"2023 Is When QT Could Really Begin To Bite"

From Bloomberg via ZeroHedge, a clear-eyed look at the competing demands of liquid good collateral markets for reverse repo and the Fed's struggle to reduce its balance sheet.

Dec 28, 2022:

Authored by Simon White, Bloomberg macro strategist,

Quantitative tightening in 2022 has lagged relative to expectations, but next year the pace is set to pick up. Money-market funds’ (MMFs) continued lack of interest in buying Treasury bills would mean QT will have an increasingly negative impact on liquidity and risk assets.

The Fed began shrinking its balance sheet through QT in June of this year.

Since then, it has fallen $350 billion, considerably less than the Fed’s $560 billion intended target.

This has been in large part due to rising rates meaning fewer MBS are naturally rolling off as mortgage borrowers are prepaying less. The Fed, though, may start to sell MBS outright, which would increase the pace of the Fed’s balance-sheet run-off.

As well as the pace of QT, how it manifests is important to gauge its impact. As the Fed is no longer a buyer for new debt that must be issued to replace maturing debt, someone else must buy it.

Ideally, one of two things happen.

1. Either an MMF buys the debt in the form of T-bills, in which case the net effect would be a fall in the RRP and a rise in bank reserves. Or,

2. ...a MMF holder buys the debt by drawing down on their MMF asset, putting the proceeds in the bank, and using the deposit for the debt. The net impact is again a fall in the RRP and a rise in reserves.

The loss of bank reserves is what makes QT bite, and if the RRP intermediates in the Treasury financing its new issuance, this mitigates the fall in bank reserves that would occur if the debt buyer simply drew down on an existing bank deposit.

But rather than the RRP falling it is stubbornly rising, now sitting at $2.6 trillion, up $300 billion since QT started. And it does not look likely this is about to change. MMFs have been continuing to spurn T-bills, with the fall in their holdings mirroring the rise in the RRP facility....

....MUCH MORE

Zelensky Says Rebuilding Ukraine Will Cost More Than $1 trillion; Talks To BlackRock About The Opportunity (BLK)

Following on November 30's "What Sort Of Dirt Does Zelensky Have On The U.S., The U.K. etc., That He Can Float A Trillion Dollar Ask?" we see this from Interfax, December 28:

Zelensky, Black Rock discuss investment in Ukraine's recovery

Ukrainian President Vladimir Zelensky and Black Rock investment company management have discussed investment in Ukraine's recovery.

"I have spoken with the head of the world's largest investment fund, Black Rock, and has been assured yet again that businesses from the developed world are ready to invest in our recovery," the Ukrainian media quoted Zelensky as saying in a video address on Tuesday.

"Company specialists are already helping Ukraine structure the Recovery Fund," he said.

"We are preparing to partake in the World Economic Forum in Davos. The posture and prospects of Ukraine will be presented there," Zelensky said.

And this from Ukraine's Office of the President:

President discussed with the CEO of BlackRock the coordination of efforts to rebuild Ukraine

Food Inflation: Corn Futures Are Approaching Resistance For The Sixth Time (plus the crimson thread of suicide)

Just as buying that creates a support level eventually runs out of money/conviction/time, so too with levels that have attracted sellers. Eventually they run out of stuff to sell and the ensuing move through what had been resistance can be dramatic.

From the Chicago Board of Trade (CME Group) via TradingView:

That area of congestion between the current price (red line) and the approximate resistance a bit above $7.00 (blue line) has to be cleared.

The key to this sort of set-up is patience. there is no reason to try to frontrun a breakout, that approach will lead to poverty and despair, though perhaps surprisingly, death by one's own hand is no more common than among the general public. From Donohoe's Magazine, June 1905:

pp. 501

"Many have sought to use the Board of Trade as a commercial Monte Carlo , and as a Monte Carlo it has used them, entailing the loss of fortune and honor, the destruction of home and happiness, the pangs of ruin and despair, with occasionally, as we have seen, the introduction of the red spectre of suicide. Once in a while comes the report of the discovery of the dead body of a trader or broker, the victim of his own hand, perhaps in some quiet spot in the parks; his brother brokers shake their heads, exchange reminiscences of him and comments on the cause of his downfall, and the affair soon becomes a dim memory. Some ruined members bring home more closely to their fellows the shadow of their doom, as instanced when an unfortunate man walked across the floor of  'change and shot himself in the screened- off washroom. It is only a year or so ago since a married member killed him- self at the door of the residence of a woman who had wrecked his fortune and domestic happiness . But probably the pro- portion of suicides on the board is not in excess of that in other speculative business; the average trader seems to be of tougher and more elastic stuff than the kind that seeks refuge in felo de se. 

Some notable cases have occurred, pitiful and pathetic, though illustrating the folly and baseness of despair. In 1868, A. de Belloy, a Parisian gentleman, handsome and highly-cultured, appeared in Chicago and began to speculate on the board. He possessed some peculiar talents; as a skilful mesmerist he had given convincing exhibitions before the leading medical society of Philadelphia. In Chicago he attained much popularity and high social standing. He was, however, generally unsuccessful in his business deals, and was at length ruined in capital and credit by trade fluctuations caused by the Franco-Prussian war. 

One day, his last dollar gone, De Belloy walked into Kirchoff's beer tunnel, then a favorite resort of traders, politely apologized to the bartender for the temporary inconvenience he was about to cause, and shot himself dead. When some members of the board brought the corpse home to the bereaved wife and infant son they found there was in their home scarce food enough for a single meal. A charitable lady kindly interested herself in the poor widow and helped keep the wolf from the door. One month later came a notification from the French government to its consul in Chicago, that, by the death of an elder brother, A. de Belloy had been left a fortune of $2,000,000 and the title of marquis. To both wealth and title the claim of the suicide's infant son was in due time fully proven, and in less than six months after the tragic passing of De Belloy his family were living in the elegant and aristocratic luxury which they enjoy to this day....

Sorry that's not the story I intended to use to make the point, 

Here it is:

pp. 510

....Secretary George F. Stone , now in his twenty -first year of office , is a native of Newburyport, Mass . In 1873-4 he was president of the Boston Corn Exchange . He came West in 1876, and in the World's Fair year [1893] delivered the address of welcome to the congress of boards of trade of America. A genial, cultured, observant Easterner, he has this to say regarding the alleged crimson thread of suicide that runs through the history of the board: "There are less cases of suicide arising from depression among members of this board than in any other class. Their business experience is such that disaster does not discourage them. Changes in the market do not affect them so much as others ; by their habits of business they are fortified against adverse financial happenings. Men who are or- dinarily depressed and disheartened may in moments of weakness be led to self- destruction by violent changes in busi- ness affairs or in values; but the average board of trade man is of other metal ; he is hopeful and looks upon the bright side impulse is to consider that better times of things, and in case of disaster his first will come, and that 'to-morrow will be another day....'" 

Well there you go. Trade away. But do keep tabs on the health of your brother, the Marquis.

679'6, down 3'0 (-0.44%) last.

Last referenced in 2020's "Understanding Commodity Financialization (and Why it Matters to Everyone)":

Trading commodities involves a high degree of risk, you will lose everything at least once.
That said, the “crimson thread of suicide”* that was alleged to run through the history of the Chicago Board of Trade was refuted by one of the longer-tenured Secretaries of the exchange:

"There are less cases of suicide arising among members of this board than in any other class."

—George  F. Stone, quoted in Donahoe's Magazine, Volume LIII, Jan. - Jun. 1905, pp. 510

On that reassuring note...

Zoltan Pozsar, December 27: "War and Commodity Encumbrance"

 Don't you go rehypothocating on me.

(hyperlinks and emphasis in original omitted)

War encumbers commodities.

A recurring theme in my dispatches this year has been that in a moment when the world is going from unipolar to multipolar, the actions of heads of state are far more important than the actions of central banks. That is because heads of state lead, their actions affect inflation, and central banks merely follow by hiking rates to “clean up”. Central banks will be behind the curve in this game, and if investors read only the speeches of central bankers but not statesmen, they will be even more behind the curve. The multipolar world order is being built not by G7 heads of state but by the “G7 of the East” (the BRICS heads of state), which is a G5 really but because of “BRICSpansion”, I took the liberty to round up.

The special relationship between China and Russia has a financial agenda to it, and what President Xi and President Putin say about the future of money – that is, the future they envision – matters for the future of the U.S. dollar and liquidity in the U.S. Treasury market. Their actions are forging something new: Bretton Woods III is slowly taking shape, and in light of developments to date, my motto for Bretton Woods III – “our commodity, your problem” – remains apt.

President Xi’s visit with Saudi and GCC leaders marks the birth of the petroyuan and a leap in China’s growing encumbrance of OPEC+’s oil and gas reserves: with the China-GCC Summit, China can claim to have built a “special relationship” not only with the “+” sign in OPEC+ (Russia), but with Iran and all of OPEC+... President Xi’s visit was the very first China-Arab States Summit in history, and echoes FDR’s meeting with King Abdul Aziz Ibn Saud on Valentine’s Day 1945 aboard an American cruiser, the USS Quincy. Fixed income investors should care – not just because the invoicing of oil in renminbi will hurt the dollar’s might, but also because commodity encumbrance means more inflation for the West.

Here are the key parts from President Xi’s speech at the China-GCC Summit (all emphasis with orange underlines are mine): “In the next three to five years, China is ready to work with GCC countries in the following priority areas: first, setting up a new paradigm of all-dimensional energy cooperation, where China will continue to import large quantities of crude oil on a long-term basis from GCC countries, and purchase more LNG. We will strengthen our cooperation in the upstream sector, engineering services, as well as [downstream] storage, transportation, and refinery. The Shanghai Petroleum and Natural Gas Exchange platform will be fully utilized for RMB settlement in oil and gas trade, [...] and we could start currency swap cooperation and advance the m-CBDC Bridge project”.

Let’s dissect President Xi’s comments bit by bit, and color them with other pieces of information as we go along. First, what is the “duration” of this theme?

It’s pretty short: in the words of President Xi, “the next three to five years”. In market terms, that means that five-year forward five-year inflation breakevens should be discounting a world in which oil and gas is invoiced not only in dollars but also renminbi, and in which some oil and gas is not available for the West at low prices (and in dollars) because they have been encumbered by the East. But it does not appear that breakeven expectations reflect anything like that...

My sense is that the market is starting to realize that the world is going from unipolar to multipolar politically, but the market has yet to make the leap that in the emerging multipolar world order, cross-currency bases will be smaller, commodity bases will be greater, and inflation rates in the West will be higher...

Inflation traders should be paranoid, not complacent. As Andy Grove said, “only the paranoid survive”, but when I asked a small group of inflation traders over dinner in London this summer about how the market (they) comes up with five-year forward five-year breakevens, I did not sense any degree of paranoia in their answer: “there is no top-down or bottom-up work that we do to come up with our estimates; we take central banks’ inflation targets as a given and the rest is liquidity”. Inflation breakevens do not seem to price any geopolitical risk.

Second, “paradigm” in “a new paradigm of all-dimensional energy cooperation” is a symbolic word. The meeting between FDR and King Abdul Aziz Ibn Saud was a new paradigm too: the U.S.’s security guarantees for the kingdom for access to affordable oil supplies. Over time, the paradigm boiled down to this:

the U.S. imported oil and paid for it with U.S. dollars, which Saudi Arabia spent on Treasuries and arms and recycled the leftovers as deposits in U.S. banks. (In the wake of the OPEC shocks of the 1970s, that recycling of petrodollars led to the Latin American debt crisis in the 1980s.) The old paradigm worked...

...until it didn’t:

the U.S. is now less reliant on oil from the Middle East owing to the shale revolution, while China is the largest importer of oil; security relations are in flux (see here); Saudi holdings of U.S. Treasuries and bank deposits are down as the kingdom went from funding the U.S. government and banks to owning equity in firms; and the Saudi crown prince said recently that the kingdom could reduce its investments in the U.S. (see here). Similar patterns hold in other GCC countries.

The “new paradigm” between China, Saudi Arabia, and GCC countries is fundamentally different from the one struck aboard USS Quincy. Naturally so, as China is now dealing with a rich Middle East, whereas FDR was dealing with a Middle East that had just started to develop. With wealth, power and priorities shift:...

....MUCH MORE

"An EV-plosion awaits in 2023, and it’ll be packed with tech"

 This is the story at TechCrunch I was going for when distracted by the wind-turbine-cleaning-robots.

From TechCrunch, December 27:

2022 was the year that electric vehicles entered the mainstream. Not everyone has one, but buying an EV no longer makes you an outlier. Driven by policy initiatives from governments and billions of dollars in investment from automakers, we can safely say the EV industry has begun to take shape.

Over the next year, that landscape will develop beyond the foundations of 2022. Here are some of our best guesses for what you can expect.  

There will be a race to sell U.S.-built EVs in the first quarter

The Inflation Reduction Act, which the Biden administration passed in August, has already had a huge effect on the EV industry as automakers work to onshore their supply chains and factories. But with certain aspects of the IRA’s EV tax credit rules now to be delayed until March 2023, we’re expecting to see EV sales take off in the first quarter of the year.

Under the bill, eligible EVs could qualify for a $7,500 tax credit if they meet the requirements of being built in North America and having sourced critical battery materials from the U.S. or free trade agreement countries. Those rules were meant to go into effect on January 1, 2023, but the Treasury Department has delayed guidance on the critical materials rule until March. And it’s a good thing, too. While automakers in 2022 scrambled to set up factories in the U.S., most critical materials still come from China, so they need time (likely years) to set up new supply chains. 

The delay means that a whole host of North American-built cars will now be eligible for the full refund, at least for the first three months of the year. The biggest winners will probably be Tesla and General Motors, whose sales caps under the previous EV tax incentives will be waived in the new year. But others like Ford, Nissan, Rivian and Volkswagen have all got a lineup of NA-built EVs that are ready to reap the benefits....

....MUCH MORE

Cleaning Up The Oil That Leaks From Wind Turbines

Those giant gearboxes aren't lubricated with sunshine and lollipops, it's petroleum.

From TechCrunch, December 27:

Clean energy: Scrubbing wind turbines with robots nets Aerones $39M

Aerones, a robotics startup that scrubs and inspects wind turbines so humans don’t have to, secured $38.9 million in fresh funding this month from dozens of undisclosed investors, TechCrunch has learned.

Wind turbines produce clean energy, but their towers tend to leak oil, which can corrode blades, increase wind resistance and pollute the ground below. Aerones’ remote-operated robots clean towers and blades by blasting them with a liquid detergent, while funnels beneath the blades collect the mucked-up liquid for reuse. The robots also inspect turbine systems with cameras and ultrasound scanners.

Aerones’ site says the company has cleaned more than 5,000 turbines to date across 19 countries. For context, there are more than 72,000 wind turbines in the U.S. alone. In 2021, turbines generated around 9% of all electricity in the states....

....MORE

"ESG Managers Told to ‘Punch Back Hard’ as PR Pros React to Attacks"

Have I ever mentioned eliminationist rhetoric?*

From Bloomberg:

After a meteoric rise, the investment strategy is being bashed by Republican politicians

ESG is beset from every angle. Republicans want to cancel it. Business leaders are muffling their former enthusiasm. Some money managers have even scrubbed the three letters from their funds.

To meet this fraught moment, brand executives who work with some of the largest US companies, including Amazon.com Inc. and Alphabet Inc.’s Google, have had a look — and their message is clear.

ESG proponents need to “punch back hard,” said David Kippen, who runs Evviva Brands in San Francisco and worked with companies including BlackRock Inc. “They can’t just run away.” He declined to comment specifically on BlackRock, which has been singled out by the GOP for its use of ESG strategies. The fanfare and buzz around environmental, social and governance investing that crested about a year ago has given way to a barrage of attacks, raising questions about the staying power of the label. The Republican onslaught, which has been picking up since the spring, gained momentum after Florida Governor Ron DeSantis lambasted ESG as “woke capitalism.”

ESG fund managers now find themselves on the backfoot.  If the acronym was a type of new technology in what research firm Gartner Inc. calls the “hype cycle,” it’s now perhaps approaching the “trough of disillusionment.”...

....MUCH MORE

As we said in the introduction to November's "Beauty shots: Germany’s Green Party economics minister wants €400,000 for personal photographers":

This is not a good sign. Any time you run into someone who puts façade before substance hold on to your wallet. Ditto for folks who focus more on messaging than on message....

*Why yes, yes I have.

From an April 2022 post: 

....Next up a pretty good definition of eliminationism via Marquette University Law Review:

Eliminationist Discourse in a Conflicted Society: Lessons for America from Africa?

1. The phrase ―eliminationist has been used by David Neiwert, a journalist who has long covered right-wing discourse and action in the United States. Joshua Holland, The Terrorist Threat: Right-Wing Radicals and the Eliminationist Mindset, AlterNet (June 12, 2009), http://www.alternet.org/story/140578/. Niewert credits the phrase to DANIEL GOLDHAGEN, HITLER‘S WILLING EXECUTIONERS: ORDINARY GERMANS AND THE HOLOCAUST (1996). Holland, supra. The book explains the rhetorical mechanisms and socio-economic dynamics that led Germany‘s non-radical majority to acquiesce, then accept the race politics of the Nazi regime. See generally GOLDHAGEN, supra. ―Eliminationism claims a moral purpose, holding that political opponents are ―a cancer on the body politic that must be excised—either by separation from the public at large, through censorship, or by outright extermination—in order to protect the purity of the nation.

That's a footnote! 

To repeat:

"―Eliminationism claims a moral purpose, holding that political opponents are ―a cancer on the body politic that must be excised—either by separation from the public at large, through censorship, or by outright extermination—in order to protect the purity of the nation."

The phrase is used in Holocaust and other genocide studies, as here re: the study of the Einsatzgruppen, the Ordnungspolizei "German Order Police" and their henchmen, the Ukrainian Auxiliary Police and the Trawniki Men in the Generalgouvernement in occupied Poland; and in the Ukrainian Soviet Socialist Republic and the Byelorussian SSR.

This was the Holocaust by bullets, the murder of some 1.5 to 2 million people outside the Nazi murder factories system (Auschwitz, Belzec, Chelmno, Sobibor and Treblinka.)

The Holocaust by bullets included the two day killathon of 33,771 souls at Babi Yar outside of Kyiv and the less-well-known Aktion Erntefest (Harvest Festival) outside Lublin Poland when 43,000 were shot to death. Along with the Odessa Ukrainian SSR massacre in 1941 by Germans, Romanian allies and Ukrainian collaborators where over 30,000 people were murdered, those were three of the ten thousand locations across Eastern Europe where populations were simply annihilated in place.

It would also apply to the Hamburg scum in Christopher Browning's Ordinary Men: Reserve Police Battalion 101 and the Final Solution in Poland and Father Desbois, whose book Holocaust by Bullets notes some of the 1744 slaughter sites his work has uncovered,

I bring up all this history because the use of eliminationist talk is a direct precursor to genocide. Which makes the series of Medium posts by Peter Leyden and Ruy Teixeira back in 2017-2018 so interesting.

The Great Lesson of California in America’s New Civil War
Why there’s no bipartisan way forward at this juncture in our history — one side must win.... 

"Should the Climate Movement Embrace Property Destruction?"

From Bloomberg via Yahoo, December 14:

The past few months have seen a flurry of climate protests. In Marseilles, a cement factory was sabotaged by activists for its high emissions. In London, tomato soup was thrown at Van Gogh’s Sunflowers by members of the group Just Stop Oil. Other activists have taken to deflating SUV tires in cities across Europe and the US to discourage use of the gas-guzzling vehicles.

This is only the beginning of what climate activists need to do in order to be effective, says Andreas Malm, associate professor of human ecology at Lund University and author of How to Blow Up a Pipeline. “The task for the climate movement is to make clear for people that building new pipelines, new gas terminals, opening new oil fields are acts of violence that need to be stopped — they kill people,” Malm says on Bloomberg Green’s Zero podcast....

....MUCH MORE

Previously (September 26, 2021):
"Should the Climate Movement Embrace Sabotage?"

From The New Yorker, September 24:

The New Yorker Radio Hour

....Also, Professor Andreas Malm, who studies the relationship between climate change and capitalism, insists that the environmental movement reconsider its roots in nonviolence.

How to Blow Up a Pipeline

Andreas Malm insists that the environmental movement rethink its roots in nonviolence and instead embrace “intelligent sabotage.”

....AUDIO

 

Also at the New York Times, January 22:
Three Books Offer New Ways to Think About Environmental Disaster

HOW TO BLOW UP A PIPELINE
By Andreas Malm
200 pp. Verso. Paper, $19.95.....

With these major media outlets giving this guy a platform, should there be physical damage, injury, death or other terror techniques commited at his behest or by his acolytes, a bright paralegal could probably find the deep pockets to sue in, oh, eight seconds. 

Iceland: Second Happiest Country In The World, 2020

 Also Iceland: "it also consumes the most antidepressants in Europe."

That's #5 on Euronews' "2022 in health news" 

And their related story: "Europe's mental health crisis in data: Which country uses the most antidepressants?"

"Bloomberg L.P. has no interest in acquiring either Dow Jones or the Washington Post, a spokesman says."

From The Star (Malaysia), December 27:

“There have been no conversations with anyone or either organisation about an acquisition,” spokesman Ty Trippet said in the tweet, which was retweeted by billionaire owner Michael Bloomberg.

News website Axios reported last Friday that Bloomberg was interested in acquiring either the Wall Street Journal parent company Dow Jones from Rupert Murdoch’s News Corp, or the Washington Post from Amazon.com’s Jeff Bezos, citing a source familiar with Bloomberg’s thinking.

Reuters reported on Friday that Michael Bloomberg had expressed a desire to own a big-name newspaper over the years, but had not reached out to Murdoch to discuss a possible purchase of Dow Jones and its flagship paper the Journal....

....MORE

"Can the French nuclear industry avoid meltdown?"

 From The Economist, December 12:

Emmanuel Macron envisions a national nuclear renaissance. First France’s reactors must survive the winter

Nuclear power seems tailor-made for this day and age. It emits next to no carbon. It provides reliable baseload electricity, vital when sun isn’t drenching solar panels or wind isn’t wafting through turbine blades. And it does not leave its operators hostage to dictators like Vladimir Putin, who has throttled the supply of Russian natural gas to Europe in response to Western sanctions over his war in Ukraine. With memories of the Fukushima meltdown in Japan 11 years ago fading, countries from Britain to India view fission as a critical part of their future energy mix. Even in nuclear-sceptical Germany, which vowed to shut its nuclear reactors in that disaster’s wake, the government has extended the lifetime of the three remaining ones until April 2023.

If there is one country that should already be enjoying the benefits of abundant carbon- and autocrat-free power, it is France. A fleet of 56 reactors make up around 70% of its electricity-generating capacity, the highest share in the world and more than three times the figure in America. The average French resident emits just 4.5 tonnes of CO2 a year, much less than gas-addled Germans (7.9 tonnes) or car-crazy Americans (14.7 tonnes). As for Mr Putin’s energy blackmail, on European minds again as a mild autumn gives way to a frigid winter, you might expect the French to react with a Gallic shrug.

France should, in other words, be basking in the warm glow of controlled fission reactions. Instead a decade of mismanagement and political mixed signals has brought its nuclear industry to the brink of implosion. A quarter of the fleet is out of action owing to maintenance and other technical problems. Experts warn of possible power outages during extreme cold spells later this winter. To keep up with demand, France has to import pricey electricity, from Germany of all places. The fleet’s state-controlled operator, EDF, is being fully renationalised to save it from bankruptcy. The company’s newly appointed boss, Luc Rémont, talks of a “serious crisis”.

A lot is riding on its resolution. Europe is counting on the French nuclear industry to stop being a drag on the continent’s strained energy system. Emmanuel Macron, France’s president, is counting on it for a national nuclear renaissance. And its success may determine whether the world’s newer nuclear converts see the French experience as an inspiration—or a cautionary tale.

To understand France’s nuclear predicament consider its roots in the oil shock of 1973. At the time, most French power plants ran on petroleum. As the fuel became scarce, French politicians concluded that true sovereignty required an energy source France could control. Nuclear power fitted the bill. France knew something about the technology, having built an atom bomb and nuclear submarines. It boasted a cohesive corps of engineers, most of whom attended the same university, the École Polytechnique. And a centralised political system allowed the powerful executive branch to ram through the ambitious programme with little input from the French public or their elected representatives.

This rapid ramp-up enabled France to enjoy what industry types call the “fleet effect”. Building a reactor is complex and requires a lot of learning by doing. So long as you keep doing, the expertise grows, making each new project easier. Between 1974 and the late 1980s EDF brought reactors online at a rhythm of up to six a year, with construction crews moving swiftly from one plant to another (see chart).

However, the French approach has created lingering problems. On the technical side, squeezing a lot of construction into a few years means that reactors undergo their big decennial refit (le grand carénage) around the same time. And since they are built to the same standard, problems found in one trigger repairs in others. As a result, French reactors’ “load factor”, a measure of whether a plant is running at full capacity, hovers at 60% or so, compared with more than 90% in America....

....MUCH MORE

"Sri Lanka farmers count the cost of government fertiliser ban"

This should be a warning to the UN, the EU and the Dutch government but for their own reasons I don' think they care.

From the Financial Times, December 27

South Asian island nation relies on international aid to stave off starvation

For centuries, Sri Lanka has been renowned for its vast and varied produce, its fertile soil fostering everything from cinnamon and black pepper to fruits and fragrant teas.

But over the past 18 months, the country has become a cautionary tale for global agriculture. Vital inputs such as fuel and fertilisers are in short supply, with prices soaring. Yields from rice and other staples have halved in many areas and the once largely self-sufficient Indian Ocean island now depends on international aid to combat a hunger crisis.

In April 2021, then-president Gotabaya Rajapaksa announced an abrupt ban on the import of chemical fertilisers to force the country of 22mn to embrace organic farming. The prohibition lasted only about six months, but analysts said the ill-fated policy not only stoked an economic crisis, it would leave Sri Lanka’s agricultural sector hobbled for years.

“It really brought everything to a halt,” said Ahilan Kadirgamar, a sociologist at the University of Jaffna who works with rural co-operatives. “Farmers have lost a lot of confidence in the government.”

Sri Lanka this year became the first Asia-Pacific country to default on its international debt in more than two decades after running out of foreign reserves, prompting a foreign exchange crisis that led to mass protests, crippling shortages of medicine and other essentials and a dramatic drop in living standards across the island.

Colombo is engaged in debt-restructuring negotiations with creditors, including China, India and commercial bondholders as it tries to finalise a $2.9bn IMF bailout.

Although the crisis had many causes, from excessive borrowing for underused infrastructure projects to loss of tourism during the Covid-19 pandemic, experts said the fallout from the fertiliser ban was an important driver....

....MUCH MORE

"Russian sausage tycoon Pavel Antov dies in Indian hotel fall"

Not the first Russian sausage magnate to die under suspicious circumstances.

From the BBC, December 27:

Russian sausage tycoon Pavel Antov has been found dead at an Indian hotel, two days after a friend died during the same trip.

They were visiting the eastern state of Odisha and the millionaire, who was also a local politician, had just celebrated his birthday at the hotel.

Antov was a well known figure in the city of Vladimir, east of Moscow.

Last summer he denied criticising Russia's war in Ukraine after a message appeared on his WhatsApp account.

The millionaire's death is the latest in a series of unexplained deaths involving Russian tycoons since the start of the Russian invasion, many of whom have openly criticised the war.

Reports in Russian media said Mr Antov, 65, had fallen from a window at the hotel in the city of Rayagada on Sunday. Another member of his four-strong Russian group, Vladimir Budanov, died at the hotel on Friday....

....MUCH MORE

In 2020 we saw "Lede of the day":

Lede of the day: "An investigation into the crossbow murder of a Russian sausage magnate has taken a bizarre turn..." https://t.co/wzxMOTKJtM

— Jesse Walker (@notjessewalker) November 3, 2020

Elon Musk Warns Against Margin Debt on Risk of Market ‘Mass Panic’

There's more going on than just a very wealthy guy talking about business, finance and investing but for now we'll just take this as presented.

From Bloomberg via Yahoo Finance, December 24:

Billionaire Elon Musk is warning against something he himself has done — borrowing against the value of securities one owns — because of the risk of “mass panic” in the stock market.

“I would really advise people not to have margin debt in a volatile stock market and you know, from a cash standpoint, keep powder dry,” Musk said in the All-In podcast released Friday. “You can get some pretty extreme things happening in a down market.”

The Tesla Inc. chief executive officer put up billions of his own money when he purchased Twitter Inc. for $44 billion earlier this year and saddled the company with $13 billion of debt. Bloomberg News has reported that Musk’s bankers are considering replacing some of the high-interest debt he layered on Twitter with new margin loans backed by Tesla stock that he’d be personally responsible for re-paying....

....MUCH MORE

GPT 3.5 (ChatGPT) Is So Last Month, Here Comes GPT 4.0 (NVDA; MSFT)

From somebody I don't know (a stranger is just a friend you haven't yet met - wrongly attr. to W.B. Yeats):

There's been a lot of low quality GPT-4 speculation recently. So, here's a relatively informed GPT-4 speculation thread from an outsider who still doesn't know that much. 🧵

— Matthew Barnett (@MatthewJBar) December 20, 2022

At the time, the top supercomputer listed by TOP500 was Summit from IBM, though the much faster Supercomputer Fugaku would be listed in the June 2020 TOP500 release one month later.https://t.co/nuAV223RFc

— Matthew Barnett (@MatthewJBar) December 20, 2022

From NVIDIA, "The theoretical peak performance of the Tensor Cores on the V100 is approximately 120 TFLOPS. This is about an order of magnitude (10x) faster than double precision (FP64)"https://t.co/3m0pbbIPyj

— Matthew Barnett (@MatthewJBar) December 20, 2022

....MUCH MORE (Thread) 

HT on the Twitter thread: Marginal Revolution

My ears sort of perk up when Nvidia is mentioned. Kind of like an old dog when it thinks it hears the car keys. Though recently, rousing oneself at the sound of NVDA has been more like realizing those are just the keys to the room where they store the cat furniture. 'Effin' cat.

But back in the day, 2015, and adjusted for the 4:1split (either $6.50 to the current $152 or $26 to $608), glory days. Maybe 300 posts:

....One of the reasons we were able to glom onto Nvidia at $21 was stuff like 2014's "Deep Learning is VC Worthy" pointing toward A.I and other areas faster chips were allowing 'puters to tackle. Our first post on NVDA was May 2015's "Nvidia Wants to Be the Brains Of Your Autonomous Car (NVDA)" which was followed by a hundred more, including 2018's play on that first post title "UPDATED—NVIDIA Wants to Be the Brains Behind the Surveillance State (NVDA)" many with this introduction from May 2016's "NVIDIA Sets New All Time High On Pretty Good Numbers, "Sweeping Artificial Intelligence Adoption" (NVDA)":

We are fans.
Before we go any further, our NVIDIA boilerplate: we make very few calls on individual names on the blog but this one is special.

They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
Not just another pretty face.

Or food delivery app.

After hours the stock is changing hands at $38.31 up 7.70% which, if it holds through tomorrow's regular session, beats the old highs from 2007.

It worked out.

FinViz

 

Possibly also of interest, last summer's "There Is A New World's Fastest Supercomputer (maybe) NVDA": 

....Two European (LUMI and France's Adastra), two Chinese and Japan's Fugaku  add diversity to the U.S. national laboratories machines with NVIDIA's Selene being the only corporate machine in the top10. Germany and Italy have machines in the 11th and 12th fastest positions with Microsoft's Azure in the 13th spot. Here are the first 100 fastest.

The highlights press release (above) takes pains to point out how deeply NVDA accelerators have penetrated supercomputer architecture: 

Highlights from the List

A total of 170 systems on the list are using accelerator/co-processor technology, up from 151 six months ago. 84 of these use NVIDIA Volta chips, 54 use NVIDIA Ampere, and 8 systems with NVIDIA Pascal....

And just for grins and giggles, April 18, 2022: 

"Nvidia’s Next GPU Shows That Transformers Are Transforming AI" (NVDA)
I don't think NVDA has seen its lows:

 BigCharts

And I'm not sure their plan to be the engine that powers the metaverse will ever amount to anything.

And I know it is not as interesting as it was in 2015 - 2016 when we started touting it at $26 to $36 ($6.50 to $9 accounting for last year's 4:1 split)*

But it still has some of the most amazing tech out there.

From IEEE Spectrum, April 8:....

Will Europe's Largest Lithium Deposit Ever Be Developed? A View From Serbia

We will have a few posts on this story, which really caught our interest when the President of Serbia said on November 29:

Vucic: I feel like the stupidest president in the world for abandoning lithium mining

The President of Serbia, Aleksandar Vučić, said today that he still regretted that he made the decision for Serbia to abandon lithium mining and that, because of that, he “felt like the stupidest president in the world.”

Commenting on the protest of environmental activists in front of the Serbian Government building (against lithium exploration), Vučić said that the government did not make any lithium-related decision, but that he did that.

“I don’t understand why they protested in front of the government. When they protest, they should protest in front of the presidency building, and I will address them and tell them politely that it is them who are destroying the country. The price of lithium today is 82,500 dollars per tonne and our lithium reserves are worth 100 billion,” he noted.

He added that Zijin economically dominates the town of Bor where the average salary is around EUR 800.

He also pointed out that the town of Loznica would benefit five billion euros from lithium mining as would the country, but that citizens believed in conspiracy theories and that the protest leaders were “paid off by foreign foundations”.

Does that mean Rio Tinto will get to go ahead with a project we had written off? Two stories from Reuters:

December 13: "Serbian PM sees no chance for reviving Rio Tinto lithium project"

December 14: "Rio Tinto has not given up on $2.4 bln Serbian lithium project"

It's complicated. The lithium could supply 90% of Europe's battery needs.

From the Berliner Gazette blog via Le Club de Mediapart, November 29:

Eco-struggles in Serbia: “We don’t need a green transition, we are already green.”

The mineral found in Serbia’s Jadar region is key to electric car batteries. The advocates of green capitalism, however, don’t have an easy time of it: they’re confronted by local farmers who claim they don’t need a green transition because they’re already green. After all, they say, the future is agriculture, as Mihajlo Vujasin notes in his contribution to the BG text series “After Extractivism.”

The river flows through a fertile green valley, surrounded by pastures, groves, and fields. Rio Tinto planned to open a lithium mine here – in the Jadar river valley in Serbia.

A nearby field grows corn over two meters tall. Although it was an arid summer this year, the corn was big and healthy. One of the locals active in the lithium mining opposition explains that this region, the valley of the Jadar and Korenita rivers in the Drina river basin in Western Serbia, is very rich in groundwater. That’s why his field is so fertile. Water is wealth, and the future is agriculture, Zlatko says.

Jadarite mineral, which contains a certain percentage of lithium, was found in this area about 20 years ago. The opinions about extraction are divided. The multinational corporation Rio Tinto is interested in exploiting these resources. Procedures were initiated, including research, land acquisition, and permitting. However, the government halted the project at the beginning of 2022.

Locals were firmly against it and managed to stop the project – after their resistance had grown into a nation-wide movement including a series of blockades and protests across the country.

This valley is a factory under the open sky, a food factory. We don’t need some green agenda here. We are all green already, say the locals in the valley of the two rivers.

The locals became ecological activists gathered in the SEOS, the Association of Environmental Organizations of Serbia. As the Jadar project is only one of many possible mining projects, there is a danger of Serbia becoming a mining colony, they say.

Mining research and extraction permissions have been a matter of public concern for months. Everybody knows that this is a turning point. When the mine opens in Jadar valley, the mining companies could then open another 30 mining sites. According to the draft of the country’s spatial plan until 2035, numerous locations across the country are planned for new mining projects. But the document still needs to be adopted.

Sacrifice zones

“Sacrifice zones” could be a new term to consider. It emerged in the controversy around the energy transition. The term is an utterly political calculation. It didn’t come from the energy or ecology scope. That is to say, the connection between extraction and politics has spilled over into the reality of green capitalism.

We are now surrounded and threatened by escapists of extractivisim. Needless to say, extractivism is not a solution. One has to grow a resolution.

The Jadar project has been halted, but activists suspect the company will try to implement it again. Politicians are lamenting over a missed chance called lithium. They’re calling for a possible revision. The mineral has been discovered in Serbia, and Europe needs it. And the world needs it, as they say. It isn’t difficult to draw a conclusion....

....MUCH MORE

"How Kindle novelists are using ChatGPT"

From The Verge, December 24:

An interview with an AI early adopter

Earlier this year, I wrote about genre-fiction authors using AI in their novels. Most wrote for Amazon’s Kindle platform, where an extremely rapid pace of publishing, as fast as a book a month, is the norm. AI helped them write quickly, but it also raised complex aesthetic and ethical questions. Would the widespread use of AI warp fiction toward the most common conventions and tropes? What parts of the writing process can be automated before the writing no longer feels like their own? Should authors have to disclose their use of AI?

With the debut of ChatGPT, many of the questions these writers were dealing with have become more urgent and mainstream. I checked back with one of the authors, Jennifer Lepp, who writes in the cozy paranormal mystery subgenre under the pen name Leanne Leeds, to see how she was thinking about AI now. She’s still using the GPT-3-based tool Sudowrite — in fact, she is now paid to write tips on using it for the company’s blog — and has begun incorporating some of the more recent tools into her fiction. We spoke about what it’s been like working with ChatGPT, how its debut has roiled the independent author community, and other topics.   

When we spoke last time, you had gone through an evolution of using Sudowrite, first mostly as a sort of thesaurus, then experimenting with incorporating its text into your work, then letting it lead you and having an alienating experience with that and reining it back and using it primarily to flesh out descriptions you’d outlined. What’s your process like now?

Well, I had hoped that it would help me write two books at the same time, and that failed spectacularly. Apparently, I’m still connected to my own writing. So, on the one hand, that was good.

You thought that it could allow you to toggle back and forth and write two books simultaneously? 

I figured, Hey, if I don’t know what to write, I’ll just pop something in there and it will get me going, and I’ll be right back into the book I left a week ago. It didn’t quite work out that way. If I didn’t know what I was doing, it didn’t matter what it spit out at me. It wasn’t going to help me reconnect with material I already wrote.

You and a few other independent authors were early adopters of these tools. With ChatGPT, it feels like a lot of other people are suddenly grappling with the same questions you were confronting. What’s that been like? 

I definitely am still grappling, and I think I’m grappling a little bit more publicly. For the most part, people before had kind of rolled their eyes — I don’t think they understood what people were using AI for. ChatGP3 exploded that. Every group, every private, behind-the-scenes author group I’m in, there’s some kind of discussion going on.

Right now, everybody’s talking about using it on the peripherals. But there seems to be this moral chasm between: “It does blurbs really well, and I hate doing blurbs, and I have to pay somebody to do blurbs, and blurbs isn’t writing, so I’m going to use it for blurbs.” Or “Well, I’m going to have it help me tighten up my plot because I hate plotting, but it plots really well, so I’m going to use it for that.” Or “Did you know that if you tell it to proofread, it’ll make sure that it’s grammatically correct?’

Everybody gets closer and closer to using it to write their stuff, and then they stop, and everybody seems to feel like they have to announce when they’re talking about this: “But I do not ever use it its words to write my books.”

And I do. It doesn’t drive my plot. It doesn’t generally drive any of the ideas in my books. It doesn’t create characters. But the actual words, just to get them down faster and get it out, I do. So I’ve found myself in the past couple of weeks wondering, do I engage in this debate? Do I say anything? For the most part, I’ve said nothing....

....MUCH MORE

Earlier in "It's not human but it's alive":

• "‘South Park’ Creators Trey Parker and Matt Stone Land $20 Million in Funding for Their Deepfake VFX Studio"
• Matthew Yglesias and ChatGPT
• NowTech: "A new AI game: Give me ideas for crimes to do" (ChatGPT)
• A Bit More On ChatGPT
• "OpenAI’s GPT chat bot enters the uncanny valley"

A little too real. I'll go back to making it talk like a pirate. pic.twitter.com/ZWHyEgOI3c

— @TedUnderwood@sigmoid.social (@Ted_Underwood) December 1, 2022

continuing to do so pic.twitter.com/LCKaQrq3GV

— @TedUnderwood@sigmoid.social (@Ted_Underwood) December 1, 2022

Way back in 2014 we were looking at:
The First Conscious Machines will Probably Be on Wall Street
Or in porn....
'Deep Learning' as Applied to Investing

"‘South Park’ Creators Trey Parker and Matt Stone Land $20 Million in Funding for Their Deepfake VFX Studio"

There are deepfake studios? Yikes.

From Variety, December 20:

Trey Parker and Matt Stone are going deeper into Deep Voodoo.

The creators of “South Park” have secured a $20 million investment for their AI entertainment startup Deep Voodoo. The funding was led by Connect Ventures, an investment partnership between CAA and venture-capital firm New Enterprise Associates (NEA). It’s the first outside capital raised by Deep Voodoo, which previously was funded entirely by Parker and Stone’s independent entertainment company, Park County.

Stone and Parker plan to use the new funding to “accelerate Deep Voodoo’s development of its leading deepfake technology, cost-effective visual effects services and original synthetic media projects,” according to the announcement. 

“We stumbled upon this amazing technology and ended up recruiting the best deepfake artists in the world,” Stone said in a statement. “We are psyched to share their brilliance with the Hollywood creative community.”....

....MUCH MORE

TS Lombard: "Things that won't happen in 2023"

 From Dario Perkins at TS Lombard, December 23:

Since we first published our annual “Things that won’t happen” outlook in 2015, writing outlandish non-forecasts has become considerably more difficult. Back then, nobody would have taken us seriously if we had said Donald Trump would become US president or the UK would quit the EU or there would be a two-year pandemic with rolling global lockdowns. And the surprises kept on coming in 2022. Suddenly we had central bankers who didn’t seem to care about the stock market (except when trading their own PA positions), equity strategists forecasting actual market declines (admittedly only after their first 15 Buy-The-Dip recommendations had failed) and England not winning the World Cup (again). Meanwhile, nobody could have known that cryptocurrencies were just digital tulips or that paying millions for Jpeg monkey pictures – freely available to anyone with a smart phone – was a bad idea. Anyway, humbled by the silliness of real life, here are some things that won’t happen in 2023 (probably…).

#PivotsAreForWimps

In 2022, Jerome Powell made no secret of his admiration for every central bankers’ hero, Paul Volcker, the 6ft7in former Fed chair who famously broke the back of inflation in the early 1980s. Powell promised to learn from the experience of the 1970s and 1980s, ‘keeping at it’ until he had slain the inflation monster once again. But in 2023, after another global energy shock pushes inflation to its highest-ever level, Powell takes his unrequited bromance with Mr Volcker a step too far, donning two-inch platform shoes and a rumpled dark suit and casually puffing on a large cigar at every public engagement. Things get out of hand in August, as US interest rates hit 25% and Powell insists on entering his FOMC press conference to the tune of “Eye of the Tiger”. His embarrassment is complete when he is finally doxxed on #fintwitter as @IHeartVolcker79 (check out his Twitter feed, which is totally dedicated to “Big Paul” and even includes the occassional love poem). Not to be out done, Christine Lagarde tries to revive the ECB’s own monetary heritage, inviting Otmar Issing to run the economics department at the ECB and forcing all officials to read the historical works of Karl-Otto Pöhl. The BoE’s Andrew Bailey treads a path of defiant British exceptionalism, giving a speech on “Why 15% inflation isn’t really that bad”. 

.....MUCH MORE

If interested see also:
TS Lombard: "Inflation was always the Endgame"

"Kremlin Rejects Reports Of 'Isolated, Paranoid' Putin Who Is Fed Inaccurate Battlefield Info"

From ZeroHedge:

Kremlin.ru

In the words of Larry the Cable Guy: "I don't care who you are, that's funny right there."

We may have to re-evaluate the post "Is Zero Hedge a Russian Trojan Horse?"

Interesting on a few levels.

First off, the source, The New Republic (TNR) has for most of its 106 year history been to the left of the American Democrat Party and for long periods has been to the left of your average Marxist.

For some reason I think of Bolsheviks bad-mouthing Mensheviks.

The second interesting point is this is reminiscent of the PropOrNot website the Washington Post was promoting in 2016, more on this after the jump.

The third point of interest is the story itself. From The New Republic, March 9....