Wednesday, November 30, 2022

"VW warns soaring EU energy costs render battery plants unviable"

From Bloomberg via Automotive News Europe, November 28:

VW brand boss Thomas Schäfer says ballooning energy costs will hamper battery-cell factories.

Investment in German and EU industrial projects such as battery-cell factories will be unfeasible if the region’s policy makers fail to control ballooning energy prices in the long-term, the head of Volkswagen Group’s namesake brand, Thomas Schäfer, said.

“Unless we manage to reduce energy prices in Germany and Europe quickly and reliably, investments in energy-intensive production or new battery cell factories in Germany and the EU will be practically unviable,” VW Schaefer wrote Monday on LinkedIn.

“The value creation in this area will take place elsewhere.”....


Related October 14: "Germany’s Apokalypse Now"  

And May 25

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

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

U.S. Army Mad Scientist Laboratory: "The Pivotal Role of Small and Middle Powers in Conflict: Poland and the War in Ukraine"

 Three from

 Posted on June 2, 2022 

[Editor’s Note:  Army Mad Scientist is pleased to welcome back returning guest blogger and proclaimed Mad Scientist Collin Meisel and newcomer Tim Sweijs with their post addressing the strategic importance small and middle powers play in competition, crisis, and conflict. As General Charles A. Flynn, Commanding General, U.S. Army Pacific (USARPAC), sagely observed in his podcast and blog post last month, “Building strong relationships between individuals, organizations, and countries is vital for deterrence by denial.From Poland’s pivotal role in the continuing conflict in Ukraine, Messrs. Meisel and Sweijs extrapolate the roles similarly-sized powers could play in the China-US competition in Southeast Asia, both as effective allies and partners, as well as “poison frogs” — whose potential occupation could present our pacing threat with exorbitant and untenable military, diplomatic, and economic costs.  In recognizing these small and middle powers’ capacity for regional influence, pursuing opportunities for collaboration, and strengthening bilateral ties, the U.S. can help ensure future global stability — Read on!]

The Russo-Ukraine war of 2022 — a bloody conflict broadcast live from thousands of cellphones from thousands more angles in near-real-time — is one of countless stories that often do not fit neatly into a single narrative. Among many narratives that have surfaced amid Russia’s further invasion of Ukraine are those of a return of great power politics, declining US hegemony, and a crossroads for China’s position in the world — and indeed, each of these stories is important. At the same time, they have, until recently, often overshadowed another important story:  that of Poland’s influence and pivotal role in Ukraine.

It is a role that Ukrainian President Volodymyr Zelenskyy movingly acknowledged in a recent virtual appearance in front of Poland’s legislature:  “I feel that we have already formed an extremely strong alliance with Poland. Let it be informal. But a union that grew out of reality, not words on paper. If God wills and we win this war, we will share the victory with our brothers and sisters.

To date, Poland has accepted the plurality of Ukrainians fleeing the conflict in their homeland. As of 31 March 2022, more than 2.3 million out of 4 million Ukrainian refugees had fled to Poland. These numbers have exceeded even United Nations High Commissioner for Refugees analysts’ worst-case-scenario estimates. Of the millions who have fled (even including those who have not settled in Poland), the majority have passed through Polish territory before continuing onward.

Meanwhile, the lion’s share of NATO-provided military equipment flowing in the opposite direction has passed through or been provided by Poland prior to its final destination in Ukraine. Poland even expressed willingness to donate its 28 MiG-29 fighters to Ukraine’s cause.

While remarkable, Poland’s outsized role is in some sense a natural consequence of its structural connections to Ukraine. The Frederick S. Pardee Center for International FuturesFormal Bilateral Influence Capacity Index shows Poland’s importance in Ukraine’s network of diplomatic, economic, and security relationships. According to our most recent data prior to the further Russian invasion, Poland had the single most influence capacity in Ukraine, outpacing even Russia, China, and the United States.

Importantly, a country’s relational power is its capacity to influence another state through economic, political, and/or security measures -- whether a country chooses to leverage that capacity is often a case-dependent political choice. Today, we are seeing Poland leverage this capacity toward positive ends rather than via “weaponized interdependence” often associated with great powers, where countries exploit asymmetric trade, aid, and arms relationships, among others....


The post that immediately preceded the above:

May 26, 2022: "400. Russia-Ukraine Conflict: Sign Post to the Future (Part 1)"

And June 16: "403. How will the RUS-UKR Conflict Impact Russia’s Military Modernization?"

What Sort Of Dirt Does Zelensky Have On The U.S., The U.K. etc., That He Can Float A Trillion Dollar Ask?

Seeing this story a month ago:

Biden lost temper with Zelenskyy in June phone call when Ukrainian leader asked for more aid
Biden had barely finished telling Zelenskyy he’d just greenlighted another $1 billion in military assistance when the Ukrainian president started listing all the additional help he needed.

—NBC News, October 31, 2022 

I thought "that sounds like every blackmail/extortion relationship I've ever seen in the movies."

And then, undeterred, President Zelensky came back this month and said he needs another $55 billion.

And now this via Newsweek (at 0:54 mark) "we're gonna need a trillion":


May 25: "Maybe We Should Just Declare War On Russia And Take Their Stuff: Zoltan Pozsar on Russia As A "Global Systemically Important Bank" Of Commodities"

November 18: "As U.S. Spending On The Russia - Ukraine War Approaches $100 Billion: Russia Delanda Est

Very related: 

UPDATED—Fundraising Lessons From Volodymyr Zelensky: Get In Front Of The World Economic Forum.... Ask For $5 Billion.... Per Month

Update below.
Original post:

From Fortune, May 23:  

Zelensky pitches Western leaders at Davos on the business opportunities that would come from giving Ukraine $5 billion a month

The World Economic Forum annual meeting opened in Davos, Switzerland on Monday morning, with as grim a message as the elite gathering has heard in many years.

In the three-day summit’s opening address, Ukraine’s president Volodymyr Zelensky, dressed in his trademark wartime olive-green T-shirt, and projected on monitors from Kyiv, told about 1,000 CEOs and government officials that Ukraine needs $5 billion a month, beginning immediately, in order to stave off full-blown economic collapse—a collapse that would have deep global ramifications.

“The amount of work is enormous,” he said. “We have more than a half a trillion dollars in losses, and tens of thousands of facilities destroyed. We need to rebuild entire cities and industries.”

