Wednesday, August 31, 2022

Toyota Decides To Electrify and Goes Big

Although Toyota led the world in hybrid electrics Mr. Toyoda and his lieutenants were reluctant to swing their massive resources into a full commitment. The cited serious issues: availability of battery metals and woefully lacking electrical generating capacity being the two most mentioned, and even got into a hissing contest with Elon Musk because they were experimenting with hydrogen fuel cell technologies.

But something changed and I'm not sure what it was. They are still pursuing fuel cells but in the last week the Government of Japan and the company have used some very big numbers.

Two from Reuters via, both August 31:

Japan calls for $24 billion investment to boost battery competitiveness

Japan needs over $24 billion in investment from both the public and private sectors to develop a competitive manufacturing base for batteries used in areas such as electric vehicles (EVs) and energy storage, the industry ministry said on Wednesday.

A specialist panel tasked with formulating battery strategy also set a target of securing 30,000 trained workers for battery manufacturing and supply chains by 2030, the Ministry of Economy, Trade and Industry said.

The final strategy is central to Japanese efforts to reinvigorate its battery industry as government-backed rivals from neighboring China and South Korea expand market share in lithium-ion batteries at the expense of Japanese companies.

“The government will be in the forefront and mobilize all its measures to achieve the strategy’s goals, but we can’t achieve this goal without the efforts of the private sector,” said industry minister Yasutoshi Nishimura at the end of a panel meeting, calling for close cooperation.

The panel has already set targets for a domestic production capacity of EV and energy storage batteries at 150-gigawatt hours (GWh) by 2030, and a global capacity of Japanese makers at 600 GWh. It has also called for full-scale commercialization of all-solid-state batteries by around 2030.

It added to those April-announced targets on Wednesday with the recruitment and 3.4 trillion yen ($24.55 billion) investment goals....



If interested see also June 7 on battery electric vehicles:
"Toyota’s Skunkworks Chief “Incredibly Optimistic” on Climate"

....For Toyota, we’ve announced that 35 percent of our production is going to be BEVs within the next eight years—by 2030. This is incredibly fast and a very, very high percentage of our production, but it’s not 100 percent. So what’s the other 65 percent going to be? When we look at the actual impact in terms of lifetime emissions for the entire life cycle of a car, there are other alternatives which are almost as good, but are actually practical sooner. And that includes PHEVs [plug-in hybrid electric vehicles], which have both a battery and an engine in them. They act like a BEV over shorter distances, roughly 40 miles or so for the models we have now. And that means that you get most of the advantages of a BEV, but you’re not as dependent on the charging network for longer trips. Even HEVs [hybrid electric vehicles] have substantial carbon reductions. And then, of course, there are fuel-cell vehicles, too.....

And June 2021 on Japan's hydrogen focus: 

"Volkswagen Is Stocking Up On Glass For Fears of a Near-Future Shortage"

From Jalopnik, August 30:

Concerns about gas rationing in Europe have led the automaker to start hoarding windows.

As the war in Ukraine wears on, it’s affecting more and more parts of global supply chains. Oil and gas prices have soared, while the barely-recovering semiconductor market has fallen into scarcity once again. Now, the war is threatening another piece of the global production puzzle: Glass.

According to a new report in the Wall Street Journal, European glassmakers are in an incredibly risky position. With their heavy reliance on natural gas, largely supplied by Russia, they stand on a precarious edge: Relied upon by thousands of businesses and consumers, but at the whims of the wartime Russian government....



"Cash has just five years left, warns ATM boss"

From The Telegraph, August 28:

Switch to plastic pushes cash use down 40pc since the pandemic 

The chief of the UK’s largest ATM network has warned that cash has as little as five years left, as the country’s infrastructure experiences “death by a thousand cuts”. 

“The cost of providing cash infrastructure, which includes the ATMs, security and bulk cash centres is huge at £5bn a year,” said John Howells, chief executive at Link. Many of these costs are fixed and will not change as consumers move to digital payments. 

Since the beginning of the pandemic, “cash use is down by 40pc – and is still falling,” he added. A recent report from UK Finance, the banking trade body, estimates that just one in every 20 transactions will be made using cash by 2031. 

“This infrastructure will start to fall apart unless something is done, and we are already seeing ATMs and branches closing at a worrying rate,” said Mr Howells. “Our cash infrastructure is experiencing death by a thousand cuts.”

An estimated five million people who rely on cash – many in rural locations or less well off – are at risk of being left behind unless more is done to help them adapt to digital, Mr Howells said.

“We have 5-10 years to fix digital payments before cash becomes unworkable, and need to start planning how to get the new system working for all.”

Link runs the UK’s network of around 54,000 cash machines and works with almost all UK banks and card issuers.....


In Case You Missed It: "Blackstone Puts Finishing Touches on Record Real-Estate Vehicle" (BX)

Opportunistic, thy name is Blackstone.

From the Wall Street Journal, July 20:

Latest iteration of main real-estate fund is expected to total $30.3 billion when it is finalized

Blackstone Inc. is in the final stages of raising a new real-estate fund that would set a record as the biggest vehicle of its kind, defying market volatility and a crowded landscape for fundraising.

The private-equity giant said in a regulatory filing Wednesday it has closed on commitments totaling $24.1 billion for Blackstone Real Estate Partners X, the latest iteration of its main real-estate fund.

