Friday, July 19, 2024

Solar: Sunpower Not So Hot (SPWR)

Lifted in toto from Tim Knight at Slope of Hope, July 18:

Another 99% Wipeout

I’d say that Sunpower is cooked. It’s incredible how much scamming and fraud took place on the backs of the Build Back Better canard.

https://slopeofhope.com/wp-content/uploads/2024/07/slopechart_SPWR-1-1536x832.jpg

Slope blog home.

0.781 last, down 0.729 (48.25%) today and down from $2.65 on July 17th.

First Solar was up yesterday apparently on the thinking that there would be less competition with SPWR gone but the two companies are in very different segments of the sunshine biz.

Here's yesterday's Bloomberg story:

SunPower Plunges After Halting Solar Installs and Shipments

And today's:

SunPower Stock Plummets as Guggenheim Analyst Says Stock Is Worthless

Ahead Of Tomorrow's 45th Anniversary Of The First Moon Landing, Norman Mailer's 115,000 Word Essay For Life Magazine: "A Fire On The Moon"

Although Life's editors said they didn't pay Mailer by the word, c'mon; no one besides, maybe, Marc Andreessen* goes on and on like that for a flat fee.

From Life Magazine via Google Books:

A Major Report by NORMAN MAILER
A Fire On The Moon

Part I of an extraordinary personal study undertaken for Life by the winner of this year's Pulitzer Prize

Part II: The Psychology of Astronauts
Part III The Future's Face

The coffee table version - unfolds into actual coffee table [kidding]
*In interested see:

November 2016
Marc Andreessen Speaks: "Flying cars are closer than you think"
And speaks, and speaks...
You know how he is....

May, 2015 
Marc Andreessen In the New Yorker:
13,000+ words.
Oct. 2014
New York Magazine's Million Word Interview With Mark Andreessen
It's not really a million words but man-o-mandingo the guy likes to talk.

"Investors are dumping CrowdStrike shares after IT outage"

From Sherwood (Robinhood: HOOD) News, July 19:

As reports of a global IT outage spread, everyone started asking the same question: what is CrowdStrike?

A global IT outage has hit banks, airlines, media outlets, and hospitals around the world.

Per The Verge, Australian firms were the first to report system failures, before similar outages around the world came to light, with all flights from major US airlines grounded early this morning. Thousands of users reported seeing a “blue screen of death” on certain Microsoft Windows machines, with reports that a faulty update from cybersecurity firm CrowdStrike had knocked servers offline.

The CEO of CrowdStrike confirmed on X:

CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts. Mac and Linux hosts are not impacted. This is not a security incident or cyberattack. The issue has been identified, isolated and a fix has been deployed.

The early reports sent internet users to Google to familiarize themselves with exactly what CrowdStrike does, with more searches for the firm in the last 24 hours than for Donald Trump or Taylor Swift. That level of attention isn’t usually a good sign for a critical cybersecurity company.

Crowdstrike google searches vs. Donald Trump & Taylor Swift
Sherwood News

...MORE

Coincidently: "Costco’s $80 ‘apocalypse bucket’ is packed with food that can last for 25 years" (COST)

From Fortune, July 18:

In a sea of economic uncertainty, Costco has long stood out as a lighthouse. In four decades, its hot-dog-and-a-drink combo has stayed glued to a $1.50 price tag. Equally comforting is the wholesaler’s $5 rotisserie chicken—a three-pound ready-to-go meal that puts dinner on the table for less than the price of a beer in most New York City bars. 

But recent signs have indicated that even Costco might be fighting against the current. Earlier this month, its new finance chief announced the company was raising its member prices for the first time in seven years—a $5 increase for its basic plan and a $10 bump to its executive membership.

Now, the bulk retailer is giving another indication of a serious disturbance in the natural order: a new 150-meal “apocalypse bucket,” lasting up to 25 years that’s appeared online and in stores. 

Available on Costco’s website for $80, the Readywise Emergency Food Bucket includes 25,280 calories of freeze-dried security for whatever the next two-and-a-half decades have to throw at the world. Inside are 80 entrees, 30 breakfasts, and 40 drink servings, with a variety of meals like pasta alfredo, teriyaki rice, and “potatoes and chicken flavored” pot pie....

....MUCH MORE

Earlier today:

"UK Firm to Use Tesla Batteries to Build French Storage Project" (TSLA)

From Bloomberg, July 18:

  • Site will be able to power up to 170,000 homes for two hours
  • Building has started and the site will come online next year

UK developer Harmony Energy Ltd. has begun construction on France’s biggest battery storage facility, boosting the country’s ability to store green electricity when it’s plentiful for use later when it’s needed.

The 100-megawatt Cheviré battery project in the western city of Nantes will use Tesla Inc.’s Megapack product and be able to power 170,000 homes for two hours, the company said. The facility, on the site of an old power station that burnt fossil fuels for more than 30 years, will provide critical balancing services to the grid and enable the shift to renewable energy.

France’s network operator said last year the country will need more flexibility such as battery storage and tools to shift demand away from peak hours as more intermittent renewables are added to supplement the country’s nuclear fleet....

....MORE

This battery energy storage system will be slightly larger than the project just energized in Britain, the Fotowatio/Harmony Energy Clay Tye battery which is currently the largest of its type in Europe.

If interested see July 11's:
Adam Jonas, Morgan Stanley's Auto Analyst Raises His Valuation Of Tesla's Energy Business, Lowers Valuation Of Auto Biz (TSLA)
with the embedded links:

July 5's The Big Money In Tesla's Energy Storage Business (TSLA) and June 26's "Morgan Stanley Analyst Adam Jonas Writes A Love Letter To Tesla (TSLA)" and the links embedded therein which began with:

A confession of bullish bias up front, from April 24's "Tesla Q1 2024 Earnings Call Transcript (TSLA)":

In pre-market action the stock is up $17.47 (+12.07%) at $162.15.

Below are the words that are adding billions ($50+) to the company's valuation. 

