Saturday, April 30, 2022

"NFT Gaming is snake oil"

From Datagenetics:

NFT gaming and blockchain gaming is snake oil.
Don’t get me wrong, it’s cool technology, and a lot of investments have been made in this arena, but these investments are all following the hype. NFT does not provide a solution to any problem the gaming industry has.

History of PC gaming

To understand, first of all, we need to take a step back and follow where the money in the industry comes from. Whilst I know there are exceptions, I’m looking about where the majority of the money comes from, over time, in the PC industry.
A couple of decades ago (before the internet), people used to go into retail outlets and purchase boxed product. They paid up front, took the game home, then enjoyed (or did not), the game they purchased: Payers became players. These people were all ‘gamers’, and self-identified as such. Developers shipped product, then moved onto the next project.
Then the internet game along, and people got online; there quickly became a proliferation of free online Flash/Shockwave games. The internet was a great leveler and exposed people who were not ‘core gamers’ to gaming entertainment. People who did not identify as ‘gamers’ loved to slide blocks, match three gems, find hidden objects, or run virtual restaurants and hairdressers. It’s estimated that about one in three people on the internet plays some sort of game. That’s a huge denominator.
So how did developers make money in this browser based arena? Online advertising. When I worked at Microsoft, for MSN Games I calculated that the average revenue for a Flash based browser game was about $0.01 per user per hour. It seems small, but remember, the denominators are large.
Then, pioneered by Popcap, the bright idea came up that the browser based games could be rebuilt into deluxe editions that you could download. These would have enhanced graphics and sound, more levels, more pixel polish, and could be played offline. These initially sold for $19.99 and were an overnight success. The payment mechanism was that you downloaded the game for free, and this gave you ten free plays. After that you needed to get your credit card to unlock the game forever.
Within weeks, everyone had jumped on the bandwagon, and there were literally thousands of ‘deluxe’ products available. Web sites sprouted up simply to catalog and broker the offerings. Most developers skipped the Flash stage all together and just shoveled out the download products. Whilst there were some diamonds in the rough, many were of dubious quality, or cheap clones. I used to attend game conferences and find that they were attended by hundreds of small independent game developers eager to make it big and get a slice of the pie.
The sheer quantity, and lack of quality, and the eagerness of the brokers to land grab market share caused price wars and a race to the bottom; prices rapidly spiraled to very low values. Most of the independent wanna-be developers could not sustain themselves at these price levels (especially as they got no visibility in the ocean of the tens of thousands of other flotsam products bobbing around). Next year the game conferences showed that hundreds of developers had imploded along with the deluxe download business.
Then the iPad and the smartphone came along. For a while you could go into the Appstore and buy games for a couple of dollars apiece (matching the prices the deluxe downloads ended up after their collapse). This did not last long.
Then the saviour of the industry came along: The free to play model.


Shipping Billionaire Fredriksen Snaps Up Stake In Tanker Company

Earlier we saw Warren Buffet upping his stake in Chevron as well as adding Occidental Petroleum to Berkshire's portfolio and now this.

Buy hydrocarbons, number go up.

From Bloomberg via The Edge Markets, April 28:

Billionaire John Fredriksen snapped up a 16% stake in International Seaways Inc, the latest major tanker investment by the shipping magnate.

The move was disclosed by one of his holding companies, Famatown Finance Ltd, through which he usually makes his acquisitions. International Seaways owns a fleet of 87 ships that include giant supertankers and vessels that haul refined products.

Fredriksen has been active in recent months, buying up a stake in tanker giant Euronav NV before proposing that it merge with Frontline Ltd, in which another of his holding companies is the largest shareholder....


"Warren Buffett says inflation ‘swindles almost everybody,’ Munger rails against bitcoin, market ‘mania’ at Berkshire meeting"

They are in the afternoon Q&A session. If You wish to watch it Live, Here is CNBC's camera.

And the headline snips:


Berkshire Hathaway’s Annual Meeting: "Warren Buffett significantly increases Chevron bet, now in Berkshire’s top 4 positions" (BRK)

 First up the Oil bet:

Berkshire Hathaway added to its Chevron bet significantly during the first quarter, making the energy stock the conglomerate’s fourth biggest equity holding.

The “Oracle of Omaha’s” Chevron investment was worth $25.9 billion at the end of March, the company’s first-quarter filing Saturday showed, a big jump from its value of $4.5 billion at the end of 2021.

Shares of Chevron have rallied more than 30% this year on the back of surging oil prices, but Berkshire’s position has increased fivefold reflecting Buffett’s buying....


And on the Annual Meeting, CNBC's live coverage.

Warren likes talking to CNBC's Becky Quick so they sometimes get some scoopage.

Here's more of their stuff on the lovefest in Omaha, updated about 15 minutes ago:

Berkshire Hathaway’s annual meeting: Follow all the action as Warren Buffett takes the stage 

Other good coverage is usually found at the hometown newspaper, The Omaha World-Herald (formerly a Berkshire Hathaway property): 

Live Updates: Berkshire Hathaway Annual Shareholders Meeting in Omaha

Russian Navy Dolphins Patrolling Black Sea Base

A lot of navies have investigated using ocean mammals for various chores but the Russians seem particularly interested. More after the jump.

From US Naval Institute News, April 27:

Trained Russian Navy Dolphins are Protecting Black Sea Naval Base, Satellite Photos Show

Russia has deployed trained dolphins during its invasion of Ukraine to protect a Black Sea naval base, USNI News has learned.

The Russian Navy has placed two dolphin pens at the entrance to Sevastopol harbor, sheltered just inside a sea wall. The pens were moved there in February, around the time of the invasion of Ukraine, according to a review of satellite imagery.

Sevastopol is the Russian Navy’s most significant naval base in the Black Sea. The dolphins may be tasked with counter-diver operations — a traditional role both the U.S. and Russia have trained marine mammals for. This could prevent Ukrainian special operations forces from infiltrating the harbor underwater to sabotage warships.

Inside the port, many high-value Russian Navy ships are arranged out of range of Ukrainian missiles but vulnerable to undersea sabotage, according to satellite photos. During the Cold War the Soviet Navy developed several marine mammal programs, including dolphin training in the Black Sea. The unit was based at Kazachya Bukhta near Sevastopol, where it still is today.

With the collapse of the Soviet Union in 1991, the unit transitioned to the Ukrainian military. Although there were attempts to keep it operational, it barely stayed open. With Russia’s 2014 annexation of Crimea, the unit came under Russian Navy control. Subsequently, the marine mammal programs have been expanded and returned to operational service....


In 2019 we linked to some stories on what the Russians were up to in the Arctic.

They began when a Beluga whale decided to vacation in Norwegian waters:

WTH: "Whale with harness could be Russian weapon, say Norwegian experts"

Which was followed a month later by:

"Satellite Images Reveal Russian Navy's Secret Arctic Marine Mammal Facility"


....The beluga whale wearing a harness with mounts for a GoPro camera that first was spotted by local fishermen on Norway’s Barents Sea coast in late April is still swimming around in the harbor of Hammerfest.

