket and satellite maker SpaceX is planning to price its blockbuster initial public offering as early as June 11 and has picked Nasdaq as its listing venue, people familiar with the matter told Reuters on Friday.

SpaceX, which is set to trade under the ticker ‘SPCX’, has accelerated its IPO timeline and is now aiming to flip its prospectus public as early as next Wednesday, with a roadshow launch targeted for June 4 and a market debut as early as June 12, according to three sources familiar with the matter.

The new plan to IPO during the second week of June represents a quicker-than-expected timeline for SpaceX’s offering, pulling forward a process that had initially been targeted for late June — around the time of Musk’s birthday — the sources said, requesting anonymity as the discussions are private....

....MUCH MORE 

*If interested see:

 

February 18 -  "OpenAI, SpaceX and other IPOs could break the S&P 500, Jeremy Grantham says"

Subjects near and dear: supply, demand, liquidity etc. 

October 2008 - IPOs Produce Smallest Gains Since 1995 as Offerings Increase

Supply and demand. The one effect I can guarantee is the sopping up of billions of dollars and yuan* that would otherwise go into currently trading issues. IPO exits are not only a sign of a top but actually help bring them on by removing some liquidity....

December 2018 - "Nasdaq, 'Tech,' & IPOs are in for Gut-Wrencher"

The Fed's interest rate moves are not that big a deal.
I know that runs counter to a lot of commentary but the upticks are not a problem. Yet.
The bigger headwind facing the market is the Fed's balance sheet unwind sucking up liquidity.
And next year's planned mega-IPOs threatening to do the same....

September 2025 - "US IPO Activity On Track For Best Quarter Since Q1 2022"

This is what we were referring to introducing August 6's "Blackstone prepares portfolio companies for IPOs":

One of the reasons markets trend higher is a lack of new shares coming on to the market.

Over the last few months the IPO window has been opening and the offerings absorb buying power that would otherwise go into issues already trading.

See also: supply/demand.

The Wall Street marketeers are nothing if not opportunistic.

And depending on how much stuff they are primping, packaging, and pushing, this is why stock offerings tend to mark the short/intermediate-term tops in markets.

Just something to be aware of, not a hard and fast rule.

Agriculture: "Monsoon rains to hit southern Indian coast early, spurring crop planting"

It is hard/impossible to overstate just how important* the monsoon is.

From Reuters, May 15: 

Monsoon rains are expected to hit India's ‌southern coast on May 26, six days earlier than usual, the state-run weather office said on Friday, spurring hopes ​among farmers of early planting of crops ​such as rice, corn, soybean and sugarcane.

 

The ⁠monsoon is likely to set in over ​the southern state of Kerala on May 26, ​with a margin of error of four days, the India Meteorological Department said in a statement.

 

Typically, the monsoon ends ​across the country by mid-September and always ​begins in Kerala.

 

The monsoon is essential to India's nearly $4 trillion ‌economy, ⁠delivering almost 70% of the rainfall needed to water farms and replenish aquifers and reservoirs....

....MORE 

 *How important? June 2018:

India to Build Supercomputer To Better Forecast Monsoon

Complex chaotic systems are some of the toughest things for the human mind to understand and one of the biggest challenges for model makers. (another of the big challenges is model makers recognizing their own biases)

On a related subject, the current trend in supercomputer construction is to use a combination of CPUs and GPUs connected by superfast links which puts the Graphics Processing Unit manufacturers such as NVIDIA in an enviable position. Both the planned-to-be-fastest-in-the-world 'puter at Oak Ridge and the current 2nd fastest at ORNL use this approach as does the just upgraded Swiss machine (7th fastest)....

Also July 2009's "Naked girls and gold demand". 

A failure of the rainy phase of the monsoon cycle combined with crop failures in any one of the world's breadbaskets, Australia, Brazil, Canada, USA, Ukraine would lead to higher prices if it lasted one year, malnutrition if the combination lasted two years and outright starvation if it got to three growing seasons. 

On the other hand a rainy season that is too intense can kill thousands/tens of thousands across south Asia.

Ditto for the breadbaskets. From May 2019:

One of the Scariest Sentences In the English Language: Crop Progress Report Edition

The weekly crop progress report was released yesterday but first a quick diversion:

In the spring of 1315, unusually heavy rain began in much of Europe. 

The story continues:

Throughout the spring and summer, it continued to rain and the temperature remained cool. These conditions caused widespread crop failures. The straw and hay for the animals could not be cured and there was no fodder for the livestock. The price of food began to rise. Food prices in England doubled between spring and midsummer. Salt, the only way to cure and preserve meat, was difficult to obtain because it could not be evaporated in the wet weather; it went from 30 shillings to 40 shillings. 

—Wikipedia: Great Famine of 1315–1317

Some of the headlines introducing yesterday's USDA report:
Spring field work continues to be hampered by cold, wet conditions
Corn planting is behind schedule in Minnesota, again
More rain to target flood-weary US Heartland this week, further delaying planting 
Ohio Crop Progress: Rain continued to stall planting
Trump tweet may play to quick-growing corn switch as rain persists

I am so torn on this stuff.
The world can handle one year of crop failures in two of the major growing regions, think Ukraine, western Russia, U.S. Midwest, northeast China, Brazil, Australia.
If it stretches to two years in two regions simultaneously it's time to start thinking famine.
And famine is profitable for everyone but the people who need to eat.

Back to the Wikipedia entry:

...The famine caused millions of deaths over an extended number of years and marked a clear end to the period of growth and prosperity from the 11th to the 13th centuries.

The Great Famine started with bad weather in spring 1315. Crop failures lasted through 1316 until the summer harvest in 1317, and Europe did not fully recover until 1322. The period was marked by extreme levels of crime, disease, mass death, and even cannibalism and infanticide. The crisis had consequences for the Church, state, European society, and for future calamities to follow in the 14th century....

Dear Norway, Thanks Again: That Time A Couple Of Old Norwegian Guys Put Down Their Coffee, Sank A Nazi Warship and Saved Western Civilization

Over the years we've posted on military moments that were turning points in history, D-Day, the second day of the battle of Gettysburg, the Black Monday hailstorm in 1360.

Here's one we haven't reposted in a while that definitely qualifies. 

April 9, 2017

Okay, the 'saved Western civilization' part may be a bit much but April 9, 1940 was an important day.

Going back 77 years to the story of how a couple old coots, Birger Eriksen and Andreas Anderssen, hanging out on their little island, decide it's their job to defend the country against a Nazi freakin' armada headed for Oslo, go out and sink a brand new battle cruiser and send the rest of the invaders running, allowing the King and Government enough time to evacuate the capital to Hamar, 125 km north and eventually to set up the Government-in-exile plus kept the national treasury, 50 tons of gold, out of the hands of the Nazis.

As I put it a couple years ago to mark the 75th anniversary:

...sank the most modern ship in the German Navy, saved the Norwegian King and government from being taken captive and pulled Churchill's fat out of the fire-keeping the path open for him to assume the premiership of Britain and thus save Western Civilization.

