Wednesday, October 4, 2023

Apple Stock Downgraded On Ennui, Generalized Malaise (AAPL)

The stock is up 37 cents at $172.77.

From The Street, October 4:

Apple stock slips after rare KeyBanc downgrade on iPhone sales concern
KeyBanc, in a rare downgrade for the world's biggest tech company, said iPhone sales could be pressured over the final months of the year.

Updated at 9:41 am EDT

Apple  (AAPL) - Get Free Report shares edged lower in early Wednesday trading after analysts at KeyBanc Capital Markets lowered their rating on the tech giant citing softer near-term iPhone sales and a muted upgrade cycle.

KeyBanc analyst Brandon Nispel cut his rating on Apple by one notch, to 'sector weight' from 'overweight' in a note published late Tuesday that cited the stock's recent premium to the Nasdaq benchmark and its near-peak valuations.

He also suggested that Apple's new iPhone 15, which it launched last month, could struggle to gain new customers as wireless carriers provide upgrade incentives that are only similar to those offered last year....

....MUCH MORE

China's Government Revenues Are Falling Dramatically

We've found the author of this piece, free-lancer Jennifer Zeng, to be a straight-shooter and handy with the numbers, she was a researcher at the Development Research Center of the State Council of the People's Republic of China.

Regarding the platform, Japan Forward, they were new to me as of yesterday and looking at their offerings seem to be center-right or somewhat conservative or whatever it would be called in Japan. They were linked in an Asia Times article if that means anything.

From Japan Forward, October 3:

A Big Turning Point in China's Fiscal Bankruptcy

Even official figures indicate that China's fiscal revenue is facing a severe, long-lasting decline, with the real estate crisis having a significant impact.

Everybody knows that China's economy is in serious trouble. But how serious is the problem? When will the tipping point be reached? What could Xi Jinping do after a full financial collapse across the People's Republic of China (PRC)? The latest fiscal data offers us some insights. 

Sharp Revenue Drop in August

In August, China's economy hit a critical point. The government's monthly budget income took a sharp drop.

Let us compare China's public budget income from January to August 2022 and the same period in 2023, as summarized by a Chinese economist named Lao Man.

These are official numbers and so may not be entirely reliable. However, we can still find some trends.

In January and February 2023, most industries and government departments were either closed or half-closed. This was due to the sudden lifting of COVID-19 lockdowns and the long Chinese New Year holiday. As a result, the income for these two months combined was ¥56.1 billion CNY (around $7.68 billion USD) less than the same period in 2022. Afterward, China's economy had a brief recovery.

At the same time, 2022's deferred value-added tax was paid in 2023, boosting tax revenue. So, in March and April of 2023, China's financial data looked very impressive. Each month had significant increases, especially April, with an astonishing ¥857.4 billion CNY ($117 billion USD) added. 

However, starting in May, with the weakening of China's economy, almost all other tax revenues began to shrink significantly. This was despite the deferred value-added tax payment having been added in. Monthly budget income quickly faltered. The revenue difference dropped to ¥400 billion CNY ($54.7 billion USD) in May, ¥110 billion CNY ($15 billion USD) in June, and just over ¥30 billion CNY ($4.1 billion USD) in July. In August, the difference became negative. 

Individual Incomes Are Dropping

Compared to August 2022, income was down by ¥60 billion CNY ($8.2 billion USD) in August of 2023. This made August of 2023 a turning point for China's fiscal revenue.

Consider some specifics. Apart from the value-added tax, most items have shrunk dramatically. From January to August 2023, non-tax revenue decreased by 3.6%. The "non-tax revenue" includes fines, meaning the economy is so bad now that even fining people is difficult.

Consumption tax fell by 9%, showing the real state of consumption. People aren't spending as much. Corporate income tax fell by 7.6%, meaning companies aren't making as much profit as before.

Individual income tax fell by 0.1%. This is not a huge drop, but it does signify a historical moment. The decreased value for individual income tax means that ordinary people's incomes are dropping. This marks the first time this has happened since China joined the World Trade Organization (WTO) in 2001.

China's Economic Numbers Are Down Across the Board

As the Total Cumulative General Public Budget Revenue graphic shows, import value-added tax, consumption tax, and export tax rebates all decreased from January to August 2023. These three sets of data complement each other, showing that China's exports are losing momentum....  

....MUCH MORE, a lot to chew on. 

"Bond yields could race through 5% in next couple of weeks, market forecaster Jim Bianco warns"

What with Jamie Dimon warning* the world isn't ready for a 7% rate on the 10-year note, Rick Santelli broaching a 13% rate yesterday (sometime between now and 2030) and now this more immediate conjecture it seems the Overton Window of possible futures is widening and opening.

And as I said on the occasion of the April CPI release, May 10:

I don't think we've seen the high inflation print for this decade, much less this century.  

Buy farmland and learn a marketable skill.

The high print so far this decade was the 9.1% registered for the 12-months ended June 30, 2022.

From CNBC, October 3:

Wall Street forecaster Jim Bianco expects Treasury yields to go a lot higher — and possibly overshoot through 5% in the next couple of weeks.

"I don't think we're near the end of this move in the bond market," the Bianco Research president told CNBC's "Fast Money" on Tuesday.

If the Federal Reserve hints about ending interest rate hikes while investors still sense inflation, Bianco warns they won't buy bonds.

"That's what I think has been killing the bond market," he said. "The more the Fed talks about being done, waiting [and] assessing all the rate hikes they've done — the more that they're making it worse."....

On September 27 we also saw Kimble Charting Solutions with "10-Year Treasury Yield Breakout Targeting 6.3 Percent?"

Our re-jiggering of Santayana may end up becoming a mantra. From the introduction to September 6's "TS Lombard: Resurging Inflation":

....Throw in a dozen other examples and that's my rationale for bastardizing Santayana with his "Only the dead have seen the end of war" observation: Only the dead have seen the end of inflation.

Speaking of Lombard, Dario Perkins had an interesting piece in November 2022:

TS Lombard: "Inflation was always the Endgame"

The Effect Of The Personal Consumption Expenditure Index Revisions: PCE Inflation Line Goes Up

 From Wolf Street, September 29:

PCE Inflation Index Revised Higher Going Back 2 Years. “Core Services” PCE Price Index Was Much Hotter 
Fed’s favored inflation measures get a big upward revision going back across this bout of inflation.

The Bureau of Economic Analysis has adjusted its Personal Consumption Expenditure data going back to Adam and Eve as part of its “comprehensive update of the National Economic Accounts.” With these adjustments, the new versions of the PCE price index, the “core” PCE price index, and the “core services” PCE price index were revised higher across this bout of inflation. In other words, inflation has been hotter.

The revised PCE price index accelerated to 3.5% in August, from the revised 3.4% in July. The old version’s July reading had come in at 3.3%.

The new version’s June was raised higher to 3.2%, from the old version of 3.0%. The new version’s peak in June 2022 was revised higher to 7.12%, up from 6.98% for the old version. The chart shows the new revised index through August in red and the old data through July in green:

https://wolfstreet.com/wp-content/uploads/2023/09/US-PCE-inflation-2023-09-29-overall-revisedold.png 

....MUCH MORE 

Also at Wolf Street, October 3: "20-Year Treasury Yield Spikes to 5.13%. Yield Curve Gets Ready to Uninvert. Juicy Yields Tempt, but Bloodbath May Not Be Over"

Capital Markets: "Strategic Ambiguity Leaves Intervention Question Unanswered, but US Dollar has Steadied"

 From Marc Chandler at Bannockburn Global Forex:

Overview: Dramatic yen price action around the JOLTS report yesterday after the dollar pierced the JPY150 level spurred speculation of BOJ intervention. Although there has been no confirmation, the strategic ambiguity is helping steady the yen and the dollar more broadly today, even though US yields remain firm. Final PMI readings were a better than the flash estimates and this may also be facilitating the consolidative tone. Most promising, from a technical point of view, is the recovery in sterling, which after taking out yesterday's low is now trading above yesterday's high. Among the G10, only the yen and New Zealand dollar (RBNZ held as widely expected) are slightly softer. Most emerging market currencies are also firmer, including the Polish zloty, where the central bank may cut rates later today.

Asia-Pacific equities fell sharply, with Japan and South Korea off more than 2% (which may help explain the won leading the losing emerging market currencies, off more than 1%). It is the third consecutive losing session for the MSCI Asia Pacific Index. Europe's Stoxx 600 is slightly firmer after losing more than 1% on Monday and again yesterday. US index futures are straddling little changed levels. Benchmark 10-year yields are higher. The 10-year JGB is at new highs, slightly above 0.80%, while European yields are mostly 2-3 bp higher. The 10-year US Treasury yield is pushing above 4.80%. Gold is consolidating after falling to almost $1815 yesterday, the lowest level since March. November WTI could not sustain yesterday's modest upticks and has come back heavier today. It is holding above yesterday's low near $87.75. Demand destruction concerns is offsetting OPEC+ expected confirmation of current output....

....MUCH MORE

Tuesday, October 3, 2023

China: "Divining Xi’s behavior: It’s all about power"

If this analysis is correct, and it seems to have a lot going for it, it would behoove Paramount Leader Xi Jinping to stop pressing on the most contentious fronts, the South China Sea, the chip war, the water wars on countries downstream, in particular the Mekong, and a half-dozen other areas that the Chinese Communist Party seems to have decided are within the Divine right of kings.

Don't press when you are weak, it often leads to further weakness.

From Asia Times:

Disappearing officials could be Xi’s version of ‘draining the swamp’ but could also signal he’s gearing up for a showdown with the US 

In China, espionage laws are being tightened and senior officials are “disappearing” — most recently the defense minister. Meanwhile, the People’s Liberation Army (PLA) is throwing its weight around in the region.

Here’s the thing to remember when considering Communist China: It’s all about power and control for the Chinese Communist Party (CCP) and especially for whoever is at the top. Xi Jinping also has to control the CCP and that’s still a work in progress. It always is.

Regarding the “disappearing officials” and the defense minister, in particular, one hopes the CIA and the rest of the US intelligence community with their US$80 billion budget know the answer and aren’t just speculating like the rest of us.

But here’s how I see it.

There probably isn’t a single Chinese official at these levels who isn’t guilty of corruption. And even if there are a few “clean” ones, as Soviet secret police chief Lavrentiy Beria said, “Show me the man and I’ll show you the crime.”

So it is unlikely that the minister got caught because of “corruption,” unlikely that Xi is just cleaning out a corrupt official or three. “Corruption” seems to be the modern version of the Maoist era’s “counter-revolutionary activities.” It’s the go-to, catch-all charge for getting rid of people and making it look like they were guilty of something.

So why is Xi doing it?....

....MUCH MORE

Very related from a few years ago:
"Why China prefers to maintain inflamed borders"

ICYMI: "China Is Building Entire Villages in Another Country’s Territory"
Going for a bit o'that lebensraum, eh Herr Xi?

"China Is Weaponizing Water"

For quite a while I kept waiting for him to pull a Hitler line out of his pocket:

'This is my last territorial demand in Europe'*
 —Adolf Hitler 
speech in Sportpalast Berlin, September 26, 1938
 
But Xi would say "My last territorial demand in Asia"
I think.

*Adolf Hitler im Berliner Sportpalast, 26.09.1938

....And now we face the last great problem that must be resolved and that will be resolved! It is the last territorial demand I shall make in Europe. It is a demand which I shall insist upon and a demand which I will satisfy so God will! A short history of this problem: Waving the banner of the right to selfdetermination of the peoples, Central Europe was torn apart in 1918 as certain crazed statesmen set to redraw the political landscape. Atomized and divided, new states were arbitrarily created in Central Europe in complete disregard of the origins of their peoples, their national desires, and of economic necessities.... 

"Copper's Price Curve Hasn't Looked Like This In Decades"

 Huh.

A twofer. First up, from OilPrice, October 2:

  • The copper market's extreme contango, not seen since 1994, indicates accumulating inventories and faltering demand, especially from a weakening Chinese property market.
  • Amidst global manufacturing slowdowns and concerns of recessions in developed economies, the copper market hints at an uncertain future, with risks leaning towards a decline in price.
  • Long-term projections, however, remain positive for copper due to the decarbonization drive, with industry experts predicting elevated prices and increased demand as the decade progresses.

The copper market is in a state of extreme contango—a state of the futures curve where futures contracts trade at a premium to the spot price and signal weak prompt demand.  

The cash to three-month contango on the London Metals Exchange (LME) jumped at the end of September to the highest since at least 1994 in data compiled by Bloomberg, as inventories pile up while demand seems to falter.   

Analysts say that increasing inventories signal weakening demand amid slowing global manufacturing and a weak Chinese property market, and are potentially anticipating recessions in developed economies.   

Due to the energy transition push, industry executives and analysts still expect high demand for copper in the medium and long term. But near-term demand and prices could continue to be weak amid an uncertain outlook for the global economy and copper market in China, the world's top commodity consumer.

The faltering Chinese economic rebound after the reopening and the continued weakness in China's property sector have weighed on copper prices this year. 

Without a meaningful recovery and amid weaker economies elsewhere, copper prices could further slide in the coming months.....

....MUCH MORE

Related:

November 24, 2022
Copper: What's Your Timeframe?

Four from Mining.com:

Tomorrow through month-end? Dollar Index down again is almost mechanistically supportive for commodities priced in bucko's.

Next month? "World’s biggest copper mine moves closer to strike"

Next year? "BHP sees 2-3 years of elevated costs, near-term copper oversupply"

Next decade? "Codelco sees copper deficit at 8 million tonnes by 2032"

For now and into Q2 2023 the West and maybe China have a recession they have to get through.

And enough with this nonsense: "Copper price rises on China’s property support".

As we've said a few times, government support of the overindebted property developers is not nearly the same thing as supporting the construction of new housing.

And from Bloomberg via India's MoneyControl, October 3/4:

Copper extends retreat to below $8,000 for first time since May
The concerns were reinforced by an unexpected increase in US job openings that highlighted the durability of the labor market. 

Copper fell for a second day as hawkish signals from the Federal Reserve and weak manufacturing data across major economies damped the demand outlook.

The industrial metal briefly traded below $8,000 a ton on the London Metal Exchange for the first time since late May as worries over higher-for-longer US interest rates spurred risk-off sentiment in global financial markets. The concerns were reinforced by an unexpected increase in US job openings that highlighted the durability of the labor market.

https://images.moneycontrol.com/static-mcnews/2023/10/402625317.jpg

....MUCH MORE

If interested see also September 20's "LME copper stocks rise to two-year high as demand falters":
This would tend to point toward Trafigura attempting to manipulate at minimum, perceptions, and possibly manipulate markets. More after the jump....

"Treasury 30-Year Yield Rises to Highest Level Since 2007"

Well, there's the answer to the question "who will buy the coming flood of treasury issuance."

All you need is a yield that's high enough i.e. a clearing price that's low enough and the primary dealers can't keep them in stock and go begging Janet Yellen to issue some more.

Plus, when the time comes, the Fed will be able to start buying some of the high-coupon stuff and get both their average duration and their average price back into a profitable position.

From Bloomberg via Yahoo Finance, October 3:

https://s.yimg.com/ny/api/res/1.2/pLttHDARmjNGGgHG9l9gew--/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTU0MDtjZj13ZWJw/https://media.zenfs.com/en/bloomberg_markets_842/5d7a6f1a7063cbbadb2d187fb09b39df

The US 30-year yield rose to the highest level since 2007, deepening a bond selloff driven by expectations the Federal Reserve will keep interest rates elevated as the supply of Treasury debt grows. Shorter-term yields also reached new highs.

The 30-year Treasury yield rose as much as 8 basis points to 4.869%, exceeding its 2010 high of 4.8559%. Shorter-maturity Treasury yields had previously reached the highest levels since at least 2007, and extended their climb Tuesday.

While supported by expectations that the Fed may raise rates again — a prospect endorsed by Loretta Mester, president of the central bank’s Cleveland branch in comments last night — and by the removal of the threat of an imminent federal government shutdown, the magnitude of the selloff continues to flummox experts.

It’s broadly indicative of investors scrapping bullish bets, JPMorgan Chase & Co. strategist Jay Barry said in a note late yesterday.

“We have been concerned that the position and hedging technicals could be an ongoing negative for Treasuries,” Barry wrote.

The rise in nominal yields has coincided with an increase in inflation-adjusted yields. The 10-year real yield approached 2.4% Tuesday, extending a climb from below 2% over the past month. The 30-year real yield rose to 2.46%, up 7.6 basis points.

“Real yields on the long end just have further to go — the pace of inflation falling is not satisfactory enough for the market, and the Fed’s framework for getting inflation lower is to slow the economy, and that’s not exactly happening to the market’s satisfaction,” said John Brady, managing director at RJ O’Brien....

....MORE

The 10-year Treasury futures are priced to yield  4.7640%, down a bit from the day (week, month, year, decade) high of 4.7720%.

And quite a ways away from the 2006 - 2007 double top over 5.00%

"Rep. Henry Cuellar unharmed after armed carjacking in DC"

From CNN, Oct. 2, 11:57 pm: 

Texas Democratic Rep. Henry Cuellar was carjacked in Washington, DC, Monday evening, his office told CNN.

According to Cuellar’s office, the congressman’s sushi dinner, phone, iPad and car were all stolen in the incident, which DC police said occurred around 9:32 p.m. Monday night.

“As Congressman Cuellar was parking his car this evening, 3 armed assailants approached the Congressman and stole his vehicle. Luckily, he was not harmed and is working with local law enforcement. Thank you to Metro PD and Capitol Police for their swift action and for recovering the Congressman’s vehicle,” his chief of staff, Jacob Hochberg, said in a statement....

....MUCH MORE

Elections: No Sex Please, We're Polish (plus Izabella Kaminska on some data skullduggery)

First up, Izzy (and Ben Munster) at Politico.eu, September 28:

Poland’s government under fire for massaging price data before election 
Opposition claims fuel and medicine prices were artificially lowered to ease inflation ahead of the October 15 general election. 

The Polish government is facing accusations it artificially lowered consumer prices — especially on core goods like fuel and medicines — to allow the central bank to make a crowd-pleasing interest rate cut before an election on October 15.   

National Bank of Poland Governor Adam Glapiński, an appointee of the incumbent Law and Justice (PiS) party, terrified financial markets earlier this month by cutting benchmark rates by a full 0.75 percentage points to 6 percent on the seemingly shaky grounds that Poland’s sky-high inflation was finally cooling.  

But now the data has more than vindicated Glapiński’s gambit, with the rise in Polish consumer prices slowing to 8.2 percent in September, down from 10.1 in August and 0.2 percentage points lower than forecasts, data showed on Friday. 

The question of how these prices are coming down, however, is turning into a political quagmire — with the opposition suggesting a state-dominated energy giant is deliberately keeping fuel prices low in the run-up to the general election.  The government has also pushed through a measure lowering power prices for consumers as well as expanding the number of people able to get free medicines....

....MUCH MORE, it's quite a story.

And from Notes From Poland a bit of the old Lysistrata sex strike notion:

Don’t go to bed with men who vote far right, left-wing leader tells women

(maybe it's just me but that order sounds a bit patriarchal coming from a guy)

Also at Notes From Poland, some irrefutable logic I wish I had thought of when I lost my bid for 7th grade Class President: 

....A senior government security official has accused opposition leader Donald Tusk of seeking to “manipulate” his followers into believing that defeat at this month’s elections could only come if the government falsifies the result. The aim is to stoke “chaos”, “social unrest” and a “revolt”, as well as to create “pressure from abroad”..... 

"If I don't get the most votes it is proof-positive that the election was rigged."

Recently:
"Polish ruling party turns elections into referendum on Tusk"
(not to be confused with the Silicon Valley political fixer Bradley Tusk)

Capital Markets: "Dollar Stabilizes After Extending Gains"

From Marc to Market:

Overview: The dollar's gains were initially extended before a consolidative tone emerged. The euro has been sold to $1.0460 and has returned to almost $1.05. Sterling fell to nearly $1.2060 and has recovered though has stopped short of $1.2100. The dollar edged closed to JPY150 but stalled near JPY149.95 and has held above JPY149.65. The Australian dollar near $0.6300 and the greenback rose to CAD1.3725.

Benchmark 10-year yields are firm, though a well-received 10-year JGB auction was well received and the 10-year JGB yield slipped slightly. European yields are 1-5 bp firmer, with yields rising more in the periphery than core. UK 10-year Gilt yield is bucking the trend nearly two basis points lows at 4.55%. The 10-year US Treasury yield is up a couple of basis points to push against 4.70%. Equities are struggling. Japan and Australia markets fell by more than 1% and the Hang Seng was greeted with a 2.7% drop as it returned from the long holiday weekend. Europe's Stoxx 500 has yet to find solid footing after falling a little more than 1% yesterday. US index futures are little changed. Gold's losses were extended to nearly $1815 today, the lowest since March. It has stabilized but it is still sporting a small loss, the seventh consecutive session with a higher close. November WTI extended its drop to almost $87.75 today, the lowest level since mid-September, but is has come back bid in Europe to trade near $89.00.

Asia Pacific
The Bank of Japan efforts to slow the yield rise underscores the wider differential with the US....

....MUCH MORE

Monday, October 2, 2023

Better Get Your Affairs In Order; It's Going To Be Bad

From the journal Nature, September 25:

This is what Earth’s continents will look like in 250 million years
Only a fraction of the planet’s surface will be habitable to mammals when the next supercontinent, Pangaea Ultima, forms.

Up to 92% of Earth could be uninhabitable to mammals in 250 million years, researchers predict. The planet’s landmasses are expected to form a supercontinent, driving volcanism and increases to carbon dioxide levels that will leave most of its land barren.

“It does seem like life is going to have a bit more of a hard time in the future,” says Hannah Davies, a geologist at the GFZ German Research Centre for Geosciences in Potsdam. “It’s a bit depressing.”...

....MUCH MORE

"DOJ finally posted that “embarrassing” court doc Google wanted to hide" (GOOG; EVIL)

From Ars Technica, September 29:

Google exec said users get hooked on search engine like “cigarettes or drugs.”

The US Department of Justice has finally posted what Judge Amit Mehta described at the Google search antitrust trial as an "embarrassing" exhibit that Google tried to hide from the public.

The document in question contains meeting notes that Google’s vice president for finance, Michael Roszak, "created for a course on communications," Bloomberg reported. In his notes, Roszak wrote that Google's search advertising "is one of the world's greatest business models ever created" with economics that only certain "illicit businesses" selling "cigarettes or drugs" "could rival."....

....MUCH MORE

You sir, are an idiot. Why would you write something like that down?

It's like Congressman John Jenrette saying, when offered $100,000 in the Abscam bribery scandal: "I have larceny in my blood — I'd take it in a goddamn minute." 

The Arab sheikh making the offer was an FBI agent and the offer was part of a sting and the G-Men were recording him. 

Why would you say something like that?

I was looking at Jenrette because we had a couple posts on his second wife Rita. When his first wife, Sally, sued him for divorce she said she had documented his affairs with 23 other women. When Jenrette was informed of Sally's grounds for the action Jenrette said:
Whew! Is that all she knew about?

The South Carolina papers said he was known for his constituent outreach work. 

And Rita? She went on to become Her Serene Highness the Principessa Rita Boncompagni Ludovisi.

After the Prince died we caught up with Rita putting the family home on the market:
December 2021
Attention Art Fans: Large Caravaggio For Sale, Asking $552 Million
Villa included....
January 2022
UPDATE: "Villa Aurora: Rome property fails to sell for €471m at auction"

And, as such thing go when money is involved, it got nasty:
May 2023
"Playboy princess Rita Boncompagni Ludovisi loses $500M home in bitter royal feud: ‘I’m palace-less and penniless’"

But back to Google. The guy also wrote:

....Beyond likening Google's search advertising business to illicit drug markets, Roszak's notes also said that because users got hooked on Google's search engine, Google was able to "mostly ignore the demand side" of "fundamental laws of economics" and "only focus on the supply side of advertisers, ad formats, and sales." This was likely the bit that actually interested the DOJ.

"We could essentially tear the economics textbook in half," Roszak's notes said.....

Oooh, that's going to leave a mark, antitrust-wise .

"Indonesia Launches China-Backed 'Whoosh' High-Speed Railway"

Meanwhile, in California the big high-speed rail news is more money from the big guy:

California high-speed rail project scores $202 million federal grant. Here’s what it will pay for

From Reuters via U.S. News & World Report, October 1: 

Indonesian President Joko Widodo on Monday inaugurated a $7.3 billion high-speed railway connecting the country's capital with the city of Bandung, a China-backed project that has been marred with problems.

The 142-kilometre (88.23-mile) railway, one of the president's flagship infrastructure projects and part of China's Belt and Road Initiative, has faced problems ranging from land procurement issues, pandemic-related delays and ballooning costs.

Monday's launch for the bullet train named "Whoosh" is far behind an original target of operations in 2019.....

....MUCH MORE

So good for Indonesia even if the cost seems high and the routing strange.

Back to California. Of all the dozens of stories we've linked to over the years this one stands out:
France Tried To Warn California That The California High-Speed Rail Plan Was A $100 Billion Farce

We've been posting on the massive grift and fraud that is the California HSR for many, many years. The New York Times just did a feature on the project that is not nearly as hard-hitting as it could be, being disingenuous from the headline on:

How California’s Bullet Train Went Off the Rails

It was never "on" The Rails, a fact that was pointed out over a decade ago.

However, to their credit, the Times writers and editors included this vignette: 

....The state was warned repeatedly that its plans were too complex. SNCF, the French national railroad, was among bullet train operators from Europe and Japan that came to California in the early 2000s with hopes of getting a contract to help develop the system.

The company’s recommendations for a direct route out of Los Angeles and a focus on moving people between Los Angeles and San Francisco were cast aside, said Dan McNamara, a career project manager for SNCF.‌

The company‌ ‌pulled out in 2011. “There were so many things that went wrong,” Mr. McNamara said. “SNCF was very angry. They told the state they were leaving for North Africa, which was less politically dysfunctional. They went to Morocco and helped them build a rail system.”

Morocco’s bullet train started service in 2018.....

There you have it, North Africa is less politically corrupt than California. Just amazing.

And the Governor of California wants to be President of the whole country.

Some previous looks at the Great Railway Robbery....

Renewables: NextEra Energy Partners Gets Whacked On Downgrade; 58% Cut To Price Target (NEP, NEE)

From The Motley Fool, October 2:

Why NextEra Energy Partners Stock Plunged by as Much as 18.4% Today

  • A Wells Fargo analyst downgraded NextEra Energy Partners and reduced his price target on the stock from $80 to $33. Rates on U.S. Treasuries rose again Monday.
  • When interest rates on debt rise, it makes financing more expensive for asset owners.
  • NextEra Energy Partners' dividend yield is now over 13% based on recent guidance.

What happened
Shares of renewable energy asset owner NextEra Energy Partners (NEP -15.35%) plunged by as much as 18.4% in early trading on Monday after an analyst downgraded the stock and rates on U.S. Treasuries rose. Shares were still down 13.7% for the day at 12:35 p.m. ET. 

So what
Wells Fargo analyst Neil Kalton downgraded NextEra Energy Partners from overweight to equal weight and sliced his price target on the stock from $80 per share to $33 per share.... 

....MUCH MORE

You have to be careful with these high-yield partnership deals. Have I ever told you about
That Time FT Alphaville's Izabella Kaminska Spotted A Potential Disaster In Natural Gas and Saved Western Civilization?

On the "saved western civilization" bit I may be confusing Ms Kaminska with another Polish name, Sobieski.
And on further reflection it may not have been Western Civ that was saved but rather some fund manager's and analyst's butts and bonuses.
Here's the story.

August 18, 2014 started like any other day, with the question of how to present oneself to the world: knee breeches or sans-culottes?
Deciding, for the umteenth time the world may not be quite ready for the revival of the eighteenth century aesthetic:

https://upload.wikimedia.org/wikipedia/commons/c/ce/Ralph_Earl_-_Elijah_Boardman_-_WGA7452.jpg

it's pantaloons and out the door, little knowing our fortunes were about to turn very jolly....

"A Nobel Laureate Offers a Biting Critique of Economics"

From Bloomberg Businessweek, September 29:

Angus Deaton says Larry Summers and other great minds in the profession have lost sight of its most important mission: Improving people’s lives.

The Scottish-born son of a one-time coal miner, Angus Deaton has spent a half-century rising to the top of the economics profession, winning a Nobel prize in 2015 and celebrated since alongside his wife and co-author Anne Case for identifying the middle-aged “deaths of despair” that have plagued America in recent decades. So, when the Princeton University emeritus professor has a new book out with the sober title Economics in America you might anticipate a valedictory celebration of the wonders of the discipline.

It’s anything but. What Deaton calls his mea culpa is a broadside on his profession and some of its most celebrated figures. Economists and their relentless focus on markets and efficiency, as well as their dogmatic attachment to theories (even after they’ve been disproven), have had life-or-death consequences for millions, he argues. The book, coming out on Oct. 3, has already triggered a debate that has him facing off with at least one other high-profile colleague.

The 77-year-old Deaton can be quietly sharp-tongued in conversation. He’s also polite, though. In an interview he will tell you that Larry Summers, the former US Treasury Secretary and president of Harvard, remains a friend and that he still considers him to have a prodigious economic mind. It’s just that Deaton believes Summers and a small cadre of influential economists helped lay the foundation for the Asian financial crisis of the late 1990s and also the 2008 global financial crisis by recklessly helping to ease restrictions on the flow of speculative capital around the world.

He makes that accusation in the chapter “Is Economic Failure a Failure of Economics?”—and it’s set off what Deaton calls a “consequential debate” with Summers over the role of economists in society that is also intensely personal. “I think of him as the best and brightest of my generation of economists, someone we all wanted to be like. So his views are not different from those that I held, too,” Deaton says of Summers. The difference, Deaton says, is that his own views have flipped.

Summers, who is a Bloomberg contributor, calls Deaton’s accusations regarding his potential role in causing two of the great economic crises of our time a “sweeping left-wing assertion rather than serious analysis,” and points out that the Asian financial crisis happened before he became Treasury secretary. “No one can be satisfied with where we have been or where we are on financial stability issues, but framing the issue in terms of all restrictions being good or bad is unworthy of an economist of Deaton’s stature,” he said in an email.

Deaton’s primary complaint isn’t with Summers. It’s that the profession has become intoxicated with markets and money, losing sight of its primary mission as set out in its earliest days by Adam Smith, John Locke and others who came to economics via philosophy and other fields, rather than commerce. “The discipline has become unmoored from its proper basis, which is the study of human welfare,” Deaton writes in his book.

In Deaton’s mind this is a life-or-death matter. Because nothing to him exemplifies how economics has gone awry more than the epidemic of deaths from alcoholism, opioid overdoses and suicide that has hit the American working class in recent decades. He believes one primary cause of that surge was economists’ enthusiasm for globalization, with its emphasis on the unfettered movement of goods, capital and jobs. “You can’t think about trade policy and think about money entirely,” Deaton says. “It’s people’s souls and their communities and their churches” and their lives that are at stake when jobs are dislocated....

....MUCH MORE

If interested, we have quite a few posts on Professor Deaton.

For more economists ripping economists see also:

Keynes on Economists

The study of economics does not seem to require any specialised gifts of an unusually high order.
Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! ....MORE

And for readers who are interested in practical economics, January 2011's: 

HOW THE RICHEST ECONOMIST IN HISTORY GOT THAT WAY

"Can Positive Thinking Fuel Economic Booms?"

Speaking of Chicago, from the University of Chicago's Booth School of Business' ChicagoBoothReview, September 15:

Economists pay close attention to consumer sentiment, seeing it as an important indicator of how an economy will do in the future. Consumers feeling flush may be more inclined to make big purchases, which would have ripple effects across the economy. Those feeling tight might pinch pennies and contribute to an economic contraction.

But the effects of sentiment on long-term growth vary by the type of economy, find Chicago Booth’s George M. Constantinides, Utrecht University’s Maurizio Montone, University College Dublin’s Valerio Potì, and Athens University of Economics and Business’s Stella Spilioti.

There are three main theories on this subject, the researchers explain. One is that positive consumer sentiment anticipates future economic growth but doesn’t cause it. Another is that sentiment has only a short-term effect on economic growth because it has no relation to fundamentals. A third theory is that sentiment has an immediate and lasting effect on economic growth through a “self-fulfilling feedback loop.”

Each theory is valid in certain contexts, depending on an economy’s size and state of development, the researchers find. Less advanced economies tend to have less efficient financial markets, so consumer sentiment has a larger effect on economic growth in those countries.

Stock prices can be an indicator of future economic activity, and consumer sentiment can drive markets. The harder it is to distinguish between psychological mood swings and fundamentals, the researchers write, the more likely it is that sentiment alone fuels booms and busts.

The researchers analyzed data from 1975 to 2019 for 17 Organisation for Economic Co-operation and Development member countries. Of those, six—Canada, France, Germany, Italy, the United Kingdom, and the United States—belong to the G7, a grouping of the world’s most advanced economies, while 11 are non-G7 countries (Australia, Austria, Belgium, Denmark, Finland, Ireland, Netherlands, New Zealand, Spain, Sweden, and Switzerland).

Consumer sentiment in non-G7 countries predicts large increases in consumption, employment, and income for as far out as four years, along with an increase in overall productivity, the research suggests. In G7 countries, sentiment tends to drive only modest increases in consumption, employment, and income, and for no longer than two years. Future productivity there is determined by fundamentals, not sentiment....

....MUCH MORE

Meanwhile In Chicago...

 From the Chicago Tribune, October 1:

‘Everyone is so freaked out’: Armed robbery crews sweep city as Chicago police task forces struggle with brazen crimes

The call that came over the police radio Monday morning was startling if familiar by now: Two men in a stolen car committing robberies at gunpoint across Chicago’s South Side.

Within a span of minutes, the robbers held up employees at two discount stores and stole wallets and other belongings from pedestrians on the street. All of the victims described having guns pointed in their faces, according to police and court records. One was knocked to the ground.

This time, police quickly caught a 25-year-old suspect after an alert witness saw two men matching the robbers’ description running from a stolen Kia with bags in their hands on South Carpenter Street, according to court records.

But it’s a drop in the bucket.

In the days before and after those robberies, waves of other stickups were happening around the city, including a driver accosted by rifle-toting teens as he was unloading his car in Bucktown, a woman carjacked at gunpoint in Rogers Park, students walking near DePaul University’s Lincoln Park campus and a bar worker mugged after leaving work in the West Loop.

While armed robberies are nothing new in Chicago, a disturbing new pattern has emerged in recent months where crews of robbers — many of them juveniles — toting high-powered weapons go on crime sprees, robbing or carjacking multiple victims in a matter of minutes, often using stolen cars and dressed head to toe in black.

They seem to be constantly one step ahead of authorities. Before police can even respond to one scene, more have popped up, leaving dozens upon dozens of victims in their wake.

The vast majority of the robberies have gone unsolved, producing a series of negative headlines for Mayor Brandon Johnson and his newly minted police Superintendent Larry Snelling, even as homicides and some other violent crime metrics are dropping.

The sheer volume of robberies has left aldermen frustrated and many residents of frequently targeted neighborhoods frightened. At a community meeting Monday evening in Humboldt Park, local leaders, anti-violence workers and police officials attempted to address area residents’ safety concerns and more fully explain the challenges.

“I think everyone is so freaked out, who’s lived in this area for a long time, because of the random and brazen nature of what’s happening right now,” said Rod O’Connor, who has lived in the Humboldt Park area for more than two decades. “I want the next generation of shooters to not become shooters, but the generation right now is what we’re all freaked out about and why I worry about my kid riding her bike two blocks from her house.”

Some have pointed to a lack of a sense of urgency from the Johnson administration.

“The City has a responsibility to protect all Chicago residents in every Chicago community. Our administration and the Chicago Police Department are fully committed to deploying strategies that will bring justice to victims of violent crimes and hold offenders accountable,” the mayor’s office said in a written response for this article. “The appointment of Superintendent Larry Snelling is just the latest step in using the full force of government to keep residents safe from harm.”

To try to thwart the growing problem, Chicago police have used an array of tools including helicopters, phone tracking, physical surveillance and fingerprint analysis to try to catch the robbery crews in real time and develop the evidence to make charges stick in court, sources told the Tribune.

Federal agencies have provided an assist with air support and real-time tracking of phones when possible, and state police have proved helpful in chasing suspects, since Chicago Police Department policies severely restrict when its officers can pursue, according to sources....

....MUCH MORE

26th ward Alderperson Ms Fuentes says:

....The number of robbery victims in her Near Northwest Side ward, which covers portions of Humboldt Park and Bucktown, has risen 361% compared with 2022, according to police data. Fuentes hopes to fight the rise with increased visibility in high-crime areas from violence prevention groups, block clubs and police, she told the Tribune. But the problem must be addressed long term with a focus on rectifying years of disinvestment in certain neighborhoods, she said.

“We have to ask ourselves, when someone is robbing someone, what are they seeking to achieve?” Fuentes said.....

Regarding "years of disinvestment", it shouldn't have to be said but...her political party has been the political party in charge of the City of Chicago for 92, nine-two, years.

"No Energy Transition Unless Tech Can Make It Cost Competitive: BlackRock"

 From OilPrice, September 29:

There will be no energy transition unless we can find new technologies that bring down the cost of renewables, BlackRock CEO Larry Fink told Bloomberg’s Dani Burger on Friday at the Berlin Global Diague forum.

“We are not going to have a transition unless we can find technologies to bring down the competitive cost of renewables. We cannot do that.” Fink said, adding that BlackRock conducted a survey that showed 57% of their global investors are planning to put more money into decarbonization technologies.

 “We saw what happened with elevated energy prices just two years in Germany and in Europe. You can’t have a transition.” Fink argued that when energy prices go up, emerging nations use more coal—because “life is more important than the future.”....

....MUCH MORE

HT: naked capitalism

Sunday, October 1, 2023

Are India and Canada Headed For A Lentil War?

 From New Delhi's The Wire, September 30:

Are Food Grains Going to Emerge a Chokepoint if the India-Canada Spat Escalates?

So if we look at India's agri-import scenario it is fair to conclude that Canada has a major influence on the lentil and edible oil security of India. A report suggests Canada may have slowed down exports of the former to India.  

It seems like Canada is turning the agri-power screw on India. A news report from Reuters suggests that lentil imports from Canada have “slowed down” after Canadian prime minister Justin Trudeau accused Indian intelligence agents of assassinating a Canadian Sikh activist Canadian soil. This has implications for domestic pulse prices as India heads into the elections.

India and Canada have been in a major diplomatic tussle since Trudeau made his allegations public. The Indian government denies these allegations.

But what does this have to do with Canadian lentils exports to India?....

....MUCH MORE

This could become a very big deal.
As noted in the intro to 2019's "Attacking Inflation: India Style":

Inflation in India always seems to hit the basics, so it's stuff people notice: legumes, onions, chickpeas; and who can forget the Great Guar Shortage of 2012?

And our thoughts in 2021:

Chaos In Delhi as Farmers March

 If the Indian farmers' despair over their situation gets much deeper all hell could break loose. Between the almost legendary suicide rate and the Modi government's apparent lack of understanding of the core issues the farmers are close to going on strike and though such an action would be self-immolateing it would also raise one hell of a problem for the rest of the country. Long lentils and guar....

Oil—"'Premiums Are Going Nuts Everywhere': Plunging US Supply Sends Oil Prices Around The World Soaring"

From ZeroHedge, October 1:

Buyers of physical oil across the planet are experiencing an acute supply shortage and are facing some of the highest premiums for supplies they’ve seen in months as plunging stocks at the largest US crude storage hub send shockwaves cross markets from Asia to Europe and the Middle East.

As Bloomberg reports, US crude cargoes on offer in Asia are being offered at the costliest premium this year. The spread between Brent and Middle East oil has jumped to the highest since February while the premium for near-term US supply is close to the highest since July 2022.

Behind the soaring premiums is Cushing, Oklahoma, the delivery point for benchmark US crude futures, which helps to set the price of oil across the Americas and beyond. As we have noted in recent weeks, inventories at the hub are now sitting just above seasonal lows last seen in 2014, and are effectively at the level known as "tank bottoms" below which inventories are for the most part unusable.

Stockpiles at Cushing, Oklahoma tumbled below 22 million barrels last week, the lowest since July 2022, and have dropped for seven straight weeks, reaching the lowest level at this time of the year since at least 2018. At these levels, many traders consider inventories to already be at the lowest levels that allow tanks to function normally.

The situation is forcing some traders to pay up big for last-minute supplies at Cushing. The prompt futures spread, which closely tracks supply and demand at the site, surged above $2 a barrel on Wednesday, the highest since July 2022.

Meanwhile, the US refinery maintenance season is getting underway, which will prevent the storage hub from draining to absolute lows. Still, exports remain a wild card for balances, given that demand for American oil is high amid OPEC+ supply curbs, meaning domestic users will likely have to pay up to keep barrels in the US.

Operationally, pulling oil out of tanks when levels fall below the so-called “suction line” is difficult and expensive, and the quality of crude can be compromised by the presence of water and sediment. For now, traders are expecting stockpiles to halt their decline by October and possibly start building up again, depending on how exports shape up. Indeed, this week’s drawdown was less than 1 million barrels — the first time that’s happened since early August.

Cushing’s role in global oil markets has also diminished in recent years since the US lifted an export ban. Most barrels now flow straight from the prolific oilfields in Texas’ Permian Basin to the coast, where they are shipped to overseas buyers.

“Cushing can stay at minimum operating operating levels for an extended period of time,” said Scott Shelton, an energy specialist at ICAP. “It’s now a transit point to the US Gulf Coast and a supply point for Cushing-based refiners.”

The latest surge in US crude spreads also fueled a jump in Brent spreads, with the prompt spread climbing above $2 as well, to the widest in a year....

....MUCH MORE

Brent futures $92.47 up 27 cents; WTI $91.08 up 29 cents.  

"French drillers may have stumbled upon a mammoth hydrogen deposit"

Definitely something you don't see every day.

From Ars Technica, September 30:

A drill site in Lorraine shows rising levels of hydrogen mixed in with methane.

On the outskirts of the small town of Folschviller in eastern France stand three nondescript sheds. One of these temporary structures has recently become a hive of activity due to a continuous stream of visitors, including scientists, journalists, and the public.

The shed sits above a borehole first drilled in 2006 and houses a gas measurement system called SysMoG, which was originally developed to determine the underground methane concentration. While the device did detect almost pure methane (99 percent) at a depth of 650 meters, probing further down, the borehole resulted in an unexpected and surprising discovery: hydrogen in high concentration. “At 1,100 meters, the concentration of dissolved hydrogen is 14 percent. At 3,000 meters, the estimated concentration could be as high as 90 percent,” Jacques Pironon, director of research at GeoRessources lab at the Université de Lorraine, said.

Based on the estimates of methane resources and the concentration of hydrogen detected so far, scientists have conjectured that the Lorraine region in eastern France, of which Folschviller is a part, could contain 46 million tons of white—or naturally produced—hydrogen. That would make it one of the world’s largest known hydrogen deposits.

Looking for something else
This remarkable discovery was not the objective of the project, called Regalor. Instead, it aimed to determine the feasibility of methane production in the Lorraine region and to record the presence of traces of other gases. “Our original research was related to the study of carboniferous sediments in northeast France. This was important as Lorraine was one of France’s largest coal-producing regions,” Pironon said.

According to Pironon, after coal production ended in Lorraine in 2004, a company called Francaise de L’Energie proposed sourcing methane from the region’s vast coal fields. Following this, the regional government sought the expertise of Laboratoire GeoRessources to determine if such a project was realistic.

“As a part of this project, we developed a new tool with the French-Swiss company called Solexperts. It consists of a patented probe SysMoG that can be lowered by a logging winch to depths of 1,500 meters,” he said....

....MUCH MORE

"Meghan Markle 'considers run for office': Duchess of Sussex's name is in the frame to fill Californian Senator Dianne Feinstein's seat after senator died aged 90"

From the Mail on Sunday, September 30:

  • Meghan Markle may run for US Senate seat to replace the late Dianne Feinstein
  • Labour source previously said she was working to aim of winning US Presidency

....MUCH MORE

I May Need To Get Out More: Asset Allocation Edition

The introduction to this decade-old post seems obsessive, borderline maniacal. (how happy I was?)

Sunday, July 22, 2012

Professional Asset Allocation: Henry Singleton of Teledyne (TDY)

I remember how happy I was when William Jahnke made the first spirited attack on Brinson, Hood and Beebower's 1986 paper, Determinants of Portfolio Performance, and its claim that 93.6% of returns could be attributed to asset allocation.

Jahnke's 1993 riposte, "The Asset Allocation Hoax" went to the heart of the matter, that BHB's model was static rather than dynamic. When Ibbotson and Kaplan came out with "Does Asset Allocation Policy Explain 40%, 90%, or 100% of Performance?" in 2000 I put the matter to rest, at least in my own mind.

Now I'm having second thoughts that I know all I need to know about asset allocation.

It started last month when we posted "Updated--Leon Cooperman: "A Case Study in Financial Brilliance: Dr. Henry E. Singleton of Teledyne Inc.". Looking at Singleton's record you get the feeling that he knew more about the tactics and strategy of using assets than just about any academician or practitioner.

Here's a version of the Singleton story that is more accessible than Mr. Cooperman's NYSSA presentation.

[Singleton has] "the best operating and capital deployment record in American business."
Warren E. Buffett

From the New York Observer, April 7, 2003:
The Brain Behind Teledyne, A Great American Capitalist
Something went haywire with American capitalism in the 1990′s, and we think we know what it was: There weren’t enough Henry E. Singletons to go around. In truth, there was only one Henry Singleton, and he died in 1999. He could read a book a day and play chess blindfolded. He made pioneering contributions to the development of inertial navigation systems. He habitually bought low and sold high. The study of such a protean thinker and doer is always worthwhile. Especially is it valuable today, a time when the phrase “great capitalist” has almost become an oxymoron.

Singleton, longtime chief executive of Teledyne Inc., was one of the greatest of modern American capitalists. Warren Buffett, quoted in John Train’s The Money Masters , virtually crowned him king. “Buffett,” Train reported, “considers that Henry Singleton of Teledyne has the best operating and capital deployment record in American business.”

A recent conversation with Leon Cooperman, the former Goldman Sachs partner turned portfolio manager, was the genesis of this essay. It happened in this fashion: Mr. Cooperman was flaying a certain corporate management for having repurchased its shares at a high price, only to reissue new shares at a low price. He said that this was exactly the kind of thing that Singleton never did, and he lamented how little is known today of Singleton’s achievements as a capital deployer, value appraiser and P/E-multiple arbitrageur. Then he reached in his file and produced a reprint of a critical Business Week cover story on Teledyne. Among the alleged missteps for which Singleton was attacked was his heavy purchase of common stocks. The cover date was May 31, 1982, 10 weeks before the blastoff of the intergalactic bull market.

The wonder of Singleton’s life and works is the subject under consideration-admittedly a biographical subject, as opposed to a market-moving one. We chose it because Singleton’s genius encompassed the ability to make lemonade out of lemons, a skill especially valuable now that lemons are so thick underfoot.
Singleton was born in 1916 on a small farm in Haslet, Tex. He began his college education at the U.S. Naval Academy but finished it at M.I.T., earning three degrees in electrical engineering: bachelor’s and master’s degrees in 1940, and a doctorate in 1950. In 1939, he won the William Lowell Putnam Intercollegiate Mathematics Competition Award. In World War II, he served in the Office of Strategic Services. At Litton Industries, in the early 1950′s, he began his fast climb up the corporate ladder: By 1957, he was a divisional director of engineering. In 1960, with George Kozmetsky, he founded Teledyne.

Anyone who was not reading The Wall Street Journal in the 1960′s and 1970′s missed the most instructive phase of Singleton’s career. When the Teledyne share price was flying, as it was in the 1960′s, the master used it as a currency with which to make acquisitions. He made about 130. Many managements have performed this trick; Singleton, however, had another: When the cycle turned and Teledyne shares were sinking, he repurchased them. Between 1972 and 1984, he tendered eight times, reducing the share count (from high to low) by some 90 percent. Many managements have subsequently performed the share-repurchase trick, too, but few have matched the Singleton record, either in terms of market timing or fair play. Singleton repurchased stock when the price was down, not when it was up (in the 1990′s, such icons as G.E., I.B.M., AOL Time Warner, Cendant and, of course, Tyco paid up-and up). He took no options awards, according to Mr. Cooperman, and he sold not one of his own shares. Most pertinently to the current discussion of “corporate governance,” he didn’t sell when the company was buying (another popular form of managerial self-enrichment in the 1990′s).

The press called him “enigmatic” because he pursued policies that, until the mists of the market lifted, appeared inexplicable. For example, at the end of the titanic 1968-74 bear market, he identified bonds as the “high-risk asset” and stocks as the low-risk asset. Accordingly, he directed the Teledyne insurance companies to avoid the former and accumulate the latter. To most people, stocks were riskier, the proof of which was the havoc they had wreaked on their unlucky holders during the long liquidation.

Some were vexed that, for years on end, Teledyne paid no dividend. The master reasoned that the marginal dollar of corporate cash was more productive on the company’s books than in the shareholders’ pockets, and he was surely correct in that judgment. Teledyne’s stable of companies (many in defense-related lines, others in specialty metals, offshore drilling, insurance and finance, electronics and consumer products, including Water-Pik) generated consistently high margins and high returns on equity and on assets.

Singleton made his mistakes, and Teledyne’s portfolio companies made theirs. A catalog of some of these errors, as well as not a few triumphs misclassified as errors, appeared in the Business Week story. We linger over this 21-year-old piece of journalism because it illustrates an eternal truth of markets, especially of markets stretched to extreme valuations. The truth is that, at such cyclical junctures, doing the wrong thing looks like the right thing, and vice versa. In the spring of 1982, few business strategies appeared more wrongheaded to the majority of onlookers than buying the ears off the stock market.

On the BW cover, the handsome Singleton was portrayed as Icarus in a business suit, flying on frail wings of share certificates and dollar bills. The article conceded that the master had done a pretty fair job for the shareholders, and it acknowledged that the share repurchases had worked out satisfactorily-to date. They had, in fact, boosted per-share earnings, “and also enabled Singleton, who held on to his own Teledyne shares, to amass 7.8 percent of the company’s stock.” He was the company’s largest shareholder and its founding and indispensable brain.

Yet the magazine was not quite satisfied, for it perceived that Singleton had lost his way. For starters, it accused him of having no business plan. And he seemed not to have one. He believed, as he later explained at a Teledyne annual meeting, in engaging an uncertain world with a flexible mind: “I know a lot of people have very strong and definite plans that they’ve worked out on all kinds of things, but we’re subject to a tremendous number of outside influences and the vast majority of them cannot be predicted. So my idea is to stay flexible.” To the BW reporter, he explained himself more simply: “My only plan is to keep coming to work every day” and “I like to steer the boat each day rather than plan ahead way into the future.”

This improvisational grand design the magazine saw as the “milking” of tried-and-true operating businesses and the diverting of funds to allow the chairman to “play” the stock market. A BW reader could imagine Singleton as a kind of Nero watching Rome burn while talking on the phone with his broker....MUCH MORE

Bankman-Fried's Mom May Be A Nut

And it raises a question: When a person has a mental illness, are people near that person required to acknowledge and accept their delusions? What about the wider society, should society play along with the mentally ill and their delusions?

This gets important in situations like that of Barbara Fried, who along with Joseph Bankman stands accused of sharing in the spoils of the FTX fraud.

When Barbara Fried wrote stuff like "The philosophy of personal responsibility has ruined criminal justice and economic policy. It’s time to move past blame" it wasn't just some intellectual talking point. As a Stanford Law Professor she was lending some academic heft to the whole "no jail, no bail" decarceration movement.

And now it appears she's outed herself as a total freakin' looney.

From The New York Post, September 26:

Sam Bankman-Fried’s mother lashed out at US prosecutors and the FTX bankruptcy estate, blasting them as “McCarthyite” over their recent legal salvos in the epic fraud case against her 31-year-old son.

Barbara Fried, who along with her son’s father was sued for “millions of dollars in fraudulently transferred and misappropriated funds” last week, also claimed that FTX’s debtors are on a “relentless pursuit of total destruction,” in an emailed statement to The New Yorker.

“It takes a lifetime to build up a reputation as honorable people,” Fried added in an email to the publication ahead of her son’s fraud trial set to kick off on Oct. 2. “It takes five minutes to destroy it, which they now have done.”....

....MUCH MORE

That statement is so out of touch with the reality of who destroyed their reputation that it can be rightly characterized as flat-out delusional. And the kicker is, she seems to think the rest of society should buy into her lunacy.

And even sicker, Barbara Fried and her ilk are the very people who think that government should be used to enforce compliance with their beliefs and delusions while at the same time advocating the police powers of the government should be used to shut down any opposition to their crazy. 

And I mean crazy, crazier even than the Three Christs of Ypsilanti. Here's March's:

Government And Compelled Speech
It seems there are people who want to use the power of government to tell you what you have to say. Which of course reminded me of something, in this case the Three Christs of Ypsilanti.

From a 2022 post:

...For a more lighthearted look at abnormal psychology there's that time a researcher in a state mental institution brought together three paranoid schizophrenics who thought they were Jesus, written up as The Three Christs of Ypsilanti. After a rather tense beginning they each became slightly more accepting of the others but eventually it all broke down:

....The relative friendliness that the men showed to each other – which Rokeach put down to the patients attempting to appear amenable, as befitting their status as the son of God – soon broke down and led to verbal and physical fights between the three "Jesuses".

In one meeting, Clyde declared that Leon "oughta worship me, I'll tell you that"....
....MUCH MORE, IFL Science, July 6, 2021

Now the question before us is: Should government tell citizens they must accept Clyde as he presents himself? And further, should government, through its vast array of coercive tools and techniques, require that we refer to Clyde as Jesus?

Asking for a friend. 

Recently on ex-Professor Fried (I think she retired): 

 FTX And The Allegations Against Sam Bankman-Fried's Mom, Professor Barbara Fried

"Break Up America's Elites"

Although there are some conceptual flaws in Pareto's Circulation of the Elite, overall it is a useful framework upon which to hang the study of the distribution of privileges and influence in a society. This framework can help distinguish between a member of the actual elite who at first glance would be assumed not to be a member, say someone working a temp job in the government's Senior Executive Service, and those who would appear to be a member of the class but are actually just wannabe.*

From Compact Magazine

In the debate pitting defenders of racial preferences in college admissions against proponents of meritocracy, both sides implicitly accept the premise that there must be a single national elite. What divides the two sides is how the members of this single national elite are to be selected in their late teens or early 20s. But there is an alternative to a national oligarchy selected on this or that basis by admissions committees at a few prestigious universities: a plurality of separate elites, each with its own constituency, its own distinct entry requirements, its own internal career ladders, and with little or no lateral mobility between different elites.

Societies in which members of a single, homogeneous national elite with similar backgrounds circulate easily among all of the various centers of power—government, business, academe, and the media—are familiar in the modern world. In Britain, graduates of Oxford and Cambridge and a few elite private schools who live in a few neighborhoods in London dominate powerful institutions. In France, the grandes écoles play the role of Oxbridge in Britain. The University of Tokyo functions similarly in Japan.

Increasingly, the pattern in the United States is similar. It resembles a candelabrum: Those who manage to squeeze through the stem of a few prestigious colleges and universities in their youth can then branch out to fill leadership positions in almost every vocation, including the arts, outside of the military and the clergy.

After attending Columbia University, Barack Obama went from being a community organizer to a state legislator to a US senator and president, to end up today in his latest career as a producer of documentaries in Hollywood. Both Bill and Hillary Clinton are now co-authors of political thriller novels. Did I mention that Obama and the Clintons also have their own nonprofit foundations? In this respect, they resemble their fellow Baby Boomer, Donald Trump, the Wharton grad who inherited the family real-estate business and has dabbled in television, menswear, golf courses, and hotels, and even founded his own university before becoming president in his first campaign for public office.

“The lateral circulation of members of the same elite … is a formula for oligarchy.”

It must be frustrating for ambitious screenwriters and directors and producers and talented novelists and nonprofit specialists who spent decades going through the paces in their respective vocations, only to be shoved aside in favor of dilettantish ex-presidents and ex-first ladies hopping from one occupation to another at the top. The lateral circulation of members of the same elite through revolving doors in the public, private, and nonprofit realms is a formula for oligarchy.

There is a better way: a system of plural elites, each with its own admissions standards and internal promotion mechanisms. Examples of vocations that are structured along these lines are the US military and the clergy of the more organized among the organized religions. In the case of the military, not only is working your way up through the ranks one way to become a general or an admiral, it is the only way. Likewise, the papacy isn’t an entry-level job open to people who spent most of their lives outside of the Catholic priesthood.

As the example of the US military suggests, the siloed career with internal upward mobility and little or no lateral mobility at higher stages is hardly a vestige of the past. On the contrary, it is perfectly modern. In the early years of the American republic, and even during the Civil War, the way to become a colonel in the militia was to be born into or married into a prominent local gentry family, and campaign contributors and influential politicians could be appointed as generals in the Army by friendly presidents like Abraham Lincoln.

In 21st-century America, campaign donors can still buy prestigious ambassadorships. But in today’s United States you can’t graduate from Harvard or Yale or Princeton, do a stint at McKinsey, work for Goldman Sachs, dabble in making documentaries about climate change or global poverty, invest in a startup, donate heavily to one party or the other and be appointed Chairman of the Joint Chiefs, any more than you can become Archbishop of Boston with that résumé.

Labor unions are another example. Leaders of traditional labor organizations work their way up through the hierarchy. They don’t parachute into the top in midlife after another career in finance, real estate, or political campaign management, brandishing their Ivy diplomas.

As recently as the 1960s and ’70s, the American elite was a mosaic made up of parallel, siloed occupational and functional elites. Outside Wall Street and the State Department and the Central Intelligence Agency and some yacht clubs, an Ivy League diploma wasn’t a particular advantage. Even on Wall Street in pre-regulation days, inheriting a seat on the stock exchange from your dad and predecessor in the Roman-numeral surname series was more important than where you went to school.

Trade-union leaders and church hierarchs and small-town courthouse gangs and big-city machine politicians were powers in the land on the basis of the numbers they represented, not their CVs.  The working-class, shoe-leather reporters hadn’t yet been edged out of the media by the Yale-educated trust-fund babies who swarmed journalism after Woodward and Bernstein made it cool with their Watergate reporting....

....MUCH MORE
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See:
Pity the poor avocado-eating graduates: "University-educated millennials have absorbed elite values but will never enjoy the lifestyle"

And that probably accounts for some of the crabbiness we see from folks who, compared with our billions and billions of forebearers, back into the mists of time, are among the most privileged and advantaged ever to walk the earth.

They also get grumpy when reminded of that fact....

And if interested, a related post:
"The Fragmenting of the New Class Elites, or, Downward Mobility"