Yet rather than describing the dire situation as a crisis, Zelensky cast it as a potentially lucrative opportunity for Western countries and companies.

"Patronage" for investors 
 Zelensky said Ukraine would have a “special, historically significant model of rebuilding,” in which companies and countries could choose a specific region or mine to rebuild....

Vaclav Smil: "Waiting for Superbatteries They are still a long way from matching the energy density of liquid fuel"

Aye lad, there's the rub.*

From IEEE Spectrum, November 29:

If grain must be dragged to market on an oxcart, how far can it go before the oxen eat up all the cargo? This, in brief, is the problem faced by any transportation system in which the vehicle must carry its own fuel. The key value is the density of energy, expressed with respect to either mass or volume.

The era of large steam-powered ocean liners began during the latter half of the 19th century, when wood was still the world’s dominant fuel. But no liners fired their boilers with wood: There would have been too little space left for passengers and cargo. Soft wood, such as spruce or pine, packs less than 10 megajoules per liter, whereas bituminous coal has 2.5 times as much energy by volume and at least twice as much by mass. By comparison, gasoline has 34 MJ/L and diesel about 38 MJ/L.

But in a world that aspires to leave behind all fuels (except hydrogen or maybe ammonia) and to electrify everything, the preferred measure of stored energy density is watt-hours per liter. By this metric, air-dried wood contains about 3,500 Wh/L, good steam coal around 6,500, gasoline 9,600, aviation kerosene 10,300, and natural gas (methane) merely 9.7—less than 1/1,000 the density of kerosene. 

How do batteries compare with the fuels they are to displace? The first practical battery, Gaston Planté’s lead-acid cell introduced in 1859, has gradually improved from less than 60 Wh/L to about 90 Wh/L. The nickel-cadmium battery, invented by Waldemar Jungner in 1899, now frequently stores more than 150 Wh/L, and today’s best mass-manufactured performers are lithium-ion batteries, the first commercial versions of which came out in 1991. The best energy density now commercially available in very large quantities for lithium-ion batteries is at 750 Wh/L, which is widely seen in electric cars.....

*In 2009 MIT's Technology Review was talking about "A Quantum Leap in Battery Design" 10 Times the Energy Density of Lithium-ion", hasn't happened.

In 2013, "Here is THE Problem Facing Alternative Energy":

Climateer Investing: Here is THE Problem Facing Alternative Energy

An article on Professor Smil from the journal Science, 2018:
Meet The Guy Who Taught Bill Gates About Energy
....The fourth transition is unlike the first three, however. Historically, Smil notes, humans have typically traded relatively weak, unwieldy energy sources for those that pack a more concentrated punch. The wood he cut to heat his boyhood home, for example, took a lot of land area to grow, and a single log produced relatively little energy when burned. Wood and other biomass fuels have relatively low "power density," Smil says. In contrast, the coal and oil that heated his later dwellings have higher power densities, because they produce more energy per gram and are extracted from relatively compact deposits. But now, the world is seeking to climb back down the power density ladder, from highly concentrated fossil fuels to more dispersed renewable sources, such as biofuel crops, solar parks, and wind farms. (Smil notes that nuclear power, which he deems a "successful failure" after its rushed, and now stalled, deployment, is the exception walking down the density ladder: It is dense in power, yet often deemed too costly or risky in its current form.)....
Same energy density problem here in 2019:
Shipping: "Electric Container Ships Are Stuck on the Horizon"—Vaclav Smil

And many, many more. Use the "search blog" box upper left, if interested.

New York City's Economic Recovery Plan: Gambling and Weed

From City-Journal Magazine, Autumn 2022 edition:

In August, New York mayor Eric Adams stood before a banner festooned with cannabis-leaf emblems, making what he billed as a major announcement. “Today, we light up our economy,” enthused the mayor. Referring to recreational pot sales, he continued: “The regulated adult-use cannabis industry is a once-in-a-generation opportunity. . . . Cannabis NYC will plant the seeds for the economy of tomorrow.” Standing with Adams, John Durso of the Retail, Wholesale and Department Store Union promised “good, union jobs.” Jeffrey Garcia of the Latino Cannabis Association predicted “one of the largest generators of wealth in New York at least for the next two decades.” Bertha Lewis of the Black Institute affirmed that “cannabis is an industry and not just a nickel bag.” Deputy mayor for economic development Maria Torres-Springer promised “hundreds of millions in revenue” for the city.

Welcome to New York’s post-pandemic economic-development policy: the promotion of vice. In this New York, vice isn’t something to tolerate, operating on the edges of the law, in a black market in a dense, wealthy city; it’s a premier growth industry.

And pot isn’t the only vice that New York is encouraging. Gotham is also eagerly courting multiple full-service casinos. It’s a path that struggling and far weaker American cities—including Atlantic City, New Orleans, and Detroit—took out of sheer economic desperation, born of policy failure. Adams is unabashedly cheering the expansion of “gaming,” as he calls it, to “create at least 16,000 good-paying jobs.”

New York’s new emphasis on pot and poker—even as the city ignores the day-to-day quality-of-life concerns of its core high-paying industries in finance and business and its highest-earning individual taxpayers—comes despite decades’ worth of evidence that vice-oriented cities don’t thrive.

The public sector’s embrace of vice as a moneymaker started more than 50 years ago. In 1963, New Hampshire faced a problem: government spending was rising, as war veterans sent their baby-boomer kids to public school, but voters were stubbornly tax-averse. Democratic lawmaker Laurence Pickett proposed an alternative: a state lottery. Residents and visitors could buy tickets for a regular, state-run sweepstakes, tied to a horse race. Religious groups were aghast. As one bishop put it: “Just think what it will do to the minds of young people when they realize their parents would rather indulge in gambling than meet their obligations in an honorable way.”

Arguments backing New Hampshire’s first-in-the-nation state lottery, though, will sound familiar to anyone following today’s push for marijuana and gambling expansions. People were already playing illegal, local “numbers games,” and the profits were going to the underworld, lottery proponents observed. Since people would engage in this activity anyway, why not eliminate corruption, via state administration? And the states could put the profits toward a good cause: education. Despite religious opposition, New Hampshire residents approved the effort, by four to one.

New Hampshire’s idea gained national traction, as many other state governments sought to defray the cost of more spending without driving taxes up too high. Just a few years later, New York became the second lottery state. In 1967, supporters promised half a billion dollars a year for education, through the proceeds of a once-a-month lottery drawing. Again, opponents fretted about the moral implications. “We are confessing we have reached a point in this state where we cannot provide for our needs by legitimate methods,” said State Senator Samuel Greenberg of Brooklyn. “It means we are bankrupt.” Across the aisle, Republican senator Thomas Laverne, representing Rochester, charged lottery backers with cynically “beclouding” the issue by tying it to education, “something everyone cares about.” The beclouding worked. Voters approved the necessary amendment to create the lottery as an exception to the state’s constitutional prohibition against gambling.

The lottery performed as advertised. It raised money for schools, without, apparently, debasing the populace, as opponents feared. The streets were not suddenly filled with broke gamblers. Demand bred supply, and vice versa. By the early 1980s, New York’s lottery system, far from a once-a-month contest, offered a choice of different weekly games, all heavily marketed to working-class and middle-class players with the promise of life-changing sudden riches: “All you need is a dollar and a dream.”

The lotteries did lure a small percentage of people into compulsive gambling; stories emerged of players who spent their life savings, or their families’ savings, on tens of thousands of dollars’ worth of tickets. But these aberrations could be chalked up to personal failings—they were the exception, not the rule.

Even fierce critics overlooked how quickly and deeply the lottery would entrench itself into everyday culture. The lottery didn’t instantly turn New York into a betting-mad mecca, but over time, it normalized low-grade, habitual gambling as respectable—even something good to do, in support of a good cause. Kids helped their grandparents pick out numbers and eagerly watched televised drawings. New York’s example spurred on neighboring states, and the concept spread nationwide. If a state didn’t create a government lottery, it would lose the tax revenue to its neighbors....


Oil: "WTI Extends Gains After Massive Crude Inventory Draw"

WTI futures $80.46 up $2.26; Brent $86.83 up $3.80

From ZeroHedge:

Oil prices extended yesterday's gains this morning with WTI back above $80 after API reported inventories fell by almost 8 million barrels and further optimism of a rising demand outlook from China lifting Zero-COVID restrictions.

“Oil is starting to get its groove back and it looks like both supply and demand drivers could turn bullish for crude,” said Ed Moya, senior market analyst at Oanda Corp.

“If China’s Covid rules are slowly eased and OPEC stays the course, crude prices could rally another 5-10% here.”

Crude has recovered in recent days as EU discussions on a Russian price cap continue. Without the measures, companies will have no access to European or UK insurance when transporting the country’s crude, potentially risking supply disruption.

We note that while API reported a sizable crude draw, it also reported builds for gasoline and diesel stockpiles, which could indicate fuel demand has remained weak amid strong post-maintenance refinery production.


  • Crude -7.85mm (-2.49mm exp) - biggest draw since April 2022

  • Cushing -150k

  • Gasoline +2.85mm

  • Distillates +4.01mm


  • Crude -12.58mm (-2.49mm exp) - biggest draw since June 2019

  • Cushing -415k

  • Gasoline +2.77mm

  • Distillates +3.577mm

After API's reported draw in crude and build in products, the official data confirmed it and then some with the biggest crude draw since June 2019 and huge product builds...

....MUCH MORE (chart mania)

"Amazon makes a new push into health care" (AMZN)

From The Economist, November 20:

Prime of life
It might be its riskiest business venture yet

AS BIG TECH firms face a brutal slow-down the hunt is on for new areas of expansion. Amazon, which is now America’s second-biggest business by revenue, is a case in point. In the final quarter of 2022 its sales are expected to expand by just 6.7% year-on-year. On November 17th Andy Jassy, its chief executive, confirmed that the firm had begun laying off workers and would fire more next year. He said it was the hardest decision he had made since becoming boss. But he also noted that “big opportunities” lie ahead. One is the largest, most lucrative and hellishly difficult business in America: health care.

Many tech firms have health-care ambitions. Apple tracks well-being through the iPhone. Microsoft offers cloud-computing services to health firms. Alphabet sells wearable devices and is pumping money into biotech research. But Amazon is now creating the most ambitious offering of all. Two days before Mr Jassy’s statement it launched “Amazon Clinic”, an online service operating in 32 states that offers virtual health care for over 20 conditions, from acne to allergies. Amazon describes the service as a virtual storefront that connects users with third-party health providers.

The Amazon Clinic launch follows a $3.9bn takeover, announced in July, of One Medical, a primary-care provider with 790,000 members that offers telehealth services online and bricks-and-mortar clinics (the deal is yet to close). The deal was led by Neil Lindsay, formerly responsible for Prime, Amazon’s subscription service. He has said health care “is high on the list of experiences that need reinvention”.

These latest moves complement Amazon’s existing assets. Its Halo band, a wearable device that went on sale in 2020, monitors the health status of users. In 2018 it bought PillPack, a digital pharmacy that is now part of Amazon Pharmacy, for $753m. Amazon Web Services launched specific cloud services for health-care and life-science companies in 2021.

The move into primary care, jargon for the role of the family doctor, is a big step but a logical one. Walgreens, a pharmacy chain, reckons the industry is worth $1trn a year. Around half of Generation z and millennial Americans do not have a primary-care doctor and One Medical’s membership has almost doubled since 2019. Amazon Clinic will accept cash for its services, rather than relying on America’s nightmarish insurance system to recoup costs....


There is something very disturbing about the data-mongers seeing “big opportunities” in one's health.

Former NY Fed Head Bill Dudley: "The Fed Shouldn’t Raise Its Inflation Target"

Our assumption is that the Federal Reserve is able, over the next 15 - 24 months, to cut CPI inflation in half—to 3.8 - 3.9%—declare victory, and go home.

From Bill Dudley at Bloomberg via Advisor Perspectives, November 28:

Some people are suggesting that the Federal Reserve consider a compromise in its battle with rising prices: Instead of imposing the full monetary tightening required to get inflation back down to its 2% target, why not increase the target a bit?

For the sake of the economy and its own credibility, I hope the Fed doesn’t listen.

The central bank last changed its inflation objective quite recently, in August 2020. Previously, the Fed had tried to hit the 2% target at all times, regardless of past performance. Under its revised monetary policy framework, it would seek to achieve an average of 2%. Past misses would no longer be treated as “bygones,” but instead offset by misses on the other side, to keep inflation expectations well anchored at 2%.