Blackstone is committing about $300 million of its own capital and already has allocated an additional $5.9 billion to investors, which will bring the fund to $30.3 billion when it is finalized, according to people familiar with the matter. The firm raised the fund, expected to be the largest traditional private-equity vehicle in history, in just three months, they said. Blackstone set the prior record with the $26 billion buyout fund it raised in 2019. The new real-estate fund will be 50% larger than its predecessor, a $20.5 billion pool raised in 2019. Together with funds dedicated to real estate in Asia and Europe, Blackstone will have a war chest of more than $50 billion to do so-called opportunistic investments, which tend to be higher-risk deals with the potential for higher returns.

That could allow the firm to take advantage of a downturn in the public markets, which has caused valuations to fall and has led some publicly traded companies to seek new sources of cash. Some of Blackstone’s best-performing deals—like its 2014 purchase of the Cosmopolitan casino and hotel in Las Vegas and its 2016 deal for life-sciences buildings owner BioMed Realty Trust Inc.—were struck during periods of market turmoil....


And just to hammer home Blackstone's apparent strategy:
Blackstone Unloads 304 Units in SoCal for $204M 


As the old traders used to say about entering into a position: "Well bought is half sold."

Blackstone's Landlord Subsidiary (Home Partners of America) To Stop Purchasing Homes In 38 Cities Tomorrow

From ZeroHedge, August 25:

The Other Shoe Drops: Blackstone Landlord Halts Home Purchases In 38 Cities As Market Crashes (BX)

One month after we reported that home prices finally dropped for the first time in year, an observation echoed yesterday by Black Knight which also found that home prices had fallen for the first time in 3 years last month - in the biggest decline since 2011 - we knew the other shoe in the ongoing housing crash was set to drop any minute.

We didn't have long to wait, because just after the close today, all those who had defended housing as backstopped by Wall Street's biggest firms and thus unlikely to crash, were suddenly silenced when Bloomberg reported that Home Partners of America, the single-family landlord owned by Blackstone, the largest residential and commercial landlord in the US, will stop buying homes in 38 US cities, becoming the latest institutional investor to back away from an overheated housing market.

The company, which was acquired by Blackstone in June 2021 for $6 billion, told customers that as of Sept. 1, it is pausing applications and property submissions in Boise, Idaho; Fresno, California; Memphis, Tennessee, and 25 other areas. The company will go on hiatus in 10 additional cities on Oct. 1 (incidentally, Boise, ID is the city which saw explosive price increases during the covid pandemic, and has since then seen an unprecedented plunge with Redfin reporting that a record 70% of home sellers had dropped their asking price in July).

"The housing recession will continue and eventually flatten house prices, Goldman Sachs economist says"

Sometimes I wonder if the Fed spent the last three months of "QT"* just waiting for the big banks to get their derivative books in order before doing a rugpull on real estate.

From MarketWatch, August 30:

The housing sector is in something of a recession, and an economist at Goldman Sachs says the downturn will continue — and eventually slow down the still-rapid pace of house price increases.

Goldman Sachs economist Ronnie Walker said housing starts have dropped 20% from their peak and existing home sales have skidded by 30%.

Mortgage rates as high as 5.8% — they were just 3.2% in January — are partly to blame. Sales and permits have fallen more sharply in regions where they increased the most in the earlier part of the pandemic, suggesting a retreat from the pandemic-related boost to housing, said Walker.Walker says existing home sales will fall another 12% by the fourth quarter, and new home sales will be flat. The latest survey from the Conference Board says plans to buy a home within six months has dropped to the lowest level since 2015....

*Since the June 1 start date: Treasury holdings down ~$70 billion vs. target down $90 billion but Agency Mortgage Backed Securities UP ~$20 billion vs target DOWN $52.5.

Tuesday, August 30, 2022

"Royal Caribbean to Use Elon Musk’s Starlink Internet Across Full Fleet of Cruise Ships"

Folks much smarter than me have said it will be SpaceX that makes Mr. Musk the world's first trillionaire, not Tesla or The Boring Company or Neuralink.

And definitely not Twitter.

From gCaptain, August 30:

Elon Musk’s Starlink has landed its first cruise industry customer.

Royal Caribbean announced a plan on Tuesday to use SpaceX’s Starlink internet across its global fleet of more than 60 cruise ships and all newbuilds on order.

Starlink is the high-speed, low-latency satellite internet constellation operated by SpaceX.

“Royal Caribbean Group selecting Starlink to provide high-speed, low-latency internet across their fleet will make their passengers’ getaways even more luxurious,” said SpaceX Vice President of Starlink Sales Jonathan Hofeller. “We couldn’t be more excited to work with Royal Caribbean Group to ensure travelers at sea can stay connected with a great internet experience.”

Royal Caribbean said the Starlink service, which will be available to both passengers and crew from anywhere in the world, will be installed on all Royal Caribbean International, Celebrity Cruises and Silversea Cruises ships, along with all newbuild vessels. Altogether that’s about 64 ships and ten newbuilds.

Royal Caribbean said deployment will begin immediately following a successful trial that has already taken place onboard its 3,600-passenger Freedom of the Seas....



"India May Import Wheat in Blow to Modi Goal of Feeding World"

Possibly offset by a big bump in the Canadian harvest.

From Bloomberg via Yahoo Finance, August 21:

Indian Prime Minister Narendra Modi boldly declared that his country was ready to “feed the world” after Russia’s invasion of Ukraine. Less than four months later, the government needs to consider grain imports.

Even before Modi made his pledge, a record-breaking heat wave that started in March was threatening Indian wheat output. That cut production and pushed up local prices, making everyday life more expensive for hundreds of millions of Indians that use the grain to make staple foods like naan and chappatis.

Indications that a bumper wheat harvest wasn’t going to eventuate prompted the government to restrict exports in mid-May. State reserves have declined in August to the lowest level for the month in 14 years, according to Food Corp. of India, while consumer wheat inflation is running at close to 12%.

The looming shortage and rising prices now have authorities making preparations to facilitate overseas purchases. Government officials are discussing whether to cut or abolish a 40% import tax on wheat to help flour millers in some regions to import grain, people familiar with the matter said, asking not to be identified as the talks are private. This was first reported by Reuters.

The finance ministry didn’t respond to an email seeking comment. A spokesperson for the food and commerce ministries declined to comment. The food department on Sunday said in a Twitter post there was no “plan to import wheat” and the country has sufficient stockpiles to meet its requirements....



Covid Vaccine: British Government Recommends Pregnant and Breastfeeding Women Not Be Vaccinated (absence of data at the present time and do not reflect a specific finding of concern.)

From the updated

Summary of the Public Assessment Report for COVID-19 Vaccine Pfizer/BioNTech

Updated 16 August 2022

....Toxicity conclusions

The absence of reproductive toxicity data is a reflection of the speed of development to first identify and select COVID-19 mRNA Vaccine BNT162b2 for clinical testing and its rapid development to meet the ongoing urgent health need. In principle, a decision on licensing a vaccine could be taken in these circumstances without data from reproductive toxicity studies animals, but there are studies ongoing and these will be provided when available. In the context of supply under Regulation 174, it is considered that sufficient reassurance of safe use of the vaccine in pregnant women cannot be provided at the present time: however, use in women of childbearing potential could be supported provided healthcare professionals are advised to rule out known or suspected pregnancy prior to vaccination. Women who are breastfeeding should also not be vaccinated. These judgements reflect the absence of data at the present time and do not reflect a specific finding of concern. Adequate advice with regard to women of childbearing potential, pregnant women and breastfeeding women has been provided in both the Information for UK Healthcare Professionals and the Information for UK recipients.....


Electric Vehicle Followup: "Warren Buffett Cuts Stake in China’s BYD, Spurring Bets More May Come"

 Our outro from yesterday's "Warren Buffett Backs Driverless Trucks. Now They're Real":

....The introductory narrative isn't quite true. Beginning in 2008 Berkshire acquired 225 million shares of Chinese electric vehicle manufacturer BYD. Counting its various offerings it is the #1 EV manufacturer in China with Tesla #2. Worldwide the positions are reversed.

At Charlie Munger's urging BRK through its Berkshire Energy sub bought the position for $232 million. As of the last annual it was valued at $7.69 billion. 

In July 2022 a trade of 225 million shares was recorded by the Hong Kong Clearing and Settlement agency. The apparent buyer, at least in nominee terms was Citibank. 

And today, from Bloomberg via Yahoo Finance, a solid write-up of what's what: 

Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in BYD Co., just over a month after speculation the legendary US investor was preparing to shed his entire position in the Chinese carmaker sent its stock plummeting.

Berkshire cut its holding in BYD’s Hong Kong-listed shares to 19.92% from 20.04% on Aug. 24, according to an exchange filing Tuesday. That equated to around 1.33 million securities at an average HK$277.10 ($35.30) apiece, valued at about $47 million.

Theories about Buffett’s plans have swirled since a 20.49% stake -- identical to the size of Berkshire’s last reported BYD position in Hong Kong as of December -- entered the Central Clearing and Settlement System last month. The move triggered the biggest slump in BYD stock in nearly two years....


Happy birthday Warren.

Browser Startups Take Aim at Google Chrome, Apple Safari

From the Wall Street Journal, August 18:

The two tech giants control more than 80% of market through Chrome and Safari, raising questions among regulators and competitors

Web browsers were at the center of the first major antitrust case challenging the power of big tech companies more than two decades ago. Now a new generation of regulators and rivals are again questioning whether the gateways to the internet are too tightly controlled.

Back then, in the 1990s, the target was Microsoft Corp. Today, it is Alphabet Inc.’s Google and Apple Inc., which together control more than 80% of the market through their Chrome and Safari browsers, respectively.

In the U.K., the Competition and Markets Authority said in June that it was examining competition between browser developers on mobile devices as part of an antitrust investigation into Apple and Google.

After complaints from a group of software developers, dubbed Open Web Advocacy, the European Commission added a section focused on browser developers to the recently passed Digital Markets Act, which is expected to impose penalties on companies that haven't adopted its recommendations by 2024. Several startups are also trying to break in, claiming they can make the browser experience more app-friendly and in hopes that the competitive landscape is shifting. Microsoft has mounted a new push with its Edge browser, which effectively replaced Internet Explorer.

Some participants in the market said that Chrome and Safari grew dominant because they were faster and more secure than competitors, and that it is relatively easy to switch between different browsers.

A Google spokesman said people choose to use Chrome because it is “fast, secure and offers the best experience,” adding that Google has made the browser’s underlying code free for others to use....


One of the upstarts:  The Browser Company | Building Arc

Turley: "Wharton Study: Biden Tuition Debt Forgiveness Could Cost $1 Trillion"

This is the high end of the range Wharton was referencing just last week: Penn Wharton: "Forgiving Student Loans: Budgetary Costs and Distributional Impact".

From Professor Turley's personal website:

The alleged cost of $300 billion for the Biden tuition debt forgiveness plan was challenged by the White House as too high. Then the figure went up to $500 billion. Now the respected University of Pennsylvania’s Wharton School of Business estimates that it will cost up to $1 trillion. Putting the merits of such debt forgiveness aside, the unilateral plan to waive up to a trillion dollars without congressional approval is a dangerous and unconstitutional violation of our system of the separation of powers. Those Democrats applauding this plan in Congress are celebrating their own institutional obsolescence.

The Wharton analysis of the student loan forgiveness plan found that the cost could be $1 trillion over a 10-year period.

What is so troubling is that, not only did Biden circumvention Congress with the constitutional control of the purse, but this plan has divided the nation. While supported by a majority, there is intense opposition to the plan and its costs. The polling also shows conflicting concerns and support from the public as they learn more about the plan.

A new Emerson College Polling national survey found that 36% believe the loan handout is too much and 35% believe that it is just right. Thirty percent think it is not enough. Only roughly half of the country believes it will actually help students gain access to a college education.  One poll shows roughly half of the country supporting the plan while another poll shows 59% are concerned that the plan will fuel inflation. A NPR/Ipsos survey found 82% of respondents believed the government should prioritize making college more affordable over forgiving student loans.

This is precisely what congressional action is meant to address in vetting ideas and the costs of such ideas.  Instead, we are scrambling to learn the costs and expected impact after it is already approved by unilateral action of the president....


The President is mandated by law to collect the debts, and Congress is mandated by the Constitution to make the money decisions. It's pretty straight-forward.

Here is the updated Wharton paper which, though it mentions the new income-driven repayment (IDR) program right up front does not focus on the details, the fact that for middle and upper-middle-income collegians the new rules require only minimum  payments with a write-off of remaining debt after ten years for wide swaths of the college-loan-takers.
From the August 24 White House Fact Sheet:

....The Department of Education has the authority to create income-driven repayment plans, which cap what borrowers pay each month based on a percentage of their discretionary income. Most of these plans cancel a borrower’s remaining debt once they make 20 years of monthly payments. But the existing versions of these plans are too complex and too limited. As a result, millions of borrowers who might benefit from them do not sign up, and the millions who do sign up are still often left with unmanageable monthly payments.

To address these concerns and follow through on Congress’ original vision for income-driven repayment, the Department of Education is proposing a rule to do the following:

  • For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.
  • Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
  • Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department of Education estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.
  • Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

These reforms would simplify loan repayment and deliver significant savings to low- and middle-income borrowers. For example:

  • A typical single construction worker (making $38,000 a year) with a construction management credential would pay only $31 a month, compared to the $147 they pay now under the most recent income-driven repayment plan, for annual savings of nearly $1,400.
  • A typical single public school teacher with an undergraduate degree (making $44,000 a year) would pay only $56 a month on their loans, compared to the $197 they pay now under the most recent income-driven repayment plan, for annual savings of nearly $1,700.
  • A typical nurse (making $77,000 a year) who is married with two kids would pay only $61 a month on their undergraduate loans, compared to the $295 they pay now under the most recent income-driven repayment plan, for annual savings of more than $2,800....

"Is America on the verge of a house price collapse? Prices could crash by up to 20% and homes are overvalued by as much as 72%, expert warns"

There are signs that such is the case. More on those tomorrow.

From the Daily Mail (as if you couldn't tell from the 400-word headline), August 26:

  • Boise, Idaho; Charlotte, North Carolina and Austin, Texas were the three most overvalued areas in the United States, according to Moody's Analytics
  • Moody's found that found that 183 of the nation's 413 largest regional housing markets are 'overvalued' by more than 25 percent
  • If a recession hits, house prices in those 183 regions could plummet by as much as 20 percent, Moody's predicted
  • If there is not a recession, they will still fall 10-15 percent, the analysts believe - echoing other experts 
  • The housing inventory is at its highest level since April 2009, as sellers struggle to get rid of their property because mortgages have become more expensive
  • Mortgage rates have nearly doubled since January, rising to 5.13 percent for a 30-year loan as of last week, according to Freddie Mac

House prices could fall by up to 20 percent next year if there's a recession, experts warn - and property in some areas of the country is overvalued by as much as 72 percent. 

Mark Zandi, chief economist for Moody's Analytics, was pessimistic about the housing market in May, but he has now made his forecasts even more bleak, Fortune reported on Wednesday.

It comes amid ongoing arguments over whether the US is already in a recession, with the country recording two consecutive quarters of negative growth - the traditional definition of such a slump.  

The news is particularly dire for people who have purchased homes in what Fortune terms 'bubbly' markets, with Boise in Idaho, Charlotte in North Carolina and Austin in Texas all named the most overvalued markets.

But a total of 180 other areas across the US have property deemed overvalued, many of them highly-desirable.

They include LA, Orlando, Seattle and Indianapolis, where property is all estimated to be 30 percent overvalued. 

Homes in Houston are around 34.5 per cent overvalued, while properties in Montana are 25 per cent overvalued.

Picturesque Bend in Oregon - regularly voted one of the United States' best places to live - has homes that are 43.8 per cent overvalued, according to Moody's, with Billings in Montana 25 per cent overvalued....


Our best guess is that the Federal Reserve's buying of Mortgage Backed Securities has created a price bubble so large that the median home price is double what it would have been in the absence of such buying. August 23:

The Mortgage Backed Securities Trap The Federal Reserve Set For Itself, In One Chart

As we saw yesterday the Fed had never bought these confections, what one observer has called "dog crap in a cat crap wrapper" until the Great Financial Crisis

Maybe confection is the wrong word.

However, during the GFC the market for bundled mortgages stopped functioning, no one trusted the quality of the mortgages inside the wrappers, what with their various tranches and flavors and ratings shenanigans.

So the Fed stepped in and started buying in size, so much so that when presented on a semi-log chart it is a graphical representation of madness:

Ben Bernanke was Chairman of the Fed from February 1, 2006 to January 31, 2014.

Janet Yellen was Chair from February 3, 2014 to  February 3, 2018.

It is on them that, after the initial emergency, the assets stayed on the balance sheet and distorted the housing finance market beyond recognition.

It is on them that mortgage interest rates were so low as to cause another housing bubble, driving house prices to levels at least double what they would otherwise be, probably more than double, and condemning generations to being nothing more than tenants with no chance whatsoever of stepping on the first rung of wealth accumulation.

And because the Fed owns so much agency MBS paper it doesn't dare sell into the market for fear of crashing the MBS market and jacking interest rates to ridiculous levels.

So the Fed announced on May 4, 2022 they would reduce the size of the MBS holdings by letting them run-off. There are three ways that existing mortgages are, in effect canceled, so they can be allowed to run off:

1) they are paid off by the homeowner.

2) they are replaced by new mortgages upon the sale of the property.

3) they are replaced by refinancing. 

There has been much discussion of the fact that refi's plummet in a rising rate environment, the homeowner keeps their current mortgage.

We are about to see the second source of roll-off available mortgages shrink dramatically as affordability issues force potential home buyers to stop bidding house prices higher and the volume of transactions grinds down.

Then the first source of paper available for roll-off, pay-offs, becomes suspect in the face of recession with its concomitant rise in delinquencies and defaults.  

The fact that Saints Bernanke and Yellen not only didn't shrink the position but, as of the last H.4.1 report from Mr. Powell's Fed, allowed it to get to $2.727 trillion, more than triple the 2013 level, is just mind-boggling.

More tomorrow, some possible resolutions of this disaster, none very appealing.

In the meantime I keep referring back to this Bloomberg Opinion piece, August 11:

Fed Purchases Of Mortgage Backed Securities Have Destroyed The Housing Market

And this from Barron's, August 7: 

"The Fed Is About to Ramp Up Balance-Sheet Shrinkage. It May Get Dicey"

Finally, if interested, a search of the blog with the keyword: H.4.1 

Monday, August 29, 2022

"Synthetic Milk Is Coming, And It Could Radically Shake Up Dairy"

Probably more palatable than some other suggestions.*

From The Conversation via ScienceAlert, August 29:

The global dairy industry is changing. Among the disruptions is competition from food alternatives not produced using animals – including potential challenges posed by synthetic milk.

Synthetic milk does not require cows or other animals. It can have the same biochemical make up as animal milk, but is grown using an emerging biotechnology technique know as "precision fermentation" that produces biomass cultured from cells.

More than 80 percent of the world's population regularly consume dairy products. There have been increasing calls to move beyond animal-based food systems to more sustainable forms of food production.

Synthetic milks offer dairy milk without concerns such as methane emissions or animal welfare. But it must overcome many challenges and pitfalls to become a fair, sustainable, and viable alternative to animal-based milk.

Not a sci-fi fantasy
My recent research examined megatrends in the global dairy sector. Plant-based milks and, potentially, synthetic milks, emerged as a key disruption.

Unlike synthetic meat – which can struggle to match the complexity and texture of animal meat – synthetic milk is touted as having the same taste, look, and feel as normal dairy milk....

*Scientists Swear Cockroach Milk Is the Next Big Superfood
But how do you milk the wee vermin...

Global Warming: "Study finds edible fungi could support transition to net zero"

Fungi, is there anything they can't do?*

From PhysOrg:

An Honorary Professor from the University of Stirling has made a breakthrough in resolving a key conflict in the world's quest for net zero—how to reconcile tree planting and food production. 

Dr. Paul Thomas's research in Mexico has found that inoculating with an edible mushroom can produce more protein per hectare than pasture-raised beef, while reforesting areas, storing carbon and restoring biodiversity at the same time.

One of the significant outcomes from the global climate conference COP26 was a pledge from world leaders to end deforestation by 2030. Trees are primarily cut down to grow for the world's growing population. In South America, for example, around 85% of rainforest has been felled to make way for pasture, or the cultivation of animal feed, to produce beef.

Dr. Thomas, affiliated to the Faculty of Natural Sciences at Stirling, said: "Land-use conflict is the major driver of deforestation worldwide, with demand for agricultural output forecast to increase for years to come.

"This study presents a whole new way of looking at land use, making it possible to combine food production—in this case an edible mushroom already appreciated in Mexico—with the carbon sequestration, biodiversity and conservation goals that forestry achieves."

The blue-colored mushroom—Lactarius indigo—was found to produce 7.3kg of protein per hectare, compared with pasture beef production, which produces 4.8-7.0kg. Soya can produce more than 200kg, but is grown as a monoculture, which depletes biodiversity and soil, releasing carbon into the atmosphere....

 *Possibly also of interest:

Helicopters On The Roof Of The U.S. Embassy In Baghdad

This fellow says "evacuated" but I'm not sure that's the case. For all I know it's the Baghdadian version of UberEats. (high operating costs, flashy, nice app)

" ...The race to build an LNG terminal in north Germany"

It's 2022, talk about leaving it a bit late.

From The Guardian, August 18L

Country is hoping a new North Sea terminal can supply 8% of its gas usage as war in Ukraine upends energy policy

s tourists at the Hooksiel resort on Germany’s North Sea coastline lean back in their wicker beach chairs or stomp around the mud flats, the jetty that stretches for 1.3km into the ocean to their right is a familiar sight. The frantic clanging of metal on metal at its furthest tip, however, is new.

Built in 1982, the jetty was designed to host not just two import terminals for chemicals but also one for liquefied natural gas (LNG), shipped in on tankers from the US. With cheap Russian gas beating LNG for price, those tankers never arrived. Two adjacent plots of land, reclaimed from the North Sea to make space for industry, instead attracted rare warblers and bitterns.

But as Russia’s war in Ukraine upends decades of German energy policy, getting LNG tankers to dock on the Hooksiel jetty is suddenly a matter of national priority.

Wilhelmshaven, the nearby historic port city, has become emblematic of a two-fold, seemingly contradictory promise made by Germany’s government: that it can import LNG to compensate for throttled gas imports from Russia at record speed, belying a reputation for bureaucratic plodding; and that the jetty into the North Sea will carry LNG – a polluting fossil fuel – for only a short time, soon to be replaced with a more climate-friendly substitute.

Wilhelmshaven is one of five floating LNG terminals Germany is rushing to build by the end of the year, creating infrastructure that a study in July by the Fraunhofer Institute argued would be vital to avoid cold homes and closed factories this winter not just in Germany but across all of Europe as Vladimir Putin turns off the tap.

The Höegh Esperanza, a 300-metre long tanker converted into a Floating Storage and Regasification Unit and chartered by the German government at a mooted cost of €200,000 a day, will dock at the jetty and turn liquid back into gas at a rate of about 10 hours per tanker load.

Roughly 80 tankers are expected to arrive at Wilhelmshaven each year, substituting half of the gas imports the German energy company Uniper used to have from Russia, or 8% of Germany’s overall gas usage before the start of the war....


 Between the "no nukes" and the gas pipeline protests the Greens are going to be responsible for a lot of volk being cold, broke and dead.

"Warren Buffett Backs Driverless Trucks. Now They're Real"

From Bloomberg via Advisor Perspectives, August 26:

Warren Buffett’s Berkshire Hathaway Inc. didn’t gain fame for investing in startups. The venerated investor has a predilection for buying time-tested businesses like an oil company, a railroad or an insurer that are bets on the steady and profitable growth of the US economy.

Buffett shied away from technology stocks for years before taking the plunge with Apple Inc., which was already woven just as deeply in the fabric of the economy as Occidental Petroleum Corp., BNSF Railway Co. or Geico. It came as no surprise that Buffett eschewed the SPAC and NFT crazes. His longtime business partner, Charlie Munger, in February railed against the “wretched excess” in both venture capital and cryptocurrencies.

This is why investors should take particular note that Pilot Co., which operates Pilot and Flying J travel centers and is owned by Berkshire Hathaway, agreed on Tuesday to take a stake in Kodiak Robotics Inc., a driverless truck startup. Pilot will get one of Kodiak’s five board seats. Although the investment amount and percentage of ownership in Kodiak weren’t disclosed, Pilot is now the largest strategic investor in the startup.

This investment is a significant validation by Berkshire Hathaway, through Pilot, that driverless trucks are on the cusp of being a reality. It may be hard and even scary to imagine an 18-wheeler with no human on board humming down the highway intermingled with passenger cars. This may happen more quickly than people think....


The introductory narrative isn't quite true. Beginning in 2008 Berkshire acquired 225 million shares of Chinese electric vehicle manufacturer BYD. Counting its various offerings it is the #1 EV manufacturer in China with Tesla #2. Worldwide the positions are reversed.

At Charlie Munger's urging BRK through its Berkshire Energy sub bought the position for $232 million. As of the last annual it was valued at $7.69 billion. 

In July 2022 a trade of 225 million shares was recorded by the Hong Kong Clearing and Settlement agency. The apparent buyer, at least in nominee terms was Citibank.

Media: The Washington Post Goes Hollywood (literally)

From Vanity Fair, August 28:

“It’s a Gold Mine”: Inside The Washington Post’s Big Hollywood Deal

Brian Grazer, Bryan Lourd, and Fred Ryan dish on the DC paper’s partnership with Imagine and CAA, which already has four projects in development. “I actually wish I’d thought of it!” says Richard Plepler.

or all its associations with the khaki-ness of the nation’s capital, The Washington Post nonetheless exudes a certain sex appeal. This was the paper, after all, that inspired All the President's Men, America’s ultimate political thriller, starring Robert Redford and Dustin Hoffman as Watergate’s Woodward and Bernstein. More recently, when Marty Baron retired last year after his storied run as executive editor, the A-listers in his video send-off included Liev Schreiber, who immortalized Baron in Spotlight, and Steven Spielberg, who directed 2017’s Pentagon Papers drama, The Post, starring Tom Hanks as Ben Bradlee and Meryl Streep as Katharine Graham.

Despite its Hollywood cred, The Washington Post hasn’t exactly had a strong presence at the intellectual property gold rush, even as other major media outlets have methodically mined their content and turned it into weaponry for the streaming wars. But that’s all changing now that the Post has become bedfellows with two Hollywood heavyweights: Imagine Entertainment and Creative Artists Agency, which are giving the 144-year-old institution a jolt of creative mojo. Two months since the announcement of a “strategic partnership”—in which Imagine will “create scripted and non-scripted film and television properties derived from The Post’s vast archives, current reporting, and ongoing investigations,” and CAA will broker the deals—the arrangement is already bearing fruit, with four projects “actively in development,” Imagine honcho Brian Grazer told me. “It’s one of the oldest and most reputable papers in America and perhaps the world. Getting special access to stories and being able to, at times, talk to journalists, is just gigantically valuable, particularly if your affinity is to make movies and television based on fact.”

As Peak TV reached a fever pitch over the past few years, news organizations became bullish about selling their IP, not only because of the ravenous demand from the networks and streamers, but as a way to diversify revenues amid the collapse of their traditional business models. The New York Times, for instance, struck a deal with Left/Right to produce documentaries for FX and Hulu, while turning its Modern Love column into an Amazon Prime series. Vox Media and BuzzFeed created in-house studios to develop scripted and unscripted features for the likes of Amazon and Netflix. Vanity Fair’s parent company, Condé Nast, has a sprawling entertainment division that shepherds our content to screen. And so on.

But a mash-up between one of America’s top news outlets and one of its top production companies—with one of Hollywood’s Big Three talent agencies in the mix as their broker—appears to be a sui generis proposition. “I actually wish I’d thought of it!” said Richard Plepler, the former HBO boss who now has a development deal with Apple TV+. “There’s so much IP out there, so many stories flying around, and breaking through is a big deal. Traders call it ‘edge’—maybe that’s AI, or a superior research team. In the content business, you’re also looking for edge. So obviously, if you have a deal with one of the greatest news organizations in the world, to me, that’s a genuine advantage.”....


How are they going to top Tracy and Hepburn in a movie about fact-checkers?

Capital Markets: Stocks and Bonds and Xi and Europe and....

 Mr. Chandler packs a lot of information into his morning missive.

From Marc to Market:

Overview: The reverberations from last week continue to roil the capital markets today. Equities and bonds have been sold and the greenback bought. Most of the large markets in Asia Pacific fell by more 2%, including Japan’s Nikkei, Taiwan’s Taiex, and South Korea’s Kospi. Ironically, the Shanghai and Shenzhen Composites eked out minor gains, but the CSI 300 still eased. Europe’s Stoxx 600 is off 1% after falling nearly 1.7% before the weekend. US futures warn of another lower opening. Recall that the major indices gapped lower last Monday as well. The US 10-year yield is up 7 bp to 3.11%, probing last week’s highs, while the two-year yield reached new highs near 3.48% before steadying. European benchmark yields are 12-13 bp higher. The dollar is firmer against all the major currencies. Most of the European currencies but the Norwegian krone and British pound are off modestly, while the yen, the Australian dollar and sterling are off more than 0.5%. Emerging market currencies are under pressure, though the Hungarian forint and Czech koruna are steady to firm. 

Rising rates and a stronger dollar are no match for gold, which has been sold to a new low for the month (~$1720.45). There appears little support in front of $1700. October WTI is firm near $93.75. Talks with Iran will carry over into next month. US natgas slipped fractionally last week and is up nearly 2.5% today to about $9.55 after testing $10 last week. News that Germany is near its 85% tank capacity objective for next month has seen Europe’s benchmark soften a little (off ~1.8%). Iron ore is giving back most of last week’s 4.7% gain. December copper is off 3.4% after posting a minor gain last week (~0.7%). December wheat rallied 4.4% last week and is off almost 1% today.

Asia Pacific
As China's Xi awaits the coronation for a third term, the challenges seem to be intensifying. Shijiazhuang, the provincial capital of the Hebei province that borders Beijing is in a partial lockdown for three days, which started yesterday, and includes the suspension of subways and non-essential business operations. It is a city of more than 11 mln people and follows lockdowns in other parts of Hebei last week. Power shortages are leading to rolling blackouts in different regions and compounding the challenge arising from the end of property boom. The economic toll spurred the government into action recently with rate cut and new lending/spending initiatives mostly concentrated on infrastructure. Over the weekend, China reported that industrial profits fell 1.1% in the Jan-July period. They had risen by 0.8% in the first half. The decline in profits dovetails with the deepening of the economic slump seen in a batch of data reported recently....

Sunday, August 28, 2022

"Be less squeamish about drinking 'sewage water', says expert"

Ummm, uhhh, ahhh, nevermind.

From the BBC, August 28:

People need to be 'less squeamish' about drinking water taken from sewage treatment plants, the head of the Environment Agency has said.

Water companies are planning "toilet-to-tap" systems, also known as water recycling, to turn sewage from lavatories into drinking water by treating it.

By 2030, toilet water could be deposited into rivers near treatment plants so it can be collected and processed as drinking water....


Is this the night train to Nowheresville?
Not liking where this is headed.


"Little by little the truth of lockdown is being admitted: it was a disaster"

 From the Times de Londres, August 28:

Jonathan Sumption
Sunday August 28 2022, 12.01am BST, The Sunday Times

Public fear was deliberately stoked to justify decisions made on the hoof and based on questionable advice

Lockdown was an extreme and unprecedented response to an ancient problem, the challenge of epidemic disease. It was also something else. It marked one of the gravest governmental failures of modern times. In a remarkably candid interview with The Spectator, Rishi Sunak has blown the gaff on the sheer superficiality of the decision-making process of which he was himself part. The fundamental rule of good government is not to make radical decisions without understanding the likely consequences. It seems obvious. Yet it is at that most basic level that the Johnson government failed. The tragedy is that this is only now being acknowledged.

Sunak makes three main points. First, the scientific advice was more equivocal and inconsistent than the government let on. Some of it was based on questionable premises that were never properly scrutinised. Some of it fell apart as soon it was challenged from outside the groupthink of the Sage advisory body. Second, to build support, the government stoked fear, embarking on a manipulative advertising campaign and endorsing extravagant graphics pointing to an uncontrolled rise in mortality if we were not locked down. Third, the government not only ignored the catastrophic collateral damage done by the lockdown but actively discouraged discussion of it, both in government and in its public messaging.

Lockdown was a policy conceived in the early days by China and the World Health Organisation as a way of suppressing the virus altogether (so-called zero Covid). The WHO quickly abandoned this unrealistic ambition. But European countries, except Sweden, eagerly embraced lockdown, ripping up a decade of pandemic planning that had been based on concentrating help on vulnerable groups and avoiding coercion.

At first Britain stood up against the stampede. Then Professor Neil Ferguson’s team at Imperial College London published its notorious “Report 9”. Sunak confirms that this was what panicked ministers into a measure that the scientists had previously rejected. If No 10 had studied the assumptions underlying it, it might have been less impressed. Report 9 assumed that in the absence of a lockdown people would do nothing whatever to protect themselves. This was contrary to all experience of human behaviour as well as to data available at the time, which showed that people were voluntarily reducing contacts well before the lockdown was announced.

And, as Report 9 pointed out, lockdown would not destroy the virus. It would come back as soon as the restrictions were lifted. The policy therefore made sense only as a stopgap until the advent of an effective vaccine, then reckoned to be 18 months away.

It was always obvious that you could not close down a country for months on end without serious consequences. The shocking thing that emerges from Sunak’s interview is that the government refused to take them into account. There was no assessment of the likely collateral costs of lockdown. There was no cost-benefit analysis. There was no planning. In government the issues were not even discussed.... 


That's former Supreme Court Justice, The Rt Hon Lord Sumption. He does not sound at all impressed with either the expert class or the political class.

HT: it was Izabella Kaminska but I've forgotten where. Here's her website. Either there or on Twitter.

"Cash is king for EV makers as soaring battery prices drive up vehicle production costs"

In light of electricity pricing, cash is also king for European, and to a lesser extent, American,* electric vehicle owners.

From CNBC, August 28:

In the transition from gas-powered vehicles to electric, the fuel every automaker is after these days is cold hard cash.

Established automakers and startups alike are rolling out new battery-powered models in an effort to meet growing demand. Ramping up production of a new model was already a fraught and expensive process, but rising material costs and tricky regulations for federal incentives are squeezing coffers even further.

Prices of the raw materials used in many electric-vehicle batteries — lithium, nickel and cobalt — have soared over the last two years as demand has skyrocketed, and it may be several years before miners are able to meaningfully increase supply.

Complicating the situation further, new U.S. rules governing EV buyer incentives will require automakers to source more of those materials in North America over time if they want their vehicles to qualify.

The result: new cost pressures for what was already an expensive process....


"Tesla’s battery metals bill balloons to $100 billion" (TSLA)
*I've been told that residential electricity prices are cheaper in Moscow, Russia than they are in Moscow, Idaho. I haven't had that verified though. How about St. Pete, Rus vs St. Pete, FL?

"Farming in the Tropics: Brazil Has High Hopes for a New Strain of Wheat"

From Der Spiegel, August 18:

A new wheat variety in Brazil thrives in high heat and arid climates. The country hopes it will not only lead the country to self-reliance, but also make it a major contributor to the global supply. 

Paulo Bonato’s freckled hand gently caresses the tips of his wheat plants. The sun is blazing down from the sky and the soil in the central Brazilian savannah is as red as the rusty hull of a ship. Yet the lush, deep green wheat field looks as though it could be in the heart of Bavaria. The wind rustles the dry leaves of the neighboring cornfield, producing a sound akin to a tropical rain shower. But the last time it has rained here, says Bonato, was on May 16, almost three months ago.

Bonato repeatedly grabs a wheat stalk and rubs it between his fingers, checking the ripening grains for potential fungal infection or pests. "I have to see them every day," he says. "I can feel how they are doing." Bonato, a 62-year-old farmer and landowner, holds the world record for tropical wheat production. Nobody achieves harvests as bountiful as his.

Bonato is a protagonist in a slow-motion revolution taking place in the surroundings of the Brazilian capital, Brasilia – one which is rapidly gaining momentum. The vision involves Brazil, a country whose climate and soil conditions are really only good for wheat farming in the milder regions to the south, becoming a major producer. President Jair Bolsonaro recently announced that the country will soon be able to take care of its wheat needs on its own. "In 10 years," he said, "we will export the equivalent of what we consume in Brazil." Since then, the country’s self-sufficiency has been discussed frequently in the media.

Harvest shortfalls triggered by drought in traditional wheat producers like Canada combined with shortages resulting from the Russian invasion of Ukraine have focused global attention on wheat. Prices for the grain have risen sharply, which has made more cost-intensive farming in subtropical regions more attractive.

"Wheat is one of the most important suppliers of calories for humanity," says Celso Luiz Moretti, head of the state-owned Brazilian Agricultural Research Corporation (Embrapa). He hopes that his innovations will ultimately provide an important contribution to global nutrition. "If there are regions of the world where we can still expand the production of foodstuffs, then it is the tropical and subtropical areas."....

Hurricane Watch: Two Areas Of Possible Development Including One That Could Make A Direct Hit On Mar-a-Lago

Following on our look at the RAND Corporation studies including ""Manipulating the Climate: What Are the Geopolitical Risks?" and including some earlier work from the U.S. Air Force, "Weather as a Force Multiplier: Owning the Weather in 2025"—U.S. Air Force", we see this from the National Hurricane Center:

Disturbance #1 coming off the African Main Development Zone is the one to keep an eye on. Here are average September tracks via WeatherBug:

And via the NOAA all the storm, hurricane and major hurricane tracks since 1851 within 30 nautical miles of Mar-a-Lago: