Sunday, May 29, 2022

More On The Problems Exposed By The Feds Reverse Repo Facility

Following on "This Is Ridiculous: The Fed's Reverse Repo Facility Has Topped $2 Trillion Dollars" is an excerpt from one of the most interesting links of the past couple years, first posted in October 2021:

"The Central Bankers’ Long Covid: An Incurable Condition"

....In the meantime, ordinary people are caught in a suffocating double bind. If credit needs to be made available to businesses, Central Banks must keep a lid on inflation, which they can do only… by draining credit! Runaway inflation can be avoided only by containing the disruptive effects of excessive money creation; that is, by bringing work-based societies to their knees. Most of us end up squashed between price inflation of essential goods, and deflationary liquidity drainage via loss of income and erosion of savings. And in a stagnant economy with inflation off the chart, each suppressed business transaction is channeled into financial assets.

A tool preventing liquidity from reaching the real economy is the Federal Reserve’s Overnight Reverse Repo facility (RRP). While continuing to flood financial markets with freshly printed money, thanks to reverse repos the Fed mops up any excess of that very cash it pumps into Wall Street. Effectively, a zero-sum game of give and take: at night, financial operators deposit their excess liquidity with the Federal Reserve, which delivers as collateral the same Treasuries and Mortgage-Backed Securities it drains from the market during the day as part of its QE purchases. In August 2021, the Fed’s usage of RRP topped $1 trillion, which led the Federal Open Market Committee (FOMC) to double the RRP limit to $160 billion, starting from 23 September 2021.

Here, then, is the elephant in the room: how will the Fed’s taper square with reverse repos of this astronomical magnitude? Is the much-anticipated reduction of monetary stimulus even possible with a global financial bubble fuelled by zero-interest-rate leveraging and structural borrowing? But, at the same time, how can central bankers continue to expand their balance sheet, when the double whammy of stagnation and rising inflation (stagflation) is just around the corner?....

That was seven months ago.

Here's the rest of the story.

This Is Ridiculous: The Fed's Reverse Repo Facility Has Topped $2 Trillion Dollars

From Bloomberg via Yahoo Finance, May 23:

Fed Facility Tops $2 Trillion as Investors Scramble to Park Cash

The amount of money parked at a major Federal Reserve facility climbed to yet another all-time high, surpassing the $2 trillion milestone for the first time, as investors struggled to find places to invest their cash in the short term.

Money-market funds continue piling into the Fed’s overnight reverse repurchase agreement facility, even as the monetary authority raises interest rates and plans to start unwinding its mammoth balance sheet next month, moves intended to tighten financial conditions and drain the amount of excess liquidity in the financial system. Yet there’s still an imbalance in the Treasury-bill market that as of late has been exacerbated by robust tax collections in the US, and as a result the so-called RRP facility remains a haven for money markets with very few investment options.

Even Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, said at the firm’s investor day Monday that the Fed almost has to do so-called quantitative tightening since there is too much liquidity out there.

On Monday, 94 participants placed a total of $2.045 trillion at the RRP facility, in which counterparties can put cash with the central bank. The previous record, set on Friday, was $1.988 trillion.

“Treasury is still decreasing bill supply and that seems to be driving the market firmly into the arms of the RRP facility as the only place of refuge,” said Gennadiy Goldberg, a senior US interest rates strategist at TD Securities. “The big implication is that with RRP usage remaining high, QT will drain reserves from the system rather quickly at the start of runoff.”....


The financial system long ago crossed the line into outright collective fantasy and the problem with fantasies of this magnitude is that should reality intrude, the shock is going to be so jarring that the political repercussions will be as dystopian as anything that can be imagined.

Saturday, May 28, 2022

"Strippers say a recession is guaranteed because the strip clubs are suddenly empty "

From The Independent's Indy100:

Some strippers on Twitter said they think recession is guaranteed - because the strip clubs are suddenly empty.

On Thursday (9 May), a woman who goes by @botticellibimbo on the platform said the following about the clubs: "The strip club is sadly a leading indicator, and I can promise y'all we r in a recession, lmao."

"Me getting stock alerts just to decide whether it's worth it to go to work," she further wrote in a subsequent tweet....



The Party That Never Ends: "Fyre Festival’s Billy McFarland mulls over ways to pay $26 million to victims while in halfway house"

He was given early release from prison due to the covid pandemic. Because, of course.

From the New York Post:

Billy McFarland, the fraudster behind the ill-fated Fyre Festival, is out of prison but he’s far from home free in his halfway house.

McFarland was sprung from prison this spring after serving less than four years of a six-year sentence in connection with his 2017 Caribbean retreat fiasco....


Much of the history has been lost although fragments of tweets from the well-to-do young Blink-182 fans survive:

Many people mentioned the feral dogs, either silently eyeing the festival-goers or howling in the moonlight.

This was also nice:

And afterwards:
Scam the Scammer: "Wannabe socialite swindler may have bilked Fyre Festival fraudster"

and the gourmet cuisine memorialized in "With The Second Anniversary Of Fyre Festival Fast Approaching: The Lego Fyre Festival Set".

Or "Hulu and Netflix could face subpoenas over their dueling Fyre Festival documentaries"
Because of course.

Maybe "Fyre Festival Lives On In The Hearts Of Those Who Believe: British Adventurers Edition"

We had seven or eight posts teed up in the queue but many of the tweets were deleted, especially from the 400 or so influencers ( Ja Rule et al.) who touted the deal.

Maybe they could chip in on the $26 mil.


Via Sal the Agorist:

Sal doesn't mention that Mrs. Gomez was actually handcuffed by the police and had to figure  out a way out of the cuffs before she could break away, scale the fence, find the kids and escort them to safety.

Sal the Agorist Twitter home (caution, independent thinker)

"Babble hypothesis shows key factor to becoming a leader"

It is with some reluctance that I share this knowledge.

From Big Think:

Research shows that those who spend more time speaking tend to emerge as the leaders of groups, regardless of their intelligence

  • A new study proposes the "babble hypothesis" of becoming a group leader.
  • Researchers show that intelligence is not the most important factor in leadership.
  • Those who talk the most tend to emerge as group leaders. 

If you want to become a leader, start yammering. It doesn’t even necessarily matter what you say. New research shows that groups without a leader can find one if somebody starts talking a lot.

This phenomenon, described by the “babble hypothesis” of leadership, depends neither on group member intelligence nor personality. Leaders emerge based on the quantity of speaking, not quality.

Researcher Neil G. MacLaren, lead author of the study published in The Leadership Quarterly, believes his team’s work may improve how groups are organized and how individuals within them are trained and evaluated.

“It turns out that early attempts to assess leadership quality were found to be highly confounded with a simple quantity: the amount of time that group members spoke during a discussion,” shared MacLaren, who is a research fellow at Binghamton University.

While we tend to think of leaders as people who share important ideas, leadership may boil down to whoever “babbles” the most. Understanding the connection between how much people speak and how they become perceived as leaders is key to growing our knowledge of group dynamics.

The power of babble...


Hangin' With Klaus: Izabella Kaminska Is Interviewed For A Job At The WEF

From The Blind Spot (BANNED in Canada!), May 24:

That time I met Klaus Schwab in my gym kit

As the rescheduled “summer” Davos gets going this week, what everybody outside of the financial commentariat space wants to know is: is the World Economic Forum (WEF) really an elitist conspiracy trying to take over the world or more like an out-of-touch modern-day Versailles with delusions of grandeur?

And does Davos even matter anymore? Or should we ignore it?

To answer those questions, I thought I would recount a few personal stories that possibly offer some insight into how “the Forum” (as they prefer to be called) operates.

Because the truth, I think, is that both sides of the Davos perception spectrum — from elite conspiracy to unquestionable force for good — are equally worthy of critique and defence.

The truth is out there, as they say. But as is often the case, it is nuanced.

The biggest part of that truth I suspect is that both the gathering and the respective backlash are something of a naturally occurring phenomena — a force of nature that if piqued would always re-generate in some other form elsewhere.

This is down to the way the Davos system has evolved over time, and the way it has generated FOMO on the part of non-attendees, especially within the media.

For me the best Davos would be the one where Klaus Schwab interviewed Joe Rogan for three hours. I’d pay to watch that. Wouldn’t you?

The media context

I first encountered the world of Davos while working at CNBC Europe as a producer in the years before the global financial crisis.

The annual meeting was, as might be expected, a scheduling highlight for the broadcaster, with the TV crew routinely given prime position in the meeting’s media enclave. (And they continue to do so to this day.) The broadcasting formula was also a reliable win win. Bag a prominent statesman, CEO or pundit, put him in front of a beautiful snowy backdrop with Maria Bartiromo or Geoff Cutmore, and watch the magic happen.

What was there not to like?

The weirdness at the heart of the set-up occurred behind the scenes and not necessarily even in Davos.

Being chosen by your media organisation to participate as part of the Davos crew became an incredibly important form of internal career recognition. It implied you were at the top of your game. A bit like being picked to be class captain or prom queen — a clear signal to all your other peers that you were being anointed for success....


"Fertilizer Prices Drop 30% Following Demand Destruction"

Three more declines of that magnitude and we're back to 2019 prices.

From Bloomberg via Yahoo Finance, May 27:

Fertilizer prices that had hit records are now plunging as buyers reel from sticker shock, but that doesn’t mean the market squeeze is over.

The June spot price in Tampa, Florida for the nitrogen fertilizer ammonia settled at $1,000 per metric ton, a drop of 30% from May’s $1,425 per metric ton, according to Green Markets, a Bloomberg company. Even with the drop, however, prices for ammonia are still 87% higher than a year ago, and supply chain issues continue to wreak havoc on global markets.

Demand destruction is part of the decline. Places like Southeast Asia are seeing buyers unwilling to pay the record high prices for ammonia that were posted in April and May, said Green Markets analyst Alexis Maxwell. It also reflects the declining cost of ammonia production as European natural gas prices fell in the second quarter, she said....


China Hates, and May Kill, Elon Musk's Starlink Satellite Constellation

From Eurasian Times, May 26:

Tracking China’s Hypersonic Missiles – After Moscow, Beijing Threatens To Neutralize America’s ‘Greatest Wartime Asset’

Chinese military researchers are reportedly working on methods to disrupt or eliminate SpaceX’s Starlink satellites if they threaten national security.

China must acquire the capability to track, monitor, and, if required, kill all Starlink satellites in orbit around the Earth, reported SCMP, citing a study published last month.  

The study states: “A combination of soft and hard kill methods should be adopted to make some Starlink satellites lose their functions and destroy the constellation’s operating system.”

SpaceX operates the Starlink satellite constellation system. It currently employs over 2,400 low-earth orbit satellites capable of providing high-speed internet anywhere globally.

The system has been credited with providing the internet to some of the world’s most remote areas. Elon Musk, the CEO, intends to deploy as many as 30,000 satellites over the next decade.

The US Department of Defense has also inked a deal with SpaceX to use the Starlink platform for military purposes. This agreement includes creating sensors for tracking hypersonic missiles, which China already has in its arsenal.

As a result, China is concerned about the security threats that SpaceX could pose to its national security, as EurAsian Times had earlier reported.

Ren Yuanzhen, a researcher with the PLA’s Strategic Support Force’s Beijing Institute of Tracking and Telecommunications, led the study. Several renowned scientists from China’s defense industry were among the co-authors. 

The report also proposes additional monitoring capabilities that would enable China to monitor data sent between Starlink satellites, potentially enhancing Beijing’s intelligence collecting capabilities....


Friday, May 27, 2022

WaPo: "Ukrainian volunteer fighters in the east feel abandoned"

This was known six weeks ago.

It's the artillery. It either kills the Ukrainian troops or it drives them insane. Very few severely wounded by artillery.

To compensate for the Russian tactics—which are not quite WWII's Operation Bagration where the Katyusha rockets ("Stalin's Organ.") were out in front of the artillery which were lined up wheel-to-wheel to destroy anything between 2 and 20 miles—but still overwhelming, the Ukrainian soldiers are literally back to trench warfare, where all you can do is duck your head and pray that today is not your last day on earth.

It's WWI all over again. And the doctors, one of whom supplied the lack-of-severe-wounds factoid, are seeing shell shock cases like this poor bastard, just as the doctors at the Battle of the Somme did 106 years ago:

This was true six weeks ago, I wonder why the Post is publishing the story now?

From the Washington Post, May 26:

DRUZHKIVKA, Ukraine — Stuck in their trenches, the Ukrainian volunteers lived off a potato per day as Russian forces pounded them with artillery and Grad rockets on a key eastern front line. Outnumbered, untrained and clutching only light weapons, the men prayed for the barrage to end — and for their own tanks to stop targeting the Russians.  

“They [Russians] already know where we are, and when the Ukrainian tank shoots from our side it gives away our position,” said Serhi Lapko, their company commander, recalling the recent battle. “And they start firing back with everything — Grads, mortars.

“And you just pray to survive.”

Ukrainian leaders have projected and nurtured a public image of military invulnerability — of their volunteer and professional forces triumphantly standing up to the Russian onslaught. Videos of assaults on Russian tanks or positions are posted daily on social media. Artists are creating patriotic posters, billboards and T-shirts. The postal service even released stamps commemorating the sinking of a Russian warship in the Black Sea.

Ukrainian forces have succeeded in thwarting Russian efforts to seize Kyiv and Kharkiv and have scored battlefield victories in the east. But the experience of Lapko and his group of volunteers offers a rare and more realistic portrait of the conflict and Ukraine’s struggle to halt the Russian advance in parts of Donbas. Ukraine, like Russia, has provided scant information about deaths, injuries or losses of military equipment. But after three months of war, this company of 120 men is down to 54 because of deaths, injuries and desertions. 

The volunteers were civilians before Russia invaded on Feb. 24, and they never expected to be dispatched to one of the most dangerous front lines in eastern Ukraine. They quickly found themselves in the crosshairs of war, feeling abandoned by their military superiors and struggling to survive.

“Our command takes no responsibility,” Lapko said. “They only take credit for our achievements. They give us no support.”

When they could take it no longer, Lapko and his top lieutenant, Vitaliy Khrus, retreated with members of their company this week to a hotel away from the front. There, both men spoke to The Washington Post on the record, knowing they could face a court-martial and time in military prison.

“If I speak for myself, I’m not a battlefield commander,” he added. “But the guys will stand by me, and I will stand by them till the end.”

The volunteers’ battalion commander, Ihor Kisileichuk, did not respond to calls or written questions from The Post in time for publication, but he sent a terse message late Thursday saying: “Without this commander, the unit protects our land,” in an apparent reference to Lapko. A Ukrainian military spokesman declined immediate comment, saying it would take “days” to provide a response.

“War breaks people down,” said Serhiy Haidai, head of the regional war administration in Luhansk province, acknowledging many volunteers were not properly trained because Ukrainian authorities did not expect Russia to invade. But he maintained that all soldiers are taken care of: “They have enough medical supplies and food. The only thing is there are people that aren’t ready to fight.”

But Lapko and Khrus’s concerns were echoed recently by a platoon of the 115th Brigade 3rd Battalion, based nearby in the besieged city of Severodonetsk. In a video uploaded to Telegram on May 24, and confirmed as authentic by an aide to Haidai, volunteers said they will no longer fight because they lacked proper weapons, rear support and military leadership.

“We are being sent to certain death,” said a volunteer, reading from a prepared script, adding that a similar video was filmed by members of the 115th Brigade 1st Battalion. “We are not alone like this, we are many.”

Ukraine’s military rebutted the volunteers’ claims in their own video posted online, saying the “deserters” had everything they needed to fight: “They thought they came for a vacation,” one service member said. “That’s why they left their positions.”

Hours after The Post interviewed Lapko and Khrus, members of Ukraine’s military security service arrived at their hotel and detained some of their men, accusing them of desertion.

The men contend that they were the ones who were deserted.

Waiting to die
Before the invasion, Lapko was a driller of oil and gas wells. Khrus bought and sold power tools. Both lived in the western city of Uzhhorod and joined the territorial defense forces, a civilian militia that sprung up after the invasion.

Lapko, built like a wrestler, was made a company commander in the 5th Separate Rifle Battalion, in charge of 120 men. The similarly burly Khrus became a platoon commander under Lapko. All of their comrades were from western Ukraine. They were handed AK-47 rifles and given training that lasted less than a half-hour.

“We shot 30 bullets and then they said, ‘You can’t get more; too expensive,’ ” Lapko said....


Again, why now? The Washington Post and the New York Times are the Party Organs for the State Department, the CIA and the military. Someone very high up in the Establishment wants this story out there. And this story, from May 20: 

Whoa: There Appears To Be A New U.S. Plan For Ukraine

And another story that Izabella Kaminska flagged: 

Kissinger turns 99 today and unlike the much younger U.S. President is not known for randomly wandering off into stories of Corn-Pop this or hairy legs that or....

well, you know. 

From the investing point of view all I can say is to repeat the outro from May 22's Ukraine: "Italy Circulates 4-Point Peace Plan":

President Zelensky has done some bluster and bluff and Poland's President Duda wouldn't like it but if the U.S. and the rest of NATO say take the deal. Ukraine won't have much choice.

If interested see also Friday's: "Whoa: There Appears To Be A New U.S. Plan For Ukraine"

Tight stops on equity shorts and hydrocarbon longs.

OMG: Izabella Kaminska Has Become A One Woman Content Machine

Here she is at UnHerd:

Elon Musk isn’t Tony Stark — he’s Han Solo
These two loveable rogues share a fondness for money-making stunts

And here tweeting on contract law

Here at Bloomberg Opinion on the stand-offish part of the periodic table.

I'm getting dizzy.

"Glencore says bribery days are over. Now it has to prove it" (GLEN.L)

Two via First up, the headline story, May 26:

Glencore Plc has closed the “cash desks” in London and Switzerland that once dispensed money for bribes. Employees implicated in sweeping, cross-border corruption investigations are gone. New safeguards are in place, and boss Gary Nagle says it’s a “different company.”

Now he will have to prove it.

Glencore this week agreed to plead guilty to a web of bribery and price manipulation charges that stretch from Venezuela to Nigeria and Los Angeles in deals with the US, UK and Brazil. The penalties will total about $1.5 billion but there’s a longer-lasting requirement — the deal with the US Department of Justice means Glencore will spend the next three years being scrutinized by an independent monitor.

It’s a potentially seminal moment for the company founded by US fugitive Marc Rich, which has powerful trading networks in every corner of the globe and operates a sprawling suite of mines producing some of the most important commodities. Glencore’s top leadership has been overhauled in the last few years as former CEO Ivan Glasenberg and his lieutenants handed over to a younger generation, although many of the new chiefs are also longtime employees....


And a bit about the physical oil market, also May 26 (both stories from Bloomberg):

Glencore’s oil-price rigging puts spotlight back on benchmarks

Glencore Plc’s settlement with US prosecutors has cast fresh light on manipulation of an under-the-radar part of the commodities world that’s crucial for valuing physical deals and derivatives.

The raw-materials giant this week agreed to plead guilty to rigging fuel-oil assessment prices after probes into wide-ranging bribery and corruption. The process for setting the benchmarks involves price reporters polling traders in the market for bids, offers and transactions so that they can publish values on products that otherwise would remain private information.

It’s a hugely important part of the industry. Billions of dollars of physical deals are set against the daily benchmarks, which also act as a reference price for big amounts of derivatives. Yet they’re often based on a relatively small number of trades — or none at all — which can give large trading houses an incentive to manipulate physical markets to benefit their derivative positions.

Glencore admitted to conspiring to manipulate from 2011 to 2019 fuel benchmarks set by price-reporting agency S&P Global Platts, which allowed it to reduce costs and boost profits artificially....


So what's a $200+ billion revenue company going to do to get a leg up on the competition?

Carbon! If they work it right they can get paid for shutting down their coal mines. And the trading opportunities!  One of a thousand posts on carbon trading, this one from June 16, 2009:
"The whole reason for the existence of traders is to make as much money as possible, consistent with what's legal...I lived through this: if you didn't manipulate the market and manipulation was accessible to you, that's when you were yelled at."
—Former Goldman Sachs trader
New York Times, May 8, 2002

"Germany to Bring Back Coal [and oil!] Power Plants If Russia Cuts Gas"

From Bloomberg via Yahoo Finance, May 24:

Germany plans to bring back coal- and oil-fired power plants should Russia cut off natural gas shipments to Europe’s largest economy.

Economy Minister Robert Habeck will on Tuesday present an emergency decree enabling the government to bring back the facilities in case of gas shortages, according to the proposed legislation seen by Bloomberg.

Germany is resorting to desperate measures to keep the lights on and its massive industrial parks running, turning to dirty fuels even if that means a surge in carbon emissions. The nation has almost six gigawatts of facilities that are currently part of a national reserve, many of which were supposed to be closed down as part of the coal phase-out plan.

“This request for additional coal-fired power generation only occurs when there is a gas shortage, or if there is a threat of a gas shortage and the gas consumption in power generation has to be reduced,” according to the proposed law.

The decision comes even as Habeck’s Greens -- part of Chancellor Olaf Scholz’s so-called traffic light coalition -- want to bring forward to 2030. The coal-phase out was initially planned for eight years later.....


I think I see the problem. Chancellor Merkel's advisors were idiots. 

They were warned, over and over again, especially fervent were the Polish geostrategists, but nein, they go their own way.

Here's one of the warnings from 2018:

Natural Gas: "Polish PM: Nord Stream II Would Make Russia Free to act Against Ukraine, So Must Not be Built"

Someone should check in with Victoria "Fuck the EU" Nuland to see what the plan to follow-up on the 2014 regime change in Ukraine was.
Because, despite the fact their first concern is their own energy security, the Poles do have a point regarding their frenemy Ukraine, things could get a bit chaotic for Kyiv if Nord Stream 2 is completed as planned.

Maybe the Ukraine follow-up plan is mixed in the same stack as the follow-up for the "We came, we saw, he died" Libya plan.

Here are three stories on some aspects of the current state of play in Eastern European energy geopolitics....

Prescient. And that's just the intro.

"First American LNG Shipment for Ukraine Arrives at Polish Port"
Poland has been trying to warn the rest of Europe of the risks in getting too dependent on Russian gas, in particular via the Nord Stream 2 pipeline.  
And one from 2016:
New Russian Pipeline In Baltic Sea Could 'Collapse' Ukraine

I'm not sure what it is about the Poles but they seem wary of their neighbors

"Berlin, Moscow Negotiate New Trade Accord".
-Reading Eagle
Feb. 12, 1940 
There are a couple dozen more if the reader is interested in the history

"DARPA Wants a Better, Badder Caspian Sea Monster"

From IEEE Spectrum, May 19:

Arguably, the primary job of any military organization is moving enormous amounts of stuff from one place to another as quickly and efficiently as possible. Some of that stuff is weaponry, but the vast majority are things that support that weaponry—fuel, spare parts, personnel, and so on. At the moment, the U.S. military has two options when it comes to transporting large amounts of payload. Option one is boats (a sealift), which are efficient, but also slow and require ports. Option two is planes (an airlift), which are faster by a couple of orders of magnitude, but also expensive and require runways.

To solve this, the Defense Advanced Research Projects Agency (DARPA) wants to combine traditional sealift and airlift with the Liberty Lifter program, which aims to “design, build, and flight test an affordable, innovative, and disruptive seaplane” that “enables efficient theater-range transport of large payloads at speeds far exceeding existing sea lift platforms.”
DARPA is asking for a design like this to take advantage of ground effect, which occurs when an aircraft’s wing deflects air downward and proximity to the ground generates a cushioning effect due to the compression of air between the bottom of the wing and the ground. This boosts lift and lowers drag to yield a substantial overall improvement in efficiency. Ground effect works on both water and land, but you can take advantage of it for only so long on land before your aircraft runs into something. Which is why oceans are the ideal place for these aircraft—or ships, depending on your perspective.
During the late 1980s, the Soviets (and later the Russians) leveraged ground effect in the design of a handful of awesomely bizarre ships and aircraft. There’s the VVA-14, which was also an airplane, along with the vehicle shown in DARPA’s video above, the Lun-class ekranoplan, which operated until the late 1990s. The video clip really does not do this thing justice, so here’s a better picture, taken a couple of years ago:

Actually we had a better picture in 2018's "To Protect The Northern Sea Route Russia Is Bringing Back the Ekranoplan!":
The Lun-class missile carrying Ekranoplan was operating in the Caspian Sea in the late 1980s. 

A better picture because, yes, those are rocket launchers on top of the fuselage, shown in 3/4-profile.

"Roman Abramovich Faces Probe After Moving Assets to an Island in the English Channel"

From the Wall Street Journal, May 24:

Jersey has tried to remake itself as an offshore haven where rule of law runs deeper than in others
ST. HELIER, Jersey—For years authorities on this small island in the English Channel have tried to clean up its image as a tax haven for the super rich, marketing it as a well-governed offshore financial center enshrined in the rule of law.

The makeover helped draw billions of dollars in new assets to the territory from other well-known, but scandal-plagued havens like the British Virgin Islands and the Cayman Islands. Part of that migration of money: Russian oligarch Roman Abramovich, who has increasingly concentrated his wealth here. The island has offered him residency and became the home to some of his closest advisers.

Now, Jersey officials are in an awkward standoff with one of their best-known customers. Last month, they froze over $7 billion of assets they say are linked to Mr. Abramovich amid sweeping economic sanctions imposed on him and scores of other wealthy Russians by Western governments in response to Moscow’s invasion of Ukraine. Jersey officials have gone a step further: opening a wide-ranging preliminary probe into how he acquired oil companies in 1990s post-Soviet Russia, according to people familiar with the matter. The probe is also looking into whether one of his business partners helped the billionaire try to evade U.K. sanctions, according to these people.
The Jersey probe, first reported earlier Tuesday by The Wall Street Journal, is in its early stages and hasn’t reached the stage of being a formal investigation. Authorities haven’t accused anyone of wrongdoing.

Located just off the north coast of France, Jersey is a self-governing island with the British monarch as head of state. Technically called the Bailiwick of Jersey, it is a picturesque island closer to France than England, popular with day-tripping tourists and famous for its low taxes and namesake cows and potatoes.

The size of Mr. Abramovich’s assets in Jersey has surprised many, forcing the government to defend its previous courtship of the billionaire. “Right across Europe, with hindsight, different decisions would have been made,” said Ian Gorst, Jersey’s minister for external relations and financial services, sitting in an office in the capital St. Helier. “But at the time, Russian individuals and oligarchs were investing and being given residency across Europe, just as they were here.”
Jersey’s outsize financial role traces its roots back to a historical anomaly in the thirteenth century, when the island pledged allegiance to the British monarchy but was never formally incorporated into what became the U.K. That left it free to set its own rules while benefiting from privileged access to Britain, including passport-free travel.

The largely agrarian economy gravitated to finance from the 1970s, when Britons and others started parking assets here to avoid higher onshore taxes. Today, funds routed through Jersey’s 46 square miles total some $1.7 trillion in assets, according to a report by industry body Jersey Finance. The island’s financial industry now accounts for 40% of its economy....

Thursday, May 26, 2022

TIME Magazine Corrects An Earlier Report

 From TIME's Twitter feed:

Beta had no business pulling his political stunt at that press conference.

As the Mayor of that torn up little town shouted: "[Y]ou’re a sick son of a b---- that would come to a deal like this to make a political issue" 

"A 'Lost Decade' Ahead For Markets?"

A very smart analysis of expected future returns, decomposition of returns and the interplay of valuation and time frames.

From RealInvestmentAdvice, May:

Is a “lost decade” ahead for markets? We and many others have discussed a topic regarding financial market valuations and forward returns. Now, halfway into 2022, all of a sudden, the “crazy talk” of valuations seems a lot less crazy as bear markets growl.

However, it wasn’t that long ago the mainstream media discounted valuations and forward returns. For example, in December 2021, Ben Carlson recounted a presenter at a 2010-2011 conference who discussed valuations for a 60/40 allocation in the 95th percentile. Historically, that suggested investors were doomed for a low-return environment of roughly 2-3% over the next decade. As he states:

“Instead, this happened.”

“U.S. growth is up almost 20% per year. The S&P 500 is up more than 16% per year. Small caps are up almost 14% per year. REITs rose more than 11% annually. Everyone has been dancing on the grave of value stocks for years now, yet they’re up nearly 14% per year over the last decade.

A simple 60/40 portfolio of U.S. stocks and bonds is up around 11% per year over the past 10 years.”

Valuation and forward return assumptions were wrong then.

Or were they?

Over the last 120-years, valuations have consistently proved to be a strong predictor of future returns with lost decades a common occurrence. However, as we discussed previously in “Rationalizing High Valuations:”

“The mistake investors repeatedly make is dismissing the data in the short-term because there is no immediate impact on price returns. Valuations by their very nature are HORRIBLE predictors of 12-month returns. Investors avoid any investment strategy which has such a focus. In the longer term, however, valuations are strong predictors of expected returns.”

The chart below shows valuations and rolling 10-year total real returns. The obvious conclusion is that overpaying for value leads to lost decades.

However, let’s go back to Ben’s comment above. In 2009, valuations had corrected significantly, not only from the “Financial Crisis” peak but also from the preceding “” bubble. Therefore, investors should have expected forward returns on equities to be higher over the next decade....


That second chart in its various manifestations is one of the most illuminating in all of finance. 

As the old pros used to say, "Well bought is half sold."

"Ghostly 'mirror world' might be cause of cosmic controversy"

Okay, we're getting into a weird place here.

From PhysOrg, May 19:

New research suggests an unseen "mirror world" of particles that interacts with our world only via gravity that might be the key to solving a major puzzle in cosmology today—the Hubble constant problem. 

The Hubble constant is the rate of expansion of the universe today. Predictions for this rate—from cosmology's standard model—are significantly slower than the rate found by our most precise local measurements. This discrepancy is one that many cosmologists have been trying to solve by changing our current cosmological model. The challenge is to do so without ruining the agreement between standard model predictions and many other cosmological phenomena, such as the cosmic microwave background. Determining whether such a cosmological scenario exists is the question that researchers, including Francis-Yan Cyr-Racine, assistant professor in the Department of Physics and Astronomy at The University of New Mexico, Fei Ge and Lloyd Knox at the University of California, Davis have been trying to answer....


Or, as SciTech put it: 

Our Reality May Only Be Half of a Pair of Interacting Worlds

We won't even get into the cosmological constant problem (okay, just a little: theory may be off by 120 orders of magnitude) 

In other news, Beyond Meat (BYND) jumped 15.5% on news Kim Kardashian was appointed the company's Chief Taste Consultant.
To think it all started with a porno tape.

French Oil Major, Total, Puts Another $2.4 Billion Into Wind and Solar

The protesters outside the annual general meeting were apparently unaware of this when they came close to rioting or decided the new, new thing, Ukraine, justified the myopic view that writing-off the Russian portfolio investments (not operations) was the virtuous thing to do.

From the AP via ABC News:

....Protesters representing Greenpeace, Friends of the Earth and other environmental organizations denounced TotalEnergies for its huge presence in Russia as well as an oil pipeline project in Uganda and Tanzania that the protesters denounced as a “climate bomb.”

In a statement, TotalEnergies did not comment on the protest disruption or on Russia, but highlighted its progress on sustainability. It said it was on track to going carbon neutral by 2030.

TotalEnergies published in March its “principles of conduct” in Russia, which said the company would “gradually suspend its activities" there and strictly comply with European Union sanctions “no matter what the consequences on the management of its assets in Russia.”....


And from Reuters via MSN, the headline story May 25:

TotalEnergies agrees to buy 50% of U.S. renewables company Clearway

TotalEnergies said on Wednesday it has agreed to buy 50% of Clearway Energy Group, the fifth-largest renewables company in the United States, marking the French group's largest U.S renewables energy acquisition.

TotalEnergies has been branching out into the fast-growing renewables energy sector and diversifying away from hydrocarbon-centred activities in recent years.

The company said the acquisition would see it team up with Global Infrastructure Partners (GIP). As part of the deal, GIP will receive $1.6 billion in cash and an interest of 50% minus one share in the TotalEnergies subsidiary that holds its 50.6% ownership in SunPower Corporation.....


Artemis 2022 Hurricane Season Forecasts & Predictions

A snippet from the current Artemis 2022 Hurricane Season page, May 26:

.....2022 Hurricane Season Forecasts & Predictions

These 2022 hurricane season forecasts provide a range of views and forecasts for the 2022 hurricane season from leading meteorologists. The 2022 hurricane forecast table will be updated throughout the year as updates are published and storms occur. Where a forecast team has specified a range we have displayed the mid-point of that 2022 hurricane forecast. If you would like to add your forecast information please contact us.

Forecaster Named storms Hurricanes Major hurricanes ACE
NOAA 14 – 21 6 – 10 3 – 6
Colorado State University 19 9 4 160
Tropical Storm Risk 18 8 4 138
Accuweather 16 – 20 6 – 8 3 – 5
Weatherbell 18 – 22 6 – 10 2 – 4 160
UK Met Office 18 9 4 176
The Weather Company
NC State University 17 – 21 7 – 9 3 – 5 129
Artemis Average forecast
19 8 4 153
2022 Hurricane Season Actuals
1950 – 2021 long-term average
12 6 3 105
1981 – 2010 median
12 6 3 106
1991 – 2020 NOAA average
14 7 3 122
2012 – 2021 recent average
17 7 3 125








Scheduling Alert: Cooper's Hill 2022

 From SoGlos:

Gloucestershire’s Cooper’s Hill has played host to the traditional Cheese Rolling event since the 1800s, with thousands of spectators and daring competitors descending on Cooper’s Hill, determined to keep this world-famous tradition alive.

