"Cocoa Price Selloff Accelerates as Global Supply Prospects Improve"

First off, putting on my academic hat, a quasi-periodic reminder. As Dylan Grice, then at Société Générale pointed out, commodities' expected long-term real rate of return is not appealing. Here's our introduction to 2010's Société Générale's Dylan Grice-"Commodities: ‘Their Expected Long-Run Real Return is 0%’" (please ignore the supercilious "Well duh", I was in my haughty Valley Girl phase, better now):....

From Barchart, the headline story, October 3: 

December ICE NY cocoa (CCZ25) on Friday closed down -291 (-4.49%), and December ICE London cocoa #7 (CAZ25) closed down -225 (-4.99%).

Cocoa prices extended their plunge this week on Friday, with NY cocoa posting a 19-month low in its nearest futures and London cocoa reaching a 20-month low.  Cocoa prices are selling off as this week's actions by the governments of the Ivory Coast and Ghana to boost the amount they pay farmers for their cocoa beans may encourage sales and boost cocoa supplies.

The outlook for abundant global cocoa supplies is hammering cocoa prices.  Cocoa deliveries in Ghana, the world's second-largest cocoa producer, have surged and are weighing on prices.  Cocoa arrivals to ports in Ghana in the four weeks ending September 4 reached 50,440 MT compared to about 11,000 MT delivered in the same period in 2024.

Cocoa prices have also been under pressure over the past seven weeks amid fears that high cocoa prices and tariffs could dampen chocolate demand.  Chocolate maker Lindt & Sprüngli AG lowered its margin guidance for the year in July due to a larger-than-expected decline in first-half chocolate sales.  Additionally, chocolate maker Barry Callebaut AG reduced its sales volume guidance for a second time in three months in July, citing persistently high cocoa prices.  The company projects a decline in full-year sales volume and reported a -9.5% drop in its sales volume for the March-May period, the biggest quarterly decline in a decade.  

Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and "materially higher" than last year's crop.  The harvest of the Ivory Coast's main crop is expected to begin next month, and farmers are optimistic about the quality of the crop.....

....MUCH MORE 

Finally, On the Trail of Cocoa: The Dark Goddess, April 3, 2021:

Readers who have been with us for a while have seen us quote one of the more evocative sentences you are likely to find on markets:

“…For, after all, I had been into cocoa a bit myself. That was back when The Great Winfield had discovered cocoa trading. Occasionally in those more leisured days I would sit with him lazily watching stocks move, like two sheriffs in a rowboat watching catfish in the Tennessee River….”

—'Adam Smith', Supermoney

Here's part of the chapter it comes from.

Via the Twitter feed of Anne-Elisabeth Moutet:

So: the funniest pages ever written on commodities investing, by the great "Adam Smith", in 1968: "The Cocoa Game", from "The Money Game". 1/2

*****

***** 

*****

There's more, all great, but that should help to sate the cravings until the chocolate Easter bunnies arrive.

If interested here are the two tweets that Anne-Elisabeth posted:

1/2   https://twitter.com/moutet/status/962695914833022977

2/2   https://twitter.com/moutet/status/962696246023553025

Possibly also of interest:

Only The Dead Have Seen The End Of Candyflation 

Living La Vida Cocoa: Warren Buffett, Berkshire Hathaway and the Chocolate Wars (BRK.A; BRK.B; CBY; KFT; HSY)  

"Goldman boss David Solomon warns of a stock market drawdown: ‘People won’t feel good’"

Can you imagine the nervousness morphing into fear into terror as holders of companies without sales, earnings, and cash flows realize what they own? Good times.

From CNBC, October 3:

• Goldman Sachs CEO David Solomon said AI presented opportunities but that some investors were overlooking “things you should be skeptical about.”
• Speaking at Italian Tech Week in Turin, Italy, he said a “drawdown” was likely to hit stock markets in the coming two years.
• “I think that there will be a lot of capital that’s deployed that will turn out to not deliver returns,” he said.

Stock markets are due a “drawdown” in the next year or two after years of being propelled to record highs by an AI frenzy, according to Goldman Sachs CEO David Solomon.

“Markets run in cycles, and whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation, and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential ... there are going to be winners and losers,” he said at Italian Tech Week in Turin, Italy, on Friday.

Solomon pointed to the mass adoption of the internet in the late 1990s and early 2000s, which led to the emergence of some of the world’s largest companies — but also saw investors lose money to what became known as the “dotcom bubble.”

“You’re going to see a similar phenomenon here,” he said. “I wouldn’t be surprised if in the next 12 to 24 months, we see a drawdown with respect to equity markets ... I think that there will be a lot of capital that’s deployed that will turn out to not deliver returns, and when that happens, people won’t feel good.”....

....MUCH MORE 

Our best guess is one more fakeout shakeout to cement the rightness/righteousness of the buy-the-dip mental map and then:

The hazards of bottom-calling were pretty much nailed by a cartoon we used as our guide and warning for readers, repeated some twenty-odd times in the six month crash during the 2008 -2009 unpleasantness: Alfred Frueh's January 16, 1932 New Yorker cartoon, "Just around the corner," playing off President Hoover's "Prosperity is just around the corner" exhortation:

 

The market finally bottomed on July 8, 1932, six months after the cartoon was published and 33 months after that all-time-high up on the upper left of the cartoon.

Bottom calling is hard. 

And dangerous.

"Iranian President Masoud Pezeshkian said on Thursday that Tehran can no longer serve as the country’s capital..."

From Iran International who we found to be pretty accurate during the Israel - Iran War of 2025:

October 2

Water crisis means Iran has no choice but to move capital, Pezeshkian says 

Iranian President Masoud Pezeshkian said on Thursday that Tehran can no longer serve as the country’s capital, citing a worsening water crisis that has depleted key reservoirs serving the metropolis.

Pezeshkian said the idea of relocating the capital had already been discussed with the Supreme Leader but now “is not a choice, it is a mandate.”

“Last year, rainfall was 140 millimeters, while the standard is 260 millimeters. That means rainfall has fallen by about 50 to 60 percent. This year, the situation is just as critical,” Pezeshkian said in a speech broadcast from Hormozgan Province.

Iran announced in January it would relocate its capital to the southern coastal region of Makran, citing Tehran’s enduring overpopulation, power shortages and water scarcity.

Pezeshkian warned on Thursday that the cost of transporting water to Tehran could reach €4 per cubic meter (about $4.65), underscoring the unsustainable pressure on the city’s resources.

Tehran’s main reservoirs are nearing depletion. Government figures show that 19 major dams nationwide are operating at below 20 percent capacity, while satellite analysis indicates Amir Kabir reservoir outside Tehran is at just 6 percent of usable volume.

Other key reservoirs, including Lar and Latyan, are also at historic lows. Officials have also reported land subsidence in parts of the capital of up to 30 centimeters per year due to groundwater depletion.

Iran has long studied moving the capital to the shores of the Persian Gulf, where access to water would be less strained.

Agriculture, which consumes about 80 percent of Iran’s water, remains highly inefficient, further straining limited supplies. Experts warn that without major reforms in consumption and water management, the country faces worsening shortages, environmental collapse and growing public unrest....

....MUCH MORE

Previously:

August 13 - Is Iran running out of water?
The country has had an expanding problem for years, and it is bad enough that the Iranians accused Israel of stealing Iran's clouds
This is the sort of thing that leads to war.... 

July 2019 - UPDATED: The Tigris and Euphrates Are Drying Up—And It's Far From Natural

January 2019 - "Iran drought turns political as lawmakers fight over water share"
It was funny when the Iranians were accusing Israel of stealing their clouds. Now it has the potential to get serious. 

June 2023 - Where things get really difficult is when you have cross-border claims such as those we're seeing right now between Iran and Afghanistan. A couple weeks ago they were shooting at each other. 

Iran, Iraq and Syria: "As neighbours build dams, Iraqis watch twin rivers dry up" 

"How GDP Hides Industrial Decline"

From Palladium Magazine, October 3:

For the past few years I have been mulling a paradox: U.S. GDP keeps going up, yet it seems like we make less stuff and that most of the smart people I know work fake jobs. Growing up in the nineties, most of my toys and clothes had tags saying “Made in Hong Kong” or “Made in Vietnam.” But the high-skill, high-tech goods—the washing machine, the car, my computer—were often made in America. Now? From my e-bike to my laptop, from my refrigerator to my mattress, very few goods I own, high-tech or low-tech, were made in the USA.

Meanwhile, I have heard arguments that America is actually making more things than ever. According to The Economist, lost jobs are due to automation, not foreign competition, and it is a good thing that machines have liberated us from factory work and enabled more service jobs. Everyone from the American Enterprise Institute to The Wall Street Journal to Wikipedia agrees that U.S. manufacturing has not just not significantly fallen—but it has never been higher.

Sometimes there are discrepancies between your real-world observations and the data. But this goes far beyond just being a discrepancy: the data is saying the complete opposite of what we see with our own eyes, hear from our acquaintances in the job market, and deduce logically from our knowledge of demographics, technology, industry, and trade. How is this possible? The answer is actually very simple: the data is completely wrong. But you can only figure this out if you go line-by-line into the hundreds of pages of government GDP calculation methodology documentation. Which is exactly what I did.

The most commonly cited graph shared to demonstrate U.S. manufacturing strength is based on the U.S. Bureau of Economic Analysis’s (BEA) manufacturing “real value-added” data, which looks at manufacturing as a subset of total GDP. This graph has been cited by Federal Reserve economists, Washington Post columnists, professors—all claiming it refutes the idea that the U.S. economy has been hollowed out. Adjusted for inflation, it shows manufacturing is up 71% since the dataset began in 1997, and up a healthy 37% per capita:

 

Patrick Fitzsimmons/U.S. real value-added for manufacturing according to the U.S. Bureau of Economic Analysis, 1997-2024

You might think that a measure of manufacturing would in some way measure actual manufactured goods emerging from U.S. factories, like tons of steel rolling out of mills, number of CPUs coming out of chip fabs, and cars rolling off the assembly line. But this is not the case. Despite the name, “real GDP” in practice is the result of hundreds of arbitrary and subjective decisions made by government-employed economists, such as “education administrators are more productive than teachers” or that a 25% increase in automobile “quality” can theoretically show up as a 166% increase in “real GDP value added.” 

It is remarkable how there is so much commentary on GDP, yet so few people have truly wrestled with the numbers and where they come from: an advanced MIT macroeconomics textbook will reference GDP over sixty times, yet not once acknowledge the decision-making that goes into making this number. Likewise, pro-market public intellectuals are only too happy to cite GDP to make a point without considering that the metric itself is the antithesis of market capitalism: GDP is a very complicated statistical construct that is made by government bureaucrats behind closed doors without any ability of the public to replicate, audit, or verify assumptions. Sometimes, these kinds of constructs can be useful for accurately representing real-world phenomena, like manufacturing capacity. But a dive into how the sausage is made makes clear that GDP is not one of them. 

Where GDP Comes From 
Back in the 1930s, U.S. policy-makers and economists were facing two big problems. The first was that the nation was suffering an economic crisis with millions of people and businesses suffering loss of income, yet there was no existing way to sum up incomes across the economy to get a sense of how the nation as a whole was doing. The second problem was that previous economic statistics focused on raw commodity outputs like bushels of wheat grown or tons of steel produced, but now more of the economy was in services, government work, and heterogeneous manufactured products.

The U.S. government commissioned economists to create a comprehensive set of national income statistics. The economists kept working and went on to develop statistics aimed to measure the economic output by category of the economy and then, ultimately, to sum it up into one number that eventually would be known as “gross domestic product,” or GDP. 

At first glance, summing up the economy into a single number seems impossible. How do you add up apples and oranges? Or, say, apples, cars, and dentist appointments? One’s first inclination may be to add up total sales receipts in each category, since dollar spending can be compared between products and over time. But this fails because a rise in total spending for a product category may be merely the result of a rise in price, not more production. The clever solution was to combine expenditures or sales receipts in dollar terms with measures of the average price of each item. If spending on cars has doubled, but the price of the average car has also doubled, then there was no real change in production of cars. But if spending on cars doubled while the price only increased 50%, then there was a substantial increase in cars purchased.

Statistical agencies built giant databases of prices across all products, then matched the prices with expenditures for each category. Now it seemed as if they had the ability to do what seemed impossible, and add up changes in the economic sectors into one number. The top economic textbooks have called this “truly among the great inventions of the twentieth century.” 

Today, GDP numbers are calculated by the Bureau of Economic Analysis, which is staffed by career economists with no political appointees involved. It’s under the U.S. Department of Commerce. However, the methodology is also an international effort. U.S. economists join with their foreign counterparts at a United Nations committee to define the “System of National Accounts.” These are standards that nations around the world at least try to adhere to—adherence can be a requirement for World Bank loans. The methodology also changes over time. For instance, in 2012 there were major updates to add development of intellectual property (IP) as being its own contributing component to GDP.

Discourse over GDP is frequently confused because there are actually three different calculation approaches: the income approach, the expenditures approach, and the value-added approach. In the textbooks, usually only the expenditures approach is taught. In theory, each approach should sum to the same total number, since everyone’s income must come from someone else’s spending. However, when comparing sectors, such as government or healthcare, the totals differ for each approach, and this can create a lot of confusion. On top of that, each approach has a nominal and a real version. Thus when a news report refers to “GDP for healthcare”, this could be referencing one of six different numbers!

For the income approach to GDP, the process is to add up every person’s compensation, plus corporate retained earnings, plus some adjustments. For the expenditures approach, the formula is to sum the final expenditures of private consumers, the capital expenditures of businesses, the spending of the government, and exports, then subtract imports. “Final expenditures” means that the price of a car bought by a consumer is counted, but the money spent by the car dealership on its electric bill, or the money spent by the car factory on steel, is not counted. Counting non-final expenditures would result in double-counting and would break the number. The expenditures approach is most frequently taught in Economics 101.

Finally, we have the value-added approach....

....MUCH MORE 

"Dicing, Slicing, And Augmenting Gartner’s AI Spending Forecast"

From The Next Platform, September 25:

When we try to predict the weather, we use ensembles of the initial conditions on the ground, in the oceans, and throughout the air to create a kind of probabilistic average forecast and then we take ensembles of models, which often have very different answers for extreme weather conditions like hurricanes and typhoons, to get a better sense of what might happen wherever and whenever we are concerned.

Trying to figure out markets is no different. More data is better, and you have to look at ensembles of data and their underlying assumptions to try to reckon what might happen. There is a certain amount of gut instinct about human behavior and economic vectors as well, which is not precisely scientific but that’s people for you. And so we try to look at as much data as we can in sussing out a market, fill in gaps where we see them, inform this with what we know about underlying component and system suppliers, and give you a likely scenario so you can plan your IT spending, your own compensation, and therefore your own life. (That’s also why we keep track of things, to be honest.)

With that, we turn our attention to the latest AI spending forecast from the market researchers at Gartner, which you can see a bit of in the public statement it made about a much deeper report it has done. The upshot is that Gartner has updated its forecast for a more ebullient AI spending environment. A day doesn’t seem to go by when someone isn’t throwing a few billion, or tens of billions, or even hundreds of billions of dollars around over the next four or five years.

Where all of this money is supposed to be coming from is still not clear, and that is either hope or deliberate obfuscation. It is hard to say because companies like OpenAI and Anthropic and xAI, which are driving a lot of spending on AI hardware and software, are privately held and have no obligation to talk about where they anticipate their funds for massive AI installations – often in multi-gigawatt capacity chunks – will come from. Thus far, none of their services generates anything close to the revenue streams necessary to support the kinds of investments we are chronicling here at The Next Platform. For their part, Nvidia, Oracle, and the neoclouds that are involved are talking about their investments and their orders, which for OpenAI in particular are stunning in their magnitude.

Like us, and like you, companies like Gartner have to look at all that is being announced and try make sense of it – in Gartner’s case by jamming it into a global IT spending model. Here is the AI spending Gartner thinks happened in 2024 and will happen in 2025 (which is nearly three-fourths over) and in 2026 (which everyone is absolutely salivating over):

The spending data from both IDC and Gartner always includes datacenter gear – the five Ss of servers, switching, storage, software, and services – and end user device gear – meaning desktop PCs, laptop PCs, tablets, and smartphones. They don’t agree on whether or not to count telecom services in the IT spending pie – IDC does, Gartner doesn’t – and that skews the numbers between the two quite a bit.

As you can see from the table above, we are talking about a lot of AI spending in 2024 and being forecast for 2025 and 2026. Gartner reckons that AI spending across all categories amounted to an absolutely huge $987.9 billion last year, and believes that based on current trends and the eight months under our belts here in 2025 will grow by 49.7 percent to a stunning $1.48 trillion in 2025. But the bucks do not stop there. Gartner is forecasting that AI spending will keep motoring with 36.8 percent growth in 2026 to crest above $2 trillion.

It sure does look like a bunch of people are going to get rich....

....MUCH MORE 

"L.A.’s Entertainment Economy Is Looking Like a Disaster Movie"

From the Wall Street Journal, October 2:

Work is evaporating, businesses are closing, longtime residents are leaving, and the city’s creative middle class is hanging on by a thread

LOS ANGELES—Brian Mainolfi has been drawing since he came to this city in 1994. The Baltimore native started as an assistant to legendary Looney Tunes animator Chuck Jones, worked on Disney’s “The Hunchback of Notre Dame” and “Mulan,” and spent a decade on the animated sitcom “American Dad.”

The appeal of the work was simple. “People love cartoons,” he said. “And I love making cartoons.”

Since his last show was canceled in 2024, Mainolfi’s artistic output has been limited to dinosaurs and monsters in his sketchbook. Like thousands of people who work in the entertainment industry, he has become collateral damage of a precipitous slowdown in production. The only work he’s found is teaching an animation class at a Cal State campus three hours away, for $350 a week.

Mainolfi’s family of four never lived extravagantly on his salary of around $100,000, but now they’re using retirement and college savings and scrimping to survive in their three-bedroom ranch house in suburban Burbank. With his union healthcare set to disappear at the end of the year for lack of work, the 54-year-old is trying to figure out for the first time in his life what he could do to make money besides draw.

“By the end of the year if I don’t have something, I’m going to have to apply to a big-box store or a grocery store or something,” he said.

Los Angeles is full of transplants who moved here to pursue dreams of working in movies and TV. Few earned millions as stars or A-list directors. They build the sets, operate the cameras, manage the schedules and make sure everything looks and sounds perfect. The work isn’t steady, because film shoots end and TV shows get canceled. But established professionals had rarely gone more than a few months between gigs—until now.

The entertainment industry is in a downward spiral that began when the dual strikes by actors and writers ended in 2023. Work is evaporating, businesses are closing, longtime residents are leaving, and the heart of L.A.’s creative middle class is hanging on by a thread.

“This is the first year since 1989 that I haven’t had a show to work on,” said Pixie Wespiser, a 62-year-old production manager and producer who has worked on 36 TV series, including the original “Night Court” and its recent revival. “I look around and I see so many people who are seriously suffering.”

At the end of 2024, some 100,000 people were employed in the motion picture industry in Los Angeles County, according to the Bureau of Labor Statistics. Two years earlier, there were 142,000.

The primary reason is that Hollywood is making less stuff. The film business has yet to rebound from the shutdown of theaters during the pandemic. TV production was booming in the 2010s and early 2020s as companies tried to jump-start streaming services, but in 2022, investors saw streaming growth was slowing and decided what actually matters is profitability. Entertainment companies, which plan productions many months in advance, cut spending dramatically when the strikes ended the following year.

Nearly 30% fewer movies and TV shows with budgets of at least $40 million began shooting in the U.S. in 2024 than in 2022, according to data firm ProdPro. The first three-quarters of this year were down another 13%.

The situation is particularly dire in Los Angeles. Because of the region’s high costs and a state production tax credit that, until recently, lagged behind what competitors like Georgia and British Columbia were offering, studios make most of their content far from their corporate offices. Last year, there was less production activity in the Los Angeles area than at any time since at least 1995, save for the pandemic, according to the nonprofit group FilmLA.