Making big headlines in Norway and around the globe, the locals name him ‘Whaledimir’ (Hvaldimir in Norwegian) after national broadcaster NRK made a poll asking their audience to name the animal. Today the beluga is stripped free from the harness, but is refusing to leave his new life of freedom in Norway. Experts say the whale will likely not survive without being fed by humans....

Hvaldimir? What kind of name is Hvaldimir?
Whaley McWhaleface should have been a lock.

There is some question whether this Beluga returning a woman's dropped phone is Hvaldimar or just some rando phone retrieving cetacean:,0)

Here's the story and video of the retrieval.
Incredible Footage Shows Whale Retrieve Phone Woman Dropped In The Ocean

"Historical U.S. Equity Valuations Under Various Inflation Regimes"

A repost of reposts (here at Climateer Investing we recycle!), last seen January 18, 2022:

A threefer. The introduction to 2012's "The S&P/Inflation Expectations Correlation (SPY)":

A major caveat for investors trying to hedge inflation with equities: they aren't that correlated once inflation goes above 4% or so. 0-to-4% is the sweet spot. Above 4% you don't want services companies, manufacturers with tangible assets are the place to be.

This is one reason the Berlin market was able to approximate (with a 3-6 month lag) the Weimar hyper-inflation (the other being survivorship bias). The companies the historians track, the big brewers, metalworkers, miners had real assets.

Stocks of service companies without near-monopoly pricing power got crushed like any other long dated asset.
This is a point you won't see anywhere else, at least until the information contained in those dusty old German-language records gets translated....

And, one of my all-time favorite scatter-plots:

From "Crestmont Research on Inflation, P/E's and Market Returns":

Here's another way to look at the relationship between inflation and P/E's. Note that both the highest inflation and deflation rates correspond with the lowest multiples accorded the earnings:

Finally, to reiterate:
A subject near and dear. The sweet spot for P/E ratios is 1.00- 2.00% annual CPI inflation. As you move away from that in either direction multiples drop off pretty fast, to the point that equities are not an optimal investment. You won't believe what the best investments for inflation in the 8-12% and greater than 100% ranges are. I'll write about them if we ever go Weimar....


Friday, April 29, 2022

"Putin’s booby-trapped bonds"

From FT Alphaville:

Sloppy covenants could lead to problems

Mitu Gulati is a professor of law at the University of Virginia.

Well, that’s that. Russia did not make its April 4, 2022 dollar bond payments. It tried, but the accounts from which it tried to make the payments have been frozen by the US Treasury Department on account of the matter of Russia having invaded Ukraine. Whoops. In a week, the 30-day grace period for Russia to cure the default will be over. Ordinarily, one would predict a certain default to be in the offing. Vladimir Putin’s bond, however, might have a few landmines buried in them. Focusing on the dollar bond that came due on April 4, 2022, here are four of them. 

1. Unilateral Modification 

Bond contracts are generally loaded with contract provisions that protect bondholders against dastardly things that a distressed debtor might be inclined to do. So, a provision that one would decidedly NOT expect to see is one that gives the debtor and its flunkies the right to unilaterally modify provisions that would otherwise protect creditors. Under the title “Modifications and Waiver”, it says: 

The parties to the Fiscal Agency Agreement may agree, without the consent of the Bondholders, to any modification of any provision of the Fiscal Agency Agreement, which is of a formal, minor or technical nature or is made to correct a manifest error....


I thought it was bad enough when we were talking about one of the issues: 

"Early Civilizations Had It All Figured Out"

Following on my mini-rant against Jared Diamond's narratives of the superiority of hunter-gatherer life, mongongo nuts and all, versus agriculture and the neolithic revolution we have a counterpoint.
(did I really refer to the good professor's writing as "This neo-Rousseau-ish babble"?)

From The New Yorker:

A contrarian account of our prehistory argues that cities once flourished without rulers and rules—and still could.

Moments of sociopolitical tumult have a way of generating all-encompassing explanatory histories. These chronicles either indulge a sense of decline or applaud our advances. The appetite for such stories seems indiscriminate—tales of deterioration and tales of improvement are frequently consumed by the same people. Two of Bill Gates’s favorite soup-to-nuts books of the past decade, for example, are Steven Pinker’s “The Better Angels of Our Nature” and Yuval Noah Harari’s “Sapiens.” The first asserts that everything has been on the upswing since the Enlightenment, when we learned that rational argument was preferable to religious superstition and wanton cudgelling. The second concludes that everything was more or less O.K. until about twelve thousand years ago, when we first beat our swords into plowshares; this innocent decision, which must have seemed a good idea at the time, heralded an era of administrative hierarchy, state-sanctioned violence, and the unchecked proliferation of carbohydrates. Perhaps what readers like Gates find valuable in these books has less to do with the purported shape and direction of history than with the broad assurance that history has a shape and a direction.

Both stories, after all, adhere to a model of history that’s at once teleological (driven by specific forces to arrive at the foreordained present) and discontinuous (such magical things as farming and rationality emerged from the woodwork, unlocking successive stages of developmental maturity). They generally agree that the crucial rupture divided some original state of nature from the grand accession of civilization. Their arcs of irrevocable decline or compulsory progress are variations on themes that were given their most recognizable modern elaborations by Thomas Hobbes and Jean-Jacques Rousseau. Pinker takes up the Hobbesian notion that early human existence was a brutish war of all against all. Harari takes rather literally Rousseau’s thought experiment that we were born free and rushed headlong into our chains. (“There is no way out of the imagined order,” Harari writes. “When we break down our prison walls and run towards freedom, we are in fact running into the more spacious exercise yard of a bigger prison.”) In both accounts, guilelessness and egalitarianism are exchanged for knowledge and subordination; the only real difference lies in the cost-benefit assessments of that trade.

About a decade ago, the anthropologist and activist David Graeber, who died suddenly last year, at the age of fifty-nine, and the archeologist David Wengrow began to consider, in the wake of Occupy Wall Street, how they might contribute to the burgeoning literature on inequality. Not inequality of income or wealth but inequality of power: why so many people obey the orders of so few. The two scholars came to see, however, that to inquire after the “origins” of inequality was to defer to one of two myths—roughly, Hobbes’s or Rousseau’s—based on a deeply ingrained and deeply misleading fantasy of the human career. The product of their extended collaboration, “The Dawn of Everything: A New History of Humanity” (Farrar, Straus & Giroux), is a profuse and antic account of how we came to take that old narrative for granted and why we might be better off if we let it go.

The consensus version of the story begins with the appearance of the first anatomically modern humans, about two hundred thousand years ago. For approximately a hundred and ninety thousand years, or about ninety-five per cent of our existence as a species, we lived in small bands of hunter-gatherers, following migratory herds and foraging for wild nuts and berries. These cohorts were small enough, and the demands of resource procurement and allocation were sufficiently minor, that decisions were face-to-face affairs among intimates. Despite the lurking menace of large cats, these early hunter-gatherers didn’t have to work particularly hard to fulfill their caloric needs, and they passed their ample leisure hours cavorting like primates. The order of the day was an easy egalitarianism, mostly for want of other options.