The new regime reflected the experience following the 2008 financial crisis, when inflation persistently ran below target, causing inflation expectations to fall. This increased the likelihood that the Fed’s short-term interest-rate target would get stuck at the zero lower bound, making it more difficult for the central bank to provide monetary stimulus — precisely what happened during the early stages of the Covid-19 pandemic.

Now the Fed faces a different problem: Inflation is too high. This has caused some prominent economists, including Olivier Blanchard and Jason Furman, to ask: What’s so special about a 2% inflation target in the first place? Why not 3%, or even higher? A higher target would result in a higher peak in nominal interest rates during economic expansions. This would create more room to cut rates during downturns, reducing the risk of getting pinned at the zero lower bound and lessening the need to use other monetary policy tools such as quantitative easing and forward guidance.

I find the case unconvincing, for five reasons.

First, and most important, there’s already less risk of being pinned at the zero lower bound. With short-term interest rates likely to peak at 5% or more this economic cycle, the Fed will have plenty of room to cut rates when the time comes. The two recent episodes of zero interest rates might even be outliers: Addressing climate change and building more resilient supply chains will require investment, while government deficits and retiring baby boomers will reduce savings, potentially increasing the neutral level of inflation-adjusted interest rates.

Second, I believe the Fed has already subtly raised its inflation objective.....


Tuesday, November 29, 2022

Nitrogen: "Netherlands to close up to 3,000 farms to comply with EU rules"

From The Telegraph, November 28:

Government tries to cut down on nitrogen pollution in a move set to reignite tensions with farmers who say the industry is unfairly targeted
The Dutch government plans to buy and close down up to 3,000 farms near environmentally sensitive areas to comply with EU nature preservation rules. The Netherlands is attempting to cut down its nitrogen pollution and will push ahead with compulsory purchases if not enough farms take up the offer voluntarily.
Farmers will be offered a deal “well over” the worth of the farm, according to the government plan that is targeting the closure of 2,000 to 3,000 farms or other major polluting businesses.
Earlier leaked versions of the plan put the figure at 120 per cent of the farm’s value but that figure has not yet been confirmed by ministers.  “There is no better offer coming,” Christianne van der Wal, nitrogen minister, told MPs on Friday. She said compulsory purchases would be made with “pain in the heart”, if necessary. 
Biodiversity under threat
The Netherlands needs to reduce its emissions to comply with EU conservation rules and agriculture is responsible for almost half the nitrogen emitted in the proud farming nation.

The Dutch environment agency has warned that native species are disappearing faster in the Netherlands than in the rest of Europe and that biodiversity is under threat. 
But the new plan looks set to reignite tensions with farmers over nitrogen reduction.  Dutch farmers have staged mass protests, burnt hay bales, dumped manure on highways and picketed ministers' houses over the last three years.  In 2019 a ruling by the Dutch Council of State meant every new activity that emits nitrogen, including farming and building, needs a permit....


Joe Weisenthal Sits In On A Green Roundtable: "The Geopolitics of Stuff"

Along with Kate Mackenzie and three people who have never been in my kitchens.*

From Phenomenal World:

The material economy is back. Economists and commentators in recent decades had heralded (or lamented) the arrival of an automated, redundant, frictionless system of international commerce. But over the past two years, multiple global crises have exposed the fragile physical underpinnings of world trade. Persistent shortages and spiking energy bills are transferring the pain of distant crises to ordinary workers and consumers. 

The global pandemic and the invasion of Ukraine are proximate causes of the current turmoil. But longer-running forces are driving the seize-up in supply chains, making it unlikely to let up. Policymakers are taking emergency lessons in the sinews of global trade: energy, materials, location, logistics, labor. We see a mad scramble to reacquaint leaders with the hard stuff of the global economy, with the moment calling for a new set of experts to come forward—and talk to one another. 

The last two years has demonstrated the power of feedback effects—how crises and policy responses magnify each other. Sanctions have sharpened geopolitical tension, for example, and produced more inflation. Uneven international access to finance for energy worsens climate vulnerability, causing countries to then pay a higher price for debt.

This roundtable discussion—“The Geopolitics of Stuff”—featured Kate Mackenzie, Tim Sahay, Joe Weisenthal, Thea Riofrancos, and Skanda Amarnath. Experts in subject matter ranging from price controls to metals mining to markets, the panelists explored recent policy moves towards more direct management of the economy: bans, nationalizations, rationing, windfall taxes, and price controls. Where are these measures well-designed? When are they counterproductive? Read an edited transcript below, and watch a recording of the event here.

The event is the inaugural presentation of a new project: The Polycrisis, a series focused on the political economy of climate, and its attendant security dilemmas, with an emphasis on Global North/South dynamics. The Polycrisis is founded and led by Tim Sahay and Kate Mackenzie. Coming soon, you can expect a series of articles, more roundtables, and a newsletter by Tim and Kate. Sign up here to receive updates and new content. 

A discussion on commodities, supply chains, and climate

Kate mackenzie: Joe, on Odd Lots, you and Tracy Alloway have covered the world of “stuff” over the past two years—choke points, bullwhip effects, bottlenecks, and the impacts of increasingly frequent and severe weather events. Back in the macro blogging days of the late-2000s, understanding how the world worked, where crises came from, was all about getting to grips with finance. What is the role of macroeconomic policy in this new world we’ve entered?

joe weisenthal: Post-2008, we were all concerned with bank balance sheets and sovereign finance. In 2010, the biggest challenge that most rich economies faced was insufficient aggregate demand. There has been a flip, and we can mark that shift in March of 2020. Since Congress’s huge fiscal bill and the unveiling of new tools by the Fed, the story has changed. From 2021 to today it’s been supply chains and energy. For us as journalists, the approach has been to start with the issues people are talking about and then pull on the strings. 

We did our first episode on supply chains in December of 2020, when shipping costs between China and the US rose dramatically. We spent all of 2021 talking about supply chains, but it wasn’t intentional—in questioning why shipping costs were so high, we found out that the unidirectionality of US imports from China meant that ships returning to China had no containers on them. As a result of the shortage, container prices increased. This brought us into the ports, and the trucking bottlenecks there.

In retrospect, I think a lot of us would like to return to the earlier set of problems, because we actually know how to solve an aggregate demand shortfall. Today, things seem much more challenging. I don’t think there is some grand solution to solving questions of global stuff, whether that’s logistics or the incorporation of renewable energy onto the grid. 