We like Norway.

The two old guys at Oscarsborg that evening were Colonel Birger Eriksen, commander of the fortress, age 64 and Andreas Anderssen, a 60 year old Kommandørkaptein but retired and living in the town who Eriksen probably enticed to come out to the fort with offers of coffee and brown cheese.

As the German armada approached, Eriksen aware his rookie cadets had started their national service just days earlier and wouldn't be able to reload the old cannons, Moses and Aron, knew he'd only get one chance so he waited and waited for the Nazis to get closer.

At around a mile he disobeys general orders to first fire a warning shot, says "Either I will be decorated or I will be court-martialed, Fire!" and shoots at the heavy cruiser Blücher which had only been completed in September 1939.

No neutrality there.

They missed.

With the artillery now pretty much useless, Eriksen tells Anderssen to fire a couple obsolete land-based torpedoes. Anderssen does, missing the mark with the first, adjusting his aim and:

The rest of the flotilla including the pocket-battleship Lützow turned tail and ran back down the fjord, not quite sure what had hit them.
A pretty good English language version of the story is at:

Making do with what you have... [link rotted, here's the Internet Archive cache]

One of these days I'll get around to explaining why Churchill almost wasn't going to become Prime Minister the following month. 

When not saving the world the blue-eyed Arabs (oil business nomenclature) settled for saving Europe:

February 27, 2018
That Time A Dozen Norwegians Stopped the Nazis From Developing the Atom Bomb and Possibly Saved Europe 

 

This isn't the story of Birger and Andreas having to take a break from the brown cheese and herring and, well, we marked that anniversary with "That Time A Couple Of Old Norwegian Guys Put Down Their Coffee, Sank A Nazi Warship and Saved Western Civilization".

Rather, our headline event happened a few years later but first, I know everyone reading can't wait for a History-of-Norwegian-Industry-ca-1900 - 1915-diversion, so here goes. We've posted on Kristian Birkeland more than once, this is part of last year's "Shipping: He May Not Have Received His Nobel Prizes But The World's First Fully Electric Autonomous Container Ship Will Be Called the Birkeland"

...the introduction to the Plasma Universe entry on Birkeland:

Kristian Olaf Bernhard Birkeland (13 December 1867 - 15 June 1917) was a Norwegian scientist who has been called "the first space scientist"^[1] and "the father of plasma experiments in the laboratory and space"^{[2] [3] [4]}. He is perhaps most well-known for his scientific work on the aurora using a terrella (a magnetized globe), and as inventor of an electromagnetic cannon, and, a method of electrically producing artificial fertilizer. He also became a full professor of physics at the University of Oslo at the age of 31.

Birkeland also had astrophysical research published on cathode rays,^[5] the Zodiacal lights,^[6] comets,^[7] the Sun and sunspots,^[8] the origin of planets and their satellites,^[9] the Earth's magnetism.^[10]
 
Some of Birkeland's other contributions to science included:^[2] • Derived the general expression for the Poynting vector • Gave the first general solution to Maxwell's equations ^[11] • Pioneered the field of charged-particle beams • Utilized the concept of "longitudinal mass" • Constructed the first foil diodes • Pioneered the field of visible-light photography of electrical discharges • Advocated charged-particle propulsion engines for space travel • Created Norsk Hydro's nitrogen-fertilizer industry (the Birkeland-Eyde method for production of potassium nitrate) • Invented an electromagnetic rail gun capable of firing a 10-kg projectile • Established Birkeland's Firearms company • Anticipated cosmic rays (discovered in 1911) with his calculations involving energies of several billion electron volts • Held patents on the electromagnetic cannon,^[12] electric blankets, solid margarine, and hearing aids.

In 1969 when field-align currents had been identified in the Earth's atmosphere, they were named in his honor: Birkeland currents.^[13]....

...MUCH MORE

He also co-founded Norsk Hydro and got his picture on the cover of the Rolling Stone Norway's 200 kr banknote:

The note will become invalid at the end of this year and the old boy will be replaced by a cod and a herring....

It was that Norsk Hydro bit that is important to this tale.
Norsk Hydro made nitrogen fertilizer using giant arcs to fix nitrogen in the air to nitric oxide which could be further manipulated to become nitric acid which can then be used to make explosives or fertilizer or other stuff. The process was very energy inefficient but hey, it was the early 20th century and we're talking Norway. They have a few waterfalls.  Fast forward thirty years and despite the efforts of Birger and Andreas the Nazis have invaded and are intent on grabbing them some heavy water, of which Norsk Hydro has become the go-to source, as a byproduct of the now-modernized (no more Birkeland-Eyde process) fertilizer operation.

And it is here the story of February 28, 1943 really begins. From The Conversation via Scientific American:

Operation Gunnerside: The Norwegian Attack on Heavy Water That Deprived the Nazis of the Atomic Bomb

February 28 marks the 75th anniversary of one of the most dramatic and important military missions of World War II

The following essay is reprinted with permission from The Conversation, an online publication covering the latest research.

After handing them their suicide capsules, Norwegian Royal Army Colonel Leif Tronstad informed his soldiers, “I cannot tell you why this mission is so important, but if you succeed, it will live in Norway’s memory for a hundred years.”

These commandos did know, however, that an earlier attempt at the same mission by British soldiers had been a complete failure. Two gliders transporting the men had both crashed while en route to their target. The survivors were quickly captured by German soldiers, tortured and executed. If similarly captured, these Norwegians could expect the same fate as their British counterparts, hence the suicide pills.

Feb. 28 marks the 75th anniversary of Operation Gunnerside, and though it hasn’t yet been 100 years, the memory of this successful Norwegian mission remains strong both within Norway and beyond. Memorialized in movies, books and TV mini-series, the winter sabotage of the Vemork chemical plant in Telemark County of Nazi-occupied Norway was one of the most dramatic and important military missions of World War II. It put the German nuclear scientists months behind and allowed the United States to overtake the Germans in the quest to produce the first atomic bomb.

While people tend to associate the United States’ atomic bomb efforts with Japan and the war in the Pacific, the Manhattan Project—the American program to produce an atomic bomb—was actually undertaken in reaction to Allied suspicions that the Germans were actively pursuing such a weapon. Yet the fighting in Europe ended before either side had a working atomic bomb. In fact, a rehearsal for Trinity—America’s first atomic bomb test detonation—was conducted on May 7, 1945, the very day that Germany surrendered.

So the U.S. atomic bomb arrived weeks too late for use against Germany. Nevertheless, had the Germans developed their own bomb just a few months earlier, the outcome of the war in Europe might have been completely different. The months of setback caused by the Norwegians’ sabotage of the Vemork chemical plant may very well have prevented a German victory.

Nazi bomb effort relied on heavy water
What Colonel Tronstad, himself a prewar chemistry professor, was able to tell his men was that the Vemork chemical plant made “heavy water,” an important ingredient for the Germans’ weapons research. Beyond that, the Norwegian troops knew nothing of atomic bombs or how the heavy water was used. Even today, when many people have at least a rudimentary understanding of atomic bombs and know that the source of their vast energy is the splitting of atoms, few have any idea what heavy water is or its role in splitting those atoms. Still fewer know why the German nuclear scientists needed it, while the Americans didn’t.

“Heavy water” is just that: water with a molecular weight of 20 rather than the normal 18 atomic mass units, or amu. It’s heavier than normal because each of the two hydrogen atoms in heavy H2O weighs two rather than one amu. (The one oxygen atom in H2O weighs 16 amu.) While the nucleus of a normal hydrogen atom has a single subatomic particle called a proton, the nuclei of the hydrogen atoms in heavy water have both a proton and a neutron—another type of subatomic particle that weighs the same as a proton. Water molecules with heavy hydrogen atoms are extremely rare in nature (less than one in a billion natural water molecules are heavy), so the Germans had to artificially produce all the heavy water that they needed.

In terms of their chemistries, heavy water and normal water behave very similarly, and you wouldn’t detect any differences in your own cooking, drinking or bathing if heavy water were to suddenly start coming out of your tap. But you would notice that ice cubes made from heavy water sink rather than float when you put them in a glass of normal drinking water, because of their increased density.

Those differences are subtle, but there is something heavy water does that normal water can’t. When fast neutrons released by the splitting of atoms (that is, nuclear fission) pass through heavy water, interactions with the heavy water molecules cause those neutrons to slow down, or moderate. This is important because slowly moving neutrons are more efficient at splitting uranium atoms than fast moving neutrons. Since neutrons traveling through heavy water split atoms more efficiently, less uranium should be needed to achieve a critical mass; that’s the minimum amount of uranium required to start a spontaneous chain reaction of atoms splitting in rapid succession. It is this chain reaction, within the critical mass, that releases the explosive energy of the bomb. That’s why the Germans needed the heavy water; their strategy for producing an atomic explosion depended upon it.

The American scientists, in contrast, had chosen a different approach to achieve a critical mass. As I explain in my book, “Strange Glow: The Story of Radiation,” the U.S. atomic bomb effort used enriched uranium—uranium that has an increased concentration of the easily split uranium-235—while the Germans used unenriched uranium. And the Americans chose to slow the neutrons emitted from their enriched uranium with more readily available graphite, rather than heavy water. Each approach had its technological trade-offs, but the U.S. approach did not rely on having to synthesize the extremely scarce heavy water. Its rarity made heavy water the Achilles’ heel of the German nuclear bomb program.

Stealthy approach by the Norwegians 
Rather than repeating the British strategy of sending dozens of men in gliders, flying with heavy weapons and equipment (including bicycles!) to traverse the snow-covered roads, and making a direct assault at the plant’s front gates, the Norwegians would rely on an alternate strategy. They’d parachute a small group of expert skiers into the wilderness that surrounded the plant. The lightly armed skiers would then quickly ski their way to the plant, and use stealth rather than force to gain entry to the heavy water production room in order to destroy it with explosives...MUCH MORE

So again, thanks. 

Peter Thiel is leading investment in an ocean data center powered by waves—and the startup is reportedly worth $1 billion

From Fortune, May 14: 

As hyperscalers like Alphabet look to the skies as the next frontier of data centers, Peter Thiel is looking to the seas. 

Panthalassa, a U.S.-based start up betting on ocean waves to power a fleet of floating data centers, announced $140 million in funding earlier this month led by Thiel.

The funding pushes Panthalassa’s valuation close to $1 billion, the Financial Times reported, citing a person familiar with the terms of the deal.

Panthalassa didn’t immediately respond to Fortune’s request for comment.

“The future demands more compute than we can imagine,” Thiel said in a statement announcing the funding. “Extra-terrestrial solutions are no longer science fiction. Panthalassa has opened the ocean frontier.”

Surging AI demand in the U.S. has hit snags with an aging and beleaguered grid system vulnerable to extreme weather. Energy analytics firm Wood Mackenzie noted in a report earlier this year that data center development has slowed down due to limited electricity capacity growth. Bottlenecked by energy infrastructure from as far back as World War II, tech companies are looking for extraterrestrial arenas to build out data centers without taxing available resources.

Panthalassa, sharing the name with the superocean that once surrounded the supercontinent of Pangaea, has designed “nodes” that sit on top of the ocean, with nearly 280-foot-long steel structures extending below the surface. The sphere at the top of the node bobs in the water, with the attached tube oscillating water within it, spinning turbines inside the structure that generate electricity. The structure also holds a hermetically sealed, or airtight, AI server that is cooled by surrounding seawater.

The company spent years designing Ocean-1 and Ocean-2 prototypes, beginning in 2021, and plans to deploy its most recent Ocean-3 system in the northern Pacific Ocean this year, with commercial deployment to follow in 2027, according to the company.

“There are three sources of energy on the planet with tens of terawatts of new capacity potential: solar, nuclear, and the open ocean,” Panthalassa cofounder and CEO Garth Sheldon-Coulson said in a statement. “We’ve built a technology platform that operates in the planet’s most energy-dense wave regions, far from shore, and turns that resource into reliable clean power. We’re now ready to build factories, deploy fleets, and provide a sustainable new source of energy for humanity.”

Thiel’s bet on subsea data centers...

....MUCH MORE 

 Also at Fortune:

Claude is telling users to go to sleep mid-session and nobody, including Anthropic, seems to fully understand why it keeps doing it 

The graphic for the Claude piece is a photo of Anthropic CEO Dario Amodei in which he looks borderline evil. 

"Martha Stewart announces new AI home management company"

Sure, why not.

She went from modeling to Wall Street broker to lifestyle-as-an-art-form* to media empire so why not throw a little AI into the mix?

Lifted in toto from Morning Brew, May 14:

Stewart is just the latest female celeb to wrap her personal brand around the technology in what The Cut recently dubbed “The Girlbossification of AI.” 

The go-to woman for pound cake recipes and clematis care is getting into the AI game, too. Yesterday, Martha Stewart announced Hint, her new company aimed at helping homeowners manage the logistics of home ownership. Stewart is just the latest female celeb to wrap her personal brand around the technology in what The Cut recently dubbed “The Girlbossification of AI.”

Some details: According to the company, the “always-on, AI-native home management platform” asks for your address and pulls relevant public information, like your property’s flood risk and soil data. You can also upload bills and other documents to enable the platform to remind you to update your insurance policy or advise you on getting your roof replaced:

• Hint will make money through premium features and affiliate or transaction fees for service recs, but claims the platform is “blind to commercial deals.”
• The app and website will go live sometime this summer.

Big picture: Venture capitalists want in on the $500 billion residential renovation and repair market. Stewart and her co-founders, former Red Ventures exec Yih-Han Ma and AI engineer Kyle Rush, raised $10 million in seed funding led by Slow Ventures. Other investors include Montauk Capital, Tusk Venture Partners, and The Points Guy founder Brian Kelly.—MM

Morning Brew front page. 

*Compare/contrast: 

....Yet it was not until I left Wall Street that I discovered my true entrepreneurial bent. I loved ideas. I loved building. I loved creating. I loved making things that would enhance everyday living. And I loved making money as a result.... 

—The Martha Stewart Story: How I Became a Household Name  

“Making money is art, and working is art and good business is the best art.”

-Andy Warhol 

—Commercialism As The Last 'ism' in Art: "Q4 Global Auction Report and Year in Review", Climateer Investing

"How the world has avoided an oil catastrophe so far"

From The Economist, May 12:

The great commodity-market mystery is deepening 

Ten weeks into the Iran war, the mystery is deepening. Every day the Strait of Hormuz remains closed, nearly 14m barrels of oil—14% of global output—are lost. At least 2bn barrels will probably disappear from this year’s total even if the strait reopens today. Yet Brent crude, at $106 a barrel, fetches much less than the $129 it hit in 2022, after Russia invaded Ukraine, and nowhere near the $150-200 analysts predicted if the Iran war dragged on.

One reason is oil traders’ perpetual optimism about a diplomatic breakthrough. “Front-month” Brent—the nearest futures contract and global benchmark—locks in a price for oil to be loaded onto tankers in roughly two months’ time. Whenever Donald Trump hints at an imminent deal, markets put off pricing in further disruption. But lately even spot prices have calmed: “dated” Brent, which tracks crude loading in the coming days, traded at $25 above front-month futures in early April; now the gap is just a few dollars (see chart 1).

 

Two forces explain why the panic has faded. First, non-Gulf producers have turbocharged exports. Net of imports, in the four weeks to May 10th Canada shipped 400,000 more barrels per day (b/d) of crude and refined products than a year earlier. Venezuela and Norway each added 200,000 b/d; Brazil, 100,000 b/d. Most remarkably, America put on 3.8m b/d, according to Vortexa, a ship-tracker; at nearly 9m b/d, its net petroleum exports in those four weeks were the highest ever (see chart 2).

 

America’s export machine took a few weeks to crank up. New contracts had to be signed; extra barrels produced or drawn from reserves; pipelines booked; the right oil blended. In March freight rates from the Atlantic to Asia and Europe jumped to lure more tankers to those routes. To compensate buyers, the discount on West Texas Intermediate, America’s flagship crude, relative to Brent and Dubai (the Asian benchmark) broke records.

The tide of non-Gulf barrels narrowed the supply gap to roughly 8m b/d. Enter the second force: in the same four weeks big oil-buying regions imported 11m b/d less petroleum than a year before. China’s purchases alone dropped by 6.6m b/d (see chart 3). The country’s refiners have even resold some cargoes they had pledged to buy from west Africa and beyond to other Asian buyers.

The fall in imports is not good news. Some of it reflects demand destruction. Crude shortages have forced refiners in Asia and Europe to cut throughput by nearly 4m b/d. The loss of 4.4m b/d of refined products from the Gulf has pushed prices of diesel, gasoline and jet-fuel up by 60-120%. Squeezed consumers have cut back. Many petrochemical plants, starved of naphtha, a crucial plastics feedstock, are running below capacity.

Yet most estimates of demand destruction fall below 5m b/d, suggesting much of the drop in imports reflects caution not privation. Some buyers, too, may believe the strait will reopen soon and are deferring purchases until prices fall. The surprising result is a mini-glut of crude. That is keeping the Brent price down.

How long can it last? Satellite imagery suggests China’s onshore stocks have barely budged, implying refineries have slashed throughput. But crude imports have collapsed so far that this cannot be the whole story. Martijn Rats of Morgan Stanley, a bank, suspects crude once held in underground caverns has moved above ground, covering the shortfall.

Such drawdowns are likely to accelerate. Soon Chinese refineries’ maintenance season will end. They may increase exports, now the government has loosened a ban imposed in March. China has perhaps 1.2bn barrels of crude in storage: enough to keep imports depressed for much of 2026. But “strategically, they don’t want to draw down everything this year,” says Neil Crosby of Sparta Commodities, a data firm. That means China importing more, and the rest of the world less....

....MUCH MORE 

Also at The Economist, May 14:

Oil prices could soon rise convulsively  

Transubstantiation (markets in everything): Turning Parmesan Into Cash

I was about to use "transmutation" in the headline but fortunately remembered Ernest Rutherford.*

From The Hustle, May 11:

Parm wheels make Italy’s economy go round 

The act of turning water into wine may be divine. But at Credem Bank’s warehouse in northern Italy, which reportedly resembles a “cathedral of parmesan,” turning cheese into cash is just business. 

Since 1953, the regional bank has been wheeling and dealing in Parmesan Reggiano — one of the most strictly regulated foods in the world, produced by just 300 dairies — accepting the cheese from producers as collateral for loans.

And, according to CNN, it hasn’t lost a euro on it yet.

Why bank on cheese

The $4.7B industry relies on a delicate supply chain, tight regulations, and age-old methods.

• It can only be produced within a small geographic location using three ingredients — cow’s milk, salt, and rennet.
• After 12 months of aging, the Parmigiano Reggiano Consortium performs a tapping test to certify a wheel’s quality with its (literal) stamp of approval. 
• Each wheel weighs 80+ pounds and can cost anywhere between $900 and $2.5k, depending on its age, with some maturing for up to 40 months.

For producers, that means revenue doesn’t arrive for at least a year. But farmers must be paid monthly, while other costs add up. Credem fills this gap.

While parm represents just 1% of the bank’s business, it’s a vital part of the overall industry.

“Without this system of leverage, the world of Parmigiano Reggiano cannot exist,” Italian dairy industry leader Paolo Ganzerli told CNN.

How it works....

....MUCH MORE 

We may have to repurpose the CCO acronym from "Collateralized Chip Obligation" to "Collateralized Cheesr Obligation"

*Ernest, Baron Rutherford of Nelson, President Royal Society, Nobel Prize etc., etc.:

...Natural transmutation was first discovered when Frederick Soddy, along with Ernest Rutherford, proved that radioactive thorium converted itself into radium in 1901. At the moment of realization, Soddy later recalled shouting out: "Rutherford, this is transmutation!" Rutherford snapped back,

"For Christ's sake, Soddy, don't call it transmutation. 
They'll have our heads off as alchemists."

 —from a May 2012 post "Climateer Line of the Day: Thorium Edition"

Seen in August 2025's "AI’s 1930s moment Are we on the brink of disaster?".

Capital Markets: "Greenback Breaks Higher, Stocks and Bonds Lower"

From Marc to Market:

The US dollar has extended its gains against most currencies today. What is seen as a successful US-China summit and a swing in expectations for Fed policy are aiding the greenback. The anticipated year-end effect Fed funds rate has risen by a dozen basis points this week and the two-year Treasury yield is up 16 bp this week and is the fourth week it has risen. With the Trump-Xi meeting over, the US is seen turning its attention back to Iran, where a fragile ceasefire has frozen the conflict. Crude oil prices are at their highest in more than a week. Bond yields are sharply higher and equities lower. 

The UK political drama continues to play out. It has weighed extra om UK stocks and bonds and sterling, which is among the worst performing currencies in the G10 this week. Meanwhile, the market has taken the yen to its lowest level since the apparent April 30 intervention. The market has become increasingly confident that the BOJ will hike rates next month. ...

....MUCH MORE 

"Britain's latest civil servant is a chatbot trained on GOV.UK misery"

From The Register, May 15:

Whitehall says the AI assistant will help citizens navigate public services faster; others may see it as a cheaper alternative to answering the phone 

After years of turning public services into a maze of dead links, phone queues, and eligibility calculators, the UK government has unveiled the inevitable next step: an AI chatbot.

The UK government on Friday announced the launch of "GOV.UK Chat," a generative AI assistant bolted into the GOV.UK app and trained on tens of thousands of pages of official guidance that Whitehall is boldly pitching as the "most comprehensive government-built chat tool in the world."

Ministers say the system will help people navigate everything from maternity pay and retirement benefits to driving licenses and startup grants without having to dig through the bureaucratic swamp that is modern Britain.

According to the government, some public sector call centers handle around 100,000 calls a day, which helps explain why ministers are suddenly very enthusiastic about citizens talking to software instead.

Technology Secretary Liz Kendall said people fed up with being stuck on hold should not have to spend hours wading through online guidance either, which sounds suspiciously like somebody inside government has finally used GOV.UK.

"For too long, navigating government has felt like a full-time job," she said. "Whether you're a parent trying to find out what childcare you're entitled to, a first-time buyer working out which schemes you can access, or someone approaching retirement, you shouldn't have to spend time trawling through hundreds of web pages to get a straight answer."....

....MORE 

Does this give hope that the dream of replacing the politicians can someday come true?

Or will I have to reuse the "Jobs the robots won't do"* headline?

Stay tuned. 

*On jobs and robots:

• Jobs the Robots Won't Do: Central Banker
• Jobs That Robots Won't Do: Clown Shortage
• A Job the Robots Won't Take: Become a Financial Charlatan
• Jobs the Robots Will Do: Foreign Exchange Traders Facing Extinction as Computers Replace Humans 
• Robot Lobbyists Say Robots Good, Create Jobs--UPDATE
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Drought:Intensifying, Spreading Across The U.S.

This is the first time this year we've posted the Drought Monitor map.

There seems to be an El Niño developing off the coast of South America which would mitigate some of the dryness in the southern and central U.S. Meaning that as all around you are losing their heads shouting "drought, drought" there would be wetter weather just over the horizon which would ruin any long futures one had on corn, beans or wheat.

However! If the arrival of the moisture is delayed much past July 1 it could be just awful for the farmers. So this is a heads-up but not actionable. Yet.

Layering one complex/chaotic system, financial derivatives, on top of another complex/chaotic system, weather can get interesting in ways even the best supercomputers haven't quite figured out.

From the University of Nebraska-Lincoln, May 14 (data through May 12):

This Week's Drought Summary

This week was defined by a significant precipitation divide, highlighted by a major deluge across parts of the South and Gulf Coast. Persistent storm systems funneled heavy moisture into Louisiana, Mississippi, and Alabama, where total rainfall reached 4 to 6 inches—and in some coastal pockets even higher—representing departures of 3 to 5 inches above seasonal norms. While an active frontal corridor brought a secondary band of moderate rain (1 to 3 inches) from Texas through the Ohio Valley and into the Northeast, the Western U.S. remained exceptionally dry, with most areas west of the Rockies receiving less than 0.1 inch of rain. This lack of moisture, paired with blustery winds, triggered extreme fire danger across the Upper Missouri Valley, though the period concluded with a pattern shift as a significant Pacific low-pressure system finally moved onshore to deliver moisture to the Northwest.

Temperature patterns showed an equally sharp geographical split, with unseasonable warmth gripping the West and parts of the South while a late-spring chill lingered over the North. In the Southwest and South Texas, summer-like heat took a firm hold as Rio Grande Village, Texas, hit a national high of 105°F and Death Valley consistently reached the triple digits; overall, the Western U.S. averaged 5 to 15°F above normal. Conversely, a significant cool-down settled over the Northern Plains and Upper Midwest, where the Dakotas and Minnesota experienced temperatures 5 to 15°F below seasonal averages. This thermal contrast was further sharpened by winter-like conditions in high-elevation regions of the West, where stations in Utah recorded lows as cold as 10°F, even as record-challenging warmth began to expand across the Pacific Northwest and the Southern Border states.

Northeast

The Northeast region experienced a pronounced late-spring chill coupled with a sharp geographical divide in precipitation. Average temperatures ranged from 39°F–48°F in northern portions of the region to 60°F–66°F in parts of Maryland and Delaware. Temperatures were below normal across nearly the entire region, with the most significant cold anomalies concentrated in New York and Pennsylvania; in these areas, departures reached 6°F to over 10°F below average. Precipitation patterns were equally divergent, featuring a surplus in the north and west but deficits in the south. Heavy moisture was concentrated in Western New York, Northwestern Pennsylvania, and much of Maine, where precipitation amounts ranged from 0.45 to 1.8 inches above normal. Moderate (D1) to severe (D2) drought, along with abnormal dryness (D0) were improved in Maine. Conversely, rainfall totals were below-normal across southern portions of the region, with precipitation deficits generally falling between 0.45 and 1.35 inches below normal. Severe (D2) drought was expanded in northern Massachusetts, Delaware, and southern portions of Pennsylvania, New Jersey and West Virginia, while moderate (D1) drought was expanded in Massachusetts, Rhode Island, Connecticut and southern Pennsylvania this week.

Southeast

Much of the Southeast experienced below-normal temperatures this week, where temperatures were 5°F to 10°F below normal. Florida, Georgia, and parts of Alabama and South Carolina were the exception, where averages were in the 80s—up to 10 degrees above normal. Exceptional precipitation totals (1.5 to 3.0 inches) were recorded across much of Alabama, and portions of Georgia and the Florida Panhandle. Localized accumulations in these areas reached 4 to over 7 inches, representing significant departures of 3 to 6 inches above normal. Weekly rainfall totals of 1.5 to 3.0 inches extended from southern Appalachian region to south-central North Carolina. Exceptional (D4) drought was removed from south-central North Carolina and northeast Georgia, and improved in the Florida Panhandle. Extreme (D3) drought improved across parts of northern Florida, Alabama, Georgia, and the Carolinas. Rainfall totals were below normal from northern portions of North Carolina, Virginia, and much of the Florida Peninsula, observing deficits of 0.5 to 1.5 inches. Extreme (D3) drought was expanded in central and southern portions of Virginia and slightly into a northern pocket of North Carolina, while moderate (D1) drought to extreme (D3) drought were expanded in southeast Florida.

South

The Southern region experienced a stark contrast in both precipitation and temperature during the week, defined by torrential Gulf Coast rains and a significant late-spring chill across the interior. Precipitation was most intense across the central Gulf Coast, particularly in Louisiana and southern Mississippi, where weekly totals reached 7 to over 9 inches. These amounts represent exceptional departures of 6 to 7.5 inches above normal. Moderate (D1) to Exceptional (D4) drought was reduced in southern and eastern portions of Texas, and in parts of Louisiana, Mississippi, and southern Tennessee. Abnormal dryness (D0) was improved in parts of Texas and southern Louisiana. Conversely, drier conditions prevailed in West Texas, Oklahoma, and much of the Tennessee Valley, where precipitation was generally 1.5 to 3 inches below average. Exceptional (D4) was introduced in southwest Oklahoma and from the Texas Panhandle into northwest Oklahoma, and expanded in parts of Arkansas and northern Mississippi. Extreme (D3) expanded in northern portions of Texas and western Oklahoma. Heat persisted in southern Texas, where average temperatures reached the 80s and 90s, representing departures of up to 5°F above normal. However, a powerful cold anomaly gripped the northern, eastern, and central portions of the region. In these areas, temperatures were broadly 5 to 10°F below normal for the week.

Midwest

The Midwest region experienced a widespread late-spring chill and a stark contrast in moisture levels between the north and south. Temperatures were broadly below average across the entire region, with the vast majority of the Midwest observing departures of 5 to 10°F below normal. Average temperatures ranged from a cool 30–40°F along the northern border of Minnesota and Wisconsin to the more seasonable 60–70°F in the southern reaches of Missouri and Kentucky. Precipitation was notably sparse across the northern half of the region, including Minnesota, Wisconsin, Iowa, and Michigan, where totals remained under 0.1 inches, resulting in departures of 0.5 to 1.5 inches below normal. In contrast, the southern tier—particularly across parts of Kentucky, southern Missouri, and the Ohio Valley—saw more active weather with precipitation totals ranging from 1.5 to over 3 inches, leading to surpluses of 0.5 to 1.5 inches and resulting in the reduction of severe (D2) and extreme (D3) drought in western parts of Kentucky. However, moderate (D1) to extreme (D3) drought was expanded in portions of central and eastern Kentucky, where rainfall amounts were below normal. Abnormal dryness (D0) was also expanded in parts of Minnesota, western Iowa, southern Missouri, and in pockets of Indiana and Ohio....

High Plains

....MUCH MORE 

 

Investing In Companies - Factors: "What Is Quality?"

We exited April 30's post "Goldman Sachs finds individual investors are piling into leveraged semiconductor ETFs" saying:

Now, as a general rule, the momo mamas aren't wrong to be enamored with momentum.

Of all the critters in the factor zoo (Fama-French 5 factor+momo) the momentum factor is the one most likely to put food on the table and cash in the bank. However! Trend>Friend>Bend>End means you are going to be trading which means you are going to have fees and slippage grinding against you.

Furthermore, using a triple-leveraged vehicle implies you had better be manipulating the market to get the timing of the turns correct. Otherwise just the variance will wipe you out, leaving aside whether you are right or wrong on the directional moves. 

Because of that bend at the end you have to exit the position or ride it down. If you exit you run into the costs and timing problems mentioned in the outro. So do you ride the downturn?

Only, and I mean only, if the underlying company is high quality.

As an example, one of the small-modular-reactor stocks, Oklo, ran from around $25 in April 2025 to its all-time-high,  $193.84 on October 14, 2025.

 

 TradingView (since July 2021)

The thing was, the company wasn't a business. It might become one, it shows promise but it has never sold a single nuke plant. On November 10, 2025 we posted "Will General Electric's New Canadian Nuclear Reactor Doom Oklo to Irrelevance?" (GEV) with the snarky little intro:

There is something to be said for actually having a product.

and more importantly, this outro: 

....As noted introducing June 27's "Trump plans executive orders to power AI growth in race with China" (PWR; GEV; CCJ): 

I think we're positioned correctly with the Quanta, GE Vernova, Cameco etc.

But until sales, earnings, and cash flow catch up to the news, valuations are getting stretched. 

But at least we have sales, earnings, and cash flow should the overall market tumble.

Money coming in the front door is comforting and a cushion against impulsivity, regret and all the other things that get in the way of big gains. 

And as mentioned exiting May 23's ""Trump plots ‘Manhattan Project 2’ in nuclear power push" (CCJ; GEV)":

The "set it and forget it" stocks are in the headline, Cameco among the miners and GE Vernova among the nuke reactor manufacturers.

However, as is so often the case the speculative lottery tickets are seeing a lot of enthusiasm for their shares. The problem with them as investments are 1) a lack of stuff like sales/earnings/cash flow and 2) our conviction that we will see at least one and possibly three bear markets before they have products.

And in bear markets it is the companies lacking in sales/earnings/cash flow that get hit hardest; as investors begin to question whether they may have made a big mistake. 

Addendum: I should have mentioned that with Cameco you also get 49% of nuke plant company Westinghouse. Brookfield owns the 51%.

Today OKLO is changing hands at $67.56USD  down $2.10 in late pre-market trade.

The point isn't that we posted less than a month after the all-time high, that was lucky, but that shareholders got nervous/scared thinking about what they actually owned.

That 65% drop occurred as the rest of the market was, in fits and stars, moving higher.

Imagine if the overall market had gone into a sustained decline! OKLO would have hit single digits. 

With that much-longer-than-usual introduction here's the headline story from the Financial Analysts Journal,  Published online: 18 Mar 2019:

Abstract

Unlike standard factors, such as value, momentum, and size, “quality” lacks a commonly accepted definition. Practitioners, however, are increasingly gravitating to this style factor. They define quality to be various signals or combinations of signals—some that have been thoroughly explored in the academic literature and others that have received limited attention. Among a comprehensive group of the quality categories used by practitioners, we find that profitability, accounting quality, payout/dilution, and investment tend to be associated with a return premium whereas capital structure, earnings stability, and growth in profitability show little evidence of a premium. Profitability and investment-related characteristics tend to capture most of the quality return premium.

“Quality” as a factor in equity investing is a collection of metrics designed to capture the indicators of higher-quality financials in companies. Quality metrics are popular in the practitioner investment community, but no standard definition for the quality factor has been agreed on. In contrast, factors such as value and size have clear and accepted definitions. Although an extensive literature is dedicated to a few specific facets of quality, certain facets used in practitioner definitions have been only minimally explored in the academic literature.

As with the conventional factors, such as value and size, quality has been widely adopted as a target for factor indexes. In the 2010s, MSCI, FTSE Russell, Standard & Poor’s, Research Affiliates, EDHEC, and Deutsche Bank, among others, have created smart beta indexes based on some quality factor. Moreover, they typically include quality as an element of their multifactor offerings. In conversations with investors, the quality factor is pitched by index providers as an independent source of return and as a source of diversification because of its supposedly low correlation with the value factor.

The challenge for researchers is that the quality factor is constructed differently from other factors. The value and low-beta factors, for example, are created from a particular stock characteristic (or a set of highly related stock characteristics) to capture a risk premium associated with an undiversifiable economic risk or to capture an anomalous return associated with a persistent investor behavioral bias. For example, the value factor is generally ascribed to stocks that have a high book-to-price ratio, high earnings-to-price ratio, high dividend-to-price ratio, or some combination of these three valuation measures. The portfolio resulting from construction based on one or more of these definitions owns low-valuation stocks.

In contrast, quality factor portfolios are constructed differently by the various providers. One provider might tag a stock as high quality if it has a high score on some combination of the following attributes: earnings growth, earnings growth stability, low return volatility, high profitability, high return on assets, low debt ratio, and accruals-related accounting quality. Because the quality label is vague, we assess in this article each of the quality definitions proposed by practitioners to determine which, if any, is a reliable source of return.

We begin by examining the definitions of quality implemented in various product offerings. We then examine various quality portfolios available in the marketplace to assess the risk of data mining and biases.Footnote¹ Based on the criteria, we consider what are the reliable sources of return premiums.

Survey of Quality Metrics in Product Offerings

Several major index providers offer quality indexes for passive investing. In , we list the company characteristics used to construct six quality factor indexes offered by six providers. We consider these characteristics to be a means to compare the indexes. For example, the quality indexes that use gross profitability, ROE (return on equity), or ROA (return on assets) are seeking to proxy company profitability, whereas indexes that use debt-to-equity and debt-to-cash-flow ratios are seeking to proxy a corporation’s financial conservatism in its capital structure.

We can group the characteristics into seven categories used by product providers to define quality:

• Profitability

• Earnings stability

• Capital structure

• Growth

• Accounting quality

• Payout/dilution

• Investment

The six quality product providers listed in use substantially different characteristics in their portfolio construction. For example, a highly profitable company does not necessarily have stable earnings or low leverage or exhibit fast growth. An examination of the existing literature does not find any research exploring how growth and accounting quality, combined with low debt, would capture a risk exposure or a persistent irrational unwillingness on the part of investors to own this desirable combination of company attributes. Nor could we find any work in the academic literature that claims these groups of variables might proxy for a common source of covariation.

To empirically study whether quality variables are homogeneous or heterogeneous, we examined the pairwise correlation of the excess returns produced by quality portfolios. The correlations reported in reveal a lack of similarity, indicating that the variables are not proxies for a common hidden factor.Footnote² The suggestion is that these leading quality index products provide a collection of heterogeneous attributes linked by the theme of financial and accounting quality. No evidence exists that these variables proxy for a unique homogeneous source of risk or a single anomaly. Therefore, quality indexes are more appropriately interpreted as multifactor portfolios whose primary commonality is that they are constructed mostly from the less well-known and less vetted company characteristics.

Table 2. Correlation of Variables Used by Index Providers in Various Quality Categories

Notes: ACCR = accruals; AG = asset growth; AT = asset turnover; CACCR = change in accruals; CP = cash flow profitability; DPS = dividends per share; DTIS = debt issuance; EQIS = equity issuance; GM = gross margins; NOA = net operating assets; NP = net payout;andTL = total leverage.Table A3 in Appendix A of the online supplemental material (available at www.tandfonline.com/doi/suppl/10.1080/0015198X.2019.1567194) provides a detailed view of the pairwise correlations of a larger list of variables....

....MUCH MORE 

If one is so inclined. do check out their "Summary of Robustness Tests"

Possibly also of interest 

September 2014 -  Market Anomalies: Can You Combine Value and Momentum?

December 2014 -What a Long Strange Trip: From CAPM To Fama-French to Four (or more) Factor   

February 2018 - Alice In Factorland: Can Momentum Investing Be Saved?—Arnott et al 

See also:

• Improving on the Four-factor (beta, size, value, momentum) Asset Pricing Model
• "A new benchmark model for estimating expected stock returns"
• Fama-French Have A Come-to-Buffett Moment
• Rob Arnott's Research Affiliates: "Finding Smart Beta in the Factor Zoo"
• "Two centuries of trend following"
• "The Equation that Will Change Finance"

and many more. Use the 'search blog' box if interested.  

ICYMI: "Gabbard plans to shift coveted, CIA-backed high-tech fund to her office"

The folks at the CIA are not happy about the DNI. Not happy at all.

I thought we had posted this but no. Better late than never.

From Politico, March 23:

Director of National Intelligence Tulsi Gabbard is finalizing a plan to assume responsibility for the CIA-backed venture capital firm In-Q-Tel 

The Office of the Director of National Intelligence is finalizing a plan to become the primary federal steward of a CIA-backed venture capital firm that funds high-tech gadgets and software for U.S. spies, according to six people with knowledge of the effort.

If approved, the move would shift intelligence community oversight of the firm, In-Q-Tel, away from the CIA, which chartered the tech innovation fund more than 25 years ago, and nest it under Director of National Intelligence Tulsi Gabbard, whose office oversees the U.S. spy community.

But there are those in the intel community and Congress who oppose the idea, setting up a bureaucratic tussle that would test Gabbard’s standing inside the Trump administration and with Congress.

Supporters of the change argue that In-Q-Tel caters too much to the tech needs of the CIA over other defense and intelligence agencies, such as the National Reconnaissance Office and the FBI.

Congress funds In-Q-Tel through the CIA, which also hosts a liaison office that helps set In-Q-Tel’s investment priorities. ODNI — which was founded to improve coordination across the expansive network of federal spy agencies after 9/11 — did not exist at the time of In-Q-Tel’s founding in 1999.

The CIA and some key Democratic lawmakers oppose the idea, according to four of the six people. Republicans, for their part, appear uncommitted thus far on the plan.

“Taking something that works and giving it to Tulsi is not a recipe for success,” said one Congressional aide. The person, like others in this report, was granted anonymity because they were not authorized to speak publicly about the discussions.

The CIA declined to comment. A spokesperson for In-Q-Tel, a not-for-profit that is legally independent of the government, declined to comment.

After publication, Gabbard spokesperson Olivia Coleman refuted some of POLITICO’s reporting in a post on X. “This is a good news story about the Intelligence Community working together to rapidly bring innovative tech to our national security professionals.”

She added: “For nearly a year, ODNI has worked in close partnership with the CIA to ensure that cutting-edge technology is easily and rapidly accessible to the entire Intelligence Community, including through long-time partner In-Q-Tel and other channels. These conversations are ongoing and have been positive, collaborative, and focused on implementing a structure that best fulfills our mission of keeping the American people safe and secure.”....

....MUCH MORE 

And this at the New York Post, May 11:

DNI Tulsi Gabbard probes US funding to more than 120 biolabs abroad  

And this yesterday:

CIA Response To Whistleblower Claim Of Covid Origin Coverup

And more to come, I'm sure. 

Capital Markets: "US Dollar Threatening to Break Higher"

From Marc Chandler at Bannockburn Global Forex:

The US dollar is trading quietly against the major currencies. The euro is holding above $1.17 and sterling is holding above $1.35, but the market does not appear done probing these support areas.  The greenback has also traded as close to JPY158 as possible without going over. This is where the Bank of Japan may have intervened last week. In the UK, Prime Minister Starmer’s rivals are preparing to mount a challenge. 

China has promised to buy more of the B-3—beans, beef, and Boeing. Trump and Xi have exchanged platitudes, and Beijing has again cautioned that Taiwan is core interest. While Xi has repeated the typical mantra of opening up China more for foreign business, it is the foreign businesses that are trying to de-risk from China. A new “board of trade” is expected to be established, though such forums have existed in the past with little to show. The PBOC set the dollar’s reference rate at a new three-year low today....

....MUCH MORE  

"Siemens Energy raises FY guidance following record Q2 orders"

Times are good in the power business. Here's GE Vernova's doppelgänger.

From ShareCast via London South East, May 12: 

Germany's Siemens Energy hiked its full‑year guidance on Tuesday after posting record second‑quarter orders and a sharp improvement in profitability, supported by strong global demand for power generation equipment and grid infrastructure.

Siemens Energy said orders for the three months ended 31 March rose 29.5% on a comparable basis to €17.7bn, while revenues increased 8.9% to €10.3bn. Profit before special items climbed to €1.16bn from €906m a year earlier, with net income rising to €835m.

The Munich-based group said demand in the US remained a key driver, particularly for gas turbines linked to data‑centre power needs and wider investment in electricity networks. The order backlog reached a record €154bn, giving a book‑to‑bill ratio of 1.72.

Chief executive Christian Bruch said the company continued to benefit from "strong market momentum" despite geopolitical uncertainty.

Gas Services delivered its highest quarterly order intake on record, with orders rising to €8.87bn, supported by US data‑centre demand and new European power projects. Revenues in the division rose 15% on a comparable basis.

Siemens Energy also noted that its Grid Technologies saw strong momentum, with orders up more than 41% year‑on‑year to nearly €7bn, helped by a major HVDC project in the Baltic Sea worth over €1bn and robust US transformer demand.

Siemens Gamesa, its wind‑turbine arm, continued its turnaround, narrowing quarterly losses before special items to €44m from €249m, aided by productivity gains and cost efficiencies....

....MORE 

Wharton: "AI’s Supply Chain Problem"

"Spät kommt Ihr - doch Ihr kommt!" 
(“Late you come, but still you come!”) 
 

—German polymath* Friedrich von Schiller in “Die Piccolomini”, part II of his Wallenstein trilogy.

 

From Knowledge@Wharton May 12:

 

The scarcest resource in AI isn’t chips or talent — it’s grid capacity, writes Wharton’s Santiago Gallino. 

In December, the nation’s largest grid operator, PJM Interconnection, failed for the first time in its history to procure enough electricity to keep the lights on reliably — falling nearly 6,600 megawatts short of its reserve target for summer 2027. The cause was not a hurricane or a war. It was data centers. Ninety-four percent of the projected load growth came from facilities built to run artificial intelligence. Capacity prices hit an all-time high, and the political backlash has been swift and bipartisan, from Senator Bernie Sanders calling for a moratorium on data center construction to Governor Ron DeSantis rallying Floridians against proposed campuses in their communities.

This is not just an energy policy story. It is a supply chain story — and it carries a warning that every business leader should hear: The AI revolution is being built on an infrastructure foundation that cannot keep pace with the demand being placed on it.

Lead Times Are the Strategy
In supply chain management, one lesson endures: When lead times are long and demand is uncertain, the decisive move is made years before anyone places an order. It is made when someone decides how much capacity to build and which supplier relationships to invest in. The AI energy crisis is what happens when that lesson is ignored at scale.

Consider the hardware required. Large power transformers now take roughly two-and-a-half years to procure. Gas turbines are booked well into the late 2020s. New transmission lines require years of permitting before a single steel tower is erected. These are not footnotes to the AI buildout — they are its binding constraint. Excitement about AI runs at the speed of software; the infrastructure required to sustain it runs at the speed of steel, copper, and concrete. When those two clocks fall out of sync, the result is not a polite delay. It is a hard ceiling on growth.

Any company that treats energy infrastructure as something to be procured when needed, rather than secured years in advance, is already behind. The hyperscalers that moved earliest to lock in power purchase agreements and reserve equipment slots are effectively erecting barriers to entry that latecomers will struggle to overcome, regardless of how much capital they deploy.

Excitement about AI runs at the speed of software; the infrastructure required to sustain it runs at the speed of steel, copper, and concrete.

You Cannot Scale Faster Than Your Slowest Supplier 
In the public imagination, the AI supply chain is about chips, algorithms, and data. In reality, it also depends on a handful of specialized manufacturers in South Korea and Germany who make the silicon steel inside power transformers, the forging shops in Europe that produce gas turbine shafts, and the small number of firms that manufacture the critical components through which electricity enters a substation. These suppliers are invisible until they become the bottleneck — and by then, the cost of delay has already compounded.

This is a lesson COVID-19 taught the semiconductor industry: Global just-in-time optimization creates catastrophic fragility when stress arrives. That same stress is now arriving in energy infrastructure. GE Vernova’s recent $5.3 billion acquisition of full ownership of transformer manufacturer Prolec GE signals exactly how the smartest players are responding. They are not buying transformer businesses because transformers are glamorous; they are buying vertical integration into a chokepoint that their customers cannot reach their AI ambitions without.

The Hype Horizon vs. the Hardware Horizon 
A large language model can be trained and deployed in months. The power plant needed to run it at scale takes the better part of a decade to permit, build, and commission. Data center development is already slowing as developers discover that available grid capacity, not capital, is the constraint. In PJM’s territory alone, data centers are projected to add five to seven gigawatts of demand each year, while only two to three gigawatts of new generation come online. That math does not resolve itself.

For business leaders, this asymmetry demands clear-eyed planning. If only a fraction of the AI infrastructure pipeline is built and demand does materialize, the grid will be inadequate. If the infrastructure is overbuilt and demand disappoints, stranded assets will be paid for by electricity ratepayers for decades. Avoiding either outcome requires the kind of long-horizon thinking that is the antithesis of the quarterly earnings cycle driving most corporate decisions.

A large language model can be trained and deployed in months. The power plant needed to run it at scale takes the better part of a decade to permit, build, and commission.

The Lights vs. the Algorithm 
There is a final, uncomfortable dimension to this story. Electricity powers hospitals, water treatment plants, and heating systems. AI, for all its promise, remains — for most current applications — a convenience layer on top of civilization, not its foundation. When a megawatt allocated to a data center is a megawatt unavailable to a hospital or a residential neighborhood during a heat wave, that allocation becomes a societal choice, not merely a market transaction....

....MUCH MORE 

*He was an M.D.; Professor of history and philosophy; poet; playwright; author of “Ode to Joy”; pal to Goethe; estimated I.Q. 185. I hate him.