Twelve thousand years ago, give or take, the static pleasures of this long, undifferentiated epoch gave way to history proper. The hunter-gatherer bands lucky enough to find themselves on the flanks of the Zagros Mountains, or the eastern shores of the Mediterranean, began herding and farming. The rise of agriculture allowed for permanent settlements, which, growing dense, became cities. Urban commerce demanded division of labor, professional specialization, and bureaucratic oversight. Because wheat, unlike wild berries or the hindquarters of an aurochs, was a storable, countable good that appeared on a routine schedule, the selfish administrators of inchoate kingdoms could easily collect taxes, or tributes. Writing, which first emerged in the service of accounting, abetted the sort of control and surveillance upon which primitive racketeers came to depend. Where hunter-gatherers had hunted and gathered only enough to meet the demands of the day, agricultural communities created history’s first surpluses, and the extraction of tributes propped up rent-seeking élites and the managerial pyramids—not to mention standing armies—necessary to maintain their privilege. The rise of the arts, technology, and monumental architecture was the upside of the creation and immiseration of a peasant class.

From roughly the Enlightenment through the middle of the twentieth century, these developments—which came to be known as the Neolithic Revolution—were seen as generally good things. Societies were categorized by evolutionary stage on the basis of their mode of food production and economic organization, with full-fledged states taken to be the pinnacle of progress.

But it was also possible to think that the Neolithic Revolution was, all in all, a bad thing. In the late nineteen-sixties, ethnographers studying present-day hunter-gatherers in southern Africa argued that their “primitive” ways were not only freer and more egalitarian than the “later” stages of human development but also healthier and more fun. Agriculture required much longer and duller working hours; dense settlements and the proximity of livestock, as well as monotonous diets of cereal staples, encouraged malnutrition and disease. The poisoned fruit of grain cultivation had, in this telling, led to a cycle of population growth and more grain cultivation. Agriculture was a trap. Rousseau’s thought experiment, long written off by conservative critics as romantic nostalgia for the “noble savage,” was resuscitated, in modern, scientific form. It might have taken three or four decades for these insights to make their way to TED stages, but the paleo diet became a fundamental requirement of any self-respecting Silicon Valley founder....


"The Greatest Unsolved Heist in Irish History"

From Atlas Obscura:
Scandal, conspiracy, and cover-ups in the theft of the “Irish Crown Jewels” from Dublin Castle. 
Spoiler alert: The Irish Crown Jewels have never been found.

Dublin, 1907.

Arthur Vicars was 45 years old in July 1907, just a few weeks from his birthday. His entire life at the time was wrapped up in his job as Ulster King of Arms. This put him in charge of the rules and regulations regarding heraldry and family trees—a very important position in early-20th-century Ireland: He was the arbiter of inheritance. “Most land, power, and wealth were vested in the hands of the aristocracy,” says William Derham, a curator at Dublin Castle, “and the question of who was the legitimate heir to an estate and a title carried with it the question of who would inherit a great deal of money,” in addition to a seat in Parliament. Vicars, from his spacious office in Dublin Castle, was well paid, well respected, and passionate about heraldic history and genealogy.

His job also included guarding what would become known as the Irish Crown Jewels, consisting of a heavily jeweled star, badge, and collars. The star, an eight-pointed wonder about four inches across, featured dozens of pristine Brazilian diamonds, described that year as being “of the purest water,” meaning the highest quality known. That star surrounded both a shamrock made of emeralds and a cross of rubies. The badge was similar: diamonds, emeralds, and rubies, set in silver. The value of the pair, according to a police notice, was, in today’s money, somewhere north of £3 million, or $4.5 million. Vicars did not particularly like this part of his job, but if being in charge of these jewels would allow him to continue his heraldry research, he would put up with it.

The jewels mostly stayed locked in a safe at a jeweler’s, in Dublin. That jeweler had been the official watchmaker for Queen Victoria, and valued security tremendously, to the point of counting the spoons they had provided to the royals, to ensure none had been pilfered. If the King, Queen, or their representatives visited Ireland and had call to wear the jewels, they would be moved to a safe that sat in Dublin Castle, an ancient complex that then served as the seat of the government in Ireland for the United Kingdom of Great Britain and Ireland.

Dublin Castle was full of military and police agents, as it was the headquarters of the Dublin Metropolitan Police, and the safe in which the jewels were kept had only two keys. Vicars, almost universally described as a pedant and nitpicker, wore one on a chain around his neck or in his pocket at all times. The other he hid in his home in Dublin. The castle, and especially Bedford Tower, where the jewel safe was located, was considered one of the most impregnable, well-defended, and heavily observed buildings on the island. From The New York Times, in 1907: “Bedford Tower is the one building in the castle into which the most enterprising burglar would find it hopeless to effect an entrance unobserved.” And the jewels weren’t even taken out of the safe very often.

The summer of 1907 had been a busy summer for the Irish aristocracy and government, which were often one and the same. The Irish International Exhibition, a grand world’s fair, had opened in May and was scheduled to run through November. The massive event featured a Japanese tea garden and an entire Somali village among hundreds of exhibits, and drew around 2.5 million visitors during its run.

King Edward VII, Queen Alexandra, and Princess Victoria were due to visit on July 10, to make an appearance at the exhibition and perform some various royal duties. The political relationship between Ireland and Great Britain was fraught, with a rising tide of Irish nationalism competing with unionists who wanted to remain loyal to the Crown. There had already been debate about how Irish—or British—the International Exhibition should be. (There were separate pavilions for Ireland and Great Britain; the Irish War of Independence would erupt just over a decade later.) On top of that, the king’s nephew, Kaiser Wilhelm II of Prussia, had just months before endured a massive political scandal. King Edward was sensitive to controversy. He needed this visit to go smoothly.

It did not go smoothly....


I wonder if David Keohane has looked into this.


I've mentioned:

One of the reasons we stopped paying attention to Jared Diamond after Guns, Germs and Steel was his false take on what happened to the Easter Islanders in his book, Collapse!*

More after the jump

From Delancey Place:

Today's selection -- from Guns, Germs, and Steel: The Fates of Human Societies by Jared M. Diamond.

Why do kleptocracies thrive?:

"The difference between a kleptocrat and a wise statesman, between a robber baron and a public benefactor, is merely one of degree: a matter of just how large a percentage of the tribute extracted from producers is retained by the elite, and how much the commoners like the public uses to which the redistrib­uted tribute is put. We consider President Mobutu of Zaire a kleptocrat because he keeps too much tribute (the equivalent of billions of dollars) and redistributes too little tribute (no functioning telephone system in Zaire). We consider George Washington a statesman because he spent tax money on widely admired programs and did not enrich himself as presi­dent. Nevertheless, George Washington was born into wealth, which is much more unequally distributed in the United States than in New Guinea villages.

"For any ranked society, whether a chiefdom or a state, one thus has to ask: why do the commoners tolerate the transfer of the fruits of their hard labor to kleptocrats? This question, raised by political theorists from Plato to Marx, is raised anew by voters in every modern election. Kleptocracies with little public support run the risk of being overthrown, either by downtrodden commoners or by upstart would-be replacement kleptocrats seeking public support by promising a higher ratio of services rendered to fruits stolen. For example, Hawaiian history was repeatedly punctuated by revolts against repressive chiefs, usually led by younger brothers promising less oppression. This may sound funny to us in the context of old Hawaii, until we reflect on all the misery still being caused by such struggles in the modern world.