It’s important to understand, though, that the traditional macro world still exists. There’s a lot of appetite to talk about lumber prices and used car prices, but the Fed still operates in a traditional macro framework. But what we have learned is to ask, “Why is this really going on?” We’re interested in pressure points, so when the Fed argues that we need to raise interest rates to fight inflation, we have to ask how this instrument will really operate. Similarly with the ECB and energy prices—we all know it isn’t equipped to deal with them. So the question for us now is: what happens when we apply these blunt instruments to a world which is fragmented and complex? This tension I think is the interesting story of our moment. 

Km: It is tough when the tools available just don’t really seem to be up to the job. 

jw: We can see this very clearly with housing. Everyone, including at the Fed, knows that rents are unaffordable and home prices are surging. When the Fed raises interest rates, mortgages go up but supply worsens because home builders exit the game. The blunt tool will pressure the housing market and probably help ameliorate inflation, but it won’t resolve the core problem underlying US housing: why is it perpetually so expensive? At some point we will need a housing-specific policy....

*As I was reading the transcript I found myself thinking of Cheers' Cliff Clavin on Jeopardy!

When Cliff makes it to the Final Jeopardy question with an insurmountable lead, Alex Trebek asks the contestants to identify Archibald Leach, Bernard Schwartz and Lucille Lesueur and says

"Cliff, unless you've done something incredibly stupid like wagering everything, you've won"

Cliff bet all his money.

His answer was "Who are three people who have never been in my kitchen".

The categories for the game were:

  • BEER

Cliff's "Dream Board".

Here's Cliff:

I. Kaminska: "Central bankers are to blame for the crypto collapse"

Of course they are. They created the excess liquidity and, as an observer, known to me only as anon. put it:

"SPACs and crypto are where excess liquidity goes to die."

From UnHerd, November 29:

Cheap money is the key to understanding Sam Bankman-Fried's downfall

The unravelling of Sam Bankman-Fried’s trading empire FTX this past month has exposed the shortfalls of crypto as the supposed solution to the excesses, conflicts and trust issues of core finance. With the impending collapse of crypto lender Blockfi it appears crypto may even be equally prone to the sort of contagion the financial sector experienced in 2008. 

What has prevented the crisis from spiralling into a fully systemic episode for the global economy — at least so far — is crypto’s still largely contained nature and much smaller size, relative to that of the traditional financial system.

Yet those keen to assert that the debacle is evidence of core finance’s clear superiority to crypto underplay the role of central banks themselves in stoking and propagating the rise of the crypto market.

The point of quantitative easing, after all, was always to lubricate the market and create the conditions for excessive risk-taking. By design....


In addition to QE the was a lot of qualitative easing as well, directly attributable to the related phenomena of low hurdle rates for every harebrained idea that could be pitched and the reach for yield in a ZIRPy world.

NFT's anyone?

"India to Test Retail Version of Digital Rupee in Thursday Launch"

From Bloomberg, November 29:

  • e-Rupee will come in the same denomination as notes and coins
  • Four banks to participate initially; four more to join later

India’s central bank will launch the retail version of its digital currency on a test basis starting Thursday, a month after allowing some banks to use it for settling secondary-market transactions in government securities. 

Four banks will initially run the digital currency pilot, with another four joining at a later stage, the Reserve Bank of India said in a Tuesday statement. A select group of customers and merchants will take part in the pilot and use the e-rupee as a replacement for hard cash. 

Digital currency would be issued “in the same denominations that paper currency and coins are currently issued,” the RBI said. India is joining countries including China in pushing forward with digital versions of their currencies, as it seeks to eliminate private cryptocurrencies that pose risks to financial stability. 

The e-rupee would offer “features of physical cash like trust, safety and settlement finality,” the central bank said, adding that it will not earn any interest and can be converted to other forms of money, including deposits with banks....


"Oil Prices Jump As Market Eyes Another Possible OPEC+ Cut"

Europe still has no deal on the "price cap" plan so this is speculation on supply/demand.

From OilPrice, November 29:

Crude oil prices jumped on Tuesday ahead of the next OPEC+ meeting as the group dispelled earlier rumors that it could agree to increase crude oil production at its next meeting.

The cost of Brent crude rose $2.07 by 9:45 am ET, to $85.26 per barrel. WTI rose $1.66 per barrel to $78.90—although both benchmarks are still considerably lower than this time last week, and nearly $15 below August levels.

Goldman Sachs on Tuesday supported the market fear that OPEC could once again cut production, sending oil prices higher, saying that it was highly likely that the group would take further measures to stop last week’s price decline and to balance the market.

OPEC+ will meet next week in Vienna on December 4 to determine the output levels for its members for January....


Here's Goldman at CNBC: 

Goldman Sachs sees ‘high probability’ of OPEC cut — and expects oil prices to hit $110 next year

Last night:  

"The week that could unravel the global oil market"

Capital Markets: "China Steps away from the Abyss and Animal Spirits are Rekindled"

From Marc to Market:

Overview: Chinese officials using the carrot and the stick have succeeded in dampening the protests and easing some anxiety and rekindled the animal spirits. Hong Kong’s Hang Seng rallied 5.25% and its index of mainland shares surged 6.20%. South Korea and Taiwan indices gained more than 1%. Among the large bourses, only Japan failed to advance. Softer than expected Spanish and German inflation may also be helping the Stoxx 600 recoup around half of yesterday’s 0.65% decline. US equity futures are firmer by around 0.5%. Benchmark 10-year yields are softer. The 10-year US Treasury yield is off three basis points to 3.65%. Most European bond yields are 10-12 bp lower. Gilts are underperforming (-4 bp) while the BOE is seeking to sell some long-dated Gilts it bought to stabilize the market (Sept-Oct). The dollar is giving back a chunk of yesterday’s gains. The Antipodeans are leading the way with gains of around 1.3%. Emerging market currencies are also advancing. The Mexican peso, South African rand, and South Korean won are up more than 1%. 

Gold has recouped yesterday’s loss in full and has pushed back above $1755 in the European morning. January WTI is extending its recovery from the $73.60 low seen yesterday and reached $79.65 today before steadying. US natgas is surging 9% today after dropping about 8.5% over the past two sessions. Europe’s benchmark is 6.7% higher. It fell 1.8% yesterday. Iron ore rebounded 2.65% losing 1% yesterday. Copper is 1.2% firmer today after slipping 0.4% yesterday. March wheat has steadied. It lost 2% yesterday on top of 2% at the end of last week.