Personally I think Musk is going to pull it off, but that's just me—perhaps informed by posting on the company and its stock since before the June 2010 share flotation (which, adjusted for the 5:1 and 3:1 stock splits gives a $1.133 IPO price)—however, there are plenty of other opinions to choose from if one doesn't care for that one....

And going back to a January 2023 post:

One of the more interesting bits in the 8K filing (and slide deck) was "Energy Storage" up 152% year-over-year in Q4. Elon is successfully building an entire new business inside of Tesla.

The "successfully" was underlined in the original. 

And related:

June 26 "Tesla Delivery Results Are Coming. Brace for More Bad News" (TSLA) plus more Nvidia
I don't think the market cares at the moment. It's a sort of looking across the valley to see the highlands opposite sort of thing.
 

RAND Corporation: "Defending the United States Against Critical Infrastructure Attacks —Exploring a Hypothetical Campaign of Cascading Impacts"

From The RAND Corporation, June 11, 2024:

In this report, the authors discuss threats to critical infrastructure (CI) and put forward a hypothetical case study to examine several phases of an adversarial attack on the United States. The attack is intended to constrain U.S. decisionmaking, disrupt military deployment, and impose strategically relevant costs on the civilian populace.

The authors aggregate CIs into seven classes to demonstrate how an attack on any one of these categories can have outsized effects because of interdependencies between infrastructure assets, systems, and networks.

Because of the interconnected nature of CI systems, damage to one system can adversely affect another. This may lead to a cascading hazard, producing disruptions across geographic boundaries and CIs. The authors draw on reports of recent attacks on U.S. CI systems to inform the case study. These real-world events demonstrate interdependencies, probable effects, and challenges that could arise from future potential adversarial action targeting infrastructure in the homeland. Finally, the authors recommend actions to reduce the likelihood and severity of disruptions to U.S. CI in the event of attacks by a capable adversary.

Key Findings...

....MUCH MORE

Reports from RAND's 'Inverted Rook' tabletop scenario wargame:

Threats to Critical Infrastructure, A Survey (36 page PDF) 

Earlier today:

Dammit! Cyber Polygon 2024 Wasn't Supposed To Happen Until September!

From Cyber Polygon.com:

Cyber Polygon
September 10–11, 2024
International online training for raising global cyber resilience.
Assemble a team, assess your threat investigation skills, and practice incident response scenarios 

About Cyber Polygon
During the training event, organizations get to test their level of resilience to cyberattacks and exchange best practices with the global community.
Security professionals can practice their forensics, security assessment, and threat monitoring skills on BI.ZONE Cyber Polygon Platform, a web resource for individual training....

"Mass IT outage: here's a list of some of the companies and operations affected"

From Business Insider, July 19:

  • A huge global IT outage is disrupting flights, banks, retailers, and media outlets.
  • The widespread disruptions have been linked to an issue with cybersecurity firm CrowdStrike.
  • Operations affected include airlines in the US and Europe, supermarkets, and some 911 lines.

A mass IT outage has hit flights, banks, retailers, and media outlets around the world.

The issues appear to be linked to the cybersecurity firm Crowdstrike.

Microsoft also acknowledged the issue in an X update early Friday: writing, "Our services are still seeing continuous improvements while we continue to take mitigation actions."

Here are some of the companies and operations affected.

Airlines
Airlines, including United, Delta, American, and Allegiant, have all grounded flights due to the mass outage.

American Airlines has blamed the issues on Crowdstrike. The airline said the tech problems are because of a "technical issue with Crowdstrike that is impacting multiple carriers," per BBC News.

On Thursday night, Frontier Airlines issued a similar ground stop order, saying in a statement: "Flight operations are currently being impacted by a major Microsoft technical outage."

European airlines Ryanair and KLM have been affected by the outage.

In a post on X, Ryanair said: "We're currently experiencing disruption across the network due to a Global 3rd party IT outage which is out of our control." The airline advised passengers to arrive at the airport at least 3 hours before their scheduled departure time.

KLM also said it had largely suspended operations.

"KLM and other airlines and airports have been affected by a global computer outage, making flight handling impossible. We realize that this is very inconvenient for our customers and staff, particularly in the midst of the summer holiday season. We're working hard to resolve the problem. Until then, we will have to largely suspend operations," the Airline said in an X post.

911 lines
According to a Facebook post from Alaska State Troopers, emergency lines in the state are also affected.

The post said: "Due to a nationwide technology-related outage, many 911 and non-emergency call centers are not working correctly across the State of Alaska."

"We appreciate your patience and will update you when we know more," the statement said.

Airports
Major UK airports, Heathrow, Gatwick, and Luton, have reported issues, with some warning of delays and disruption....

....MUCH MORE

Thursday, July 18, 2024

"Beyond Meat Engages Bondholders for Restructuring Talks" (BYND)

Speaking of faux food.

From the Wall Street Journal, July 17:

Lawyers for the company are beginning debt discussions with bondholders owed $1.1 billion

Beyond Meat, the purveyor of plant-based meat substitutes, has engaged with a group of bondholders to initiate discussions about a balance-sheet restructuring, according to people familiar with the matter.

The Los Angeles-based company’s liquidity has diminished over the past several quarters as it continues to burn cash. The group of bondholders, which has interests in Beyond Meat’s $1.1 billion of convertible notes, is working with the law firm Akin Gump Strauss Hauer & Feld, the people familiar with the matter said. The company is represented by Latham & Watkins.

We had fun with this one

"UK first European country to approve lab-grown meat, starting with pet food"

What's with the name? Those -ly names are so last decade.*

From The Guardian, July 17:

Regulators approve Meatly pet product, cultivated chicken made from growing cells

Lab-grown pet food is to hit UK shelves as Britain becomes the first country in Europe to approve cultivated meat.

The Animal and Plant Health Agency and the Department for Environment, Food and Rural Affairs have approved the product from the company Meatly.

It is thought there will be demand for cultivated pet food, as animal lovers face a dilemma about feeding their pets meat from slaughtered livestock.

Research suggests the pet food industry has a climate impact similar to that of the Philippines, the 13th most populous country in the world. A study by the University of Winchester found that 50% of surveyed pet owners would feed their pets cultivated meat, while 32% would eat it themselves.

The Meatly product is cultivated chicken. It is made by taking a small sample from a chicken egg, cultivating it with vitamins and amino acids in a lab, then growing cells in a container similar to those in which beer is fermented. The result is a paté-like paste....

*As we've preached over the years, beware of bombast in stock promoters and cutesy in company names. On the latter here's a 2016 post:

"Silicon Valley Is a Big Fat Lie"

Comparing the geniuses of old Silicon Valley, for example (ca. 1993), Nvidia, "Nvidia Wants to Be the Brains Of Your Autonomous Car (NVID)", who make the chips that will go into the world's fastest supercomputer with the list of names currently on offer:
Bitly, Borkly, Barnly, Molestly, Strinkingly, Happily, Crappily, Maply, Morply, Dottly, Dootly, Godly, Angrily.
And you almost want to cry. See also after the jump....
*****
Silicon Valley's Stupid Name Problem, Visualized

 

"Asia’s 20 Richest Families"

Following on Monday's "The Ambani-Merchant Wedding Cost How MUCH???!!!".

From Bloomberg, January 24:

The Ambanis, Mistrys and Jindals lead the region’s surge, while Hong Kong’s storied clans suffer a reversal.

Hong Kong’s old-money families are feeling the chill of China’s economic downturn.

An unprecedented four out of the five Hong Kong dynasties who rank among the 20 richest Asian clans have seen their fortunes erode over the past year, according to the Bloomberg Billionaires Index.

The families — many of whom have substantial chunks of their riches in real estate — are confronting both the slide in the city’s stock market and their exposure to the sustained property crisis in China.

Yet the collective wealth among the region’s richest clans has never been greater: $534 billion, up $55 billion since March, driven by furious growth in India that has bolstered the Ambani, Mistry, Jindal, Birla and Bajaj fortunes.

The divergence is another indication of how the concentration of wealth and power in Asia is shifting as China's growth slows. The nation served for decades as the region's economic power, minting fortunes for those who built businesses tied to its rise. Yet this year, for the first time since 2020, no mainland family appears in the ranking.

Instead, it’s India on the move: This week, its stock market became the fourth-biggest globally, overtaking Hong Kong’s.

One of the most prominent losers in this recalibration are the Chengs of Hong Kong, whose $23.6 billion fortune grew from a single jewelry shop almost a century ago.

Shares in the clan’s flagship operation, builder New World Development Co., sank to a 20-year low this week. The company is much more leveraged than its local peers, and the family's private office channeled almost $3 billion through an acquisition deal last year to shore up the developer’s finances.

All told, the Chengs’ wealth is $2.4 billion lower than it was last year, the first time it has declined since Bloomberg began tracking the data in 2019.

As their fortune cracked, current patriarch Henry Cheng upended the long-held assumption that his son Adrian, New World’s chief executive officer, would take the helm of the empire. He said in November he’s still looking for a successor, and that different family members might just take charge of different businesses. He also didn’t rule out hiring an outsider.

“Appointing different people to lead different parts is a good succession strategy, especially if the underlying businesses are substantial,” said Marleen Dieleman, a professor at IMD Business School who studies family businesses. “But this strategy also unleashes the forces of fragmentation.”

Three of Henry’s children now have top roles at key family-owned business units.

Sonia runs the upmarket Rosewood Hotel chain and was appointed joint vice chairman of Chow Tai Fook Jewellery Group Ltd. in June 2022. Its market value has more than doubled since a Covid low in 2020 and it is now worth four times New World.

And a month after Henry’s comments on the succession, his youngest son Brian, a former investment banker, was appointed as co-CEO of the family’s infrastructure unit, NWS Holdings Ltd.

For many multi-generational dynasties, there can be a sense of deja vu as the decades go by around succession planning and younger leadership. The Chengs are no different.

Back in 1989, when new to the throne, Henry Cheng embarked on a rapid expansion of New World that left the company mired in debt. His father, Cheng Yu-tung, had to step in soon after to orchestrate a series of asset sales to raise much needed capital.

Despite his stumble, Henry went on to cement his status as one of Hong Kong’s premier tycoons, overseeing landmark development projects and Chow Tai Fook’s expansion into the mainland. All eyes are now on whether one of his children can make the same impact....

 Keeping in mind the data is over six moths old, here are the top three from Bloomberg's story:

Name Ambani
Company Reliance Industries
Wealth $102.7bn
Industry Conglomerate
Location India
Generations
 
Name Hartono
Company Djarum, Bank Central Asia
Wealth $44.8bn
Industry Tobacco, Finance
Location Indonesia
Generations 3
 
Name Mistry
Company Shapoorji Pallonji Group
Wealth $36.2bn
Industry Conglomerate
Location India
Generations 5

"GenAI startup Dust’s founders on raising €15m, leaving Silicon Valley and launching in Paris"

From Sifted.eu, July 10:

The company's founders, who came from the ranks of Stripe and OpenAI, say Paris is the next place to be for AI startups

The past decades have seen French talent leaking by the bucketload to the US, tempted by Silicon Valley’s cutting-edge companies and the eye-watering salaries they offer. But now the beginning of a counter-trend has started to emerge — with French techies returning home to launch startups — and few companies embody this as well as Paris-based AI startup Dust.

The company was cofounded in the French capital in 2022 by Stanislas Polu, who had returned from a seven-year stint in the US, where he’d been working as a software engineer at OpenAI. Before that, he’d been at Stripe’s Silicon Valley office like his cofounder Gabriel Hubert, who had come back to France a couple of years earlier to lead healthtech unicorn Alan’s product team. 

Dust offers a platform for businesses to build a range of custom-made AI assistants that can help with different tasks like meeting preparation or data analysis. It raised a €5m seed round last year from global investors Sequoia Capital, Seedcamp and Connect Ventures and earlier this month it closed a €15m Series A from the same backers.

At the same time, the team opened a bottle of champagne to celebrate reaching €1m in annual recurring revenue (ARR), says Hubert.

The business is still in its early stages, but the founder says, contrary to a few years ago, building an AI company in France, rather than in the US, hasn’t felt like an uphill struggle.

“France is increasingly establishing itself in the AI sector,” says Hubert. “There is still a lot to prove, nothing is done and things are moving quickly — but we’re accelerating.”

“We shouldn’t lie to ourselves: the best place in the world to start a company is Silicon Valley, and the cost of not being there still exists. But it’s not as high as it was 10 or 15 years ago.”....

....MUCH MORE

It's taken a bit longer for France to develop the ecosystems, the connections, than we thought it would take, six - seven years ago but it is indeed happening. If interested see:

"Venture Capital: "These 12 startups could be France’s next unicorns"
French Tech: "Mistral AI secures €105M in Europe’s largest-ever seed round"

Although we've been pitching French startups as a potential engine of growth to supplant German dominance, and although we've made Artificial Intelligence one of the foci of the blog since 2013 - "Why Is Machine Learning (CS 229) The Most Popular Course At Stanford" - and although we began juxtaposing the two strands five years ago, I'm still impressed with this sort of money going into a company that was formed in the last five weeks.

French OpenAI Rival Mistral Nears $2 Billion Valuation With Andreessen Horowitz Backing
This. This is what we've been pitching for the last five years as the way France picks up the economic torch from Germany....
"...Big Tech Alumni building AI startups in Paris"
"France makes high-profile push to be the A.I. hub of Europe setting up challenge to U.S., China"
"Report: France's Macron Seeks Seat at AI Table"

And back into the mists of time (well, the twenty-teens):

"French government officials advocate for a €500m investment in blockchain technology"
The country might be better served adding to the €1.5 billion that President Macron has pledged for research in Artificial Intelligence.
But I might be biased....
Related:
France: "For Emmanuel Macron, AI is more than a technological revolution. It is a political revolution of hope in an increasingly dystopian future"
"The Race is On for European AI Research"
Profit From The Global Riot Control Industry
"The Top-10 French Artificial Intelligence Startups"
The Creator of the iPod and the iPhone Seeks to Dethrone Tech’s Giants
It’s a crisp January morning in Paris’s 13th Arrondissement, and outside Station F, the former freight terminal that is the epicenter of France’s startup scene, twentysomethings climb out of cars hailed using iPhone apps.
Tony Fadell’s Next Act? Taking on Silicon Valley—From Paris

"‘The Disruptors’ — Unique insight into Europe’s 1,600 AI startups (Part 2)"
I was about to headline this link "The 1600 AI Startups you must know" to play off the "672 thought leaders you must follow on Twitter" or the "37,000 young people who want to take your job" articles but then realized our wary-yet-intrigued readers are not the type of people who respond well to someone saying they 'must' do anything....

Wednesday, July 17, 2024

"Serbian Government Restarts Rio Tinto's Contentious Lithium Mine Project"

It is the largest known lithium deposit in Europe.

From Radio Free Europe/Radio Liberty (RFE/RL), July 16:

Serbia’s government has reinstated a spatial plan for a multibillion-dollar lithium mine and processing plant, days after the Balkan state's Constitutional Court said a previous government acted improperly to halt the project amid public protests.

Anglo-Australian metals and mining giant Rio Tinto's plans for a sprawling 250-hectare complex to exploit huge mineral deposits in a fertile western valley have pitted environmental and other local opponents of the so-called Jadar project against President Aleksandar Vucic and his ruling allies for years.

But a government session on July 16 adopted a decree to restart the project immediately, based on the Constitutional Court's conclusion five days earlier that the government of then-Prime Minister Ana Brnabic had acted unconstitutionally when it withdrew permits for Rio Tinto....

....MUCH MORE

Also at RFE/RL and probably related, July 17:

Previously:

"Nat-Gas Prices Plummet on a Glut of US Supplies"

From Barchart, Wednesday July 17:

August Nymex natural gas (NGQ24) on Wednesday closed down by -0.153 (-6.99%).  

Aug nat-gas prices Wednesday plummeted to a 2-1/2 month low and closed sharply lower.  A glut of US nat-ga supplies continues to undercut prices, with nat-gas inventories +18.7% above their 5-year seasonal average as of July 5.  Also, an outage at the Freeport liquified natural gas terminal has reduced US gas exports and boosted already bloated inventories.  The Freeport LNG terminal slowly began to restart after Hurricane Beryl damaged part of the plant.   The Freeport LNG plant is one of the largest in the US and can liquefy as much as 2% of US daily gas production.

Lower-48 state dry gas production Wednesday was 100.8 bcf/day (+0.3% y/y), according to BNEF.  Lower-48 state gas demand Wednesday was 79.7 bcf/day (+3.0% y/y), according to BNEF.  LNG net flows to US LNG export terminals Wednesday were 10.6 bcf/day (-6.2% w/w), according to BNEF.

An increase in US electricity output is positive for nat-gas demand from utility providers.  The Edison Electric Institute reported Wednesday that total US electricity output in the week ended July 13 rose +2.5% y/y to 97,089 GWh (gigawatt hours), and US electricity output in the 52-week period ending July 13 rose +2.13% y/y to 4,149,112 GWh....

....MORE

In electronic trade the futures have regained a few cents, 2.077 last,  down 0.129 (-5.85%).

The constant contract low was 1.5220 on February 20.

"Nvidia, ASML, and TSMC stocks are getting hammered...."

From Yahoo Finance, July 17: 

Chip stocks Nvidia (NVDA), Taiwan Semiconductor Manufacturing (TSM), and ASML (ASML) have all soared this year thanks to investor bets on the artificial intelligence boom. On Wednesday, their momentum came to a screeching halt.

The three stocks were down more than 5% in midday trading on Wednesday for reasons ranging from investor concern over export restrictions to a broader rotation out of tech stocks.

Chip stocks plummeted on Wednesday as the Biden administration reportedly mulled tighter restrictions on China and Republican candidate Donald Trump hinted Taiwan should pay for US defense against any Chinese aggression.

One headwind that emerged was the potential for tighter restrictions on exports of semiconductor technology to China.

Bloomberg reported the Biden administration is considering implementing a more severe curb involving controls on foreign-manufactured products that use even the smallest amount of American technology.

Current restrictions have already impacted US-based companies’ ability to sell to China. Nvidia sales to China decreased as a percentage of total data center revenue from 19% in fiscal year 2023 to 14% in fiscal year 2024.

ASML stock saw the steepest decline on Wednesday, falling as much as 11%.

Shares of the Netherlands-based chip equipment maker were also pressured following its third quarter guidance.

While ASML beat its second quarter top- and bottom-line expectations, its revenue forecast for the current quarter came in shy of the consensus analyst estimate.

The company also said it expects quarterly gross margin in the range of 50% to 51% versus Wall Street expectations of 51.1%....

....MUCH MORE

The highest of high tech. NVDA designs the chips they want (also the software to run on the chips), TSM makes the chips (on track to put a trillion transistors on a single GPU chip), ASML makes the machines that TSM needs to make to make the chips.

Truly amazing.

Yield Curve Control Means The Party Can Continue, What's Not To Love?

Following up on yesterday's "Société Générale's Albert Edwards On The Endgame".

This little essay from Mises Wire begins with one of the great lines in the finance literature:

Yield Curve Control: Bubbles and Stagnation 

Central banks do not manage risk, they disguise it.

You know you live in a bubble when a small bounce in sovereign bond yields generates an immediate panic reaction from central banks trying to prevent those yields from rising further. It is particularly more evident when the alleged soar in yields comes after years of artificially depressing them with negative rates and asset purchases.

It is scary to read that the European Central Bank will implement more asset purchases to control a small move in yields that still left sovereign issuers bonds with negative nominal and real interest rates. It is even scarier to see that market participants hail the decision of disguising risk with even more liquidity. No one seemed to complain about the fact that sovereign issuers with alarming solvency problems were issuing bonds with negative yields. No one seemed to be concerned about the fact that the European Central Bank bought more than 100 percent of net issuances from eurozone states. What shows what a bubble we live in is that market participants find logical to see a central bank taking aggressive action to prevent bond yields from rising … to 0.3 percent in Spain or 0.6 percent in Italy.

This is the evidence of a massive bubble.

If the European Central Bank was not there to repurchase all eurozone sovereign issuances, what yield would investors demand for Spain, Italy or Portugal? Three, four, five times the current level on the ten-year? Probably. That is why developed central banks are trapped in their own policy. They cannot hint at normalizing even when the economy is recovering strongly, and inflation is rising.

Market participants may be happy thinking these actions will drive equities and risky assets higher, but they also make economic cycles weaker, shorter, and more abrupt.

Central banks have exhausted tools like repurchasing bonds and cutting rates, the diminishing returns are evident. Now they look to Japan, of all places, to look at yield curve–control policies.

Many articles hail the Bank of Japan’s curve control strategy as a big success. It has managed to keep bond yields inside a narrow range around 0 percent, since it adopted its yield curve control (YCC) policy in 2016.

However, all this has done is disguise risk and lead the economy to massively indebted stagnation.

Why? The central bank applies constant changes in its purchases of sovereign bonds with different maturities to prevent the yield curve from steepening and bond yields from rising above a certain level, which could cause an economic crisis as risk-off takes over.

There is a deeply flawed view of markets in this theory. YCC does not reduce the risk of a crisis, simply disguises it by manipulating the price of sovereign bonds, the alleged lowest risk asset. As such, market participants always take significantly more risk than what they want or should, because the price of risk and the shape of the curve is artificially managed by the central bank.

The idea behind YCC is that savers will stop purchasing or selling sovereign bonds when they perceive that the economic cycle is changing, and that investors’ funds will be directed to finance the productive economy and put to work to invest in industry and provide credit to households. However, that does not happen. Market participants know that the shape of the yield curve is manipulated, and that risk is hidden, so most of the funds go to liquid, short-term assets and to refinance zombie firms that are already in high debt. Overcapacity is perpetuated, risky asset inflation soars, those that are already indebted are refinanced eternally and low interest rates push high liquidity to the least productive parts of the economy. It is no coincidence that the number of zombie firms has soared in the period when YCC was implemented. It is even less of a coincidence that unproductive debt has ballooned.

Allowing rates to adjust to reality through free float would be more effective to transfer liquidity to the productive segments of the economy and strengthen the recovery. It would also reduce the incentive to overspend from governments. Central banks say they do not cut rates but just follow market demands. If that is the case, let them float freely. But they will not....

....MUCH MORE

Another of the great Finance lines: Schumpeter's opening words are apocalyptic: "Can capitalism survive? No. I do not think it can."

Also, "Can Stock Market Forecasters Forecast?" is the title of a paper by one of my heroes, Alfred Cowles III.

It appeared in Vol.1, No. 3 of Econometrica, after having been read to a joint meeting of the Econometric Society and the American Statistical Society.

Mr. Cowles answer to the question?

"It is doubtful."
December 31, 1932.

"A New Age of Materials Is Dawning, for Everything From Smartphones to Missiles"

This dawn they speak of has been a long time coming.*

From the Wall Street Journal, July 5:

Labor-intensive manufacturing has limited the use of lighter, stronger composites but that may change with emerging techniques

There have been only a handful of ages of new materials in the history of humankind—ceramics, steel and plastics come to mind—and we are now on the cusp of the next one: composites.

When we talk of composites, we’re speaking about such things as the carbon-fiber ones in wind turbines, race cars and the Boeing 787. Such materials have the advantage of being far lighter than the metal parts they typically replace, while being just as strong, and requiring fewer resources to make.

Materials scientists have had limited success making composites affordable and accessible for decades, or possibly millennia—technically, they were invented by the Mesopotamians. The labor-intensive nature of their manufacturing has made them expensive, which has limited their application to a handful of areas where their advantages outweigh their costs, such as the aerospace industry.

Now, thanks to new manufacturing techniques that can churn out composite parts quickly and cheaply, all of that is changing, and the results could be both profound and exciting.

Modern composites, starting with Bakelite, were pioneered in the early part of the 20th century. Other composites were invented at a steady pace, and the industry began to hit its stride in the late 1990s and early 2000s, when automated processes for turning things like carbon fiber into giant structures like airplane bodies and windmill blades reached maturity.

In just the past couple of years, a number of startups have developed processes for creating all sorts of small objects from composites, in a way that is fast and inexpensive. These include Berkeley, Calif.-based Arris Composites, 9T Labs in Zurich, Orbital Composites in Silicon Valley, and others.

Shifting substantial portions of what we make and use from steel and plastic to composites—which are amalgamations of a variety of fibers, embedded in a variety of plastics—could bring new kinds of transportation, more terrifying weapons of war, and lighter and more durable smartphones, wearables and other consumer electronics.

All of that is possible because composites, while they have their challenges, are often able to perform just as well as high-strength metal parts, but with a fraction of the weight. Composites are the reason modern jetliners are so fuel-efficient, and the entire wind-power industry would be impossible without enormous turbine blades made from composites.

It’s one thing to make airplanes out of composites—Boeing pioneered this technology with its 787, on which nearly every visible surface is in fact made of a carbon-fiber composite. It’s quite another to mass-produce smaller composite parts of the kind that we typically make out of titanium or other metals, such as the bolts and brackets that hold a 787 together.

As with other pioneering manufacturing technologies, such as 3-D printing, bringing composites into the mainstream is more of an evolutionary process than a revolutionary one.

Today, you can buy consumer products made with ultralight, ultrastrong parts from Arris and 9T Labs, including Brooks running shoes, spokes for bicycle wheels, and luxury watches. But what’s coming is even more interesting: Arris’s technology is being tested by Airbus to replace metal brackets inside its planes and by Singapore-based ST Engineering, which performs a substantial fraction of the repairs on airplanes in the U.S.

9T Labs is also working on aerospace applications, and by the end of the year it hopes at least one of its customers will be ready to announce bicycles made with its parts. Orbital Composites, meanwhile, has a handful of contracts with the U.S. military to develop its composites-manufacturing process for satellites, rockets, drones and hypersonic aircraft....

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*The outro from 2023's ""Material Impact announces $352m materials science fund"
Putting it simply, materials science is the future of stuff.

*****
We've been pitching materials science since 2009's "What It Takes: Building a Materials Science Company for the 21st Century".
First off, 3D printing is not dead, it's not even resting. But like nanotechnology (remember nano?) it is becoming just another wrench in the toolbox. Here's how we were viewing nanotech in 2010:
...The reason for highlighting nano is two-fold.

1) Since Feynman coined the word there has been a misconception among investors that there would be a nano-technology "industry". This has proven not to be the case and won't be in the future. Rather nano is a tool, an approach toward problem solving.

There will be some breakthroughs that make their discoverers instantly (after 10 years of research) wealthy but the real beneficiaries will be companies like Kyocera and 3M and Siemens. They will use the technology to do what they are already doing, just better, faster, cheaper, more.

2) In spite of the fact that there will be few pure plays we are convinced that nano combined with advances in materials science and manufacturing technology is what will spur the next secular bull market....
When it becomes ubiquitous, the distinctions blur, the drive for creativity recedes, stasis, then death.
Wait what? Entropy! I meant to co-opt the physically precise  concept of entropy to metaphorically describe the trend. Not death.
No, death bad, Sand Hill Road good.

And today's story, from CB Insights...

And many more. If interested use the 'search blog' box, upper left.

Musk's "Neuralink Will Offer Telepathy and then Brain Control of Teslabots"

Throw in Full Self Driving and paraplegics will recover a lot of agency/autonomy.

From Next Big Future, July 10:

Neuralink will double the bandwidth of its devices with more accurate placement of the threads into the brain. The next generation device will have 3000 channels. The company’s first system, called Telepathy, centers around 64 threads that are inserted directly into the brain. The threads are thinner than a human hair and record neural signals through 1,024 electrodes. They will double the bandwidth with minimal modifications. The next generation device will be about 25-50 times the bandwidth....

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"Dow Jones Futures Fall; Chips Tumble On ASML Earnings, Tougher China Curbs, Trump"

From Investor's Business Daily, July 17:

Dow Jones futures declined slightly early Wednesday, while S&P 500 futures and especially Nasdaq futures fell solidly as semiconductor-equipment giant ASML (ASML) tumbled on guidance. Nvidia (NVDA) and several other chip plays also retreated on reports of even-tougher U.S. export curbs to China and former President Donald Trump's comments on Taiwan.

Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value, with Johnson & Johnson a Dow component. S&P 500 futures declined 0.8% and Nasdaq 100 futures tumbled 1.3%.

The 10-year Treasury yield ticked up to 4.18%. Crude oil futures rose slightly.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

The stock market rally had another positive session Tuesday, led by small caps, the Dow and many non-tech sectors. Toast (TOST), Uber (UBER), UnitedHealth (UNH), Woodward (WWD) and Flowserve (FLS) flashed buy signals.

The video embedded in the article discussed Tuesday's market action and analyzed Toast, Woodward and Uber stock.

ASML Earnings, Other Chip Headwinds
ASML earnings and revenue topped second-quarter EPS and sales estimates, while surging bookings bodes well for long-term growth. But Q3 revenue guidance was light.

Also, the Biden administration is mulling its toughest-possible trade restrictions if Dutch-based ASML and others continue to sell advanced chip technology to China, Bloomberg reported. The administration has told allies it may impose controls on foreign products that use the tiniest amount of U.S. technology.

ASML stock slumped 7% in premarket trade, signaling a sharp drop below a 1,056.34 buy point.

Nvidia stock sank more than 3%, signaling a clear move below its 21-day line. Taiwan Semiconductor (TSM), which makes chips for Nvidia and many others, lost 4%.

In addition to ASML and tougher export curbs, Trump said Taiwan should pay the U.S. for defense, claiming it "doesn't give us anything." That raises concerns about whether Trump would defend Taiwan from a China attack if he became president again.

TSMC earnings are due early Thursday.

ASML peer Applied Materials (AMAT) and U.K. chip design giant Arm Holdings (ARM) lost 4%....

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 If interested see also Tuesday evening's "The Winners From U.S.-China Decoupling",

Nvidia was recently changing hands at $121.34 down $5.02 (-3.97%) premarket.

Tuesday, July 16, 2024

"The Winners From U.S.-China Decoupling"

From Foreign Policy, July 15:

From Malaysia to Mexico, some countries are gearing up to benefit from economic fragmentation.

A full decoupling of the Chinese and Western economies could be a costly proposition. The International Monetary Fund estimates that it could shave around 7 percent off global GDP in the longer term, a loss equivalent to $7.4 trillion or about the size of the French and German economies combined.

The IMF also predicts that developing economies would be hit hardest if Washington and Beijing were to cut economic ties. But what these aggregate figures miss is that is that some emerging economies will be winners from decoupling—or, as its somewhat milder form is called today, de-risking. In fact, some emerging countries are fast positioning themselves to benefit as China and the West rewire their supply chains—for example, by serving as industrial and trade hubs between both sides or by playing one side against the other for investment support.

Here are five trends that highlight how some countries are gearing up to benefit from U.S.-China tensions and the economic fragmentation they are bringing about.

***

 1. Countries like Malaysia benefit as new industrial hubs for critical goods. Malaysia’s northern island state of Penang may not often make the headlines, but its 1.7 million inhabitants have lately been witnessing an economic boom. As multinational companies diversify supply chains for the production of critical goods away from China, Penang has positioned itself as a neutral manufacturing hub for legacy semiconductors. While Malaysia has a 50-year history producing microchips, there has been an unprecedented recent rush to set up assembly and testing lines for semiconductors on Penang. The island attracted $13.5 billion in foreign direct investment last year, more than the sum of all such investment from 2013 to 2020.

In turn, the island has become a major supplier of semiconductors, providing 20 percent of U.S. chip imports in 2023. Looking ahead, the island’s edge in microchips looks set to grow further: U.S.-based Intel has just announced a $7 billion plan to expand production on the island. Western firms are not the only ones interested in Penang: xFusion, a former Huawei subsidiary, and Shanghai-based Starfive both plan chip production on the island. Perhaps the interest of Chinese firms for Malaysia should not come as a surprise: Unlike China, Malaysia is not subject to U.S. controls on the export of advanced semiconductor technology or machinery, making Penang an ideal base for Chinese firms looking to skirt these measures.

2. China is redirecting its investments to new emerging markets. Western firms setting up additional production lines outside China have become a familiar example of corporate de-risking, but they are not the only ones diversifying. Chinese firms, too, are shifting or adding production abroad to hedge against Western de-risking plans. This trend explains the huge rise in Chinese foreign direct investment (FDI) in several emerging economies, including Mexico and Hungary.

In early 2024, Mexico became the favorite destination for Chinese greenfield FDI in manufacturing and logistics. This trend looks set to last: Mexican industry bodies reckon that one in five businesses setting up shop in the country’s industrial parks—which are a perfect base to produce goods covered by the U.S.-Mexico-Canada free trade agreement—will be Chinese in the coming two years. Eastern Europe is another beneficiary of China’s diversification strategy. CATL, a Chinese battery giant, is building an $8 billion plant in Hungary, for instance. By cultivating economic ties with a Beijing-friendly European Union member like Hungary, China is playing the long game. If it were to invade Taiwan, Beijing would be quick to point out that the EU has every interest in remaining neutral (read: avoid imposing sanctions on China) if the bloc does not want to jeopardize thousands of jobs on European soil.

3. De-risking is turning some countries into intermediaries. De-risking comes with unexpected side effects: according to the Bank of International Settlements, which has looked at the production lines of thousands of global firms, supply chains are getting longer. At first glance, this seems counterintuitive. If de-risking is pushing Western companies to produce closer to home, surely supply chains should be shortening? BIS data show that this simple reasoning does not hold up to scrutiny. Instead of cutting ties with China, many Western businesses are still buying Chinese-made supplies—but they are now buying them from connector countries that act as a proxy between both sides.

A look at Vietnam’s trade statistics shows how this works in practice. The value of Chinese goods exports to Vietnam has nearly doubled since 2017, to more than $138 billion last year. (China’s overall goods exports only grew by about half over the same period.) It is hard to believe that Vietnam’s consumer market is absorbing such a massive influx of Chinese gadgets. Instead, many of China’s shipments are simply transiting via Vietnam en route to the United States. This trend helps to explain why U.S.-Vietnamese trade is booming. The value of Vietnam’s exports to the U.S. has grown almost three-fold since 2017, with a near-perfect correlation between the growth in Vietnam’s imports from China and that of its exports to the U.S. On paper, this looks like a de-risking win for the U.S., which imports less from China and more from Vietnam. Yet the reality is different: In truth, U.S. reliance on China remains unchanged—while supply chains get even longer....

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Also at Foreign Policy, July 16:
China’s Third Plenum, Explained

Watch Out Elon: China's Guangdong province to spend $40bn on flying electric vehicle sector

With yesterday's somewhat-opaque explanation of Tesla's robotaxi rollout delay (our comment when the delay was first announced: "Personally I don't really care but with the stock down $17.05 (-6.48%) it's obvious somebody cares. $246.21 last. Tell me more about the Dojo supercomputer and what it's doing, or not doing, for TSLA"): 

Reuters - Musk signals delays to robotaxi unveiling for key design change - it's time to pull this story out of the link-vault as a reminder that the world is not standing still as we anticipate our Jetsons' future.

From Global Construction Review, June 4, 2024:

China to spend $40bn on flying electric vehicle sector

https://www.globalconstructionreview.com/wp-content/uploads/2024/06/car.jpg

 Xpeng Aeroht’s image of its combined ground vehicle and flying unit – the design for which has yet to be finalised

China’s Guangdong province is planning to invest $41.4bn in the emerging “low-altitude economy” over the next 2.5 years.

The phrase refers to the nascent industrial sector focussed on electric airborne vehicles that are expected to enter Pearl River Delta’s urban scene over this decade.

China Daily reported last week that the plan was to build a “world-leading low-altitude economy hub” in Guangzhou, Shenzhen, and Zhuhai....

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Like the U.S. passenger railroads in the 1960's and '70's when automobiles and airplanes really started moving people en masse, ya snooze, ya lose.  

Société Générale's Albert Edwards On The Endgame

 From Mr. Edwards' twitter feed:

Monday, July 15, 2024

The Ambani-Merchant Wedding Cost How MUCH???!!!

From Vanity Fair, July 15:

Inside the $600 Million Ambani Wedding: Jewels, Stars, and the Party to End All Parties
The eye-popping celebrations from July 12 to 14 included a red carpet, Hollywood and Bollywood royalty, actual royalty, and some names that will surprise you. 

There are weddings, and then there’s the Ambani wedding, the lavish series of events that has unspooled party by unbelievable pre-wedding party over the last several months and culminated this weekend with the union of Anant Ambani, the youngest son of super-billionaire Mukesh Ambani, and his new wife, pharmaceutical heir Radhika Merchant in Mumbai.

The celebrations from July 12 to 14 included a red carpet for attendees to walk, spotlighting the Hollywood, Bollywood, political, business, and tech luminaries invited to the wedding. Guests at the wedding, which cost a reported $600 million, included Indian prime minister Narendra Modi, John Cena, Priyanka Chopra Jonas and Nick Jonas, Nicky Hilton Rothschild and James Rothschild, former U.K. prime ministers Boris Johnson and Tony Blair, stylist Law Roach, designer Prabal Gurung, Kim Kardashian and Khloé Kardashian, former U.S. Secretary of State John Kerry, and many more, with a reported crowd of some 2,000 guests. It was an A-list cast worthy of a Hollywood production, evidenced by the fact that the Kardashians brought their own camera crew to document their trip for their eponymous show, as Kim revealed in her Instagram Stories.

At pre-wedding events throughout 2024, stars such as Rihanna, Justin Bieber, Akon, Katy Perry, Pitbull, Andrea Bocelli, and the Backstreet Boys performed for guests. The weekend of the wedding itself, headliners such as Adele, Drake, and Lana Del Rey were rumored, but guests danced to a more internationally-focused lineup of entertainment: Luis Fonsi performed “Despacito,” K’Naan offered up his hit song “Waving Flag,” Afrobeats star Rema got the crowd going, and Bhangra musician Sukhbir also took the stage.

The details and grandeur of the wedding are expected to set trends for celebrations “for decades to come,” insiders told Vanity Fair. Bride Radhika told Vogue that her new mother-in-law, Nita Ambani, was “the CEO of the wedding, as I like to say. “It was Nita’s commitment and vision that brought our entire celebration to life.” Nita was assisted by daughter Isha Ambani and daughter-in-law Shloka Ambani....

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The Hindustan Times has a couple dozen sidebar stories including:

Ambani wedding: Ever wondered what guests have been gifting Anant Ambani, Radhika Merchant? We have the answer!  

Shloka Mehta's 450-carat diamond necklace with gigantic hearts is the talk of the town as US influencer shares details

The groomsmen got watches. From Tatler Asia, July 14:

Anant Ambani’s watches and jewellery: From Audemars Piguet gifts to bespoke Cartier brooches  

Billionaire heir Anant Ambani dazzled with million-dollar timepieces and bespoke jewellery at his star-studded nuptials and gave Audemars Piguet watches worth US$240,000 each as gifts to his groomsmen

Have you ever heard of a wedding gift so extravagant that it costs more than the GDP of a small nation? That’s exactly what happened at Anant Ambani and Radhika Merchant’s recent nuptials, where he gifted his groomsmen Audemars Piguet watches worth approximately US$240,000 each.

The limited-edition timepieces from the Royal Oak Perpetual Calendar series, known as the Luminary Edition, were presented to 25 high-profile guests. Among the lucky recipients were Bollywood superstars Shah Rukh Khan and Ranveer Singh, as well as close friends Shikhar and Veer Pahariya. These watches feature a 41 mm 18-karat pink gold case with a sapphire crystal back and a pink gold dial with a Grande Tapisserie pattern.

As for Anant Ambani himself, he showcased an impressive array of timepieces throughout the festivities. Tatler takes a closer look at the groom’s choicest collection of watches and jewellery....

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Flashing back on pre-partition India:

"Mechanical Elephant: The cult of Rolls-Royce in India"
If you are going to join a cult this looks like one to consider.  From Road & Track:

When flamboyance met bespoke luxury, the amazing happened.

https://hips.hearstapps.com/roa.h-cdn.co/assets/cm/14/47/546b278046780_-_0127phantom-lg.jpg?crop=1xw:1.0xh;center,top&resize=768:*

Dawn breaks in Hyderabad, and workers head out to collect the city's garbage in a fleet of Rolls-Royce sedans. 900 miles away in Jamnagar, a Phantom II, painted pink to match its owner's favorite slippers, coasts along the beach. There's a 20/30 Sedanca de Ville floating through the streets of Travancore, too, and it's got a miniature stool molded into its floor so that a "dwarf" can massage the passenger's legs.

Welcome to prewar India, where aristocrats engage in a lavish game of one-upmanship using the Rolls-Royce cars as fodder.

At the turn of the 20th century, India was under colonial British rule and divided into several hundred city-states, many led by native royal patriarchs called Maharajas. These men were rich, powerful, and obsessed with the pageantry of luxury. But in a time when automobiles were less reliable than weather reports, the most exclusive cars were ones that didn't break down.

Keen on cracking into the Indian market, a suave British businessman named Frank Norbury schemed a dramatic demonstration of engineering prowess in 1907 using his Rolls-Royce 40/50 hp: He threw out the Silver Ghost's toolkit, locked its hood shut, and drove 620 miles through Ghat mountain passes from Bombay to Kolhapur. The Maharaja of Gwalior was smitten; he had to own that motorcar....

https://hips.hearstapps.com/roa.h-cdn.co/assets/cm/14/47/546b2781efe2f_-_0134phantomii-lg.jpg?crop=1xw:1.0xh;center,top&resize=768:*

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