"What should an elite do to gain popular support while still maintaining a more comfortable lifestyle than commoners? Kleptocrats throughout the ages have resorted to a mixture of four solutions:

1. Disarm the populace, and arm the elite. That's much easier in these days of high-tech weaponry, produced only in industrial plants and easily monopolized by an elite, than in ancient times of spears and clubs easily made at home.

2. Make the masses happy by redistributing much of the tribute received, in popular ways. This principle was as valid for Hawaiian chiefs as it is for American politicians today....


Professor Diamond was so set on using Easter Island as an example of his ecocide thesis that he regurgitated it despite huge flaws in the theory at the time he was writing. And then: 

It Wasn't 'Ecocide': What Happend On Easter Island

Jared Diamond has some explaining to do.*

From Chicago's Field Museum of Natural History, August 13, 2018 via PhysOrg:

Easter Island's society might not have collapsed

More on how he twists facts to fit his sales pitch, here on how great hunter-gatherers have it vs. peeps who practice agriculture:

"The Worst Mistake In The History Of The Human Race" – 1987 article by Jared Diamond

Diamond, at least since Guns, Germs and Steel, has struck me as lightweight, just coasting, trying to force observations into a prejudiced worldview. I know his impressive c.v. but it had gotten to the point where any time I read something of his I thought of Churchill's comment:
A fanatic is one who can't change his mind and won't change the subject.

It turns out that he was like that a quarter century ago.
More spleen venting below....


.....This neo-Rousseau-ish babble makes me want to grab a mongongo nut and crack it on his head.

Painting the image of hunter-gatherer superiority he makes no mention of the agricultural peasants of the middle ages who worked between 180 and 260 days per year, the rest of the time being taken up with Sundays, feast days, holidays, fair days etc.

Denigrating the division of labor he makes no mention of the benefits that he has personally derived. I would estimate his Sasquatch-sized ecological footprint to be equivalent to 500-1000 Bushmen.

In many ways the best thing he could do, if he truly believed what he writes, is join the Voluntary Human Extiction Movement instead of jetting off to his next book-signing.

In the meantime we have 7 billion people to feed.

[link to his paper rotted, substitute]

It appears I got sort of worked up.

"Apparently the Brontës all died so early because they spent their lives drinking graveyard water."

Huh, not feeling so bad about stuff like markets and such.

From Literary Hub:

It is a well known and oft-romanticized fact that the Brontë sisters—and the Brontë brother, for that matter—all died young, one after the other, leaving moody, moor-y masterpieces in their wake. Officially, they all suffered from tuberculosis, or complications thereof, and unofficially, they all died of grief for one another, but as I learned this week, apparently there was a very real and disturbing factor that contributed to their lifelong illnesses and early deaths: they spent their lives drinking water contaminated by the local graveyard—and possibly the local privies, too.

An 1850 investigation by Benjamin Hershel Babbage—which was instigated by Patrick Brontë, the novelists’ father and the parish priest, shortly after the deaths of Emily (1848; she was 30), Branwell (1848; he was 31), and Anne (1849; she was 29)—showed that the small town of Haworth, where the Brontës lived, had much higher mortality rates than other nearby towns of similar size. 41.6% of Haworth’s inhabitants died before the age of 6; the average age of death was 25.8. (Charlotte would die in 1855 at the age of 38—of what would have been a treatable condition today; Patrick would outlive all of his children.)...


Repeating For Clarity and Emphasis...

"The 2009 - 2022 bull market is over"
That was part of the introduction to our Tuesday, April 26 post on Google's earnings.

After the Google news, the outro was:

For the broader market, first comes p/e multiple contraction followed by revenues held up only by inflation and should we enter a recession, declining earnings.  
That being said, we'll probably be up on Monday

U.S. Natural Gas Exports Are Growing 3x Faster Than Production

= $7.11 mcf. at Henry Hub.

This piece by John Kemp is three weeks old but still true.

At some point the American consumer is going to figure-out they are paying for the war in Ukraine not just by sending billions to Kyiv but by the inflation tax represented by the worldwide increase in the price of oil and the more direct effect of sending so much natural gas that it is actually hampering the storage build that should be occurring ahead of the summer heating season.*

From Reuters, April 8/10:

Column: U.S. gas storage emptied by exports to Europe and Asia

U.S. gas prices have climbed to their highest level in more than a decade as strong demand from overseas has emptied storage and left inventories well below average for the time of year despite a mild winter.

Front-month futures for gas delivered at Henry Hub in Louisiana have risen to $6.40 per million British thermal units, the highest in real terms since 2010.

Wholesale prices in the United States are still far below those prevailing in Northeast Asia ($33 per million British thermal units) and Northwest Europe ($34).

Full price convergence is prevented by the limited liquefaction capacity for exports from the United States and regasification capacity for imports into Asia and Europe.

But shortages in other regions and fears of an interruption of supplies from Russia are pulling U.S. prices higher via increased demand and prices for LNG.

U.S. LNG exports rose 13% in the three months from November to January compared with the same period a year earlier, while gas production was up by less than 5%....

*April 19

American Consumers Are Paying The Cost Of Europe's Energy Fecklessness
Following on yesterday's "It Appears The U.S. Is About To Have Its Own Natural Gas Crisis":
We are in the Spring shoulder season when gas in storage is ramped up to meet Summer cooling demand. But this year the U.S. is exporting to Europe as much gas as the LNG tankers can carry...


Here is the graph from yesterday's EIA storage report, we are far below the point where gas in storage should be to avoid summertime brown-outs:

Post-IPO Performance Of Three Of The Most Anticipated Flotations Of Recent Years (COIN; OTLY)

From Slope of Hope:

Coinbase………bringing the joy of crypto to the masses.

Oatly……..bringing the joy of non-dairy-based milk to the masses.


Add to list of things Alphaville's Jamie Powell observed professionally.

Also at Slope: 

Personal Consumption Expenditures Price Index UP 6.6%

Last month the PCE index was up 6.3%; the month before, 6.0% so PCE inflation is not just high but still rising.

From the Bureau of Economic Analysis, April 29:

Personal Income and Outlays, March 2022

Personal income increased $107.2 billion (0.5 percent) in March, according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) increased $89.7 billion (0.5 percent) and personal consumption expenditures (PCE) increased $185.0 billion (1.1 percent).

Real DPI decreased 0.4 percent in March and Real PCE increased 0.2 percent; goods decreased 0.5 percent and services increased 0.6 percent (tables 5 and 7). The PCE price index increased 0.9 percent. Excluding food and energy, the PCE price index increased 0.3 percent (table 9).


The increase in personal income in March primarily reflected an increase in compensation, proprietors’ income, personal income receipts on assets, and government social benefits (table 3).  Within compensation, the increase reflected increases in both private and government wages and salaries. The increase in proprietors' income was in farm income, reflecting increased crop and livestock prices. The increase in personal income receipts on assets was led by personal interest income. The increase in government social benefits was led by Medicare and Medicaid.