The industry’s slump is contributing to L.A.’s broader economic challenges. The region’s recent employment growth has been anemic compared with other major metropolitan areas and the nation overall. Its 5.7% unemployment rate is higher than California’s 5.5% and the nation’s 4.3%. And L.A. is still struggling to recover from the winter’s devastating fires in Altadena and the Pacific Palisades, where many entertainment workers lived. That disaster exacerbated the city’s already severe housing crunch.

Hollywood has endured downturns before, but rarely this sudden and severe. Some industry analysts believe consumers might be pivoting permanently from professionally made content to the endless buffet of YouTube and social media. 

Any rebound in production activity would take at least a few years, and possibly many more. And a full recovery might never happen if generative artificial intelligence makes animation and visual-effects jobs obsolete, as many workers fear.

Meanwhile, thousands of dreams built around working in the movie and TV business are evaporating.

Missing purpose
Thomas Curley won an Oscar recording the sound on 2014’s “Whiplash” and had more job offers than he knew what to do with as recently as 2022. The 49-year-old hasn’t worked since April of last year, save for one week on a movie that was made in Europe but needed to shoot exteriors in San Francisco.

The hardest part isn’t watching his savings wither while he does home improvement projects and hunts for jobs, Curley said. It’s missing the creative camaraderie he has enjoyed for most of his adult life on movie and TV sets.

“Feeling like you’re part of a team that’s making something that can provide joy for millions of people around the world is what drew me here in the first place,” said the native of upstate New York. “That level of purpose is a really hard thing to let go of.”

Entertainment industry workers got through last year with a mantra: “Survive ‘til 25.” But jobs are even more scarce this year. L.A. and New York-based members of the health and pension fund that covers most behind-the-scenes craftspeople worked 18% fewer hours this year through mid-August than in the year-earlier period.

“It felt like the floor fell out,” television writer Matt Walsh said of the evaporation of job prospects. After moving to L.A. from Orange County, he spent a decade hustling as an assistant on sets and in writers’ rooms before finally getting his first scriptwriting assignment in 2023, on the TBS series “Miracle Workers.”

Since the strikes ended, the 34-year-old hasn’t been able to find work as a writer. He’s back to working as a production assistant, the first job he ever had in entertainment. 

Hollywood’s downturn has rippled through the region’s economy. Fewer productions mean fewer orders for props, costumes and catering from local businesses, and less spending by unemployed or anxious workers on everything. 

Courtney Cowan’s Milk Jar Cookies shop made deliveries to movie sets and agents’ offices, but most of its business was regular people. She was expecting 2023 to be a banner year with the opening of her second location and a franchise program. Instead, the strikes began and sales immediately dropped 30%....

....MUCH MORE 

Brutal, just brutal.

Possibly also of interest:

Creativity: The Business of Early Hollywood

Interview with Fritz Lang, Beverley Hills, August 12, 1972

Business Opportunities Are Everywhere: "High-Profile L.A. Crimes Spark Rush for Bullet-Proof Cars, Rolex Replicas and Safe Rooms"

Our Last F. Scott Fitzgerald/Great Gatsby Post: "Living on $500,000 a Year" 

"New 'Mary Poppins' Movie in the Works from Disney"
Blasphème! 

"Concern grows over whether Hollywood's film and TV industry can survive in California"
Well, they had a good run.

And many many more, 

"Will We Know Artificial General Intelligence When We See It?"

From IEEE Spectrum, September 22:

The Turing Test is defunct. We need a new IQ test for AI 

Buzzwords in the field of artificial intelligence can be technical: perceptron, convolution, transformer. These refer to specific computing approaches. A recent term sounds more mundane but has revolutionary implications: timeline. Ask someone in AI for their timeline, and they’ll tell you when they expect the arrival of AGI—artificial general intelligence—which is sometimes defined as AI technology that can match the abilities of humans at most tasks. As AI’s sophistication has scaled—thanks to faster computers, better algorithms, and more data—timelines have compressed. The leaders of major AI labs, including OpenAI, Anthropic, and Google DeepMind, have recently said they expect AGI within a few years.

A computer system that thinks like us would enable close collaboration. Both the immediate and long-term impacts of AGI, if achieved, are unclear, but expect to see changes in the economy, scientific discovery, and geopolitics. And if AGI leads to superintelligence, it may even affect humanity’s placement in the predatory pecking order. So it’s imperative that we track the technology’s progress in preparation for such disruption. Benchmarking AI’s capabilities allows us to shape legal regulations, engineering goals, social norms, and business models—and to understand intelligence more broadly.

While benchmarking any intellectual ability is tough, doing so for AGI presents special challenges. That’s in part because people strongly disagree on its definition: Some define AGI by its performance on benchmarks, others by its internal workings, its economic impact, or vibes. So the first step toward measuring the intelligence of AI is agreeing on the general concept.

Another issue is that AI systems have different strengths and weaknesses from humans, so even if we define AGI as “AI that can match humans at most tasks,” we can debate which tasks really count, and which humans set the standard. Direct comparisons are difficult. “We’re building alien beings,” says Geoffrey Hinton, a professor emeritus at the University of Toronto who won a Nobel Prize for his work on AI.

Undaunted researchers are busy designing and proposing tests that might lend some insight into our future. But a question remains: Can these tests tell us if we’ve achieved the long-sought goal of AGI?....

....MUCH MORE 

Also at IEEE Spectrum, September 22:

Are You Smarter Than an AI?
Play a version of the game that researchers are using to track AI’s progress toward artificial general intelligence.

Electricity: Canada Pension Plan Investments Buys A Piece Of U.S. Independent Power Producer AlphaGen For $1 Billion

From the Toronto Star, October 2:

CPP Investments invests US$1 billion in U.S. power producer AlphaGen
The Canada Pension Plan Investment Board has signed a deal to invest US$1 billion for a minority position in AlphaGen, which owns power plants in the U.S. 

The Canada Pension Plan Investment Board has signed a deal to invest US$1 billion for a minority position in AlphaGen, which owns power plants in the U.S.

Bill Rogers, head of sustainable energies at CPP Investments, says AlphaGen provides efficient, reliable power in some of the most high-demand U.S. markets. 

AlphaGen owns and or operates 23 generation facilities across the U.S.

It is a partnership formed and owned by an affiliate of ArcLight Capital Partners....

....MORE 

 Here's AlphaGen's homepage.

In the run-up to the Great Financial Crisis there was quite a bit of hubbub surrounding Calpine, then the largest IPP, most recently sold to Constellation Energy earlier this year by their private equity owner, Energy Capital Partners. 

"Bezos Says AI Spending Boom Is a Bubble That Will Pay Off"

From Bloomberg via Advisor Perspectives, October 3: 

Amazon.com Inc. Chairman Jeff Bezos said that the spending on artificial intelligence resembles an “industrial bubble” that could lead to lost investment but will also make society better off.

“When people get very excited, as they are today about artificial intelligence for example, is every experiment gets funded, every company gets funded, the good ideas and the bad ideas,” Bezos said, pointing to companies getting billions of dollars of funding before they have a product. “Investors have a hard time in the middle of this excitement distinguishing between the good ideas and the bad ideas.”

Still, AI is going to change every industry and improve productivity of “every company in the world,” he said at Italian Tech Week in Turin on Friday. What’s happening currently is an “industrial bubble” akin to the biotech bubble in the 1990s where companies went out of business and investors lost money, but “we did get a couple of lifesaving drugs.” Bezos also pointed to the dot-com bubble a quarter century ago as a frothy investment period that’s benefiting the world today.

Companies building AI as well as the technology around it, from data centers and chips to applications, are receiving enormous amounts of funding. So-called neocloud providers, that provide big technology companies with extra computing power and access to specialized chips for running AI, are being funded even before they’ve built the infrastructure....

....MUCH MORE

"Tesla's New 'Master Plan 4' Puts EVs On The Backburner" (TSLA)

From Inside EVs, September 2: 

Tesla's so-called "Master Plans" have been more or less the guiding principles behind how the company was run over the last two decades. It's been the set of documents that the public could go back and read to see just how and why the automaker was committed to building more sustainable transportation. It was the rails that kept Tesla on track to what it once said was its ultimate goal: affordable electric vehicles for the world.

That mission has changed. It now seems like Tesla is officially more interested in building robots than cars.

Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: Acrura is moving to an all-crossover lineup with lots of hybrids and BYD's sales slip for the first time in five years. Let's jump in.

30%: Tesla's New 'Master Plan Part 4' Appears To De-Prioritize EVs

 

Tesla dropped its Master Plan Part 4 on CEO Elon Musk's social media platform, X yesterday. But rather than tease some shiny new EV or tell the world how sustainable electrified vehicles need to be a focus, it instead published a glorified fluff piece on AI, robotics and something that it calls "sustainable abundance."

Now, it's not like the new plan ignores cars completely. It acknowledges Tesla's roots in electric vehicles as a foundational springboard for the company. But what it doesn't do is focus Tesla's next chapter as a corporation on EVs. Instead, it's putting the spotlight on products like Optimus and other software-driven solutions that use AI to solve the world's problems....

....MUCH MORE 

At the company:

https://digitalassets.tesla.com/tesla-contents/image/upload/Tesla-Master-Plan-Part-4.pdf 

After briefly surpassing $500 Billion yesterday Mr. Musk's net worth has fallen back to $488.9 Billion, up $3.1 Billion on the day.

Wow! "Truck driver spent 21 years creating a massive model of New York City out of balsa wood: ‘It was quite the process’"

From the New York Post, July 21:

Is this NYC’s next top model?

Joe Macken has spent the past 21 years painstakingly erecting an intricate 3D replica of New York City by hand — using nothing but balsa wood, Elmer’s glue and a whole lot of ingenuity.

The finished product, unveiled recently in a viral TikTok video, features nearly a million buildings spanning all five boroughs — including Staten Island, and even parts of New Jersey, Westchester and Long Island.

“It was quite the process. I just kept building and building and building,” truck driver Macken, 63, told The Post of his sprawling pet project. “I never thought in a million years I would ever get done with the whole, entire thing.”

At 30 feet wide and 50 feet long, the diorama is so gargantuan that he keeps it in a storage unit near his house in Clifton Park, about 20 miles north of Albany....

 

....MUCH MORE 

BlackRock's Global Infrastructure Partners Circling $40 Billion Data Center Purchase (BLK)

 From Bloomberg via MSN, October 3:

BlackRock Nears $40 Billion Data Center Deal in Bet on AI 

BlackRock Inc.’s Global Infrastructure Partners is in advanced talks to acquire Aligned Data Centers, targeting a major beneficiary of AI spending in one of the year’s biggest deals, according to people familiar with the matter.

Aligned, which is backed by Macquarie, could be valued at about $40 billion in a transaction, one of the people said. An agreement could be announced within days, the people added, asking not to be identified because the information is private. 

MGX, an AI investment company established by sovereign wealth fund Mubadala Investment Co., is also involved in the talks and would invest independently as part of a transaction, one of the people said. Mubadala has separately already invested in Aligned.

GIP has also been eyeing other big takeovers, including a potential acquisition of power company AES Corp. on expectations that the sector will benefit from surging electricity demand from facilities running AI applications. AES has an enterprise value of about $38 billion, including debt.

GIP hasn’t reached a final agreement for Aligned Data Centers and some details might change or the talks could still end without a transaction, the people said.

A spokesperson for BlackRock declined to comment. Representatives for Aligned, Macquarie and Mubadala didn’t respond to requests for comment outside of regular business hours....

....MUCH MORE 

Recently:

• Fun Fact: "Just under 50% of GDP growth is attributable to AI Capex"
• Private Equity: BlackRock's Global Infrastructure Partners Close To $38 Billion Takeover Of Major Utility AES

"Capex Cycles"

From Verdad Advisers, September 8:

Measuring the impact of higher capex on business fundamentals. 

We are currently in the middle of a massive AI-driven capex cycle that is driving spending in the technology and utilities sectors to new heights.

The key question for investors in these sectors is what the return on this massive investment will be. Some critics are skeptical of tech leaders’ belief that we are in a race to achieve AGI (artificial general intelligence) and that AGI’s value will essentially be infinite. Enthusiasts point out that these leaders have been right on SAAS, mobile, and other big bets.

To try to contextualize this capex cycle, we can look at historical capex cycles across sectors and see what the fruit of that spend has been. There have been many new, exciting, and industry-transforming technological developments over the last 30 years, like the internet, mobile phones, and shale drilling, all of which have driven massive capex cycles.

For this analysis, we aggregated LTM assets, revenues, EBITDA, net income, and capital expenditures across all US-listed companies over the last 30 years, quarterly, by sector. When we scale capex as a percentage of revenue, we can see the historical capex trends clearly for sectors like communications services and energy below.

Figure 1: Capex/Revenue 

 

Sources: S&P Capital IQ and Verdad analysis

So what do companies get in return for their capital investments? To answer this question, we regressed forward 12M asset, revenue, EBITDA, and net income growth against the percentile-rank of trailing LTM capex as a percentage of revenue. The percentile rank allows us to control for sector-level differences in capital intensity.

The biggest finding from our regressions, with a high degree of confidence, is that higher capital expenditures as a percentage of revenue generate higher asset growth....

....MUCH MORE 

"$100 billion OmegaPro scandal highlights Turkey’s role as a haven for global fraudsters"

That would be a big fraud.

From Nordic Monitor, September 29:

A massive US class-action lawsuit has turned the spotlight on Turkey’s growing role as a safe haven for international fraudsters, exposing how the country became a staging ground for the $100 billion OmegaPro crypto Ponzi scheme.

The 137-page complaint, filed in Miami federal court in August 2024 and amended in February 2025, details how OmegaPro and its successor Go Global lured millions of investors across Africa, Europe, the Middle East, Asia and the Americas with promises of “guaranteed” 200–300 percent returns. But behind the glossy seminars and celebrity endorsements, prosecutors say, the money was never invested. Instead, it was laundered through shell firms in Dubai, Malta, Panama and, crucially, Turkey.

The OmegaPro fraud was no secret to regulators. On March 17, 2022, French and Spanish financial authorities issued cease-and-desist letters and formal fraud alerts against OmegaPro, warning that the company was operating illegally and deceiving investors.

Despite these alerts and mounting complaints from European victims, Turkey did not move against OmegaPro’s operators until mid-2024, when Andreas Szakacs and Robert Velghe were finally arrested in Istanbul, possibly after mounting pressure from other countries.

The delay raises troubling questions: Why did Turkish authorities wait more than two years to act, even as other European regulators flagged the company as fraudulent? During that gap, OmegaPro continued to recruit thousands more investors, including Turkish citizens, and launder millions through Istanbul. 

Amended complaint filed by the plaintiff against Omega and its operators, alleging fraud and other criminal violations:

***** 

The Dubai-based OmegaPro, branded as one of the world’s largest crypto investment platforms, is accused of defrauding nearly 3 million investors worldwide across countries including Colombia, Mexico, Nicaragua, Argentina, Chile, Hong Kong, Singapore, the UK, France, Belgium, Nigeria, Congo, India and South Korea.

In Turkey the scandal exploded in the summer of 2024, when Istanbul’s gendarmerie and prosecutors began investigating local complaints. Authorities determined that OmegaPro was not registered with the Capital Markets Board (SPK) or any licensed crypto exchange platform.

Prison record showing that Andreas Szakacs was jailed at Maltepe Prison in Istanbul under the Turkish name Emre Avcı:

***** 

The first major breakthrough came on July 9, 2024, when gendarmerie raided villas in Istanbul’s wealthy Acarkent compound in Beykoz and arrested Andreas Attila Szakacs, the Swedish-Turkish co-founder of OmegaPro. Having acquired Turkish citizenship under the name “Emre Avcı,” Szakacs had been living in a four-story luxury villa equipped with security cameras, whiteboards filled with crypto notes and computers used to manage the company’s servers....

....MUCH MORE

Capital Markets: "The Dollar Limps into the Weekend"

From Marc to Market:

Overview: The US dollar is trading softer but most inside yesterday's ranges. An unexpected jump in Japanese unemployment has weighed on the yen, which is the only G10 currency that is not gaining on the dollar today. The soft greenback means the Canadian dollar is likely under-performing and it is barely firmer on the day. Sterling is the next to weakest following the final September composite PMI reading that lowered to slightly above the 50 boom/bust levels. Most emerging market currencies are also firmer. The JP Morgan and MSCI emerging market currency indices are up 0.2%-0.3% this week. 

Equities are pushing higher. In the Asia Pacific region only Hong Kong among the large bourses fell. Japan's major indices were up over 1%. Taiwan is pushing against US pressure to bring half of its chip making capacity to the US, but stocks rallied 1.45% today, about half of this week's gains. South Korea's Kospi rallied 2.7% today and was up 2.25% on the week. Europe's Stoxx 600 is up for the sixth consecutive session. It nearly 2.8% rally this week is the most in five months. US index futures are trading higher. Benchmark 10-year yields are narrowly mixed in Europe, except for the 10-year Gilt, where the yield is off a couple basis points. The 10-year US Treasury yield is up one basis point to 4.09%, roughly the middle of the recent range. Gold is firm but off record high set yesterday near $3897. It is up for the seventh consecutive week. November WTI has stabilized after tumbling more than 2% yesterday to approach a four-month low near $60. 
 
USD: The Dollar Index snapped a four-day slide yesterday, after retracing almost half of the post-Fed rally. It reached almost 98.15 yesterday, a three-day high. Monday's high was closer to 98.20. There has been no follow-through buying today. It has held below 98.00 and recorded the session low near 97.70 in Europe. The September employment report should be the highlight of the day, but the government shutdown is continuing to disrupt the release of economic reports. Still, it seems an exaggeration to claim the Fed (and investors) are "flying blind". The use of private sector data has grown from looking at corrugated cardboard orders, train car loadings, and holiday wrapping paper sales. The PMI/ISM, ADP, Boeing orders, auto sales, Challenger job cuts, and house prices are examples of private sector generated data. The University of Michigan and Conference Board surveys have moved markets. There are numerous regional Federal Reserve surveys that are also tracked by policymakers and investors, which should not be disrupted by the political impasse in Washington. On tap today is the final services and composite PMI and ISM services. The preliminary PMI showed slower growth in services and composite output and at 53.9 and 53.6, both are at three-month lows. The ISM services index is seen softening to 51.7 from 52.0. The employment sub-index has been 50 since June.... 

....MUCH MORE

Electric Cable Giant, Prysmian S.p.A. Closes At All-Time High (PRY.MI)

They are also big in optical fiber cabling but since they bought America's General Cable Prysmian is far-and-away the class of the field.

No news, just stock action. From TradingView, one year of daily prints:

 

88.00 euros last, up €3.76 (+4.46%)

It is often a positive indicator when a stock closes at its high for the day. Day's Range €84.28 - €88.00

For the year. 52 Week Range €38.57 - €88.00

Forever. 

If interested see also:

July 2024 - Transmission/Grid: Prysmian Has Received A €450 million Contract From The European Investment Bank (PRY:Milan)
Time to string some lines.This is the name for transmission cable.

January 2024
"There’s a Shortage of Electrical Wires, Transformers. That’s Good for These Stocks."
April 2024
Grid: How U.S. Electrical Transmission Lines Will Be Rebuilt—Reconductoring
April 2024
Electrical Transmission: Speaking Of The Farsighted Italians...

Our interest had been in General Cable which PRY snatched up in 2017, as noted in the reconductoring post.

June 2025

"Reconductoring: Building Tomorrow’s Grid Today" ("same towers, better wires")

"PG&E Launches $73B California Grid Plan To Feed Starving AI"

From OilPrice, September 29:

Pacific Gas and Electric has unveiled a $73-billion spending program through 2030 to overhaul California’s grid as electricity demand from artificial intelligence and cloud infrastructure explodes, Reuters reported on Monday. The utility said the plan will support as much as 10 gigawatts of new load from data centers slated for development in its service territory over the next decade.

Brent crude and copper traders aren’t the only ones recalibrating supply-demand curves. U.S. utilities are now staring down a structural load shock driven by AI. PG&E’s multibillion-dollar commitment indicates that AI has shifted from a niche workload to a dominant driver of electricity consumption. The scale is staggering, with a single hyperscale AI campus capable of drawing as much power as a small city, overwhelming systems already balancing renewable intermittency and wildfire risks.

California’s grid operator, CAISO, projects peak demand climbing from about 46,094 megawatts in 2025 to nearly 52,940 MW by 2030, which represents a 15% increase before counting speculative AI loads. Its 2025 assessment shows only 2,163 MW of new capacity coming online by mid-year, mostly batteries (1,654 MW) and solar (354 MW). That buildout won’t keep pace if AI data centers scale at current trajectories. 

California’s regulators estimate the state will need more than $30 billion in transmission and distribution upgrades over the next two decades just to stay level....

....MORE 

Fun Fact: "Just under 50% of GDP growth is attributable to AI Capex"

From the proprietor of The Random Walk.

AI-Capex is the everything cycle, now

Just under 50% of GDP growth is attributable to AI Capex pic.twitter.com/0nacpaOtHf

— Random Walk (@MosesSternstein) September 9, 2025

"Offshore Wind Is a Mess. A Hedge Fund Sees the Perfect Time to Buy"

From Barron's, September 30:

Hedge fund founder Charles Lemonides is making a bet on an industry most investors wouldn’t touch today: offshore wind.

Under President Donald Trump, the outlook for almost every kind of renewable energy is bleak, but offshore wind is in the worst shape of all. Trump calls the industry a scam and wants it stopped in its tracks. His administration has revoked permits for projects, pulled back money for port upgrades, and stopped new leasing and permitting. Officials have even halted projects that were in the middle of construction.

Most investors abandoned the offshore wind industry when Trump was elected, and have stayed away since. But Lemonides, the chief investment officer and founder of the New York hedge fund ValueWorks, sees a buying opportunity.

While several companies have invested in offshore wind projects, including European energy company Equinor and the investment firm BlackRock, the only real pure-play stock in the industry is Orsted, a Danish firm that develops wind projects around the world. Lemonides has been buying Orsted shares, and plans to invest in a rights offering where the company is selling even more equity to existing shareholders.

Orsted stock trading in Denmark is down 64% this year.

“We try to buy growth stocks at value prices,” he said in an interview. “Orsted used to be perceived as a great growth stock, and I think it will be perceived that way again.”

ValueWorks owns about $10 million worth of the stock, a stake Lemonides began amassing in July. His bullish case is based largely on the value of Orsted’s non-U. S. assets. As of last year, the company was working on more than twice as many projects outside the U.S. as it had in the U.S. Even if Lemonides values the U.S. assets at zero, the overseas assets are worth much more than the entire value of the company today, he said.

The headlines about offshore wind may be scary, but “you typically get stuff cheap when that happens,” he said.

Indeed, Orsted’s stock chart shows signs of panic selling at several moments this year. In late August, Orsted shares plunged after the Trump administration suddenly ordered construction to stop on Revolution Wind, an offshore project near Rhode Island that Orsted owns along with a unit of BlackRock. The project was about 80% complete....

....MUCH MORE 

Not just hedge funds: 

Private Equity - "Ørsted in talks to sell 50% stake in flagship U.K. offshore wind project to Apollo - FT"

Oil & Gas -  Nordic Solidarity: "Equinor to Subscribe for Orsted Shares Worth Up to $939 Million in Rights Issue"

GE Vernova Downgrades Royal Bank of Canada: They're A False Bacon Of Hope, Eh? (RY; GEV)

In pre-market action RY is DOWN 0.12 (-0.08%) at $147.20.

Here's yesterday's news that knocked GEV down $8.75 (-1.42%). 

From Sherwood News, October

GE Vernova declines after analyst downgrade of top AI energy trade 

Power turbine maker GE Vernova GEV $613.49 (-1.42%) is down midday after RBC analysts cut their rating on the stock from “outperform” (essentially a “buy”) to “sector perform” (essentially a “hold”), suggesting that long-term earnings expectations for the company might have gotten too optimistic.

RBC’s Christopher Dendrinos wrote:

“Our longer-term expectations are more conservative than consensus expectations which we think could be over appreciating the cadence of revenue growth in the power segment in 2029-2030. We believe investors are already fully valuing the company on the longer-term 2030 outlook and there could be more limited opportunity for positive rate of change in current expectations.”

Dendrinos argues that the Street’s expectations for when the river of payments will materialize from the service contracts GE sells to maintain the newly installed turbines is too soon. He wrote that it will take a much longer cycle:

“Mgmt sees an opportunity to double the installed base of baseload power over the next 10 years which should support significant rev growth and stronger margins (we estimate gas service margins over 30%).

However, the first major service cycle typically occurs ~3-4 years after installation so the benefit of service price increases and new LTSAs are unlikely to begin to benefit the income statement until later in the decade and will be a gradual increase.”....

....MORE 

In early pre-market trade GEV is up $7.35 (+1.21%)  at $613.50

Capital Markets: It's Quiet Out There, Too Quiet

 Our headline, not Marc Chandler of Bannockburn Global Forex's.

He went with "Quiet Foreign Exchange Market in which the Greenback Struggles to Find Traction": 

Overview: The dollar is soft and trading near session lows in late European morning turnover. The news stream is light and large parts of the US federal government remain closed. China's mainland markets are on holiday. Among the G10 currencies, the Canadian dollar remains the laggard in a soft greenback environment. Most emerging market currencies also are firmer against the US dollar. The Argentine peso sold off for the third consecutive session yesterday after rallying every day last week. It settled at its highest level since September 22 yesterday. Gold demand persists and it looks poised to challenge yesterday's record high near $3895. 

Equities are mostly stronger today. Though Japanese markets were mixed, nearly all of the other markets outside of China and India, which is also on holiday today, rallied, led by South Korea's Kospi's 2.7% rally. Europe's Stoxx 600 is up about 0.75% after a 1.15% surge yesterday. It is the fifth consecutive gain. US index futures overcame early worries about the government shutdown to close higher yesterday and are trading with a firmer bias now. Most benchmark 10-year rates in Europe are softer, though the 10-year Gilt yield is slightly firmer. The 10-year US Treasury yield is a little below 4.10%, the middle of the recent range. November WTI is hovering near $61.50. It has not been much lower since testing $61 in early September. 

USD: The Dollar Index is holding above the (50%) retracement of its gains since the Fed's rate cut on September 17 found near 97.40. It is trading softly but within yesterday's range and still looks vulnerable....

....MUCH MORE 

"Ford's CEO Issues A Stark Warning For America's EV Industry" (F; TSLA)

Readers who have been with us for a while knew this but it is nice to have confirmation from someon in the belly of the beast.

From InsideEVs, October 1:

“Customers are not interested in a $75,000 electric vehicle," Ford's CEO said. So what comes next for the industry as the tax credit ends?  

It’s the first of October, which means the electric-vehicle tax credit is officially dead, having passed away in the wee hours of the morning. Speaking of “morning”, we, and more than a few auto companies, are mourning its death.

It's no secret that the EV tax credit was a boon to the industry. That $7,500 credit helped a lot of buyers afford EVs, whether it was via a purchase incentive done right at the point of sale or placed into a lease.  We're already starting to understand the fallout of what this will mean for the EV industry as a whole. And the chief of one big American automaker says it's already putting a damper on his plans.  

Welcome back to Critical Materials, your one-stop shop for the biggest news in the EV world. Today, we’re focusing on early reactions to the EV tax credit’s impact, and what it will mean for consumers now that it’s dead. Let’s hop right in, folks.

30%: Ford Says Expect EV Market To Halve

Man, EV companies can’t catch a break, huh? For a long time, the U.S. EV market was heavily reliant on Tesla for a lot of reasons; the cars themselves were kind of the only game in town that was worth a damn to the average consumer.

Range, price and general usability hit all of the sweet spots with consumers, especially with the (relatively) reasonably priced Model 3 and Model Y. Add in the tax credit, and things were good for Tesla.

And now that other automakers are finally starting to catch up, they’ve been cut off at the knees. The tax credit was a large incentive for American car buyers, and now it's gone. According to reporting from Fortune, Ford CEO Jim Farley said that the death of the EV tax credit could cut the industry in half: 

Ford CEO Jim Farley, speaking at the Ford Pro Accelerate summit in Detroit on Tuesday, said he sees a huge impact from the policy change.

While he still sees EVs being a “vibrant industry” going forward, it’s also “going to be smaller, way smaller than we thought.” He called the end of the $7,500 consumer incentive a game-changer and said he wouldn’t be surprised if EV sales in the U.S. go down to 5% of the industry from the current level of roughly 10% to 12%. The most recent forecast from J.D. Power and GlobalData estimated that EVs would account for 12.2% of new-vehicle sales in September 2025....

....MUCH MORE 

We have dozens, if not hundreds, of posts on this topic, stretching back to 2022 or so.

Some that pop up on a quick search of the blog:

January 2024 - "China could be on track to dominate the world’s EV market, even if not in the U.S."
Elon Musk, who seems to have some insight into the industry, says there will be 10 surviving manufacturers, 9 of them Chinese.*

*****

*Here's December 8's [2023] "Western Legacy Automakers Probably Won't Be Long-Term Survivors":

Because their current business is being mandated and legislated out of existence the Western marques, barring some serious breakthroughs in small-scale hydrogen or methanol, will have to pivot to EV's.

And they won't be able to compete.It almost appears that the gifting of the electric vehicle and solar industries to the Chinese was deliberate. 
First up, from Electrical Engineering Times, December 6....

March 2024 - This Will Be A Bloodbath: "Biden Set to Crack Down on Auto Emissions to Accelerate EV Sales"
The net effect of this order will be to give the Chinese the auto industry.*
And maybe that's the intent.... 

May 2024 - "Tesla’s in China – It’s just a question of how long" (TSLA)

The writer appears to think Mr. Musk is a naïf or even a Candide, blissfully unaware that all may not be for the best in this best of all possible worlds.

Wrongo, Bucko. Musk has a minor depression, possibly akin to Churchill's “Black Dog” that leads him to catastrophize worst case scenarios without succumbing to the debilitating effects (learned helplessness, hopelessness, suicide) you'd look for in a victim of a major depression.

He would be a good risk manager. The ketamine probably helps.

May 17, 2024
Reuters Exclusive: Musk pushes plan for China data to power Tesla's AI ambitions (TSLA)
Mr. Musk is walking a tightrope between American and Chinese national security concerns and more probably the use of faux concerns as an excuse to rein him in should doing so seem like the thing to do for either government.

We wish him luck and think he will succeed with the autonomous vehicle push but the risks increase with dependency on governmental goodwill.

The point is deadly serious, you had better know what you are up against when venturing into the big kids' sandbox. Our first inductee into the Climateer Hall of Fame was deadly serious as well:

...As always, heed the wise words of our first inductee into the Climateer Hall of Fame....

*****

....On the issue of the Chinese government attitude toward controlling information, its uses and its flows, the October 2019 post "So You Want To Do Business In China Do You? "China’s New Cybersecurity Program: NO Place to Hide" embedded in a post last week is a quick primer on what the Party and government think.

As Intel's Andy Grove famously said:

“Business success contains the seeds of its own destruction. 

Success breeds complacency. Complacency breeds failure. 

Only the paranoid survive.”

Mr. Musk has his blind spots but China sneaking up on Tesla probably isn't one of them. He knows that Western companies will eventually lose the battle for electric vehicle dominance and something that he saw sometime in the last couple years seems to have scared him into action on the fronts where Tesla has a competitive advantage: access to some truly brilliant people; artificial intelligence facilitated by a long history with Nvidia and autonomous vehicles.

So again, we wish him luck, and think he'll succeed but this stuff is serious business.  

Here's the stock price action over the last year:

FinViz

June 2024 - Morgan Stanley Analyst Adam Jonas Writes A Love Letter To Tesla (TSLA)

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....

More from that post after the jump.

As noted July 8 with the stock at $249.07: "Chartology: Tesla Stock Now Has A Very Wide Range To Churn Through (TSLA)". And September 5 A Word Of Caution On Tesla's Stock (TSLA):

Now don't get me wrong, I'm as much into Elon's/Baidu's/Nvidia's vision of flying cars and robotaxis as the next person and haven't changed this opinion on the company 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.

....One quibble. The line "Tesla has relied on price cuts since late 2022..." reads like a bad thing but the fact of the matter is that the entire industry has been cutting prices and Tesla getting out in front of that reality has kept them competitive in the battery-electric-vehicle business.

As we've been saying for quite a while now, Mr. Musk saw something a couple years ago that led him to a) the price cuts and production efficiencies that are proving crucial to survival in not just EV's but in the wider automobile market as well. Volkswagen talking about possibly laying off 30,000 of their German employees was inconceivable five years ago. And b) whatever it was he saw also led to the emphasizing of things they been working on for a decade: robotaxis and AI and supercomputers and robots.

So, for patient reader, having read this far, here's my two cents worth: 

Deliveries will be in-line this month and the next few months and the robotaxi unveil will be written up as a bust. The people who write the headlines hate Elon Musk and nothing he does will ever, ever change that. The financial question is: will the self-driving taxis be contributing to sales and earnings in two years?

Based on the fact that Waymo is now booking 100,000 rides per week I think the answer is yes but your mileage may vary. To repeat the comment on the April earnings call transcript:

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....

In late pre-market action the stock is trading up $1.17 (+0.45%) at $262.80 after closing Monday at $261.63 also up $1.17 (+0.45%).

October 1, 2025: TSLA $459.46 last, up $14.74 (3.31%)