Asia Pacific
With the apparent help of Chinese censors and police, the protests in several cities eased and Chinese officials made several announcements that lifted sentiment.
For sure, the Golden Dragon China Index of companies that trade on US exchanges rallied 3% yesterday, the most in a couple of weeks, after the CSI fell 1.1% on Monday. Local equities had begun to recover well before the official announcement that seemed more like signaling than substantive changes, but the market has been primed since the end of the 20th Party Congress for a shift. Today's announcement focused on urging older parts of the population to get vaccinated (personal responsibility) and played down the virulence of the virus now and the mutations. It noted the low death rate that official figures show in China. Central government officials also reiterated that local authorities should not be over-zealous with its Covid restrictions, respond to reasonable public demands, and minimize the impact.

Many seem to think it that China's Covid policy is simply the result of President Xi's preferences even though Chinese and international experts have warned that the country is ill-prepared for the surge in infections and fatalities that would likely result from "opening up." Hong Kong, which has opened up, has recently had to cancel non-emergency medical procedures because the hospitals are overwhelmed with Covid cases. Others look to Taiwan, which moved away from its zero-Covid policy in May, and it has a similar elderly share of its population (~15%). It has recorded 11k deaths related to the virus since then. Extrapolating from China could mean at least 700k fatalities in six months. And that might be a conservative estimate given the less effective vaccine and weaker healthcare system. China reports its November PMI tomorrow....


Stock Of Largest U.S. Undertaker Continues To Outperform Pfizer (SCI; PFE)

We've been tracking these two as a pair-trade since the excess mortality figures got so ridiculously high for so ridiculously long (over a year, month in, month out) that they could no longer be ignored.

Here's the year-to-date comparison:

....since we posted our follow-up: "UPDATE: Funeral Homes Outperforming Pfizer (PFE; SCI)" on May 4, Service Corp. not only continued but extended the outperformance:....

That's a thirteen percentage point spread, enough to make or break a year. As one of my favorite analyst buddies (two 1000-fold publicly traded issues) might say: "A trend is emerging." 

Service Corporation International does not refer to themselves as "undertakers". They go with "leading provider of funeral, cremation and cemetery services." That's more straightforward than sort-of competitor Carriage Services which euphemizes:

Transformative High Performance
....a leading consolidator and provider of deathcare services and merchandise 

Monday, November 28, 2022

Currencies: Bill Ackman, Izabella Kaminska and Xi Jinping Walk Into A Bar

On Friday, November 25 Izabella Kaminska mentioned Bill Ackman's bet against the Hong Kong dollar's peg to the USD. So I was primed in that Baader-Meinhoff Phenomenon sort of way when this piece from Asia Times dropped out of one of the feed readers:

Bill Ackman’s HK dollar play a certain losing bet
Prominent American hedge fund manager says the HK-US dollar peg is doomed but like Soros and Bass before him he’s likely wrong

And here is The Blind Spot, Izabella Kaminska, proprietor: 

In the Blind Spot (HKD, Semafor, Elon) 

....Bill Ackman reveals short position against Hong Kong dollar.

As one of the largest managed currency board systems in the world, the Hong Kong dollar — whose value is linked to the dollar at a range of 7.75-7.85 — is arguably to traditional finance what the Tether stablecoin is to crypto.

How so? Well, historically, much of the allure of holding the Hong Kong dollar has been its ability to operate as an on and off ramp for foreign capital seeking exposure to Hong Kong or related Chinese assets. Unlike the Chinese yuan, the HKD is not constrained by capital controls. Over time, this open but banded status has seen the HKMA absorb a large volume of US dollars into its reserves....


And me, I don't know nothin'.

Maybe one thing: The Chinese will play smash-mouth FX if it suits their plan.
Anything from crushing the peg themselves to squeezing Mr. Ackman in 14 different ways including many he hasn't even thought of. 

The three largest reported positions in Pershing Square's 13F (62% of the portfolio) are Lowe's Companies, Chipotle Mexican Grill, and Restaurant Brands.

In such a concentrated portfolio, an attack on any of those could do some real harm to Ackman's master plan for world domination.

"Saab Signs Contract for Two SIGINT ships for Poland" (plus some other stuff)

A few days ago Phillip Pilkington—one of the few living economists whose views we actually care about, the others being a couple of Marxists: Michael Hudson and Michael Roberts, a couple of Nobel Laureates: Robert Shiller and William Nordhaus, Pilkington, and maybe a half dozen others—a few days ago Phillip Pilkington published a thread to Twitter:


Which was fine as far as it went but where it went wasn't far enough,

Beginning with the South Korea deal. Poland isn't simply buying big iron.  As noted in August's "Watch Out Lithuania: Poland Is Militarizing Faster Than Any Nation In Europe" as part of the agreement Poland has a license to build the tanks:

....Poland will import the first batch of 180 K2PL tanks, with another 800 manufactured in Poland, under the name “Wilk” (“Wolf”)....

These aren't just any tanks. From the introduction to September's "Poland Will Have a Large and Modern Tank Army

One off the odder comments on Russia's war against Ukraine was making the rounds last week, to the effect that Russia buying munitions from North Korea was a sign of weakness.

It is more likely a sign that North Korea's war plans are very similar to Russia's, lots, and I mean lots of artillery, and the shells to go with them. It actually seems natural.

In the same vein, Poland's joint venture with South Korea to secure a whole bunch of tanks seems very smart. These are the tanks Seoul developed to hold back the North Koreans and they are reputed to be among the best in the world....

Which was followed by: "...And Helicopters, Poland Will Have A LOT Of Attack Helicopters":

...Deadly nasty killing machines. 

So the distance from Warsaw to Brussels being 1160 km (721 miles) and with a ferry range of 1,900km the copters would need to be refueled outbound and for a return trip. Unless it's a kamikaze mission.

Wait, what am I saying, they aren't going to attack EU headquarters. 
Probably just Berlin and back home for dinner. 

Maybe Strasbourg.

There is much more than just buying arms and armaments going on here. Because of the hostility toward Poland's government from Brussels, and the possibility that at some point in the future NATO's Article 5 will be invoked by Poland only to be met with reluctant mobilization on the part of the other NATO members or, worse, silence, Poland wants at minimum to have the capability to slow-down any future attack. Memories are long in that part of the world and everyone remembers what happened to Czechoslovakia in 1938, what with the 'Peace for our time' and all. 