The $185.0 billion increase in current-dollar PCE in March reflected an increase of $114.6 billion in spending for services and an increase of $70.4 billion in spending for goods (table 3). Within services, increases were widespread across all subcomponents and led by “other” services (which includes international travel) as well as food services and accommodations. Within goods, an increase in nondurable goods (led by gasoline and other energy goods) was partly offset by a decrease in spending on durable goods (led by motor vehicles and parts). Spending on food services as well as most categories of goods reflect updated Census retail sales data that were recently benchmarked to results from the most recent annual survey. Detailed information on monthly PCE spending can be found on Table 2.3.5U.

Personal outlays increased $188.9 billion in March (table 3). Personal saving was $1.15 trillion in March and the personal saving rate—personal saving as a percentage of disposable personal income—was 6.2 percent (table 1).

The PCE price index for March increased 6.6 percent from one year ago, reflecting increases in both goods and services (table 11). Energy prices increased 33.9 percent while food prices increased 9.2 percent. Excluding food and energy, the PCE price index for March increased 5.2 percent from one year ago.....


Capital Markets: "Did China's Politburo Throw Markets a Lifeline?"

From Marc Chandler at Bannockburn Global Forex:

Overview: Speculation that a midday statement by China's Politburo signals new efforts to support the economy ahead of next week's holiday appears to have stirred the animal spirits. The unusual timing of the statement helped spark a rally in Asia-Pacific that lifted most of the large market by more than 1%. Europe's Stoxx 600 has nearly completed the gap created by Monday's sharply lower opening. It is rising for the third consecutive session. US futures are, however, struggling, after some earnings disappointments. The 10-year yield was virtually flat on the week coming into today and is up five basis points to 2.87%. European benchmark yields are up 2-4 bp. The dollar is heavier across the board. Among the majors, the Scandis and Australian dollar are leading the way. Among emerging market currencies, only the Turkish lira is unable to gain on the greenback. 

Gold is extending yesterday's recovery off the $1872 area and has approached resistance near $1920. June WTI is making nine-day highs, almost to $107. US natgas is off a little after yesterday's 5.2% decline. Still, this just pares the gains from earlier in the week, leaving it up around 5%. Europe's benchmark is up 2% and about 4.5% for the week. Iron ore prices rose 3%. Although it was, the fourth consecutive gain, it finished 2.8% lower on the week. Copper is up almost 1% to recoup yesterday's loss, leaving it off 2.7% this week. July wheat is firm closing in on a nearly 2.5% gain for the week.

Asia Pacific
It was unusual for China's Politburo to make a midday statement, but it did, and it gave the statement greater sway.
It pledged to meet economic target (5.5% GDP this year), and many took it as a signal that more stimulus will be forthcoming. Earlier this week, President Xi seemed to make similar allusions, that all-out efforts were needed and emphasized infrastructure projects. Separately, talks with the US about on-site audits of Chinese companies also was supportive of Chinese tech companies and the gave the Hang Seng an extra boost. China's mainland markets are closed until next Thursday. Over the weekend, the "official" PMI will be reported. The composite fell below the 50 boom/bust level in March and likely remained below there in April.

Japanese markets were closed today and re-open Monday, but then are on holiday again Tuesday through Thursday. The economic highlight next week is the Tokyo CPI at the end of the week. It is expected to jump sharply as last year's decline in mobile phone service costs drop out of the 12-month comparisons. It is worth around one percentage point. The Reserve Bank of Australia meets next week and that higher-than-expected Q1 CPI has fanned speculation of a small hike to begin the tightening cycle. The market appears to have fully discounted a 15 bp move that would bring the cash target to 0.25%....


With The Departure Of Jamie Powell From FT Alphaville....

....and the editorship of Norwegian Robin Wigglesworth, can the dream of Svalbard 24/7 at FTAV be far behind?

From FT Alphaville, April 29, 2022:

It’s Jamie Powell’s last day on FT Alphaville. From writing in 2018 about how Tesla was overvalued at $340 to writing in 2022 about how Tesla was overvalued at $920 post a five-for-one stock split, Jamie has been a constant source of insight and/or entertainment. 

To mark his departure, here’s a selection of hits from the past four years:....


Mr. Powell arrived as a somewhat brash spreadsheet maven, came to see the fact that Excel can't explain everything, and leaves as a better writer and far keener observer of market mania. 

He was fortunate in that his time at Alphaville overlapped covid, r/wallstreetbets, stimmies, and Elon. Along with negative oil prices, SPAC's, NFT's and Izabella Kaminska, and the events the un-bylined, electron-stained wretches known only as FT Alphaville have chosen for the look-back.  

"Fair Winds and Following Seas," Jamie.

Now on to Longyearbyen.

Thursday, April 28, 2022

"Amazon stock sinks 10% after Q1 earnings as costs rise amid inflation, supply chain pressure" (AMZN)

After-hours $2612.375 down $279.555 (-9.67%) after trading up $128.59 (+4.65%) in the regular session.

From Seattle's own, GeekWire:

In-depth coverage of Amazon from the tech giant’s hometown, including e-commerce, AWS, Amazon Prime, Alexa, Echo, logistics and more.

Amazon shares declined more than 10% in after-hours trading Thursday after the Seattle tech giant revealed its first quarter earnings report and provided a lower-than-anticipated sales forecast for the second quarter, due in part to rising costs and inflation.

Revenue for the first quarter came in at $116.4 billion, which met estimates and was up 7% year-over-year. That’s the slowest growth rate for revenue in more than two decades.

Amazon posted a net loss of $3.8 billion, or $7.56 per diluted share. The net loss includes a pre-tax valuation loss of $7.6 billion included the company’s non-operating expense from its investment in automaker Rivian.

Without the Rivian impact, Amazon would have posted a profit of $3.8 billion, which still translates into earnings below Wall Street’s expectations of $8.07 per share.

Operating income came in at $3.7 billion, down from $8.9 billion in the year-ago quarter.

Looking ahead, the company’s Q2 sales forecast of $116 billion to $121 billion came in below estimates. Operating income for the second quarter is expected to range between a $1 billion loss and a $3 billion profit, down from $7.7 billion in the second quarter of 2021....


For what it's worth, the other mega-cap to report, AAPL, was down $6.51 (-3.98%), almost giving up Thursday's $7.07 gain.

Probably a rough day for the QQQ tomorrow. 

"How Stocks Performed Prior To, And Entering The Last Seven Recessions"

With the news this morning that the U.S. is one quarter of negative growth away from entering a recession a repost from March 9 (yes, we were thinking of such things. Don't let your kids grow up to be risk managers): 

Past is not prologue but it is the only guide we have. And unfortunately we only have one time and price series. Someday it will all end, it may be tomorrow, it may be in a couple hundred years as stasis and/or entropy and/or civilizational catastrophe makes its mark.

Here's our boilerplate intro to extrapolating the past into the future:
"Industrial Revolution Comparisons Aren't Comforting"
Partly because of Eddington's Arrow of Time, at least in the mundane everyday experience, we only have one economic history dataset to work with. Because of this I used to argue with people who said this time will be like the last time but found that approach neither satisfying nor enlightening. I don't argue anymore, I just observe, like a kid watching a bug and wonder where the almost metaphysical certitude would be coming from, because, truth be told, nobody knows how this all works out....

....Again, we only have one dataset. We can say that U.S. stocks have returned 'X' over 'Y' time period, and for long periods we've been able to extrapolate those variables, but no one knows what tomorrow brings.  

So, with that rather longish caveat, we're off. From Forbes, March 30, 2020: 

Stock markets have been gyrating wildly as the world leaders’ close massive portions of the global economy in response to COVID-19. It’s safe to say that a global recession has begun, and that the U.S. is also in a recession. Moreover, fear has risen as investors attempt to understand what this could mean to their portfolios. Could stocks lose as much as they did in 2008? It’s quite possible. What can we learn from past recessions to help this time? Plenty. To address these issues, we will examine stock performance during the past six U.S. recessions, beginning in the mid-70s.

A note on the graphs below: Recessions are shaded grey, the Dow Jones Industrial Average is used for stocks, and dividends are excluded.

The 2008 Great Recession

Start: December 1, 2007

End: May 31, 2009

This recession brought the worst economic contraction since The Great Depression. Precipitated by a housing bubble which burst, U.S. stocks were only 2.7% overvalued when it began. Nonetheless, stocks proceeded to sink, ultimately losing 53.78% from peak to trough. By the time it ended, stocks had recouped about 14% of the loss, ending the recession down 40% from its October 9, 2007 peak (A-1).

Other noteworthy items include a record high close on the VIX of 80.86 November 20, 2008 (A-3). The VIX measures the expected volatility of the S&P 500 Index over the next 30 days. The yield on the 10-year U.S. treasury also fell to an all-time low during this period, dropping nearly 70% from 5.26% June 12, 2007 to 2.08% December 18, 2008 (A-2).

The 2001 Recession

Start: March 1, 2001

End: October 31, 2001

This recession was relatively mild. It began 13 months after the tech bubble burst and lasted eight months. It was worsened by the 911 tragedy which occurred six weeks before the recession ended.

Stocks bottomed twice during this recession, once March 24 and again September 21 (B-1). After each bottom, the Dow rose about 16% before hitting a new low. Stocks didn’t hit their ultimate bottom until October 9, 2002, almost a year after the recession. From its peak January 14, 2000 to its ultimate bottom October 9, 2002, stocks fell about 38%.

About a year before the recession began, stocks were 49% overvalued, which was a record high. When the recession began, due to the bursting of the tech bubble, this overvaluation had fallen to 9.5%. A year after the recession, stocks were about 33% undervalued, setting the stage for the longest economic expansion and bull market in U.S. history.

On January 26, 2018, stocks were 49.4% overvalued, breaking the previous record. Two short years later, February 19, 2020, another record was set when stocks became 58.9% overvalued.

Although the VIX spiked to 43.74% during this recession, it rose even higher after it ended (B-3). The 10-year Treasury also fell slightly (B-2).

....MUCH MORE, plus he updates to include the crash of March 2020.

Two of the takeaways from this study:

  • Stocks may rise entering a recession.
  • Stocks always decline during a recession.....

Again much more.

U.S. Drought Monitor, April 28, 2022

As far as food goes the two areas of immediate concern are California's Central Valley and Texas.*
Last year, the 2020 big dry in North Dakota foreshadowed the tripling of wheat prices especially for the world's best pasta flour.
This year so far it looks like veggies will be front and center.
From the University of Nebraska - Lincoln, April 28:

....MORE (drought summary/discussion)
*Our general thinking on the hydrological cycle and people, June 20, 2021: 

As we were saying with pretty much every Drought Monitor report this Spring (here's April 20):

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....

And March 25: "Drought Monitor: Southwest Desert Remains A Desert; Pasta May Get More Expensive".

"Will anyone tell Europe the age of cheap living is over?"

First up, a stroll down Memory Lane. From the World Economic Forum, November 11, 2016:

Welcome to the year 2030. Welcome to my city - or should I say, "our city". I don't own anything. I don't own a car. I don't own a house. I don't own any appliances or any clothes.

It might seem odd to you, but it makes perfect sense for us in this city. Everything you considered a product, has now become a service. We have access to transportation, accommodation, food and all the things we need in our daily lives. One by one all these things became free, so it ended up not making sense for us to own much....


The WEF pulled this page from their site, but a couple of the archives captured it

And from The Times von London, April 26:

In supermarkets across Europe food prices tick upwards almost every week. The war in Ukraine adds more pain to already sharply rising energy bills. Inflation instantly wipes out the gains of those lucky enough to receive a pay rise.

As public anger rises over the cost-of-living crisis, and governments try to offset the damage, senior European officials say something different. They say that the Continent must accept that the two necessities of life — food and fuel — have been far too cheap for a generation, and national leaders must be prepared to risk a political backlash and tell voters the truth.....
....The European Commission, which sets key energy policies across the European Union, sees the higher bills as a long overdue and unavoidable reckoning with reality.

Diederik Samsom, chief of staff for Frans Timmermans, the commission’s executive vice-president responsible for energy policy, warned that the previous low cost of living came at the expense of the environment and depended on imports of Russia’s fossil fuels.

Samsom admitted that “no one dares to say out loud” to voters that past living standards were unsustainable and that higher prices will be permanent.

“Yes, energy will be much more expensive as of now. Energy was way too cheap for the last 40 years,” he told a recent meeting of Brussels policymakers at the Bruegel think tank, urging governments to confront “taboos”.

“We have profited from it and created enormous wealth at the expense of planet Earth and, as we realise right now, at the expense of geopolitical imbalances [with dependency on Russia]. Both need to be repaired. In order to repair them we need to pay more for energy — and also for food. The two basic needs of life — food and energy — we have paid way too little for in the past 40 years.”....


And back to the WEF, January 19, 2017:

What If: Privacy Becomes a Luxury Good?

For what it is worth France's Paris Basin may contain as much as a billion barrels of oil (with associated gas) but it is trapped and would need to be fracked open, so probably a non-starter.

U.S. GDP Q1 2022 Advance Estimate: DECREASE of 1.4%

Combined with 8.5% inflation.

Is that stagflation. That sounds like stagflation.

From the Bureau of Economic Analysis, April 28:

Gross Domestic Product, First Quarter 2022 (Advance Estimate)

Real gross domestic product (GDP) decreased at an annual rate of 1.4 percent in the first quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 6.9 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (refer to "Source Data for the Advance Estimate" on page 3). The "second" estimate for the first quarter, based on more complete data, will be released on May 26, 2022

Real GDP: Percent change from preceding quarter

The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased (table 2)....


And more to come.

Tesla's Pivotal Move In Battery Chemistry (TSLA)

From Reuters via, April 27:

Iron man Elon Musk places his Tesla battery bets

As Tesla’s profits and prices grabbed headlines last week, a potentially pivotal development for the global car industry flew largely under the radar.

The US electric pioneer disclosed that nearly half of the vehicles it produced in the first quarter were equipped with lithium iron phosphate (LFP) batteries – a cheaper rival to the nickel-and-cobalt-based cells that dominate in the West.

The revelation, eclipsed by the carmaker’s $19 billion revenue and Elon Musk’s Twitter charge, was the first time Tesla had disclosed such specifics about its batteries make-up.

It flashed a strong signal that iron-based cells are finally starting to win global appeal at a time when nickel is blighted by supply concerns due to major producer Russia’s war in Ukraine and cobalt is tainted by reports of dangerous conditions at artisanal mines in Democratic Republic of Congo.

Tesla is not alone in betting that LFP batteries, already popular in China, can make inroads into Western markets.

More than a dozen companies are considering establishing factories for LFP batteries and components in the United States and Europe over the next three years, according to a Reuters review of the electric vehicle (EV) scene and interviews with several players.

“I think lithium iron phosphate has a new life,” said Mujeeb Ijaz, founder of U.S. battery startup Our Next Energy which says it is scouting a U.S. production site. “It has a clear and long-term advantage for the electric vehicle industry.”

Ijaz has worked in the field long enough to see a technology that failed to catch on in America a decade ago gather fresh momentum. He was chief technology officer at Michigan-based A123, an early producer of LFP batteries that went bankrupt in 2012 and was acquired by a Chinese company.

He and other LFP advocates cited the relative abundance and cheaper prices of iron as a key factor beginning to outweigh the drawbacks that have held back the adoption of LFP cells globally – they are bigger and heavier, and generally hold less energy than NCM cells, giving them a shorter range.

There is a mountain to climb, though....


Batteries: ...The Race to Build Europe’s Frst Lithium-Iron-Phosphate Battery Gigafactory
Lithium-Iron, it's all anyone is talking about....

"Tesla in talks with China's EVE for low-cost battery supply deal -sources" TSLA)
Well I guess Tony Stark Elon Musk is now officially Iron Man.

Back in 2018 we posted "Batteries: Lithium-Iron may be Competitive With Lithium-Cobalt" but with so many technologies that failed to scale-up over the years we are a little bit jaundiced about wasting the reader's time chasing every rabbit that pops up.

However, if this works, Elon may have found the chemistry for the next generation of Powerwalls.

Also from 2018:
"Ten years left to redesign lithium-ion batteries"
This time frame is not too restrictive.
Tesla and their battery partner, Panasonic, have removed a lot of the cobalt (60%) from their battery recipe and are on their way to zero cobalt over the next couple years.

So, more interesting than any time pressure is the potential spur to creativity on the question of alternative chemistries.

From the journal Nature, July 25:...

One more from 2018—apparently a great year for Iron Age types while I kept writing Bronze Age on my checks. ("Dad, what's a check?"):

Twenty Month Payback for Tesla 100-MW Utility Scale Battery Storage System
Elon (and Panasonic) may have just found another multi-billion dollar business.
Going forward the chemistry probably won't be Lithium ion, maybe molten-salt or iron based, but the fact TSLA can now pitch this kind of payback probably heralds the beginnings of lithium rush 3.0, or at least the promotion thereof....

And just so you know how long it can take to go from lab bench to production, this post is from 2008! 

Lithium-Ion Batteries for Less

From MIT's Technology Review:
Researchers show a low-cost route to making materials for advanced batteries in electric cars and hybrids.

A new way to make advanced lithium-ion battery materials addresses one of their chief remaining problems: cost. Arumugam Manthiram, a professor of materials engineering at the University of Texas at Austin, has demonstrated that a microwave-based method for making lithium iron phosphate takes less time and uses lower temperatures than conventional methods, which could translate into lower costs.

Lithium iron phosphate is an alternative to the lithium cobalt oxide used in most lithium-ion batteries in laptop computers . It promises to be much cheaper because it uses iron rather than the much more expensive metal cobalt. Although it stores less energy than some other lithium-ion materials, lithium iron phosphate is safer and can be made in ways that allow the material to deliver large bursts of power, properties that make it particularly useful in hybrid vehicles.

Indeed, lithium iron phosphate has become one of the hottest new battery materials. For example, A123 Systems, a startup based in Watertown, MA, that has developed one form of the material, has raised more than $148 million and commercialized batteries for rechargeable power tools that can outperform conventional plug-in tools....MORE

Capital Markets: "BOJ Demonstrates Resolve and Riksbank Surprises"

From Marc to Market:

Overview: The BOJ underscored its commitment to capping the 10-year yield at 0.25% and sent the yen reeling. The dollar rose to JPY131, a new 20-year high. Sweden's Riksbank caught many wrongfooted with a 25 bp hike to initiate the tightening cycle. The krona shot up and is the strongest of the major currencies, rising about 0.65% against the US dollar. Most of the other currencies are =/- 0.25% against the greenback. The euro briefly traded below $1.05 late Asia. Better than expected results for Meta helped lift Asia Pacific equities. Of the large markets in the region, only Taiwan and China failed to rise by more than 1% today. The Chinese yuan is the weakest among the emerging market currencies, sliding about 0.75%, which puts the greenback above CNY6.60 for the first time since November 2020. Europe's Stoxx 600 gapped slightly higher at the open and its gains are being led by tech, energy, consumer discretionary, and financials (also helped by favorable earnings). The US 10-year yield is little changed near 2.82%. The drop in the yen appears to have no impact. European yields are mostly 1-2 bp higher. 

Gold was sold to a new two-month low near $1872 but has steadied in the European morning and is now a little higher on the day. June WTI continues to consolidate. It has not been above $103 this week and for the second session is finding support around $100. US natgas prices are struggling to extend the roughly 11% gain over the past three sessions, while Europe's benchmark is off almost 4.4% after rallying almost 17% in the past two sessions. Iron ore rose for a third session, but it still has not recouped Monday's 9.5% drop. Note that China announced it would remove tariffs on coal (3%-6%) to ensure adequate energy supplies. Copper is little changed. July wheat is trading higher and has recouped yesterday's 0.35% decline.

Asia Pacific

The Bank of Japan did not back down an inch, and instead reinforced its message. The coming rise in inflation is not going to be sustainable and the economy still needs robust monetary support. A weaker yen is overall beneficial but too quick of a pace could hurt companies. The BOJ stands ready to buy an unlimited about of 10-year Japanese government bonds to defend the 0.25% cap on 10-year yields indefinitely. As expected, the BOJ raised this year's inflation forecast to 1.9% from 1.1% and left the next two year's forecasts unchanged at 1.1%. It also reduced this year's growth forecast to 2.9% from 3.8% but lifted next year's projections to 1.9% from 1.1%. 

Separately, Japan reported weaker-than-expected March industrial output. The earthquake last month disrupted output and a 0.3% gain was recorded after a 2.0% rise in February. On the other hand, March retail sales were stronger than expected, rising 0.9%, not the 0.3% that the median in Bloomberg's survey anticipated. Meanwhile, according to the weekly MOF portfolio report, Japanese investors continue to the campaign that goes back to the second half of October of selling foreign bonds. In those subsequent 29 weeks, Japanese have sold foreign bonds in all but eight weeks. The monthly breakdown that is included in the current account report does not appear the US Treasuries are being singled out, but rather a bear market is global bonds seems to be the main consideration. And this this point, indirect bidders, where foreign demand is recorded, at US auctions, continue to be strong.... 


"Poland raises stakes on Putin as Draghi goes to Washington"

For the sake of the Polish people I sure hope their leaders understand what they are doing.

Being a stalking horse out in front of the U.S. and NATO and especially the EU, is a very dangerous position. And in addition, they've accepted something on the order of three million Ukrainians who crossed the border, an extraordinary humanitarian act on a national scale, but one that can't go on forever. So here's wishing the Poles the best.

From Asia Times, April 25:

The new hardline demand by Poland, which will most probably be joined by Baltic NATO members, will never be acceptable to Russia  

Poland is preparing to raise the diplomatic stakes significantly against Russian President Vladimir Putin by calling for the removal of the Black Sea Fleet from Ukraine as a condition for easing crushing economic sanctions imposed on Russia for its unprovoked invasion of Ukraine.

The new demand for the withdrawal of all Russian troops came during an interview of Poland’s ambassador to the United States, Marek Magierowski, by Carlyle co-founder and co-chairman David Rubenstein of the Economic Club of Washington on April 20.

“I will give you some very specific conditions. These are not yet official, and this is my personal view. If we want to even start thinking about easing up those restrictions or lifting part of the sanctions, there are some obvious conditions,” Magierowski told Rubenstein, adding: “First of all, Russia has to withdraw all its troops, not just from Ukraine proper, but also from Crimea and all those territories that were annexed in 2014.”

Magierowski’s demand for complete withdrawal of the Russian military from Crimea, including the Black Sea Fleet in Sevastopol, is a major diplomatic escalation on the part of Poland, as it would mark a Russian military defeat even surpassing that of the Russo-Japanese War of 1904-05, a defeat that led to the eventual downfall and execution of Czar Nicholas II.

Notwithstanding his statement as “not yet official,” Magierowski, who served as Poland’s deputy foreign minister prior to his appointment to Washington, leaves no doubt that there is any light between himself and Polish President Andrzej Duda.

Kremlin watchers deemed reliable, including the former US ambassador to Moscow and current CIA director, Bill Burns, believe that Putin’s impulsive decision to annex Crimea in 2014 stemmed from disinformation from his inner cabinet. The United States and North Atlantic Treaty Organization wanted to kick the Black Sea Fleet out of Crimea after the Euromaidan protest ousted kleptocratic Russian ally Viktor Yanukovych from power....


Wednesday, April 27, 2022

"Five Oil Pipeline Valves Reportedly Shut Down By German Activists"

There's one way to make a point.

If those weapons pouring into Ukraine should start making their way west the activists could do it Red Army Faction/Baader-Meinhof style.

From OilPrice:

German activists have allegedly succeeded in halting the flow of crude oil through pipelines at five separate locations in protest against the country’s foot-dragging on a ban on Russian oil.

A group calling itself “The Uprising of the Last Generation” claims to have breached the pipelines at emergency stations on Wednesday where climate activists activated shut-off valves and then chained themselves to the valves.

According to Reuters, the five valve locations were in Berlin, Munich, Leipzig, Greifswald and Koblenz. 

The group said that “crude oil pipelines had been turned off all over Germany and the flow of oil had been interrupted”. Members of the group filmed the shut-offs, posting video and photographs on Twitter and Instagram.

According to Germany’s Tichys Einblick daily, it was unclear at the time of writing if crude oil flows along this pipeline had effectively been halted.

Activists are demanding that the government of Olaf Scholz work faster to find ways to reduce Germany’s dependence on Russian energy sources.

"We are in a climate emergency! The German government not only ignores it, it plans to fuel it further. To now want to drill for oil in our North Sea - this is madness that you must stop, Mr. Habeck!" activist Edmund Schulz said in a statement....


"Coast Guard Confirms Delay for New Icebreakers"

You would think that if the goal is to confront Russia, confront them where they live, you should have an icebreaker or ten. but no, this farce has been going on for over a decade.

Here are a few prior posts:
The U.S. Has NO Icebreakers It Can Deploy To The Arctic This Year

What the actual hell.
Congress and the Obama administration should have ordered six heavies ten years ago.
This is dereliction of their single most important function, national defense, and borderline suicidal.

An Account of The Voyage Of The Icebreaker USCG Polar Star (It's bad)

FIRE IN ANTARCTIC OCEAN Aboard U.S.Coast Guard’s Last Heavy Icebreaker
The introductions to our two most recent posts on the Polar Star began with "This is just sad".
It is now beyond sad and is stupidly dangerous to use this ship any longer.

The Only U.S. Heavy Icebreaker Suffers MULTIPLE Mechanical Problems On Voyage To Antarctica

This is just sad.
The Polar Star has a sister ship, the Polar Sea, but that has been deactivated and is being cannibalized for parts. The only other major American icebreaker is the USCGC Healy, a big boat but only a medium icebreaker.
"US Coast Guard Turns Down Arctic Exercise Because 40-year-old Icebreaker Might Break Down And Would Require Russian Help"

"U.S. Watchdog Warns The Coast Guard To Get Real About Its Plans To Field Critical New Icebreakers

And the headline story, from National Defense, April 21:

The pandemic and design-related work will push the Coast Guard’s new icebreakers to an expected 2025 delivery date, according to service leaders.

Icebreakers are difficult to build and are an important national asset, Rear Adm. Douglas Schofield, assistant commandant for acquisition and chief acquisition officer for the Coast Guard, said at the Navy League’s annual Sea-Air-Space conference in National Harbor, Maryland. The Coast Guard is working with the Navy to collaborate on the design.

“We’re excited to get her out, start building this year, and then deliver her in [2025],” Schofield added.

Commandant of the Coast Guard Adm. Karl Schultz announced last fall that the delivery date of the new icebreakers would be delayed one year due in part to COVID-19 as well as a complex design of the new cutters. The fiscal year 2022 budget requested $80 million for the procurement of three Polar Security Cutters.

The new Polar Security Cutters will have a “multi-mission construct,” given that the ship will sail through extreme temperatures and conditions around the world and breakthrough ice as thick as six feet. Currently, the Coast Guard has one heavy-duty icebreaker and a medium-duty icebreaker, which is primarily used for research purposes.

The Coast Guard is working on a more effective, versatile design than that of previous icebreakers, Schofield said.

“There’s a lot of great design aspects that we’re working in here with more maneuverable, up-to-date hull form that actually takes less maintenance and less horsepower to break the same amount of ice,” Schofield continued. The multi-mission aspect, which includes boat launching, helicopter recovery, as well as tailoring to crewmembers’ needs, is crucial, he added.....


Give me an 'effin break.

We've been chronicling the failures of the executive branch and the Pentagon for 12 years.

If interested see January's "As Russia's New Icebreaking Monster Completes Maiden Voyage, The U.S. Contracts For A New Heavy, Scheduled For 2025"

Or December's "China to build its third icebreaker":
Oh good grief. China isn't even an Arctic nation, yet they are going to have more operating icebreakers than the United States....