While the Cheese Rolling usually takes place on the late May bank holiday Monday each year, due to the Queen’s Platinum Jubilee, this year’s event is due to take place on Sunday 5 June 2022 instead – according to the Cooper’s Hill Cheese Roll Facebook page....


After two years of "Gloucestershire Cheese Rolling 2021 has been cancelled" and "Gloucestershire Cheese Rolling cancelled for 2020 amid ..." the pent-up anticipation is almost unbearable: The beauty, the grace, the effortless athleticism:


However, should you absentmindedly show up on Monday all is not lost. 

Cooper's Hill is #6 on the SoGlos list "20 of the most romantic places to propose in Gloucestershire" while nearby Cranham Woods is one of the "14 of the best places to walk your dog in Gloucestershire.

Ordnance Survey map

(No Context Brits home

Wednesday, May 25, 2022

"Copper market needs more than China’s covid stimulus measures"

 From Bloomberg via, May 25:

Copper prices in China have barely budged since the central bank cut interest rates and the government announced 33 measures to rescue the economy from the clutches of its Covid Zero policy.

Given the wide range of copper’s applications, from construction to white goods and renewable power, it might seem odd that such a broad response from the authorities has failed to provoke much enthusiasm among buyers. However, it may be that the bulk of the stimulus, particularly around freeing up lending, has actually been skewed to bandaging Beijing’s self-inflicted wounds in the real estate sector.

And Chinese demand for property is in the deep freeze. While lockdowns or the threat of them persists, buying a new home is probably the last thing on people’s minds....


Similar thoughts a couple weeks ago with this intro:

Copper: It Is All About China's Economy
If China ever begins tearing down the tens of millions of apartments that are sitting empty the amount of supply from copper that will be recycled is mind boggling. Barring that, the huge cutback in residential construction has taken one of the largest demand factors out of the equation and except for the run-up in price we saw immediately after Russia invaded Ukraine, when it appeared China was converting their foreign exchange holdings into just about any kind of tangible stuff that would be storable, grains, metals etc., the trend since the Shanghai lockdowns became widely publicized has been pretty much unidirectional....

4.2190 down 0.0360 (-0.85%) last.

"Extremely Tense" Beer Bottle Shortage Emerges Ahead Of Germany's Oktoberfest

This is not good news, but the connection to Oktoberfest is a bit strained.*

From ZeroHedge:

The world's largest beer festival, "Oktoberfest," situated in Munich, Germany, is four months away, and the country's energy crisis has sparked a beer bottle shortage. 

Germany is Europe's largest manufacturing hub and faces exorbitantly high energy costs, rapid inflation, and a breakdown in supply chains, pressuring energy-intensive glass manufacturers. This economic backdrop alone could unleash stagflation

Holger Eichele of the German Brewers' Federation told the German newspaper Bild the beer bottle shortage would impact small- and medium-sized breweries the hardest. He described the situation as "extremely tense" as the rising cost of production and logistics problems plague breweries. 

"If you don't have long-term contracts, you currently have to pay 80% more for new glass bottles than you did a year ago. Some breweries are threatened with idling, they may soon be without bottles," Eichele warned. 

Bild found the shortage of glass bottles is due to the soaring cost of fossil fuels, such as natural gas and diesel....

*I thought most of the beer hall and biergarten brew was on draught.
There was a similar scare in 2012: 
(It's a recipe for disaster)
From NBC's Bottom Line blog:
Beer brewers in Munich may not be able to supply enough beer for the annual Oktoberfest beer festival, local newspaper Munich TZ reported, but the problem is not a lack of the alcoholic beverage.

Instead, Heiner Müller, manager at the Paulaner and Hacker-Pschorr brewery told TZ, brewers do not have enough bottles to supply the festival. He called on drinkers to return their empties.

"Dear Munichers — bring back your crates. We need our empties,” Müller said....MORE
At Munich's Burgerbrau Keller in 1923 Herman Goering was at least able to say to the assembled putschers:
"Shut up. You've got your beer, haven't you?"
And related:
"Is the End of the German Beer Industry Near?"
From Knowledge@Wharton....

The Era of Borderless Data Is Ending


Every time data is shared it increases the risk of nefarious actors gaining access.

In fact, people, companies and governments that have information about individuals should be ring-fenced and isolated. With the servers air-gapped* so there is no direct connection to the internet. If they can't do that they aren't competent to have the data in the first place.

Too clumsy? Too onerous? Then stop the data collection.

From the New York Times, May 23:

Nations are accelerating efforts to control data produced within their perimeters, disrupting the flow of what has become a kind of digital currency.

Every time we send an email, tap an Instagram ad or swipe our credit cards, we create a piece of digital data. The information pings around the world at the speed of a click, becoming a kind of borderless currency that underpins the digital economy. Largely unregulated, the flow of bits and bytes helped fuel the rise of transnational megacompanies like Google and Amazon and reshaped global communications, commerce, entertainment and media.

Now the era of open borders for data is ending.

France, Austria, South Africa and more than 50 other countries are accelerating efforts to control the digital information produced by their citizens, government agencies and corporations. Driven by security and privacy concerns, as well as economic interests and authoritarian and nationalistic urges, governments are increasingly setting rules and standards about how data can and cannot move around the globe. The goal is to gain “digital sovereignty.” Consider that:
In Washington, the Biden administration is circulating an early draft of an executive order meant to stop rivals like China from accessing American data.

In the European Union, judges and policymakers are pushing efforts to guard information generated within the 27-nation bloc, including tougher online privacy requirements and rules for artificial intelligence.

In India, lawmakers are moving to pass a law that would limit what data can leave the nation of almost 1.4 billion people.

The number of laws, regulations and government policies that require digital information to be stored in a specific country more than doubled to 144 from 2017 to 2021, according to the Information Technology and Innovation Foundation.

While countries like China have long cordoned off their digital ecosystems, the imposition of more national rules on information flows represents a fundamental shift in the democratic world and alters how the internet has operated since it became widely commercialized in the 1990s. 

The repercussions for business operations, privacy and how law enforcement and intelligence agencies investigate crimes and run surveillance programs are far-reaching. Microsoft, Amazon and Google are offering new services to let companies store records and information within a certain territory. And the movement of data has become part of geopolitical negotiations, including a new pact for sharing information across the Atlantic that was agreed to in principle in March.

“The amount of data has become so big over the last decade that it has created pressure to bring it under sovereign control,” said Federico Fabbrini, a professor of European law at Dublin City University who edited a book on the topic and argues that data is inherently harder to regulate than physical goods.

For most people, the new restrictions are unlikely to shut down popular websites. But users might lose access to some services or features depending on where they live. Meta, Facebook’s parent company, recently said it would temporarily stop offering augmented reality filters in Texas and Illinois to avoid being sued under laws governing the use of biometric data.

The debate over restricting data echoes broader fractures in the global economy. Countries are rethinking their reliance on foreign assembly lines after supply chains sputtered in the pandemic, delaying deliveries of everything from refrigerators to F-150s. Worried that Asian computer chip producers might be vulnerable to Beijing’s influence, American and European lawmakers are pushing to build more domestic factories for the semiconductors that power thousands of products.

Shifting attitudes toward digital information are “connected to a wider trend toward economic nationalism,” said Eduardo Ustaran, a partner at Hogan Lovells, a law firm that helps companies comply with new data rules.

The core idea of “digital sovereignty” is that the digital exhaust created by a person, business or government should be stored inside the country where it originated, or at least handled in accordance with privacy and other standards set by a government. In cases where information is more sensitive, some authorities want it to be controlled by a local company, too....

*As noted in the outro from a 2021 post
Just ten years ago the neo-Luddite approach was easier than it is today when even air-gapped servers with zero connections to the web can be monitored.
We mentioned this in the introduction to 2018's "Science Academies Urge Paper Ballots for all US Elections": 
Following on the MIT Technology Review piece immediately below.

Back in the dark ages, 2010 or so, the gold standard of network security was physically isolating a computer from any other and from intranets and internets, so called air-gapping.
Sweet innocent days gone by.
Over the last five or ten years that ultimate security approach, a literal air-gap surrounding the target computer, has been beaten with at least a half-dozen different approaches.
So the advice in the piece below is already behind the times if the polling place is relaying voting numbers over the internet but at least it is a start.

Seriously, we used to say the only secure computer was one not connected to the internet, ha!

Lifted in toto from the journal Nature, September 6....
But taking the grid offline can and probably should be done.  

"Russia and Iran agreed to connect Shetab and Mir payment systems"

This version of the story is via the Russia-Islamic World Group of Strategic Vision.
I use them because, despite being new to me they appear to be legit and I wanted them searchable on the blog.
See the members list. I was most interested in the second group of 35, the non-Russian members.

May 25:

Russia and Iran have agreed to move to the highest possible level of mutual settlements in national currencies. The countries are discussing the connection of the Mir and Shetab  (Iran's payment system) payment systems, as well as the work of national systems for transmitting financial messages, the co-chairman of the intergovernmental commission of Russia and Iran, Russian Deputy Prime Minister Alexander Novak said.

"One of the key topics (of the talks) was to create conditions for mutual settlements and the passage of payments between our legal entities, organizations. It is important that we have agreed to switch as much as possible to settlements in national currencies. Together with the central banks we have discussed the distribution and operation of financial messaging system, as well as the connection of payment cards Mir and Shetab,"  he said after the meeting of co-chairmen of the Intergovernmental Commission.

Currently, the Mir card does not work in Iran. It was reported that Iran and Russia are discussing the issue of connecting their banks to the Financial Message Transfer System (FTS), the Russian equivalent of the SWIFT system of international settlements....


Also at TASS via the sustainable development peeps at World News Monitor who get the HT that the story was out.

I am starting to think the Western Grand Strategy poobahs really, really screwed up.
Or things are proceeding exactly according to plan. Who the hell knows?

Following-Up On Zoltan Pozsar's Thinking We See: "Is America the Real Victim of Anti-Russia Sanctions?"

Mr. Pozsar's April 14 piece on Russia as a "'Global Systemically Important Bank' Of Commodities", linked in the post immediately below, is mirrored in this article from Tablet Magazine yesterday, May 24:

By misjudging the size and importance of Russia’s economy, the West might have taken steps toward its own isolation

Remember the claims that Russia’s economy was more or less irrelevant, merely the equivalent of a small, not very impressive European country? “Putin, who has an economy the size of Italy,” Sen. Lindsey Graham, R-S.C., said in 2014 after the invasion of Crimea, “[is] playing a poker game with a pair of twos and winning.” Of increasing Russian diplomatic and geopolitical influence in Europe, the Middle East, and East Asia, The Economist asked in 2019, “How did a country with an economy the size of Spain … achieve all this?”

Seldom has the West so grossly misjudged an economy’s global significance. French economist Jacques Sapir, a renowned specialist of the Russian economy who teaches at the Moscow and Paris schools of economics, explained recently that the war in Ukraine has “made us realize that the Russian economy is considerably more important than what we thought.” For Sapir, one big reason for this miscalculation is exchange rates. If you compare Russia’s gross domestic product (GDP) by simply converting it from rubles into U.S. dollars, you indeed get an economy the size of Spain’s. But such a comparison makes no sense without adjusting for purchasing power parity (PPP), which accounts for productivity and standards of living, and thus per capita welfare and resource use. 

Indeed, PPP is the measure favored by most international institutions, from the IMF to the OECD. And when you measure Russia’s GDP based on PPP, it’s clear that Russia’s economy is actually more like the size of Germany’s, about $4.4 trillion for Russia versus $4.6 trillion for Germany. From the size of a small and somewhat ailing European economy to the biggest economy in Europe and one of the largest in the world—not a negligible difference.

Sapir also encourages us to ask, “What is the share of the service sector versus the share of the commodities and industrial sector?” To him, the service sector today is grossly overvalued compared with the industrial sector and commodities like oil, gas, copper, and agricultural products. If we reduce the proportional importance of services in the global economy, Sapir says that “Russia’s economy is vastly larger than that of Germany and represents probably 5% or 6% of the world economy,” more like Japan than Spain.....


Today's mini-series:

Maybe We Should Just Declare War On Russia And Take Their Stuff: Zoltan Pozsar on Russia As A "Global Systemically Important Bank" Of Commodities

None of the electorate in the NATO countries voted for another of these inconclusive, forever wars, so profitable for a select few and so costly in life and treasure for regular people. Surely no one in the developing nations signed on to pay for sanctions with their food budget. It is time to figure out a) What our goals are and b) What the hell we are doing, period and in furtherance of those goals. This isn't some game of RISK with let's try this, or let's try that and no consequences at the end of the night. Since the Maidan coup in 2014 the West has had eight years to plan for this.

Do it or don't do it; because trying to finesse a halfway reaction is nuts.

As the philosopher asked the generals and armaments producers some time ago: 
"When was the last time you b****es won a war?" 
From Zoltan Pozsar at Credit Suisse, April 14, 2022:

The “G-SIB” of Commodities 

Regular readers of our dispatches are familiar with our framing of J.P. Morgan as the “Bakken Shale” of global dollar funding markets, and as the system’s Lender of Next-to-Last Resort: J.P. Morgan cannot print reserves like the Fed, but it has the most amount of reserves at the Fed relative to other banks, and the bank that has the most reserves backstops the liquidity of the system during non-systemic episodes of liquidity shocks. In the world of commodities, the equivalent of J.P. Morgan is the Russian Federation. Not only did Russia own as much in FX reserves as J.P. Morgan owns in reserves at the Fed, but Russia’s exports of commodities (like J.P. Morgan’s “exports” of reserves) exceed the exports of every country in the world, including the United States.

What J.P. Morgan is to dollar funding, Russia is to the world of commodities – both are G-SIBs in a way, with similar phraseologies (“fortress balance sheet”; “Fortress Russia”). In today’s dispatch, we map Russia’s commodity fooprint...

...which, as the size of the country’s geographic reach would imply, is very big, or, rather, systemic. The first chart shows that the Russian Federation is the single largest exporter of commodities, and the U.S. is a very close second. Saudi Arabia comes third, but they export much less than the U.S. or Russia.

Russia’s dominant position spans many commodities. Similar to how J.P Morgan is a dominant player as a marginal lender (the marginal lender) in the repo, FX swap, and equity funding markets, as well as in Treasury underwriting and trading, Russia is a dominant exporter of energy, grains, metals, and other commodities.

The next set of charts (all in the form of Sankey diagrams) shows Russia’s commodity exports across a range of commodities, starting with energy exports.

In terms of crude oil, Russia is the single largest exporter outside of OPEC, and most of the oil Russia exports goes to Europe. The second biggest market for Russian crude is China, and the re-routing of Russian oil from Europe to China will lead to severe shipping bottlenecks as we discussed in detail here.

In terms of refined oil products (for example, diesel fuel), Russia is the third largest exporter in the world, and sends most of its refined exports to Europe.

In terms of natural gas (gas through pipelines), Russia is the biggest exporter in the world serving primarily Europe: Germany, the Baltics, and Eastern Europe. In terms of LNG (liquefied gas, seaborne) Russia is not a significant player, but the point about LNG is that it’s much smaller than the piped gas market, and (potential) disruptions to the flow of piped gas is impossible to replace with LNG. Not only in a “spot” sense but also over the medium term. That’s an issue.

In terms of coal, Russia is the world’s third biggest exporter after Australia and Indonesia, and much like with oil and gas, its biggest market for coal is Europe.

Now onto foodstuffs.
Russia is the single largest exporter of wheat, and Russia and Ukraine combined are an even more systemic source of wheat exports to the world. Combined, Russia and Ukraine export as much wheat as the U.S. and Canada combined. Unlike energy, most of the wheat exports of Russia and Ukraine go to emerging economies – Egypt and Turkey and other countries in Africa and Asia.

In other words, while in Europe industry is reliant on Russian energy to function, in EM, people are reliant on Russian grains to sustain themselves. Either way, much like you need funding to survive, and J.P. Morgan ensures your survival in that sense, you need energy to sustain industry and food to sustain yourself, and in those departments, Russian exports to Europe and EM countries ensure survival. That’s how you define systemic. Russia is a “commodity G-SIB”.

In terms of fertilizers, Russia is systemic again – it is the single largest exporter of fertilizers, and much like reserves in finance, nothing gets done without fertilizers in an age of industrialized agriculture when land is never given a chance to rest: unless you stuff earth with potash, you can’t grow stuff, and everything from peppers to tomatoes, potatoes, strawberries, and watermelons needs lots of potash. No reserves, no harvesting of basis points. No potash, no harvesting of fruits or veggies. No good harvest, higher headline inflation, not to mention the extra costs to growing vegetables that come from higher energy costs (to heat a greenhouse) and from the higher cost of plastic wraps used to build greenhouses and to cover the soil to keep the produce “tucked in”.

Now onto metals..


If you've forgotten what was decided regarding G-SIB's after the Great Financial Crisis, the Canadian Office of the Superintendent of Financial Institutions has a handy infographic

And as far as the "a)" question above, on conceptualizing and communicating goals, this guy seemed to understand the need for clarity in matters of great importance:

"You ask, what is our aim? I can answer in one word: victory; victory at all costs, 
victory in spite of all terror, victory, however long and hard the road may be..."
No ambiguity, no finesse, just straight talk.

Natural Gas Market Is Hurtling Toward Historic Winter Shortages

It's not just the current prices,* it's the fact there will not be enough natural gas to store for the northern hemisphere heating season - except maybe for Britain whose shrunken storage capacity is filled to the brim. And Norway. And Russia who will probably establish a chain of sauna's up and down that long border, just to tempt, tease and torment the Finns.

From Yahoo Australia, who also have a lot of gas, Bloomberg, May 23:

The liquefied natural gas market is hurtling toward a potentially historic shortage this winter as the world rushes to secure the super-chilled fuel.

Europe’s plan to cut imports of piped Russian gas by two-thirds by the end of the year and replace it with LNG from the US and Africa is sharply intensifying competition for the power-plant and heating fuel. There’s also an expectation that China’s battle with Covid-19 will be winding down later in 2022, which should stoke industrial demand from Asia’s biggest economy.

In a normal year, LNG importers stock up on supplies for the peak winter season over the summer. That appears to have started earlier this year, with South Korean and Japanese utilities already snatching up shipments for delivery through early 2023. The looming supply crunch risks pushing up electricity bills and inflation and could see poorer nations miss out entirely.

“This coming winter has everyone on edge,” said James Whistler, the global head of energy derivatives at Simpson Spence Young. “All things point to tight supply under normal conditions, but additional risks are also present.”

How to cope with the widening gap between supply and demand will be the hot topic at the World Gas Conference in South Korea this week. It’s the first major gathering of the industry in Asia since Russia’s invasion of Ukraine upended the LNG trade and sent prices surging.

Global demand will hit 436 million tons in 2022, outpacing 410 million tons of available supply, Rystad Energy said in a note this month. Although soaring consumption has spurred the greatest rush of new projects worldwide in more than a decade, most new supply will only come online after 2024, it said....


*All Is Proceeding According To Plan: U.S. Natural Gas Futures Break Through $9.00

Fortunately, should sweaters become a necessity we have historical precedent on the various means to profit along various links in the supply chain:

You may also want to dip into the big daddy of price series:
"A History Of Agriculture And Prices In England, From The Year After The Oxford Parliament (1259) To The Commencement Of The Continental War (1793)"
by J. E. Thorold‐Rogers, 7 volumes, 1866-1887 which probably influenced Jevons.

It appears most of the upstream plays involve sheep.

And being something of a neo-Luddite the midstream with the looms and the other textile machinery doesn't entice.

So perhaps wholesale and retail are beckoning  Marketing and market differentiation.

Is there a demand for yak wool?
Tibetan yak all dressed up
Possibly also of interest:
The Strange Business of Subsidized Yak Insurance

I'm not sure if the world is ready for our "Tips on Trading the Insulation Complex".
It resembles what we found in "Stimulus: Tips on Trading the Caulk/Putty/Grout Complex".