This attitude on the part of the Poles is exactly the same as their reasoning on the Nord Stream 2 gas pipeline, February 2018: "Polish PM: Nord Stream II Would Make Russia Free to act Against Ukraine, So Must Not be Built".

When Germany and the EU decided to go ahead with the pipeline, despite a half-decade of warnings* from Poland, the Poles bought themselves a geopolitical insurance policy, the President Lech Kaczyński LNG facility in Świnoujście, about eight feet from the German border on the Baltic. Which they expanded. And expanded again while offering Germany some of the gas if Germany would just think twice about Nord Stream 2.

The thing to know about insurance policies is you have to pay the premium up front and it can be a very visible cost. Which will only seem prudent should something bad happen.

But there are some things you can't measure in zlotys alone.
(or rubles or euros or krone or...)

After that much-longer-than usual introduction, the headline story from Naval News, November 25:

Saab has today signed a contract with the Polish State Treasury Armament Agency for design, production and support of two ships for Signal Intelligence (SIGINT) for Poland. 

Saab press release

The total order value corresponds to approximately EUR 620 million with deliveries planned during 2027.  The order is expected to be booked by Saab before year end.

A SIGINT ship is used to support the acquisition of intelligence data across the full spectrum of naval intelligence capabilities. Saab will serve as prime contractor, designing and producing the two ships including the integration of advanced mission systems. The ships will be built by subcontractor Remontowa Shipbuilding SA in Poland....


Poland has some history with signals intelligence:
That Time Poland Took The Nazi's Most Precious Treasure, Gave It To the French and British and Changed History

*The Nord Stream 2 Natural Gas Pipeline Is A Game Changer For Gazprom
Dec. 2017 
Germany May Be Trying to Destabalize Poland But No Worries
August 2016
New Russian Pipeline In Baltic Sea Could 'Collapse' Ukraine

"The week that could unravel the global oil market"

A very deep dive from the Financial Times, November 27:

As western countries prepare to impose a price cap on Russian crude, many of the industry’s norms are being undermined

As an epic oil crash threatened more havoc on a pandemic-stricken global economy in April 2020, the US, Saudi Arabia, Russia and other G20 countries met to thrash out a solution. The co-operation helped end an Opec+ price war and restored stability to the market. Prices recovered.

Two-and-a-half years later, and nine months into Russia’s war in Ukraine, such collaboration on energy between global powers seems a distant memory.

Moscow has weaponised its natural gas supplies to Europe for months and is now actively trying to disable Ukraine’s electricity network. Consumer countries have become competitors as they race to secure scarce energy supplies. Fractures are visible in the decades-old Saudi-US oil relationship. Even in clean energy, leaders such as Joe Biden talk of a new battle to dominate supply chains.

The potential unraveling of the old order in the global oil market will reach a defining moment over the next week when Europe starts to block Russian seaborne crude from the continent — one of the strongest responses yet to Vladimir Putin’s brutal invasion of Ukraine.

The new sanctions will also stop European companies from insuring vessels carrying Russian oil to third countries — unless those countries accept a price for the oil dictated by western powers. In other words, western countries will attempt to impose a cap on the price of oil sold by Russia.

No one can say how disruptive these measures will be. Sanctions imposed on Russia since Putin ordered troops across Ukraine’s border on February 24 have barely dented the country’s oil exports or the Kremlin’s oil income.

But the very principle that Moscow’s geopolitical foes will set the price at which Russia sells its crude is a humiliation for a petrostate that produces more than 10 per cent of the world’s oil and sits alongside Saudi Arabia at the top of the Opec+ cartel. A price-setter would become the ultimate price-taker.

Alexander Novak, Russia’s deputy prime minister, will have a chance to discuss Moscow’s response when he sits down with Saudi energy minister Prince Abdulaziz bin Salman, at another Opec+ meeting in Vienna on Sunday, a day before the European embargo and price cap plan come into effect.

For energy industry veterans, the coming days mark a moment of deep peril for the oil market — and a global economy that still depends heavily on the commodity. Established geopolitical norms have been eroded in the past year, they say, and supply chains that have existed for decades are now being upended.... 


Crypto Contagion: "Crypto firm BlockFi files for bankruptcy as FTX fallout spreads"

From CNBC, November 28:

Distressed crypto firm BlockFi has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey following the implosion of putative acquirer FTX.

In the filing, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion.

In the filing, the company listed an outstanding $275 million loan to FTX US, the American arm of Sam Bankman-Fried’s now-bankrupt empire....


Capital Markets: "China Shakes Markets, Euro Shakes it Off"

 From Marc Chandler at Bannockburn Global Forex:

Overview: The surging Covid cases in China and the protests in several cities seemed to set the tone for today’s session. Equities are lower. China, Hong Kong, Taiwan, and South Korea were marked down the most. Of the large bourses, only India escaped unscathed. Europe’s Stoxx 600 is off more than 0.8% and US futures are poised to gap lower. Bond markets are quieter. The 10-year US Treasury yield is off a little more than one basis point to around 3.66%. European benchmarks are mostly firmer, and peripheral spreads are a few basis points wider. The US dollar began off stronger, but now only the dollar bloc among the majors is weaker. The euro rose through the recent high to edge closer to $1.05. Among emerging market currencies, central European currencies are leading. China, Taiwan, and South Korea, join Russia with the largest losses. 

Gold is trading near a six-day high and reached almost $1764. Demand concerns and Europe’s inability to agree so far to a price cap for Russian oil have pushed January WTI below $75 a barrel for the first time since mid-January. February Brent is near $81. It had briefly traded below $80 in late September. US natgas is off 5.75% after falling almost 4% before the weekend. Europe’s natgas benchmark is off 5.2% after rallying more than 25% over the past two weeks. Iron ore fell almost 1% today. It offset last week’s 0.55% advance, which was the fourth consecutive weekly rally, during which time it had surged by nearly a quarter. March copper is off about 0.5% to give back a little more than it had gained before the weekend. Lastly, March wheat has fallen in seven of the past eight weeks and starts this week with a loss of nearly 1%.

