Friday, April 30, 2021

"The Last Days of Satoshi: What Happened When Bitcoin’s Creator Disappeared"

From Bitcoin Magazine, April 26:

10 years ago today, Bitcoin creator Satoshi Nakamoto's disappeared. Pete Rizzo tells the story.

“Tradition demands that there is no gap between kings.” – Terry Pratchett

They suspected that he was British[X], that he was Yakuza[X], that he laundered money[X]. They wondered if he was a woman[X], laid claim just in case[X] and joked about fucking him[X]. They kept contingencies for if he proved crazy[X], eyed for shifts in his sleep[X], debated why he spoke and didn’t speak and sent him eager patches signed with pretty please[X].

To be sure, by the waning days of 2010, Satoshi Nakamoto was still acknowledged for inventing Bitcoin, and was respected for growing the world's first decentralized digital currency into a $1 million market. But as frustrations with his authority and availability built, it became all too common for users to decry Satoshi the admin[X], Satoshi the bottleneck[X], Satoshi the dictator[X].

If it can be said a quiet clamour against Bitcoin’s creator had been simmering since summer, it soon became something of an outcry. As demands escalated, Satoshi sightings even assumed the role of sport, with users speculating when and why he might appear on the forums[X].

That’s not to say Satoshi was able to bring order to the discussion if and when he surfaced.

Indeed, as winter approached, a noticeable change in the conversation would begin with a wave of posts casting doubt over the project, and more specifically, Satoshi’s role in its operations.[X] In response, users drew a dividing line – it was not Satoshi, then still directing development, but the users who ran the software who were the project’s ultimate authority.

“There is no single mastermind in open source. It's more of a brain where a single human is just a cell,” wrote ShadowOfHarbringer[X]. “If one day Satoshi says, ‘OK guys, it was just a joke with this Bitcoin thing, I'm closing down the project,’ we would simply fork the code.”

This line of defense was echoed broadly, even by Satoshi’s most active assistant, Gavin Andresen, who wrote in no uncertain terms: “If Satoshi goes rogue, then the project forks.”[X]

At the heart of this defense was a growing belief – stronger perhaps than any confidence in Satoshi himself – that no Bitcoin user could be greater or less than any other, that they were all nodes on the network, authors of code, individuals responsible for the software’s success.

Still, the coming weeks would find Bitcoin’s early users exercising this power in ways that would upend assumptions about the software’s usability, politics, limitations and freedoms.

In the end, this awakening would amount to something more, the first assertion of authority over Bitcoin’s creator and his system of rules, one already defined by choices so absolute they may as well have been divine.

Wrote user Thrashaholic to one early critic[X]:

"How Long Can We Live?"

One of the most human of all the comments from the very old was made by the 10th longest lived person, Misao Okawa (born 1898)

Said about her life the day before her 117th birthday: 

"It seemed rather short"

She died four weeks later at 117 years, 27 days

From the New York Times Magazine, April 28:

New research is intensifying the debate — with profound implications for the future of the planet.

In 1990, not long after Jean-Marie Robine and Michel Allard began conducting a nationwide study of French centenarians, one of their software programs spat out an error message. An individual in the study was marked as 115 years old, a number outside the program’s range of acceptable age values. They called their collaborators in Arles, where the subject lived, and asked them to double-check the information they had provided, recalls Allard, who was then the director of the IPSEN Foundation, a nonprofit research organization. Perhaps they made a mistake when transcribing her birth date? Maybe this Jeanne Calment was actually born in 1885, not 1875? No, the collaborators said. We’ve seen her birth certificate. The data is correct. 
Calment was already well known in her hometown. Over the next few years, as rumors of her longevity spread, she became a celebrity. Her birthdays, which had been local holidays for a while, inspired national and, eventually, international news stories. Journalists, doctors and scientists began crowding her nursing-home room, eager to meet la doyenne de l’humanité. Everyone wanted to know her story.

Calment lived her entire life in the sunburned clay-and-cobble city of Arles in the South of France, where she married a second cousin and moved into a spacious apartment above the store he owned. She never needed to work, instead filling her days with leisurely pursuits: bicycling, painting, roller skating and hunting. She enjoyed a glass of port, a cigarette and some chocolate nearly every day. In town, she was known for her optimism, good humor and wit. (“I’ve never had but one wrinkle,” she once said, “and I’m sitting on it.”)

By age 88, Calment had outlived her parents, husband, only child, son-in-law and grandson. As she approached her 110th birthday, she was still living alone in her cherished apartment. One day, during a particularly severe winter, the pipes froze. She tried to thaw them with a flame, accidentally igniting the insulating material. Neighbors noticed the smoke and summoned the fire brigade, which rushed her to a hospital. Following the incident, Calment moved into La Maison du Lac, the nursing home situated on the hospital’s campus, where she would live until her death at age 122 in 1997.

In 1992, as Calment’s fame bloomed, Robine and Allard returned to her file. Clearly, here was someone special — someone who merited a case study. Arles was just an hour’s drive from the village where Robine, a demographer at the French National Institute of Health and Medical Research, lived at the time. He decided to arrange a visit. At La Maison du Lac, he introduced himself to the medical director, Victor Lèbre, and explained that he wanted to interview Calment. Lèbre replied that it was too late; Calment, he said, was completely deaf. But he agreed to let him meet the grande dame anyway. They walked down a long concrete corridor and into a small and spare room.
“Hello, Madame Calment,” Lèbre said.

“Good morning, doctor,” she answered without hesitation.

Lèbre was so shocked that he grabbed Robine by the arm and rushed him down the corridor back to his office, where he interrogated the nurses about Calment’s hearing. Apparently she could hear quite well at times, but experienced periods of near deafness; Lèbre had most likely mistaken one of those interludes for a permanent condition. Upon returning to Calment’s room, Robine saw her properly for the first time. She was sitting by the window in an armchair that dwarfed her shrunken frame. Her eyes, milky with cataracts, could distinguish light from dark, but did not focus on any place in particular. Her plain gray clothes appeared to be several decades old.

During that first meeting, Robine and Calment mostly exchanged pleasantries and idle chatter. Over the next few years, however, Robine and Allard, in collaboration with several other researchers and archivists, interviewed Calment dozens of times and thoroughly documented her life history, verifying her age and cementing her reputation as the oldest person who ever lived. Since then, Calment has become something of an emblem of the ongoing quest to answer one of history’s most controversial questions: What exactly is the limit on the human life span?

As medical and social advances mitigate diseases of old age and prolong life, the number of exceptionally long-lived people is increasing sharply. The United Nations estimates that there were about 95,000 centenarians in 1990 and more than 450,000 in 2015. By 2100, there will be 25 million. Although the proportion of people who live beyond their 110th birthday is far smaller, this once-fabled milestone is also increasingly common in many wealthy nations. The first validated cases of such “supercentenarians” emerged in the 1960s. Since then, their global numbers have multiplied by a factor of at least 10, though no one knows precisely how many there are. In Japan alone, the population of supercentenarians grew to 146 from 22 between 2005 and 2015, a nearly sevenfold increase.

Given these statistics, you might expect that the record for longest life span would be increasing, too. Yet nearly a quarter-century after Calment’s death, no one is known to have matched, let alone surpassed, her 122 years. The closest was an American named Sarah Knauss, who died at age 119, two years after Calment. The oldest living person is Kane Tanaka, 118, who resides in Fukuoka, Japan. Very few people make it past 115. (A few researchers have even questioned whether Calment really lived as long as she claimed, though most accept her record as legitimate based on the weight of biographical evidence.)....


"Chicken prices rise as poultry plants struggle to find workers"

A trend is emerging.

From Yahoo Finance:

Barbecue- and Buffalo-lovers, take note: chicken wing prices are going up. 

Chicken producers are crimped by a labor shortage, and inflation is making its way through the entire bird. Fast-casual chain Wingstop saw bone-in wing prices rise 25.8% in its first quarter, which was considerably lower than the market-rate increase of 50%. (Company executives said they were able to negotiate lower prices with suppliers.)

"You're actually seeing inflation in all parts of the bird, not just wings," Wingstop Chief Financial Officer Michael Skipworth told Yahoo Finance Live.

There are poultry producers who are having trouble staffing their plants at 100%, he said. "We really believe that has to do with the pressure on the labor market and the amount of stimulus that's enabling people not to have to go out and work, and claim these open jobs that are available to them," he added. 

Wingstop has been able to mitigate those higher poultry costs by boosting menu prices and managing other types of costs, according to Skipworth. He highlighted that while processors are having a tough time finding employees, Wingstop is not: "We have an efficient model that is able to leverage a relatively small roster, and with that small roster size, we were able to minimize the impact of any sort of labor shortage as well as any sort of impact as it relates to wage inflation." 

Meanwhile, chicken and pork producer Pilgrim's Pride is acutely feeling the labor shortage. This week the company, controlled by Brazil's JBS, reported sales rose 6.5% last quarter. But it's shelling out $40 million in wage increases this year to attract and retain workers, targeting a shortage that's the result of "the stimulus payment, income tax refunds, and ... unemployment benefits," Pilgrim's Pride CEO Fabio Sandri said on the conference call....


Procter & Gamble, Kimberly-Clark and Coca-Cola have all warned that they'll raise prices on many of their products as raw material costs rise

 I still wonder about the Registered Investment Advisers going out of their way to say:

From WBIR, Knoxville TN, April 29:

Everyday products are about to get more expensive, companies warn

Plastic, paper, sugar, grain and other commodities are all getting more expensive as demand outpaces supply.

Toilet paper, baby care products, soft drinks and many other everyday products are about to get more expensive.

Procter & Gamble, Kimberly-Clark and Coca-Cola have all warned that they'll raise prices on many of their products as raw material costs rise. Plastic, paper, sugar, grain and other commodities are all getting more expensive as demand outpaces supply. Companies are also paying more for shipping as fuel costs rise and ports experience longer delays because of congestion.

The potential hit to consumers’ wallets comes as the economy returns to some semblance of normalcy. Vaccine distribution continues at a steady pace, promising to put the worst of the pandemic and business shutdowns in the past. States have been loosening restrictions and businesses are reopening to a lot of pent up demand from people who have been staying cautiously close to home during the pandemic.

But that improving economy and pent-up demand is straining distribution channels for raw materials and other goods.

Prices for many consumer goods, such as toilet paper, ticked up modestly over the last few months, according to data from NielsenIQ. Pressure is building, though, as costs increase for companies and many have signaled that the price increases are coming later this year and likely into 2022 to offset the impact.

Cheerios maker General Mills is considering raising prices on its products as things like grain, sugar and other ingredients become more expensive. Hormel Foods has already increased prices for Skippy peanut butter and its turkey products.....


Not Cheerios! There go our leisurely games of pin-cushion ring-toss! 

Leaving me far too much time to think.

How would I bribe an RIA to say certain things while leaving little to no trace?

Hmmmm....perhaps give them some millions to invest solely in ultra-low-cost index ETFs so they could pocket some fee income? Hmmm,

While I hedge that bet in unrelated accounts with what look like speculations? Hmmmm....

Ma, Pa, let's go buy us an RIA to write stuff for us.

Well that certainly took a conspiratorial turn.

Better to keep occupied than to pursue this 'thinking' thing.

"Lack of tanker truck drivers could lead to gas shortages this summer"

As Grandmother used to say, "If it's not one tham ding it's another"

From KETK Jacksonville Texas:

With gas prices already surging this year, another fuel problem may soon be on the horizon.

Some in the industry are now predicting a fuel shortage come summer. And it’s not due to a supply issue, but rather not enough tank truck drivers to move the fuel to gas stations.

CNN reported that industry group National Tank Truck Carriers said nearly 20% to $25% of tank trucks aren’t being used right now as there are not enough qualified drivers available. The year before the pandemic struck, that number was only at 10%.

The problem reportedly became magnified last year when Americans weren’t driving due to the coronavirus pandemic shutdowns, and gas stations just didn’t need as much gas. This meant truck drivers weren’t getting enough work and many chose to leave the business....MORE

Just one more anecdote about the labor market.

Employment Cost Index Comes In Hotter Than Expected

Slightly above the 0.7% consensus guesstimate. (Trading Economics, also on blogroll at right)

From the Bureau of Labor Statistics:

Employment Cost Index News Release

Transmission of material in this release is embargoed until
8:30 a.m. (ET) Friday, April 30, 2021


Compensation costs for civilian workers increased 0.9 percent, seasonally adjusted, for the 3-month period ending in March 2021, the U.S. Bureau of Labor Statistics reported today. 

Wages and salaries increased 1.0 percent and benefit costs increased 0.6 percent from December 2020. (See tables A, 1, 2, and 3.) Compensation costs for civilian workers increased 2.6 percent for the 12-month period ending in March 2021 and increased 2.8 percent in March 2020. 

Wages and salaries increased 2.7 percent over the year and increased 3.1 percent for the 12-month period ending in March 2020. Benefit costs increased 2.5 percent over the year and increased 2.1 percent for the 12-month period ending in March 2020. (See tables A, 4, 8, and 12.)....


Reprising April 21's Roubini: "Is Stagflation Coming?":

Astute readers have probably picked up on the fact that except when quoting others, we attempt to avoid the word inflation, instead focusing on whether prices are rising (they are). The reason for this choice in framing the conversation is a concerted effort by folks who make money off of inflation, including financial advisors to insist there is no inflation. Or at worst, there is but it is transitory.

They don't want the Fed to pull the punch bowl and have the party end.

Their most common argument is that we are not seeing wage increases.

That's cool, we'll just talk prices.
(although we are seeing anecdotal reports that companies, the hospitality industry in particular, are paying bounties for new hires and are paying retention bonuses for existing employees. Anecdotes turn into statistics after a lag)....

Follow-up: Inside The Secretive World Of Chinese Foreign Infrastructure Loans

A sweet catch by Claire Jones who, in addition to her FT Alphaville duties is heading up the FT vertical "Trade Secrets", global trade, supply chains, our kind of stuff. Via today's FTAV Further Reading post,

From Klement on Investing, April 28:

Why isn’t this a bigger bombshell?

I have recently been interviewed for the CFA Institute’s Enterprising Investor blog on the geopolitical trends for the coming years. I mentioned that the rise of China is one of three major geopolitical trends that will have a significant influence. No surprise there but I also said that most investors aren’t aware how influential China already is and how much the country works behind the scenes and under the surface to further its interests. Not even 24 hours after I finished the interview, a report by a group of researchers from Georgetown University, the Kiel Institute for the World Economy, and the Center for Global Development at William and Mary University landed on my desk. 

These guys were able to get a hold of 100 lending contracts between Chinese government entities or state-owned lenders and 24 developing countries around the world. Even though these contracts cover only 5% of the estimated total lending of China between 2000 and 2017, it provides some important insights into the implementation of the Belt and Road Initiative and how China uses money as a tool to increase its political influence.

First, it is interesting that the Chinese loans are far more focused on the energy, transport, and telecom sectors than the global average. This is no surprise since the Belt and Road Initiative is an infrastructure project, but it is nevertheless interesting to note that lending in “social infrastructure” like healthcare or education is almost never done by Chinese entities....


We happened to catch the Reuters blurb on the report in March 31's "Database reveals secrets of China's loans to developing nations, says study" which we outro'd with:

That's wonderful research but I'm still curious about the 12+ port deals China has done in Europe and whether those deals contain any secret protocols or annexes.

I will probably be dipping into the report this weekend or next but if you can't wait:

"How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments" (85 page PDF)

EIA Natural Gas Storage Report And Weekly Update

Natural gas in storage came in a bit higher than the estimates gathered by FX Empire, 15 Bcf versus a median of the guesses of 8 Bcf. 

First up, from the Energy Information Administration, the Storage Report, April 29, 2021:


Working gas in storage was 1,898 Bcf as of Friday, April 23, 2021, according to EIA estimates. This represents a net increase of 15 Bcf from the previous week. Stocks were 302 Bcf less than last year at this time and 40 Bcf below the five-year average of 1,938 Bcf. At 1,898 Bcf, total working gas is within the five-year historical range. ...MUCH MORE

And, also from the EIA:

Natural Gas Weekly Update
for week ending April 28, 2021 | Release date: April 29, 2021 


Natural gas prices rise in most markets as demand remains robust in response to elevated power generation demand. Temperatures along the Gulf Coast rose late in the report week, with nighttime temperatures in the 70s—up to 12ºF above normal, on Tuesday and yesterday. IHS Markit estimates power generation rose in the Southeast above 10 Bcf/d for the first time since October 28 of last year and in Texas to the highest levels since February 20. The Henry Hub spot price rose 28¢ from $2.65/MMBtu last Wednesday to $2.93/MMBtu yesterday.

Midwest prices rise, as the polar vortex disruption, which developed in late January, continues to affect weather in the region. Temperatures in the region oscillated widely, resulting in relatively rapid shifts from heating demand to cooling demand. These shifts elevated residential and commercial demand for natural gas early in the week and demand for power generation toward the end of the report week as air-conditioning load developed in major consumption centers. Maximum temperatures in Chicago reached 59ºF last Thursday, or 3ºF below normal; dropped as low as 47ºF, or 16ºF below normal on Sunday; and then rose to 78ºF, or 15ºF above normal, on Monday and 86ºF, or 22ºF above normal, on Tuesday. The significantly warmer weather coincided with elevated demand for natural gas for power generation in the Midwest. According to IHS Markit, demand for natural gas for power generation increased from less than 2.4 Bcf/d on Sunday to 3.6Bcf/d on Tuesday and more than 4.1 Bcf/d yesterday as a result. Prices at the Chicago Citygate and across the Midwest rose in response, reaching weekly highs yesterday. At the Chicago Citygate, the price increased 10¢ from $2.68/MMBtu last Wednesday to $2.78/MMBtu yesterday. The Natural Gas Intelligence Midwest Regional average rose by 15¢, from $2.62/MMBtu last Wednesday to $2.77/MMBtu yesterday. Both prices recorded weekly lows on Friday, at $2.60/MMBtu and $2.57/MMBtu, respectively....

U.S. LNG exports are flat week over week. Twenty LNG vessels (seven from Sabine Pass, four each from Cameron and Freeport, three from Corpus Christi, and two from Cove Point) with a combined LNG-carrying capacity of 73 Bcf departed the United States between April 22 and April 28, 2021, according to shipping data provided by Bloomberg Finance, L.P.


We'll get more interested as the withdrawal season kicks in.

Finally, from the CME, the new June futures are up less than a penny at 2.920 (one week chart, 30-minute candles):

Amazon Crushes Earnings Estimates, Stock Does Not Act At All Well (AMZN)

 I mean it is trading up $80.59 (+2.32%) at  $3551.90, enough for a new all-time high if it carries through to the regular session but not exuberant. And considerably off yesterday's after-hours high, where a lucky buyer was able to snag some shares at $3667.66.

From Seattle's own GeekWire:

Amazon crushes earnings estimates with $108.5B in Q1 revenue, up 44%, profits of $8.1B, up 224%

Amazon blew past expectations for its first fiscal quarter earnings, posting revenue of $108.5 billion, up 44% year-over-year, and earnings per share of $15.79, up from $5.01. Profits of $8.1 billion and an operating margin of 8.2% set new records. Analysts expected Q1 revenue of $104 billion and earnings per share of $9.54.

The Seattle-based giant has surged amid the pandemic as more consumers turn to online shopping and companies rely on its cloud arm, Amazon Web Services. Its advertising and grocery delivery businesses are also gaining momentum, and streaming hours on Prime Video are up 70% year-over-year.

Even as life returns to some level of normalcy in parts of the world, Amazon’s growth continues to accelerate, much like other tech powerhouses such as Microsoft, Facebook and Apple, which all reported giant revenue gains this week....


Thursday, April 29, 2021

"On French Lake, Mariners Learn How Not to Get Stuck in the Suez Canal"

The first thing I thought of was this pic from April 11's French History Messy Nessy Style: "Little Tuscany in the Heart of Paris":

But non.

Even better!

Via gCaptain, April 21:

Francois Mayor, managing director of Port Revel, steers a scaled-down model of a tanker, named the Brittany, on a lake at the Port Revel Shiphandling Training Centre in Saint-Pierre-de-Bressieux, France, April 19, 2021. Picture taken April 19, 2021. 

Francois Mayor nudged back on the power and made a subtle adjustment on the wheel as he coaxed his cargo vessel through a narrow point in the Suez Canal — not the Egyptian one, but a replica in the middle of a French forest.

This stretch of water was built to train ship captains and maritime pilots how to navigate the Suez Canal — a skill now in the spotlight after the Ever Given cargo ship got wedged in the Egyptian waterway last month in high winds and a sandstorm.

The channel is built to one twenty-fifth the scale of a section of the real Suez Canal. Trainees have to steer through scale models of massive container ships without getting stuck.

“It’s a bit hard to recreate sandstorms,” said Mayor, the managing director of the Port Revel training facility, built around a lake in eastern France. “But we have gusts of wind which will push our ship to one side or another.”....


"Yields have to rise and the dollar has to fall"

Thus sayeth Asia Times.
[more accurately, the Deputy Editor (Business) at AT]*

From Asia Times, April 30:

The worst thing to own right now is US bonds; meanwhile, the Chinese market looks attractive

Either the dollar has to fall or Treasury yields have to rise – or both. That’s the only way the US government can persuade the world to buy US$3 to $4 trillion of Treasury securities.

US prices are rising and the dollar is worth less in real terms. Bond yields will have to rise to compensate investors for inflation, or the price of US bonds to foreign investors will have to fall with the US currency.

The chart shows the steady decline of foreign holdings of US Treasuries since 2015. The rest of the world dumped Treasuries when they became expensive in currency terms: notably in late 2016 and early 2017, and again during 2019 and early 2020....


*As we've pointed out elsewhere, the author, David Goldman was one of those guys who couldn't keep a job:

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

I think one of his requirements for moving on was a "Global Head" title.

Now he's Deputy Editor (Business) at AT.

Pre-Digital NFT: "World’s most valuable stamp to go up for auction in NYC"

Thinking about it I guess it actually was fungible. On a couple different levels. So a FT

From the New York Post:

An 1856 British colonial stamp once owned by the eccentric millionaire and convicted murderer John du Pont — and which broke records in four auctions — is going under the hammer again in the Big Apple.

The British Guiana One-Cent Magenta, described as the most famous and valuable stamp in the world, is expected to sell for up to $15 million – more than a billion times its original value – on June 8, The Guardian reported.

“It is the Mona Lisa of philately,” philatelic expert David Beech told the news outlet. “It is the one stamp that every philatelist and every collector would have heard about and seen an illustration of.”....

....MORE, including pics.

I think those guys just like saying "philately"


Media: "Forbes considers SPAC, and investor bid for $700 million"

 I don't think anyone who follows business media would put a penny into Forbes Magazine.

Under current editorship it has become something of a garbage property. And although Steve Forbes is head of the parent Forbes Media, he sure as heck is not his father.

From TalkingBizNews:

Forbes Media is in talks to go public through a merger with a special purpose acquisition company as it attracts acquisition interest, including an offer for $700 million, according to a Reuters report.

Joshua Franklin, Echo Wang and Krystal Hu of Reuters report, “Forbes’ owner is also fielding offers from bidders including investment vehicle Borderless Services Inc, which has bid $700 million, and from a consortium led by tech investor Michael Moe, the sources said. Both of these bids would result in Forbes remaining a privately held company....


China's Electricity Derived From Thermal (coal, oil, etc) Up 21.1% Q1 2021 vs. Q1 2020

One of our sources said the growth in thermal plant capacity* (not production) in 2020 was 38.4 gigawatts. This is the equivalent of  adding a large (1,000 megawatt) coal plant every nine days. Every nine days.

Continuing that trend, coal plant capacity additions just in the first quarter of 2021 were 10,600 megawatts.

And from China Energy Portal, the Q1 totals and breakdowns: 

2021 Q1 electricity & other energy statistics

Published on: April 22, 2021

Original title: 2020年1-3月全国电力工业统计数据一览表
Links: Source document (in Chinese) (link). Same statistics for (Q1 2020) (Q1 2019) (Q1 2018) (Q1 2017) (Q1 2016) (Q1 2015) (Q1 2014) (Q1 2013) (Q1 2012) (Q1 2011) (Q1 2010) (Q1 2009).

[*:'Thermal' power generation includes coal, gas, oil, and biomass. Note wind and solar stats taken from NBS, as the CEC's stats of current edition exclude these]


See also March 18's "China Energy Stats and Policy

*"China's new coal power plant capacity in 2020 more than three times rest of world's" 

China Does Not Plan To Stop Burning Coal 

"China generated 53% of the world’s total coal-fired power in 2020"


"The Lumber and Chip Shortages Have the Same Root Cause: Underinvestment"

 From Matthew C. Klein at Barron's, April 27:

Perhaps no manufactured good is less technologically sophisticated than a 2×4, while none is more complex than the latest microprocessors. Yet the U.S. economy is currently suffering from shortages of both lumber and chips—and for similar reasons.

In both cases, today’s shortages are the legacy of past busts, which then led to years of underinvestment that has left producers unable to respond to sudden surges in demand.

Start with lumber, which is an essential material input for home building. Sawmills and other wood product manufacturers cut their production capacity by about a quarter after the housing bust. While investment has since recovered, productive capacity in March was still about 11% below the 2006 peak.


Until recently, that seemed like a sound business decision. Most lumber and other wood products are used for construction and furniture manufacturing—two industries that looked to be permanently smaller after the mortgage debt bubble popped. The number of single-family housing starts from 2017 to 2019 was about half what it was from 2003 to 2005. Despite the capacity cuts, the Federal Reserve estimates that sawmills and other wood product manufacturers were operating at about 78% of capacity in the years immediately preceding the pandemic, compared with 79% during the peak of the housing bubble. 

The problem—for both home builders and home buyers—is that the construction industry’s lost decade-plus ended so suddenly. Since July, Americans have bought about 79,000 new single-family homes each month, up roughly 50% from the recent pre-pandemic average—and the pace of purchases seems to be accelerating.

Even during the best of circumstances, builders would have struggled to meet that surge in demand, because construction takes time. That’s why the number of completed new homes available for sale has plunged to its lowest level ever. Builders have only been able to prevent overall inventory from collapsing by selling homes where construction hasn’t yet started....


REVIEW ESSAY Trade Wars Are Class Wars by Matthew C. Klein and Michael Pettis
Or last year's Barron's article that signaled a shift from his usual focus on the Federal Reserve:
Barron's Matthew C Klein Is Monitoring Inflation in Paper Towels and Cleaning Supplies

And dozens of visits with Mr. Klein during his time at FT Alphaville:
Questions Americans Are Asking: What Size Are Matthew Klein's Shoes?

Investment Banks As Marxist Paradise
I think I could learn to like this young Matthew Klein fellow....

Ooh, ooh: Matthew Klein on New York Fed Head Calling For More Cashout Refi

Expanding on and contextualizing Monday's "New York Fed Chief Dudley Has An Idea — Homeowners Should Tap Into Equity".
In Which FT Alphaville's Matthew Klein Flexes His Clickbait Muscles

Aaarrrggghhh: I Can't Get Matthew Klein's Song Out Of My Head
Leaving the office after posting "Pray For FT Alphaville's Matthew Klein" I found myself humming Jingle Bells à la Klein:
Rolling down the curve
With my Eurodollar strips
Making tons of money
‘til the Fed hikes 50 bps!
"The long history of dodgy art 'investing'"
We had two other art posts in the queue but this one is better than those.
Matthew Klein writing at FT Alphaville:...

 See also: 

The FT's Jamie Powell and Barron's Matthew Klein Both Do Cameos at Upfina: "ESG: Robots > Humans"
Ha! I'm beginning to think of the FT Alphaville peeps, current and former, as sort of like the Trilateral commission.
Or maybe the Illuminati.
Strategically embedded around the world to spread the doctrine of Alphavilleism.
And many more. Use the search blog box if interested.

Chartology: Crude Oil

Over the years I've mentioned one of my pet peeves with technical analysts* is their habit of applying the general principles to extremely long time periods. A trendline of Treasury yields going back to 1982 has no predictive power. The only reason this stuff works at all is because the charts are just graphic representations of what people did, and in the case of the "yields are breaking above the 30-year trend" observations, who cares? Chart memory/price memory is people memory.

The people who ran those trades in the 'eighties are dead. Or at minimum retired. Well, most of them.

On the other hand this chart from Kimble Charting Solutions may have it just right on one of the lines, in this case the support/resistance highlighted in pink:

Commodities prices have risen rather sharply over the past 12-18 months, adding to worries of pricing pressure and inflation.

As you can see in the chart above, businesses are taking note. The word “inflation” is being mentioned at a record rate by S&P 500 companies on earnings calls.

Although there are several inputs that effect consumer prices and inflation, perhaps one major indicator is worth watching right now: Crude Oil..... 


*Two others are doing analysis of non-tradeables such as ratios: "The tuna/rhodium ratio bounced as we foresaw, right at the 38.2% Fibonacci  retracement level"; and the Elliot-Wave Theorists propensity for seeing multiple trajectories from the same data meaning their forecasts are non-falsifiable so they are never wrong. Just give me your best guess and we'll see how it works out, scaling in if there seems to be any of what the computer modelers call "skill".

Because human beings are such great pattern recognizing animals, it's what we do, you have to be constantly on guard against seeing patterns that aren't even there.

U.S. Drought Monitor: Spreading Into Agricultural Areas

 When the desert is in drought I remonstrate Phoenix and Las Vegas for having allowed population growth far beyond the dry times carrying capacity. When California is in drought I trot out the little chart that shows the historical prevalence of drought—last seen in April 19's "US West prepares for possible 1st water shortage declaration":

Some of the Western megadroughts have been hundreds of years long. As the San Jose Mercury-News depicted it in 2015:

—San Jose Mercury-News "California drought: Past dry periods have lasted more than 200 years, scientists say"

That little red blip at the far right side of the timeline is the current drought.
You could make a reasonable argument that for the last 150 years Californians have been living in a fool's paradise. 

But when the drought spreads to North Dakota and threatens the world's best pasta wheat, durum, of which 80% of the U.S. crop is grown in the state, Well if you can imagine the Great Bucatini Shortage of 2020 spreading to all 600 types and shapes, you know my anxiety.

First up the current map, from the University of Nebraska - Lincoln, followed by the map from eight weeks (rather than our usual four) prior:

 And March 2, 2021:

Drought Monitor for conus

The drought summary diagnostic discussion for the area:  

High Plains

There were patches of 0.5-1.0 inch of precipitation in southeast Kansas, the Dakotas, Wyoming, Colorado, and the western half of Montana this week. But most of the region was dry, with less than 0.25 inch of precipitation falling. With improving conditions in the short-term (last 1-6 months), D0-D2 were pulled back in parts of South Dakota and northeastern Wyoming. But D4 expanded in northwest Colorado, and D3 expanded in eastern North Dakota where this week was dry and 6-9-month SPI are D3-D4, deeper soils are bone dry, streams are low, and stock ponds are dry or almost empty....

....MUCH MORE (all areas and national)

Wednesday, April 28, 2021

"Deep-sea mining robot lost on cobalt-rich floor of Pacific"

It's not lost, they just can't bring it up at the moment.

Via, April 28:

A deep-sea mining robot on test mission to bring up rocks rich in cobalt and nickel from the floor of the Pacific Ocean has malfunctioned.

Controversial plans to mine the ocean floor face a key test this year when a United Nations body unveils rules that could spur the exploitation of hundreds of billions of dollars of battery metals. Environmentalists say that would endanger fragile marine ecosystems, while the industry argues that extracting metals needed for the green-energy transition would cause less damage than terrestrial mining.

Global Sea Mineral Resources, a unit of Belgium’s DEME Group, brought up its first minerals from the ocean floor on April 20. It’s one of the companies, including DeepGreen Metals Inc., Lockheed Martin Corp. and China Minmetals Corp., spearheading moves to exploit seabed metals needed by electric vehicles....


Wannabe Seabed Miner DeepGreen Has Entered Into An Agreement To Come Public Via SPAC (SOAC)

"France warns of 'reprisals' over Brexit fishing deal"

Huh. My first thought was to check the Bayeux Tapestry Museum to see if there are any analogs.

And, as a first pass guess, it looks like a no. Halley's comet isn't due until 2061 so the current reprisals probably won't be a re-enactment of 1066.*

From PoAndPo Agrifish, April 27:

France on Tuesday threatened "reprisals" against Britain unless a post-Brexit deal on fishing rights is implemented, the latest sign of cross-Channel tensions over the highly sensitive sector.

French fishermen say they are being prevented from operating in British waters because of difficulties in obtaining licenses.

They began a protest movement last week by blockading trucks bringing fish from Britain to France, saying that only 22 boats out of 120 from the Boulogne-sur-Mer port had obtained a licence for British waters.

"We are asking for the whole deal, nothing but the deal, and for as long as it has not been implemented... we will carry out reprisals in other sectors if it is necessary," French Europe Minister Clement Beaune told the BFM Business channel on Tuesday....


*On the tapestry the comet flies across the top as the people watch and point:
(segment 32 on the digitized panorama) 

But no such portent for another forty years. So what will the Normans French do?

Shipping: "Maersk Lifts Outlook on Surging Demand"

 From Maritime Logistics Professional, April 27:

Shipping group Maersk lifted its full-year forecasts after a strong first-quarter performance driven by high demand which has led to supply bottlenecks and higher freight rates.

Shares in Maersk rose 5% in early trading.

Maersk raised its outlook for underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) to $13-15 billion from $8.5-10.5 billion.

It expects underlying EBIT of $9-11 billion, up from 4.3-6.3 billion previously, Maersk said in a statement released late Monday....


Mining Major Vale Reports Record Q1 As Iron Ore, Copper Prices Soar in Tight Market

 Via Hellenic Shipping News, April 29:

Brazilian miner Vale, one of the world’s largest iron ore producers and a major copper producer, reported record first quarter financial results late April 26 as prices for these commodities soared, partly due to supply-side issues.

The company said it continues to stabilize output following dam disasters that resulted in lower iron ore production in recent years and the continuing impact of COVID-19 on its operations, now seen reducing copper output.

In Q1, Vale reported a pro forma adjusted EBITDA of $8.47 billion, a record for a first quarter, compared with EBITDA of $3.04 billion in Q1 2020, with seasonally lower volumes partially offset by higher prices. Q1 iron ore reference prices rose to $166.90/mt from $89/mt a year earlier. The performance was mainly pushed by the ferrous metals and base metals divisions.

Second quarter EBITDA is likely to rise on continuing increases in both iron ore and copper during April, particularly as Vale has now paid off a major part of expenses related to its fatal 2019 Brumadinho tailings dam accident, executives said on an April 27 call with analysts.

S&P Global Platts assessed the 62% Fe Iron Ore Index at $193.85/dry mt CFR North China on April 27, up $2.40/dmt day on day to its highest ever, reflecting surging demand for steel amid a COVID-19 recovery stimulus, which has led to a flurry of new construction projects. The previous record was registered on Feb. 15, 2011, at $193/dmt.

The LME cash copper price stood at $9,849/mt April 27, close to a 10-year high amid concerns of production shortfalls in Latin America as demand grows from the electrification sectors.

Vale’s net income rose to $5.55 billion, an increase of $4.81 billion from fourth-quarter 2020, when the company registered payment of a chunk of Brumadinho-related expenses and asset impairment charges on its nickel and coal businesses....


In The Year 2020 The Chinese Navy Surpassed The U.S. Navy In Number Of Ships

It's probably nothing.

Or at least that's what The Diplomat seems to be saying:

April 7, 2021
Yes, China Has the World’s Largest Navy. That Matters Less Than You Might Think.
China’s fleet relies disproportionately on smaller classes of ships – and U.S. capabilities are bolstered by its allies’ navies.

Since the release of the Department of Defense’s “2020 China Military Power Report” this past September, much has been made of China’s securing the title of the “world’s largest navy.” Indeed, the United States Office of Naval Intelligence has confirmed that the People’s Liberation Army Navy (PLAN) has surpassed the United States Navy in total battle force ships, approximately 360 to 297, with future projections expecting the gap to grow. By 2025, the PLAN is predicted to field as many as 400 vessels whereas the United States plans only to field 355. Quantitative discussions of this sort have fostered an increasing level of hysteria in the U.S. media and even parts of its foreign policy and defense establishments.

What such discussions fundamentally misunderstand about the two fleets, however, are the major differences in force structure as well as the incomparable regional ally differential maintained by the United States. In fact, most discussions about the size of the PLAN inflate its surface warship fleet by including either small coastal patrol ships or its amphibious transports and landing ships.

In order of descending size, the PLAN’s surface force is comprised of two aircraft carriers, one cruiser, 32 destroyers, 49 frigates, 37 corvettes, and 86 missile-armed coastal patrol ships. In addition, China’s submarine fleet includes 46 diesel-powered attack submarines, six nuclear-powered attack submarines, and four ballistic missile submarines. This is further supplemented by the China Coast Guard, which fields roughly 255 coastal patrol ships. In sum, China has a surface warship fleet of 121 vessels, a submarine fleet of 56 platforms, and another 341 coastal patrol ships.

For its part the United States Navy boasts a surface fleet of 11 aircraft carriers, 92 cruisers and destroyers, and 59 small surface combatants and combat logistics ships. Its submarine fleet is comprised of 50 attack submarines, 14 ballistic missile submarines, and four cruise missile submarines. As such, the United States maintains a surface fleet of about 162 vessels, depending on the inclusion of its small combatants and combat logistics ships, and a submarine fleet of 68 platforms....


Yet, despite the reassuring words, China just keeps building and building. From DefenseNews, April 26:

China simultaneously commissions three warships on Navy anniversary

MELBOURNE, Australia — China commissioned 60,000 tons worth of major vessels earlier this month, officially putting into service a new nuclear-powered ballistic missile submarine, a guided-missile cruiser and an amphibious helicopter carrier on the 72nd anniversary of its Navy.

The unprecedented triple commissioning was carried out in a ceremony held at the Yulin naval complex near the city of Sanya on the southern Chinese island of Hainan. Yulin is the main naval base of the South Sea Fleet of the People’s Liberation Army Navy. The fleet’s area of responsibility lies in the waters of the nearby South China Sea.

Chinese President Xi Jinping attended the ceremony, which saw the Type 075 (Yushen-class) amphibious helicopter carrier Hainan, the Type 055 (Renhai-class) guided-missile cruiser Dalian and the Type 094 (Jin-class) nuclear-powered ballistic missile submarine Changzheng-18 join the PLAN.

The Hainan is the lead ship of a new class of amphibious assault ships being built for the PLAN as it continues to boost its naval capabilities. The helicopter carriers, which are estimated to displace between 35,000 to 40,000 tons, have an uninterrupted flight deck with seven deck spots for large transport helicopter operations, and a well dock for launching conventional or air-cushioned landing craft for amphibious landing operations...


Now I don't care who you are, a 35,000 ton helicopter carrier is a big boat with major capabilities. 

Here's the Japanese 27,000 tonne helicopter carrier Izumo:

It would take very little in the way of modifications to haul Short Take Off/Vertical Landing F-35 fighters. Ditto for the larger Chinese helicopter carriers.

And even if they stick to the smaller ships, under the right captain the smaller boats can raise havoc.

In last December's "Meanwhile, in the Mediterranean: Egyptian Frigate Goes All Medieval On Turkish Frigate" our introduction was:

There's something so primitive and basic about ramming that it gets the intended rammee's attention when the position is assumed..

Granted, this wasn't as dramatic (or suicidal) as the little American destroyer escort, Samuel B. Roberts charging at the Japanese armada (eleven destroyers, eight cruisers, and four battleships) at the Battle of Samar but again, it is just so basic that the Turks couldn't help but notice when the Egyptians turned toward them.

Ever since I first heard of the charge of the tiny (1,350 tons) boat at the 23 Japanese ships I've wondered what the Japanese were thinking as the Roberts came at them. 

The Samuel B. Roberts blew the stern off one Japanese heavy cruiser (it later sank) and set another heavy cruiser ablaze before one of the battleships was able to react and shell the Roberts forcing the order to abandon ship.

The Giant Easter Island Heads Have Giant Bodies

 In addition to the snazzy hats:

Following up on April 23's "What we know—and still don’t know—about Easter Island"

Via Artifact Hub:

One of the more observant Twitter commenters asks if the body on the right is wearing a thong, and, now that you mention it...

And from the snazzy hats link, Ineffable Island:

Analysis of giant stone hats found on Rapa Nui, Chile (Easter Island) provides evidence contrary to the widely held belief that the ancient civilization had a warrior culture. According to a new study conducted by a team of researchers, including a professor at Binghamton University, State University of New York, these stone hats suggest that the people of Rapa Nui were part of a supportive and inclusive community.

Carl Lipo, anthropology professor and director of the Environmental Studies Program at Binghamton University, and a team of researchers studied the monumental statues (moai) on Rapa Nui, and the previously unacknowledged giant stone hats (pukao) that were placed atop them. Pukao are large, cylindrical stones made from a volcanic rock known as 'red scoria.' Weighing multiple tons, they were placed on the heads of the moai during prehistoric times, consistent with the Polynesian traditions of honoring their ancestors.

So that's where it stands at the moment. They weren't a warrior society but instead were a supportive, inclusive haberdasher community who wore thongs. Or dressed the statues in thongs. And hats..

Baidu, Geely Joint Venture Unit to Invest $7.7b to Enter China’s Electric Vehicle Market

 Tesla was the number one EV seller in China last year. This year the competition is ramping up.

Via TechInAsia, April 24:

“Jidu Auto, a joint venture between Chinese giants Baidu and Zhejiang Geely Holding Group, aims to spend 50 billion yuan (US$7.7 billion) over the next five years on developing smart-car technology,” Bloomberg reported.
  • As part of this plan, Jidu is looking to onboard between 2,500 and 3,000 staff, of which 500 will be software experts, over the next two to three years.
  • The branding for the EV newcomer is set to be revealed in the third quarter of this year.
  • The announcement comes after Xiaomi said it plans to invest US$10 billion to enter China’s growing EV space.
  • Jidu’s CEO Xia Yiping previously said the company is aiming to launch its first model within three years, with new models slated to be introduced every year or 18 months.

TechInAsia homepage

"Dollar Dives After Dovish Fed Statement, Bonds Shrug"

Lifted in toto from ZeroHedge:

Treasury yields are dramatically unchanged after The Fed's latest statement which recognized economic improvements but shrugged off inflation entirely leaving the outlook as dovish as ever.

The dollar is reflecting that 'dovishness'...

But we note the short-end is hawkishly pricing in a 90-plus percent chance of a rate-hike by the end of 2022...

Which is well ahead of The Fed's 2024 forecast for its next move.

I like "dramatically unchanged"

Also arrows on charts (for the directionally challenged)

Elon Musk and Tesla Have A Big Problem With China (TSLA)

 When she isn't promoting Poles and the Polish brand, see here, a Mr. Smithski:

I'm guessing third-generation North London. 

Or in today's Further Reading post where she notes: "Obituary for an internet security saviour.", That would be Daniel Kaminsky, a very important person in the history of finding and solving a very big problem. And someone whose surname is also the basis of Izabella's feminine adjectival surname (I looked it up).

—when she isn't promoting all things Polish, she also has a pretty good nose for news. Which may explain the Financial Times editorship.

All of which brings us to Mr. Musk's potentially insurmountable problem, also commended to our attention via today's Further Reading post

From the Chinese Communist Party's outwardly directed mouthpiece, Global Times, April 27:

Tesla 'brakes' in China over image crisis, despite record Q1 earnings

While releasing record first-quarter earnings on Monday (US time), Tesla CEO Elon Musk avoided any specific mention of the Chinese market, in an apparent attempt to brush its public relations crisis in China under the carpet - a notable sharp contrast to his previous high-profile emphasis on the Chinese market.

The revenue generated in China was not made public until Wednesday, which shows that China revenue increased by 238.1 percent in the first quarter amid customer's quality complaints. With revenue totaling $3.043 billion, China is now Tesla's second biggest market, taking up about one third of the brand's total revenue in the first quarter. 

In comparison, the US, Tesla's current biggest market, saw its revenue totaling $4.424 billion in the first quarter, accounting for 42.58 percent in Tesla's total revenue, down from 46.23 percent in the same period last year. 

That reflected a delicate and sensitive time for the US-based automaker, as it faces a reputational challenge in one of its most crucial markets over suspected quality issues of its cars and a widely criticized public relations strategy. 

Tesla is still betting big on the Chinese market. But its sales in China are doomed to experience a sharp fall in the second quarter and its global sales could also be affected, analysts warned. 

In the first quarter, total revenues rose 74 percent year-on-year to $10.39 billion. Tesla also set records for production and deliveries.

During the earnings release, Tesla said that it expects its Shanghai Gigafactory "will continue to increase quarterly production through the year."

Over 90 percent of the components are now sourced domestically in China, which cuts costs and improves production efficiencies, Tesla said, adding that its exports to Europe and the Asia-Pacific region are progressing as planned.

 "It is undeniable that Tesla has widespread recognition in the Chinese market, especially in first-tier cities. The company's fans are buying into its luxurious brand image and avant-garde intelligent system," independent car analyst Feng Shiming told the Global Times on Tuesday. 

But that image is in serious trouble and the recent protest at the auto show was a watershed, analysts said, with one comparing its impact to "braking a speeding car." ....


Keeping in mind the fact Global Times, like the inwardly directed Xinhua, prints nothing that isn't approved by the ruling CCP, a message is being sent.

And either Tesla and Musk are being set up for a shakedown, money, IP, whatever, or the government has gotten as much technical information out of Tesla as they think they need and are getting ready to toss the company aside. 

Combine the GT story with this video from their Twitter feed, April 19:

And a series of headlines that CNBC has reported:
January 20, 2021
Tesla Model 3 reportedly explodes in Shanghai parking garage
March 19, 2021
Chinese military reportedly restricts use of Tesla cars among personnel
April 22, 2021
Tesla branded as ‘arrogant’ in China as pressure mounts on the electric car maker

And it sure looks like Tesla is being set up.
And that we are a long way from August 1, 2020: "Elon Musk says ‘China rocks’"

TSLA $697.00 down $7.74. It was up a buck-fifty when I started typing, sorry about the 30 WPM.

Capital Markets: "Biden and Powell are Center Stage"

 From Marc to Market:

Overview: It appears that the backing up of US yields is giving the dollar a better tone and challenging the Eurosystem, which has stepped up its bond purchases. The US 10-year yield is around 1.65%, roughly a two-week high and back above the 20-day moving average. European yields are mostly 2-4 bp higher, but benchmark UK yield is up six basis points about 0.84%, which, if sustained, would be the highest close this month. For its part, the greenback is firm against all the majors, but to be sure, the gains are modest. After falling each day last week against the yen, it is posting gains for the third consecutive session. The dollar traded above JPY109 for the first time since April 14. The euro made a marginal new low for the week near $1.2055 but has steadied in the European morning. Soft inflation data weighed on the Australian dollar, but the other dollar-bloc currencies and Scandis are sporting only minor losses. Emerging market currencies are mixed, though of note the Indian rupee is recovering, and its equity markets advanced the most in the Asia Pacific region today. The JP Morgan Emerging Market Currency Index is little changed. The rising yield has sapped gold prices. After rejecting the $1800-level last week, the yellow metal was sold to almost $1766 today, a seven-day low. OPEC+ decision to go forward with returning some output it has cut next month, despite emergencies in Japan, the lockdown in India, and restrictions in parts of Europe, coupled with the build that API reported (which would be the largest in several weeks), leaves June WTI in roughly a 30-cent range on either side of $63.

Asia Pacific
Japan retail sales rose 1.2% in March.
That was twice the median forecast in the Bloomberg survey. Despite a reduction in hours, shops were open, consumers appeared resilient. In turn, that may encourage economists to shave forecasts that saw the economy contracting by 3.9% in Q1. Still, the real challenge is here in Q2. The third formal emergency for several large population centers began this past weekend and runs through May 11. However, recall that the first two emergency declarations were initially extended.

Australia's Q1 inflation undershot expectations. The quarter-over-quarter increase of 0.6% missed the 0.9% median forecast, which anticipated a steady pace from Q4 20. The underlying measures were softer, and the trimmed mean rose 0.3% for a record low 1.1% year-over-year. If it weren't for energy and administrative prices, inflation would have been even weaker. However, we are reluctant to read too much into today's report for implications for monetary policy. Recall that in Q2 20, Australia's CPI fell by 1.9%. This will drop out of the year-over-year calculations (base effect). The beginning of the exit for QE and yield curve control remains possible in Q4....


Tuesday, April 27, 2021

"This startup says its new laser-armed weeding robot is already sold out for 2021"

Nyuh, uh, uh. Fool me once.

Oh it was looking like the future I was promised back in July 2019:

"Remote-controlled Salmon Farms to Operate Off Norway by 2020"
"And then Mr. Poisonnier, the robots massage the salmon..."

And it just got better and better:
Also at IEEE Spectrum:
Lice-Hunting Underwater Drone Protects Salmon With Laser

Sadly, The Fish Site reports:
Lasers For Shooting Pests Off Salmon Don't Work As Well As One Might Think

I think we'll just wait and see.

From AgFunder News: 

Autonomous robotics company Carbon Robotics today debuted its third-generation weeding robot which combines AI and laser technology to take care of one of farmers’ least-favorite jobs.

“After meeting with a bunch of farmers and talking about their costs and biggest struggles with automation, weed control really kept popping up,” the startup’s founder and CEO Paul Mikesell tells AFN.

“So, we built an autonomous robot that drives itself and uses computer vision to kill weeds with a really high-powered laser.”

A single robot can weed up to 16 acres per day, replacing several hand-weeding crews, according to the Seattle-based startup. Each one weighs about 10,000 pounds and is the size of a medium tractor, using a hydraulic diesel system for power.

The bots are armed with eight 150-watt carbon dioxide lasers that are capable of cutting metal. They rely on computer vision tech to identify weeds and distinguish them from the valuable crops farmers are aiming to protect.....


Jonathan Ruffer: Quarterly Investment Review, April 2021

 One of the sharpest people in investment management.

First a reprise of December's "Izabella Kaminska: "2020: The year bitcoin went institutional"":

Bitcoin is on a tear. And this time, the hyper valuations might stick.

On December 11, a prominent but very private financial newsletter author noted to clients that while he had never previously written about bitcoin, it was correct to say that institutional capital had now started to arrive in scale and that it would be churlish to pick a fight with it. Demand for bitcoin would now outstrip supply. 

Bitcoin, he observed, would become an excellent metaphor for risk appetite in 2021 as a result. 

Less than a week later, Coindesk confirmed that UK-based asset manager Ruffer had accumulated some £550m of bitcoin since November, representing some 2.7 per cent of the firm’s AUM. Ruffer’s move is now being widely interpreted as the beginning of a major portfolio diversification trend into bitcoin. It seems institutional money can no longer afford to ignore it. And bitcoiners are understandably overjoyed....


On the day that was posted, December 18, bitcoin traded at $23,138.89 (4pm Eastern)
(it had begun the month of November 2020 at $13,803.69)

And our outro from her piece:

Jonathan Ruffer is justifiably famous for some high kurtosis (fat tail/black swan) VIX trades that ZeroHedge was tracking.

I like Ruffer's quarterly Investment Review but I have a serious problem when I read it.

I start to sing. This song:

"I like… fat… tails and I cannot lie, You vol sellers can’t deny..." 

From Ruffer LLP, April 12:

In lockdown, I have been watching the blockbuster Deutschland 89. There’s a moment in the hours before the fall of the Berlin Wall when the top-dog commissar considers whether to shoot himself – but a little piece of hemp consoles him with the thought that times of change are times of opportunity, times that bring up new winners.

I take it pretty much for granted that the forty year bull market is ending, and that it will be replaced by hard investment times. I am sure it will be a period dominated by what has come to be known as financial repression – a period when the post-tax returns from assets don’t keep pace with higher inflation. Savers will endure many years of enforced declines in the value of their wealth – in real (inflation-adjusted) terms.

It is through the eyes of the income owner I want to examine this phenomenon. Those who own assets outright can look at the ‘total return’ from their investments, indifferent to whether the money they spend (or accumulate) takes the form of income or capital. But not everyone is in the fortunate position of retaining flexibility in how they seek gains. For those with restrictions – such as the trustees of others’ assets – there is often a need to balance the competing interests of income today and capital tomorrow, regardless of which way the financial winds are blowing.

One strategy which has done well for total return has been the standard 60:40 ‘balanced’ portfolio. A 60% allocation to equities – believed always to be long-term winners – is offered protection in hard times by 40% in bonds (because in difficult conditions, bond yields come down and – crucially – the price of the bond goes up). It’s a great game, but only when inflation is falling. Ruffer’s early fortunes in the 1990s were made on this single insight – we went for 50:50, rather than 60:40 – matching War Loan (oh those days when government bonds told the truth about their past!) with a broad spread of equities. Back then, we had the field to ourselves, as few believed inflation could be comprehensively beaten.

A quarter century on, a bond yield may drop, in a matter of days or weeks, from, say, 0.5% to 0.25%. This sounds, in common sense, to be a drop from ‘very little’ to ‘very little indeed’ – but the arithmetic of the bond markets is mechanical, and that drop in yields moves the capital dial a fair bit. Yet this is arithmetic that works both ways. It makes today’s fixed interest security not a safe pairing for equities, but simply the opposite sort of danger. Now that inflation is about to go up, we enter a world in which bond and equity prices look poised to fall in tandem.

This review is the outcome of the struggle to understand the difference between income and capital, in a world where today’s true things may be fleeting, but where tomorrow’s true things will ineluctably become market truth....


If interested here is another of Ms. Kaminska's pieces on the change in bitcoin, this time dated February 19, 2021:
Seeing The Opportunity In The Financialization Of Bitcoin