Pacific It is difficult to know what to make of the protests in China. The deadly fire in Urumqi last week, blamed on zealous local authorities, seems to have been the spark. The kindling is the rising Covid cases in China, the slowing economy, popular discontent, and pent-up frustrations Demonstrations took place in several cities, but might not be a "nationwide movement" as some in the media claim. Calls for Xi to step down and criticism of censorship suggest underlying frustrations. Paradoxically, the more profound the challenge (which is the hope of many), the more possible repression. At the same time, Beijing may align with the people against the overzealous. China needs to buy some time if it is going to make a significant change in its Covid policy stance. It needs to construct emergency medical facilities, boost the vaccination rate, and import mRNA vaccines, which Beijing already accepted making one available to foreigners. We are skeptical that the property measures will be sufficient and see the surge in Covid making us even more suspicious. Similarly, last week's 25 bp cut in reserve requires (worth ~CNY500 bln or ~$70 bln) is going to be lost amid the continued surge in Covid cases....

Sunday, November 27, 2022

"Mining coal in your garden is a lucrative business in Poland"

From Bloomberg via

Polish taxi driver Grzegorz says his phone won’t stop ringing, such is the demand for his services. Yet it’s not a ride people want.

Grzegorz has given up driving for a far more lucrative line of work as Poland grapples with energy shortages: illegal mining. Around his home in the Lower Silesian city of Walbrzych, coal sits as little as a meter below the surface in fields, recreation areas and even gardens. A four-man team can unearth a ton in an hour and make 1,000 zloty ($220) each for half a day’s work, roughly 60% of what an average person earns in a week.

“My wife is against it and worried about me, but as a taxi driver I wouldn’t be able to make this kind of money,” Grzegorz said as he hoisted a bucket of the black gold from a square hole on the edge of a residential area while two of his cohort chipped away with pickaxes.

Across the world, the dirtiest of fuels is going through a revival as Russia withholds gas supplies needed to generate electricity because of the war in Ukraine. That clamor is even more acute in Poland because a disproportionate number of households still depend on coal for heating and there’s a shortage the government is struggling to address.

Vladimir Putin’s invasion of his neighbor has reshaped the energy market, with European Union sanctions on Russia shutting down coal imports to Poland, where it’s used to heat 37% of homes. The nation of 38 million accounts for 77% of all households using coal for heating in the 27-member bloc.

With coal reserves being used up and temperatures plunging, the government in Warsaw is securing coal and relying on municipalities to distribute it. But some coal storage facilities have had to shop from supermarkets after suppliers ran out of stock in the immediate aftermath of the war, undermining President Andrzej Duda’s assurance that Poland has enough coal to last for 200 years....


So Superstar Finance Writer Michael Lewis Was Embedded With FTX For Six Months, Raising The Question: Did He Spot The Frauds?

After reading about the methamphetamine people piles in the Bahamsa I maybe shouldn't use the word embedded.

From The Ankler, November 13:

H'wood FTX Frenzy as Michael Lewis Reveals He Spent 6 Months with Founder
Author compares Sam Bankman-Fried, Binance's CZ to 'Luke Skywalker and Darth Vader' in email sent by CAA

In this issue:

  • The full CAA email reveals Michael Lewis’ next book is about Sam Bankman-Fried with at least one plot point focusing on the rivalry with Binance’s Changpeng Zhao

  • The role of former CAA agent (and Elon Musk pal) Michael Kives with Bankman-Fried

With the stunning collapse of crypto exchange FTX still rippling through the financial markets, the entertainment industry sprang into action over the weekend with a far more pressing concern: Who’s going to nab the rights to this story?

We now know at least one part of how this plays out. The town was abuzz Saturday after an email spread that revealed that Michael Lewis — the most talented and successful non-fiction writer working today — had embedded with FTX founder Sam Bankman-Fried for the past six months and was making the collapsing cryptocurrency exchange the centerpiece of his next book. The Ankler obtained the email from CAA agent Matthew Snyder, originally sent to potential buyers on Friday (CAA did not immediately return a request for comment). The email reveals that not a word of the book has been written yet but, well, things just can’t wait:

The email from Snyder:....


Stock Markets: "EU Brings Clearing In-House Amid Push to Reduce Reliance on London"

From, November 27:

Formed by the merger of several European Union (EU) stock exchanges at the turn of the 21st century, Euronext can trace its origins back to some of the world’s first bourses, formed in Bruges, Antwerp and Amsterdam between the 13th and 17th centuries.

In that light, it has a heritage that predates the likes of Nasdaq and the New York Stock Exchange (NYSE) by several hundred years. Even the London Stock Exchange Group (LSEG) pales in comparison, with the U.K. exchange only founded in 1801.

Incidentally, that year also witnessed the inception of the Brussels Stock Exchange, which together with its peers in Amsterdam and Paris would unite to create Euronext much later in 2002. Since then, exchanges in Dublin, Lisbon, Oslo and Milan have joined the club.

To further strengthen the pan-European stock exchange, Euronext, which has long relied on LSEG’s clearing house LCH to clear trades in Paris, announced in a Q3 earnings statement earlier this month that customers will be able to clear all share trades at its Italian arm from the end of 2023. Derivatives clearing on the platform will follow in 2024.

The latest member of the Euronext family, Milan’s Borsa Italiana was acquired by LSEG last year as part of the latter’s efforts to gain regulatory approval for its $27 billion purchase of data provider Refinitiv. As part of that deal, Euronext gained the multiasset clearing house CC&G, thus significantly enhancing its in-house clearing ability....


Inflation in the United Kingdom

So, when did inflation rear its ugly head?

From Trading Economics (also on blogroll at right:

Scroll down, pick your country, pick your statistic of choice. 
Win prop bets at the bar.
In the example above: Halt economic activity by disrupting production and supply chains with lockdowns, February - April 2020. Pump billions and billions into the bank accounts of individuals with no place to spend it. After a year or so of lockdowns, reopen into even further degraded supply chains, watch that saved up money bid for goods, leading to demands for higher wages to chase the higher goods prices. Watch the cost of services rise as those wage increases are passed through to the end user.
Then note the jump from February to March to April 2022 coincident with Putin's invasion of Ukraine and the initial jump in energy, fertilizer and food prices.
Well, world energy prices are down considerably from March 2022 and it is those countries and regions with little of no energy reserves that are still paying top buck (pound, euro etc).

Lockdowns created the supply and production problems at the front end. Lockdowns forced the savings rate higher, note how little inflation there was in 2020 when people couldn't get out to spend, and then removing lockdowns unleashed all that pent-up demand all at once and boom: April 2021 to February 2022 it was off to the races.
By the bye, here's Brent (again via Trading Economics), right back to January 2022 prices: