First, the bezzle represents recorded or perceived wealth that does not exist as real wealth (productive capacity), and as such it boosts collective recorded wealth above real economic wealth. This discrepancy gooses GDP growth in at least three ways. One way this happens is that bezzle creates a temporary wealth effect that boosts consumption and investment spending to a level higher than where either normally would have been. A second way is when part of this false wealth shows up either as higher income or higher profits for the entity that benefits from the boost in recorded wealth. A third way is when rising market values collateralize increases in borrowing that are then used either to raise prices further or to increase spending. It is not a coincidence that GDP growth rates are always higher than expected in periods during which a great deal of bezzle is being created.

Second, the reverse is true when the bezzle is directly or indirectly recognized and amortized, as it must eventually be. One or more sectors of the economy (households, businesses, local governments, farmers, or banks) must absorb the loss. As they do, the wealth effect reverses, their lower earnings or profits are reflected in lower-than-expected GDP figures, and they are forced to pay down the debt. Just as it is not simply a coincidence that bezzle is created mainly during economic booms, nor is it a coincidence that it tends to be recognized during economic downturns or financial crises.

Third, bezzle creation seems to be systemic. There are periods, in other words, when it seems that the operation of the financial system errs toward creating bezzle, and these times always seem to be followed by periods in which the bezzle is automatically wrung out of the system.

Fourth, as Galbraith especially pointed out, the bezzle has a self-reinforcing impact on growth in either direction. When it is being created, the illusion of wealth tends to reinforce growth and encourage the creation of more bezzle. When it is being amortized, it tends to inflict additional costs of financial distress on the economy, especially to the extent that it was financed by debt.

I find discussion of the bezzle in valuations a useful way of thinking about how the wealth effect is produced and eventually reverses. The Japanese property bubble or China’s property/infrastructure bubble both fit neatly into those terms with the boom and bust of property markets making relatable backdrops for discussion.

Electricite de France SA said last week it will halt four reactors accounting for 10% of the nation’s nuclear capacity, straining power grids already faced with the prospect of a spell of cold weather. At the beginning of January, almost 30% of France’s nuclear capacity will be offline, increasing the country’s reliance on gas, coal and even oil.

“If we have a very, very cold day, it could be problematic, especially if we have to import and our neighbors have problems as well,” said Paris-based Anne-Sophie Corbeau, a research scholar at the Center on Global Energy Policy at Columbia University. “This is the domino effect we need to fear. But electricity will be expensive, there’s going to be a cost to pay.”

German power for next year jumped to a high of 335 euros a megawatt-hour, following a 25% rally on Tuesday, before slipping back. The French equivalent rose as much as 2.5% to record of 408 euros. Prices gained amid thin holiday trading even as gas declines. There was also speculation some traders may be closing short positions due to rising capital requirements from exchanges.

“The strength in the French market has been the main engine -- aside from gas prices -- of strength in neighboring markets, including Germany, in recent days,” said Glenn Rickson, head of European power analysis at S&P Global Platts.

“I also suspect that any big moves ahead of the run-up to Christmas have as much to do with the thinness of the market and traders needing to close short positions ahead of shutting down for the holidays as anything else.”

Soaring gas and power prices have already forced European utility giants from RWE AG to Uniper SE to boost liquidity requirements. Many smaller suppliers didn’t have the same option, with more than 20 going out of business in the U.K. alone.

Half of the UK’s energy traders/providers have gone out of business since the spike in natural gas prices began. The survivors will be the best capitalised companies that can ride out this volatility. They will also benefit in future from capturing market share during this tumultuous period. 

Elon Musk has disposed of enough shares to reach a target of reducing his stake in Tesla Inc. by 10%, the head of the electric-car leader said in an interview. 

“I sold stock that should roughly make my total Tesla share sale roughly 10%,” he told satirical website Babylon Bee. 

Musk has been offloading Tesla stock since asking his Twitter followers in November whether he should sell some of his stake. The move is part of a plan to generate cash to cover an estimated tax bill of more than $10 billion on stock options Musk is due to exercise.

Elon Musk’s personal holding of Tesla shares represents a significant source of supply. His sales soaked up a lot of demand over the last six weeks and contributed to an almost complete unwinding of the overbought condition relative to the trend mean.

1.Due to its unusual investment characteristics in terms of performance, correlation and volatility, Bitcoin (and selected altcoins) can serve as useful supplement within a diversified portfolio.

2.Gold and Bitcoin are non-inflatable and as such profit from monetary inflation. Together they shine even brighter due to a superior risk/return profile. We are convinced that an increasing number of investors will treat Gold and Bitcoin as parts of one non-inflatable asset class.

3. Most altcoins are not here to stay. However, some projects have the potential to serve as market disruptors and substantially change aspects in our lives. Conceptionally, we consider (most) altcoins more like venture capital investments, whereas Bitcoin to us is digital Gold.

4. Various indicators are signaling a bullish environment for Bitcoin. However, the most relevant model to monitor is the S2F model by PlanB. In this regard, it is our opinion that the current halving cycle is not over yet. Our base scenario is a delayed peak in this cycle. If this assumption is correct, we could see the Bitcoin price pushing above USD 100,000 in the coming months.

As a trend persists, the evidence from past performance swells to make the bullish case more convincing. This is doubly true for bitcoin because despite its history of significant drawdowns no one who has held the asset for four years has sustained a loss regardless of the price they paid. That’s only possible because the trend has been so strong and the breakouts, when they come, have been among the most explosive of any asset ever.

Cultivated meat has the potential to not just match but surpass the taste and texture of conventional meat, as well as to introduce novel products. If consumers take to these products, the market for cultivated meat could reach $25 billion by 2030 (Exhibit 3). Currently, the world primarily eats the meat of animals that are the easiest to farm industrially, but cultivated meat won’t face those constraints. Instead, the industry could select cell lines from specific animals with the best traits, such as Wagyu beef or wild salmon, and replicate them at the same cost as, say, beef patties or tilapia.

Cultivated meat can also go one step further and select cell lines from animals that are not widely eaten because of their low meat content, long growing time, or lack of availability. For example, ostrich meat, a product that has challenged many ranchers, could be cultivated and become a trendy low-fat, red-meat alternative. There could even be room for highly creative product innovation: the industry’s imaginative take on dodo poultry could make a better nugget than chicken, or a burger made of what research chefs think mammoth might have tasted like could be a mouthwatering new concept.

While most start-ups are focusing first on more popular species and breeds, Eat Just’s GOOD Meat and the company Orbillion Bio are exploring Wagyu, and the company Vow is working to explore more exotic options, such as kangaroo and alpaca.

In the nearer term, companies may choose to focus on a single area and mix plant protein and other flavors into their products to achieve the desired taste and texture. Eat Just’s chicken product sold in Singapore, for example, is more than 70 percent cultivated cells, with a small amount of plant protein added in for structure, while Future Meat in Israel mixes cultivated fat with plant protein. It’s too early to tell if blended options are merely an interim fix or if they present a sufficiently compelling option for long-term adoption.

At a dinner party a few years ago a successful restauranteur held forth on what was required to be successful in the business. She said one had to realise there are only three products groups; Fat, sugar, and salt. You need the correct blend of each to ensure consumers keep coming back. At the same time, if you want to make money, the food had better be salty because then people drink more alcohol which is where margins are widest. That basic rationale is why fast-food outlets focus on all three groups. They keep people coming back for more.

A rout in some of the world’s biggest technology companies dragged down the broader equity market, outweighing gains in companies that stand to benefit the most from an economic rebound.

The S&P 500 fell after earlier climbing on bets that central banks can move toward tighter policies to fight inflation without derailing the economy. The Nasdaq 100 tumbled, led by losses in giants like Apple Inc. and Tesla Inc. Commodity, financial and industrial shares rose. European equities jumped as the region’s policy makers unveiled a gradual pullback of pandemic stimulus, while the pound gained as the Bank of England unexpectedly raised rates. Bitcoin slumped.

Central banks are weighing measures to fight price pressures while balancing risks to growth amid coronavirus challenges. European Central Bank President Christine Lagarde unveiled forecasts showing a strong economic rebound along with an outlook for faster inflation. The Federal Reserve said Wednesday it will accelerate the pace at which it tapers bond purchases, and projected rate hikes through 2024.

This is a very whippy environment for trading. No sooner do we see a rebound than most of its is given up. This is attributable to the divergence between central bank pronouncements about their expected rate hikes and what the market believes is possible. Short-dated bond yields contracted today to reflect the expectation that if the Fed were in fact to raise rates three times, there will be economic consequences.

“Anytime there’s a risk of easy money being taken away, that will result in some of these very expensive areas of the market to pull back,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

“The pressure on the Fed to pick up the pace of tightening is only mounting. With higher prices permeating the marketplace, we could see a snowball effect when it comes to inflation challenges as more suppliers justify higher prices and more consumers begin to close their wallets,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial.

“The inflation trajectory remains worrisome. While we believe that price pressures will abate next year, the Fed is doing the prudent thing by tapering faster, so that it is well-positioned to hike rates if needed,” said Win Thin, global head of currency strategy at Brown Brothers Harriman.

Liquidity is the only game in town. With a looming threat that the USA is about to close the momentary spigot, a distinct air of risk-off trading is increasingly evident. That suggests, the risk of a lengthier and deeper process of consolidation is rising.

The first phase of the Teesside battery is due to be completed by 2023, a Sembcorp spokeswoman said by phone, adding that the investment required would be in the “hundreds of millions” of pounds.

“Flexible energy sources play an increasingly important role in maintaining secure and reliable energy supplies,” Andy Koss, Sembcorp’s chief executive officer for the U.K. and Middle East, said in the statement. With a growing reliance on renewables, the U.K. energy system must be “able to respond

quickly to changes.”

The new storage site is expected to top the largest current planned battery -- a 100-megawatt facility by Zenobe Energy Ltd. Sembcorp said its total U.K. battery pipeline is now almost half a gigawatt. It already operates 70 megawatts and has a further 50 megawatts due to come online in early 2022.

In just the same way that fossil fuels require storage facilities, renewable energy requires batteries and storage solutions for when demand spikes amid slower supply. The building of industrial utility-scale batteries reflects a doubling down of government policy on renewable energy. That trend has been underway for a decade; since the refusal to reinvest in the Rough storage facility in 2012. 

Tapering is tightening for markets, if not the economy. Due to the much greater than expected rise in inflation, the Fed is pivoting to a more aggressive removal of monetary accommodation. We believe this is warranted and supported by an administration that appears less focused on the stock market as a barometer of its success. Furthermore, tapering is different than in 2014 for 3 reasons: 1) the Fed is exiting QE twice as fast this time,2) asset prices are much richer today and 3) growth is decelerating rather than accelerating. This could be important for the economy, too, given how levered consumers are to stock prices today.

The uptrend over the last 13 years has been liquidity fuelled. That’s been the abiding factor behind every correction and every recovery since the initial lows in late 2008. It is reasonable to expect the end of the latest quantitative easing program will have a similar effect on market prices as every other one.

Montreal company Carbicrete has developed a method for sequestering carbon in concrete, claiming its product captures more carbon than it emits. The technology cuts out the need for calcium-based cement, a key ingredient in traditional concrete that is responsible for around eight per cent of all global CO2 emissions. I thought you might be interested in this.

Thank you for this informative email. There is a clear incentive for innovators to come up with ways to profit from the rising cost of carbon emissions. The COP26 agreement will create a global market for emissions and will broaden the number of companies subject to carbon restrictions. That is all aimed at creating a market for alternatives in much the same way that subsidies fostered the solar and wind sectors.

Volkswagen AG raised its five-year spending plan and overhauled its management board, seeking to catch up with Tesla Inc. and end an internal dispute over the changes needed to get there.

The German company will invest 159 billion euros ($180 billion) in total in the next half decade, of which 89 billion euros are for technologies like software and electric cars. That’s more than in last year’s rolling plan, pointing to a faster departure from combustion engines. By 2026, about a quarter of all sales will be electric only, VW predicted.

VW’s aggressive transformation hasn’t been without controversy, and Chief Executive Officer Herbert Diesshas come under fire from labor representatives accusing him of plotting mass layoffs to make VW more nimble.

Diess’s position at the helm was the subject of public debate in recent weeks, and Chairman Hans Dieter Poetsch sought to quell any speculation today about his future by calling Diess an “agent of change.” At the same time, the CEO ceded some tasks to others on the management board, which has now swelled to 12 members.

“Our exceedingly robust and solid financial base enables us to finance the necessary investments on our own,” Poetsch said in a statement. “We are also therefore very confident that these investment decisions will steer the Volkswagen Group to future success.”

Tesla has leapfrogged other auto manufacturers by adopting an aggressive build schedule; funded in part by the proceeds from carbon credits sold to it competitors. In today’s environment, corporate boards are under increasing pressure to leverage their balance sheets because of the success of companies like Tesla.

Vodafone shares rose as much as 3.3% following a so-called “uncooked” mention in a Betaville report regarding potential private equity interest in the telecom operator. Shares pared gain to 1.8% as of 4:18 p.m.

Representatives for Vodafone were not immediately available to comment when contacted by Bloomberg via phone and email
Betaville says there is speculation that one of Europe’s largest private equity firms is looking at all of some of Vodafone, citing people following the situation
NOTE: The speculation is described as “uncooked,” a term the Betaville blog often uses to refer to market gossip
NOTE: Vodafone shares have declined 5.9% YTD vs Stoxx Telecoms Index’s 9.5% gain
READ: Private Equity Rummages in the Telco Bargain Bin: Chris Hughes

One of the biggest questions for investors today is how to hedge a portfolio against inflation. The answer is not easy. Finding a business that has strong cash flows with the possible of passing on incremental price increases is a strong contender for the most attractive contender.

Henkes, a former Toyota Motor quality division manager, was fired from Tesla in August 2020 and he sued Tesla claiming the dismissal was in retaliation for raising safety concerns. Tesla did not respond to Reuters' emailed questions, while the SEC declined to comment.

In the SEC complaint, Henkes said Tesla and SolarCity, which it acquired in 2016, did not disclose its "liability and exposure to property damage, risk of injury of users, fire etc to shareholders" prior and after the acquisition.

Tesla also failed to notify its customers that defective electrical connectors could lead to fires, according to the complaint.

Tesla told consumers that it needed to conduct maintenance on the solar panel system to avoid a failure that could shut down the system. It did not warn of fire risks, offer temporary shutdown to mitigate risk, or report the problems to regulators, Henkes said.

Tesla shares fell 5.5% at $960.25 on Monday after the Reuters report.

More than 60,000 residential customers in the U.S. and 500 government and commercial accounts were affected by the issue, according to his lawsuit filed in November last year against Tesla Energy over wrongful termination.

It is not clear how many of those remain after Tesla's remediation program.

Elon Musk’s Teflon-like ability to bait officialdom, and avoid censure, has been part of his appeal for years. He has actively cultivated the persona of a bad boy as a means of personifying the “move fast and break things” culture of Silicon Valley. So far, it has worked and by attracting legions of retail investors he has a solid backing on social media to support him if the strategy goes sideways.

a contact living in northern Portugal has informed me of the ecological disaster there being caused by Lithium mining. In the attached article we can read that thousands of protesters are marching in Serbia in opposition to Lithium mining there. https://www.theguardian.com/world/2021/dec/05/rio-tinto-lithium-mine-thousands-of-protesters-block-roads-across-serbia Regards A.

There is no getting around two important facts. Mining, all mining, is destructive. It is also absolutely necessary to further the goal of global economic development of every kind. There is a good reason that most mining takes place in sparsely populated areas and most particularly in emerging markets. No one wants a mine in their backyard.

A year ago, I began a series of reviews of longer-term themes which will be updated going forward on the first Monday every month. The last was on October 1st. These reviews can be found via the search bar using the term “Secular Themes Review”.

One of the most basic truisms in the financial markets is it is easier to make money in a bull market. The bull market that began in late 2008 and early 2009 has been liquidity fuelled. That was not obvious to everyone a decade ago but now everyone gets the message. Money printing inflates asset prices. As long as central banks are printing, we will have bull markets and the most speculative assets will perform best.

In today’s Audio you stated that there was an increasing risk of deflation. This is unsurprising because the capitalist system rewards the production of cheaper and better goods, while the continuing industrialization of the under-developed countries maintains downward pressure on wages. Throw in the emergence of crypto currencies and one must ask if gold will ever regain its former status in the economic system. Your views would be appreciated.

Thank you for this question which is particularly topical as we look to the year ahead. This year has been notable for a significant uptick in inflationary pressures. The extraordinarily low base level of 2021 contributed enormously to the year over year change while the tsunami of liquidity ensured readings were above even the most ambitious forecasts. This has resulted in economic statistics hitting headlines for most of the year even though most of what has happened is a product of base effects and liquidity.

Apple Inc. shares dropped after the iPhone maker was said to tell suppliers that demand for its flagship product has slowed, taking the shine off their recent record high.

Apple announced last month that it was having difficulty sourcing sufficient chips to meet demand. Today’s announcement suggests they may be under less pressure going forward as supply and demand come back into balance.

Companies currently listed in the U.S. and Hong Kong that use VIEs would need to make adjustments so their ownership structures are more transparent in regulatory reviews, especially in sectors off limits for foreign investment, the people said. It’s unclear if that would mean a revamp of shareholders or, more drastically, a delisting of the most sensitive firms -- moves that could revive fears of a decoupling between China and the U.S. in areas like technology. Details of the proposed rules are still being discussed and could change.

The overhaul would represent one of Beijing’s biggest steps to crack down on overseas listings following the New York IPO of ride-hailing giant Didi Global Inc., which proceeded despite regulatory concerns. Authorities have since moved swiftly to halt the flood of firms seeking to go public in the U.S., shuttering a path that’s generated billions of dollars for technology firms and their Wall Street backers.

It’s all part of a yearlong campaign to curb the breakneck growth of China’s internet sector and what Beijing has termed a “reckless” expansion of private capital. Banning VIEs from foreign listings would close a gap that’s been used for two decades by technology giants from Alibaba Group Holding Ltd. To Tencent Holdings Ltd. to sidestep restrictions on foreign investment and list offshore. It potentially thwarts the ambitions of firms like ByteDance Ltd. contemplating going public outside the mainland.
 

The era of China’s “don’t ask, don’t tell” regulation of the equity market is over. The government has been suspicious of the ease with which companies were raising capital overseas for years. The most particular concern is that foreign interests are gaining control of boards and companies are too independent from government oversight. That’s particularly true as plans become more ambitious and require national focus. Didi’s sneak listing, while regulators were away from the office, brought the issue to a head.

South Africa announced the identification of a new variant on Nov. 25, saying a few cases had first been identified in neighboring Botswana and then others had followed in Tshwane, the municipal area in which Pretoria is located. The announcement caused a global panic, roiling markets and resulting in travel bans on southern African nations.

Scientists advising South Africa’s government told a media briefing on Monday that while omicron appeared to be more transmissible, cases appeared to be very mild.

Coetzee’s patients have been relatively young. A vaccinated 66-year-old patient did return a positive test on Monday but was only mildly ill, she said.

Everything we have been led to believe over the last couple of years is that cold and flu viruses mostly evolve to be more transmissible because that furthers the urge to replicate all organisms share. Becoming less deadly is often a part of that because it aids in replication. That part of the argument is complicated by the fact that COVID does not kill before it is has ample time to replicate and disperse.

6. How worrisome is this variant?
It’s too early to say. The World Health Organization said there are fewer than 100 whole genomic sequences of the new strain available, which could add to the time it takes to study how it compares to previous strains and its impact on Covid therapies and vaccines. Viruses mutate all the time, with the
changes sometimes making the virus weaker or sometimes making it more adept at evading antibodies and infecting humans. Covid vaccines have shown they are effective against previous variants and pills being developed by Merck & Co. and Pfizer Inc. may also provide new treatments. 

7. What should we look out for next?
In the U.S., which recently lifted a year-long ban on tourism from much of the world, top medical adviser Anthony Fauci said he wants to see more data. The European Centre for Disease Prevention and Control assigned the variant -- first detected in South Africa and Botswana -- the category “Variant of Concern.” BioNTech expects the first data from laboratory tests about how it interacts with its vaccine within two weeks.

This is the most important chart from the above article. It highlights how transmissible this variant it. From the available data, it is much more transmissible than the Delta or Beta variants and is already approaching dominance of South Africa cases. That implies it will spread around the world rapidly and within a month or at most two will be the dominant global strain.

Staples Center is getting a new name. Starting Christmas Day, it will be Crypto.com Arena.

The downtown Los Angeles home of the NBA's Lakers and Clippers, the NHL's Kings and the WNBA's Sparks will change its name after 22 years of operation, arena owner AEG announced Tuesday night.

Crypto.com is paying $700 million, according to multiple reports, over 20 years to rename the building. The parties aren't publicly announcing the financial terms of what's believed to be the richest naming rights deal in sports history.

The 20,000-seat arena has been Staples Center since it opened in October 1999, with the naming rights owned by the American office-supplies retail company under a 20-year agreement. The name will change when the Lakers host the Brooklyn Nets in the NBA's annual Christmas showcase.

Staples was an enormous 1990s success story. The share opened at $0.89 in the 1989 IPO and peaked in 1999 at $23.95. It briefly regained that peak in 2006 and was taken private in 2017. Back in 1999 it must have felt like the world was the company’s oyster. Today it represents a diminishing position in the office supplies and services market.

DAOs are not a new idea. Vitalik Buterin, Ethereum’s co-founder and unwitting figurehead, contemplated Decentralized Autonomous Organizations in the original Ethereum Whitepaper in 2013. The DAO, a doomed decentralized venture fund, launched and folded in 2016. DAOs have been on fire this year within the web3 community; becoming a DAO is the de facto long-term fate of any sufficiently serious protocol. 

In October, a16z led a $10 million round in the popular DAO Friends with Benefits. A couple weeks ago, PleasrDAO bought a 1/1 Wu-Tang album for $4 million. Last week, the Ethereum Name Service (ENS) became a DAO and airdropped $2 billion worth of ENS tokens on anyone who’d bought a .eth domain over the past few years. Many people received $10s of thousands just for being an early adopter. 

But despite the early bright spots, most people have never heard of a DAO or bought into web3 yet -- it’s still very early. There’s still a struggle going on between web3’s fans and its skeptics, including many members of the US government. That’s not how it should be. America should be the home of web3, as @punk6529 eloquently laid out here: 

I’m sure those of us with a few grey hairs remember 2008 when securitization was a dirty word that was blamed for crashing the global financial system. The reason it created such a problem was it took groups of cashflows, treated them as a whole, they spliced them up into income streams with varying degrees of risk. Then smart people took that structure, leveraged it, and kept on leveraging it until it broke. Banks went bust all over the world and regulators swore it would never happen again. That’s why banks are less than eager to participate in these new ventures.

•Facebook AI is introducing M2M-100, the first multilingual machine translation (MMT) model that can translate between any pair of 100 languages without relying on English data. It’s open sourced here.

•When translating, say, Chinese to French, most English-centric multilingual models train on Chinese to English and English to French, because English training data is the most widely available. Our model directly trains on Chinese to French data to better preserve meaning. It outperforms English-centric systems by 10 points on the widely used BLEU metric for evaluating machine translations.

•M2M-100 is trained on a total of 2,200 language directions — or 10x more than previous best, English-centric multilingual models. Deploying M2M-100 will improve the quality of translations for billions of people, especially those that speak low-resource languages.

•This milestone is a culmination of years of Facebook AI’s foundational work in machine translation. Today, we’re sharing details on how we built a more diverse MMT training data set and model for 100 languages. We’re also releasing the model, training, and evaluation setup to help other researchers reproduce and further advance multilingual models.

The trend of artificial intelligence away from iterative learning to free associative learning is a major innovation which has also been used to by Google’s DeepMind to make substantial progress in a range of medical questions.

Meanwhile, mines across China and India have been ramping up production in recent weeks to ease a supply crunch that’s caused widespread power shortages and curbs on industrial activity. China’s miners have beaten a government target to raise output to 12 million tons a day, while India’s daily production is close to 2 million tons.

“The power cuts since mid-to-late September show that we are still not prepared enough,” Yang Weimin, a member of the economic committee of the Chinese People’s Political Consultative Conference and a government advisor, told a conference in Beijing on Saturday. Additional funding is needed to ensure coal plants can be used to complement a rising share of renewables, he said.

Coal’s share in global electricity generation fell in 2020 to 34%, the smallest in more than two decades, though it remains the single largest power source, according to BloombergNEF.

In China, it accounted for about 62% of electricity generation last year. President Xi Jinping has set a target for the nation to peak its consumption of the fuel in 2025, and aims to have non-fossil fuel energy sources exceed 80% of its total mix by 2060.

For India, coal is even more important, representing 72% of electricity generation. The fuel will still make up 21% of India’s electricity mix by 2050, BNEF analysts including Atin Jain said in a note last month.

The focus on attention right now is on the willingness and potential of both India and China to eventually limit their use of coal. Much less attention is focused on Africa where the bulk of population growth is occurring. The next couple of billion people will mostly be born in Africa. That means increasing demand for power and higher standards of living as the continent urbanises. 

The question remains then whether $20.23 is still too high. For example, with a 6% dividend yield, the stock has to trade at $19.17 per share. If we add $4.76 to that price, this implies that T stock should be at $23.93 per share.

That implies that T stock could fall another $1.12 or 4.5% to $23.87 if the post-split dividend yield will be at 6%.

But don’t forget this is just an estimate. We don’t know exactly what the new dividend payment will be. For example, if the dividend is reset at $1.18, then today’s price implies a new post-split yield of 5.62% (i.e., $1.18 / $20.99). That is fairly close to 6% and may imply that T stock is actually near a trough.

Until the company begins to clarify some of these issues, the market will not know exactly where to price T stock. However, all indications are that it is getting close to a trough, assuming that the new yield will be close to 6%.

An 8.38% yield is conspicuously large even for the high yielding global telecommunications sector. With a lengthy history of both paying and increasing the pay out, it is reasonable to assume a good many investors are in the share for the income and are selling because they fear their income will be reduced.

Investors will keep a close eye on UMich inflation expectations, due at 10 a.m. NYT. Another piece of the inflation picture that bears attention is the auto supply-chain crunch that’s been an exceptionally large contributor to rising prices.

News from Toyota adds to signs that supply issues may finally be easing. The carmaker is targeting greater December output than it’s seen in recent years, with next month set to be the first time in seven months that all of Toyota’s production lines in Japan will be operating normally.

That follows an Oct. 31 report that GM had no chips-related downtime scheduled in North America, the first time it had been able to resume full production since February. BMW’s results showed it’s muscling through the chip shortage, and Ford said revenue and profit rose due to increases in chip availability and vehicle shipments. Smartphone chipmaker Qualcomm‘s outlook, and steel and freight shifts, have also added to recent signs of broader relief.

Yet consumers may not feel like there’s been a downshift. U.S. used-vehicle prices rose 9.2% in October, according to Manheim Auctions; the index was up 38% from a year earlier. Reported used-vehicle inflation is also lower than suggested by the Manheim index, suggesting another big print for November’s CPI, as my colleague Cameron Crise pointed out.

There is clear potential that we are looking at the peak of supply disruption for chips. This is obviously a nuanced topic because there are lots of different kinds of chips and not every sector requires the same types of components. However, on aggregate, the supply of chips to the sectors that have contributed most to inflationary pressures is improving.

The producer price index climbed 13.5% from a year earlier, the fastest pace in 26 years and above economists’ median forecast for a 12.3% gain, data from the National Bureau of Statistics showed Wednesday. The consumer price index rose 1.5%, the highest since September 2020 and exceeding the projected 1.4% gain.

Producer prices in China have been rising rapidly in the past few months, first due to the global commodity price rally and then output curbs caused by a power crunch. Consumer inflation is also starting to pick up as weather-related supply problems push up food prices and manufacturers pass on higher costs to retailers. 

The data “implies broad-based inflation pressure on both the production side and the consumer side,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd. “Inflationary pressure and the more hawkish stance of monetary policy in other major economies will likely limit China’s room to maneuver for monetary easing.”

China exported deflation for much of the last twenty years, with a steady flow of cheaply manufactured goods flooding the global market. That boosted consumption as well as created the impression prices would never again rise in an unexpected matter.

“We haven’t seen, I’ll say, any more resistance to our price increases than we’ve seen historically.” -- McDonald’s Corp. CFO Kevin Ozan, Oct. 27 earnings call

“Looking at Q4, we expect our selling price actions to continue to gain traction, as we work to mitigate the raw material and logistics inflationary pressures we have experienced throughout the year.” -- 3M Co. CFO Monish Patolawala, Oct. 26 earnings call

“We feel very comfortable that any inflation that is affecting our margin today, we have the ability to offset it.” - Chipotle Mexican Grill Inc. CFO John Hartung, Oct. 21 earnings
call

“We have now announced pricing in nine out of ten categories, so very broad based.” -- Procter & Gamble Co. CFO Andre Schulten, Oct. 19 earnings call

While most CPI categories rose, the cost of airfares declined for a fourth month and apparel prices were unchanged. Wages have strengthened markedly in recent months -- with some measures rising by the most on record -- but higher consumer prices are eroding Americans’ buying power. 

Inflation-adjusted average hourly earnings fell 1.2% in October from a year earlier, separate data showed Wednesday.
 

The ability of companies to pass on inflation is a good reason why the stock market generally does well in the early portion of an inflationary cycle. The big question therefore is not whether they can successfully pass on one price increase but whether they can continue to pass on price increases should inflationary pressures trend higher.

Hi Eoin, would like to hear your opinion on the Global Telecom sector and AT&T in particular. Is there any reason why these high yielding but low growing stocks are so unloved? Tkx for your thoughts!

Thank you for this question. I was also looking at AT&T over the weekend and found the size of the decline puzzling. The most recent news is focused on the delay to rolling out 5G imposed on both AT&T and Verizon; resulting from a complaint by the FAA that their signals might interfere with aircraft.  

Gains in Treasuries may be partly driven by short-covering, which appears to have contributed to Thursday’s U.K.-led rally. CME Group Inc.’s preliminary open-interest data for Treasury futures show steep declines, in particular for the two-year note contract. Open interest in two-year note futures fell 2.3%, its biggest drop in three weeks.

Fed officials continue to emphasize that inflation is too high even as they hope to foster labor-market recovery by keeping interest rates low.

Federal Reserve Bank of Kansas City President Esther George Friday said “the risk of a prolonged period of elevated inflation has increased,” and “the argument for patience in the face of these inflation pressures has diminished.”

The declines in 10- and 30-year yields -- which fell as much as 6.5 basis points to 1.899%, the lowest since Sept. 23 -- come despite next week’s auctions of those tenors. The auctions, whose sizes were announced on Nov. 3, are smaller than the previous new-issue auctions in August, however. The reductions were the first since 2016.

The longer-term inflationary trend is being driven by wage demand growth and the upward pressure on the cost of housing and rents. However, it does not all happen at once, and some of the supply inelasticity factors that contributed to inflation over the last year are easing.

The company, now called Meta Platforms Inc., argues that millions of users are ready to adopt virtual reality technology — like its own headset — and live their lives in immersive online environments. That could mean attending a work meeting in a virtual boardroom, touring a digital factory or hanging out with far-flung friends in a simulated saloon. “The metaverse is the next frontier,” Chief Executive Officer Mark Zuckerberg declared.

For now, few people even have VR gear, and the metaverse concept would have to overcome concerns about privacy and — for some — a certain creepiness. But it has a big believer in one key corner: the largest maker of video-game chips, which says the metaverse is closer than we think and potentially the next gold mine for technology. 

The video-game boom set Nvidia Corp. on a path to become the world’s most richly valued chip company — overtaking the likes of Intel Corp. — and now it’s ready to remake the internet as a three-dimensional place. Rather than using the web to look at electronic pages, there will be a set of connected virtual worlds, according to Richard Kerris, an executive at the chipmaker whose career has included stints at Apple Inc. and Lucasfilm.

“You might not think you’ll be in the metaverse, but I promise in the next five years all of us will be in one way or another,” he said.

The metaverse has captured the imagination of the mob over the last week. The fact it twins with the evolving trend of recreating the supply inelasticity of land in the virtual world through the issuance of non-fungible tokens and crypto tokens has helped fuel enthusiasm. 

For Opendoor, Zillow’s departure represents an opportunity, CEO Eric Wu said in an interview. He expects his company, which pioneered the iBuying model, to be the market leader now that the best-known brand is out.

“We’re going to lead the charge in this transition from offline to online,” he said in an interview.

Wu said Opendoor has invested heavily to build expertise in home pricing and getting renovations done in a timely, cost-efficient manner. Those challenges contributed to Zillow’s iBuying demise.  

On Oct. 17, Bloomberg reported that the Seattle-based company would stop pursuing new acquisitions for its iBuying business, citing shortages of workers and supplies it needed to fix up homes. But Zillow also struggled to get pricing right. The company bought many homes for more than it could sell them for, forcing it to take writedowns of more than $500 million on property inventory. 

Those results convinced Zillow CEO Rich Barton that the iBuying model was too risky for his company.

“Fundamentally, we have been unable to predict future pricing of homes to a level of accuracy that makes this a safe business to be in,” Barton said on the company’s earnings call this week.

Anyone using Zillow’s app to look at houses over the last year will quickly have realised how inaccurate the “Zestimate” score is for gauging a home’s value. It was in no way reflective of the market condition because it was not adjusting quickly to new selling prices for homes. That resulted in differences of over 20% when we were housing hunting in the spring. That would also have forced Zillow’s algorithm to be manually adjusted to cope with the lag of data which obviously created issues.

Applications for 5G are expected to include autonomous driving, the massive internet of things (IoT) and telemedicine, mobile and fixed broadband, among others.

• Investor perceptions of 5G are tracking prior cycles of early excitement followed by skepticism. While there are certainly technologic and economic hurdles to overcome, we view the global 5G build-out as inevitable and see the current sentiment as an attractive opportunity.

• The 5G build-out will take a number of years before consumers fully realize its benefits. However, we believe the “inevitability” of 5G relative to investor skepticism creates an attractive opportunity in companies leveraged to infrastructure. We believe infrastructure companies will benefit from 5G before smartphone-focused companies.

The big difference 5G offers over existing infrastructure is that it eliminates lag. One of the limiting factors behind current wireless technology is the time it takes to upload a file versus downloading it. That slows down two-way communication. Anyone who had ever played an online multiplayer game is familiar with lag because one’s character can hang on the screen while the connection tries to catch up with the activity. During that time you often end up getting killed by someone with a better connection.

The key inefficiency is intermittency. When winds don’t blow and the sun doesn’t shine, electricity has to be found elsewhere. In July there was so little wind driving the turbines on which Britain depends for a quarter of its power supplies that they operated at less than 5 per cent of their capacity for 314 hours. We’re told that we’ll eventually have battery farms on such a scale storing back-up energy to overcome the intermittency problem with the renewables that will replace fossil fuels. But the figures don’t add up. A friend who has analyzed them tells me that, using reasonable assumptions, to replace the 1,400 Terawatthours of electricity used in the European Union each year and currently coming mainly from natural gas and coal will require battery storage back-up of some 273 million tonnes of batteries. Assuming battery prices continue to fall, that will nevertheless cost say $8.2 trillion – double that taking into account necessary peripherals -- and need about 25 years’ mining of lithium carbonate. And you’d need to replace the entire stack of batteries every few years as their charge holding capacity erodes. As my friend says: These are “insanely prohibitive costs.” Activists argue that the current energy crisis must be used to intensify the transition to renewables. That is, more of one of the root causes of the crisis. More inefficiency, more malinvestment and more demand for relatively scarce materials such as copper.

 

The willingness of the environmental lobby to drive investment towards renewables remains unabashed particularly as we look at the verbal commitments being made as part of the COP26 discussions. The viability of these commitments rests squarely on developing new battery chemistries that are more efficient, cheaper and less resource intense. It’s a tall order and, even then, will only form part of the wider energy mix.

Facebook, Apple, Netflix, Google, Microsoft, Amazon and NVidia are the most significant shares in the US market and occupy approximately 20% of the market cap of the total market. Owning these seven shares contributed to massive outperformance following the credit crisis crash.

HALEU is in between, with 5% to 19.75% of the uranium mass that power-source isotope. As an added bonus, HALEU can be made from down-blending the used, military-grade uranium. The U.S. Department of Energy (DOE) is so excited by HALEU that it’s close to approving a new generation of reactor designs it says “will completely change the way we think about the nuclear industry.” Power plants will be smaller, more efficient, produce less waste uranium and they won’t need their cores replaced for 20 years, unlike every 18 to 24 months for current reactors. At the moment, the DOE is in the process of deciding on the next generation reactor from 10 finalists; nine of them are designed to use HALEU.

The first market for HALEU will be micro-reactors for the military. The Pentagon is seeking to remove domestic bases from the wider electrical grid as part of its climate change-related plans to keep bases operational under increased extreme weather events. A Defense Department prototype reactor, Pele, should be available by 2024. Perhaps 130 reactors will be deployed. By mid-decade, utility owned micro-reactors will start rolling out for remote locations like interior Alaska and far-flung islands. They’ll generate perhaps 10 megawatts (MW) of energy with a one-time upfront fueling to last 20 years. More powerful, advanced utility reactors could come to market by 2030. Even current reactors will be able to use HALEU in place of the low-enriched stuff.

Militaries pioneered small modular reactors for use in aircraft carriers and submarines so they are also likely to be the first to deploy small reactors for use in other applications as well. The US military’s answer to climate change is to double down on nuclear reactor technology by taking bases off the grid and creating options for power in remote locations like Alaska and forward operating bases. 

Analysts said speculators are cutting back on positions as the launch of the first U.S. Bitcoin exchange-traded fund fanned enthusiasm and pushed prices to new all-time highs. Total liquidations of long crypto positions topped $700 million on Wednesday, the most since Sept. 20, according to data from
Bybt.com. 

“The market has been leveraged long for a few weeks, so there has been that overhang in positioning,” said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX.

Stephane Ouellette, chief executive and co-founder of FRNT Financial Inc., a crypto-focused capital-markets platform, said some of the elation around the ETFs has vanished and the selloff’s been exacerbated by the fact that there is much more leverage available in crypto for retail traders globally than there is in other asset classes.

“We already saw a wave of quite severe leverage come into the space which was evidenced by futures contangos, perpetual swap and peer-to-peer lending rates all spiking around the launch of the BTC ETF,” Ouellette said. “In the last few weeks, for example, we saw monthly and quarterly BTC futures contangos in the 20-to-30% range. While leverage can in some cases get even more extreme, the activity over the last few days has some tell-tale signs of a typical crypto check-back.” 

Futures-based funds were originally designed for intraday trading but investors assume they were designed for holding for longer time periods. The embedded loss from rolling contracts in contango ensures futures’ funds fall more during setbacks and rally less during rallies. That guarantees they will underperform their benchmark over the medium term.

Wednesday’s $61b Treasury 5-year auction was among the strongest on record gauging by its yield relative to where it was trading at the bidding deadline. The auction yield of 1.157% was 2.5bp lower than the approximate pre-auction level of 1.182%, a sign that dealers underestimated investor demand for the notes. Consistent with that, the share awarded to primary dealers was among the lowest on record.

While the difference between an auction yield and the pre-auction level is always an estimate, as dealers may quote the issue differently, the last time a 5-year note auction stopped short by more than that was in November 2009; a $42 billion auction that month was awarded at 2.175%, 3.6bp below where it had been quoted moments before

Wednesday’s 17.9% primary dealer award was the third lowest on record in data since 2004, reflecting above-average shares for indirect and direct bidders

Longer-dated bonds rallied in a number of countries today. That suggests investors are still willing to give the benefit of the doubt to the view that inflationary pressures are going to moderate or at the very least that yields have run away from the publicly stated intentions of central banks.  

Chinese authorities told billionaire Hui Ka Yan to use his personal wealth to alleviate China Evergrande
Group’s deepening debt crisis, according to people familiar with the matter.

Beijing’s directive to the Evergrande founder came after his company missed an initial Sept. 23 deadline for a coupon payment on a dollar bond, said the people, asking not to be identified discussing a private matter. Local governments across China are monitoring Evergrande’s bank accounts to ensure company cash is used to complete unfinished housing projects and not diverted to pay creditors, the people said.

The demand that Hui tap his own fortune to pay Evergrande’s debt adds to signs that Beijing is reluctant to orchestrate a government rescue, even as the property giant’s crisis spreads to other developers and sours sentiment in the real estate market. Chinese President Xi Jinping has been cracking down on the billionaire class as part of his “common prosperity” campaign to reduce the country’s yawning wealth gap.

It’s unclear whether Hui’s fortune is big and liquid enough to make a sizable dent in Evergrande’s liabilities, which swelled to more than $300 billion as of June. The developer’s dollar bonds are trading at deep discounts to par value as investors brace for what could be one of China’s largest-ever
debt restructurings.

Bailing out troubled lenders during the credit crisis and letting their senior management walk away with golden handshakes helped to seed a populist backlash against the status quo in the USA. That was exacerbated by a foreclosure crisis that saw millions of people kicked out of their homes. China appears to have learned from that mistake and Hui Ka Yan is unlikely to escape Evergrande’s dissolution unscathed.

The cars will be delivered over the next 14 months, and Tesla’s Model 3 sedans will be available to rent at Hertz locations in major U.S. markets and parts of Europe starting in early November, the rental company said in a statement. Customers will have access to Tesla’s network of superchargers, and Hertz is also building its own charging infrastructure.

It’s the single-largest purchase ever for electric vehicles, or EVs, and represents about $4.2 billion of revenue for Tesla, according to people familiar with the matter who declined to be identified because the information is private. While car-rental companies typically demand big discounts from automakers, the size of the order implies that Hertz is paying close to list prices.

“How do we democratize access to electric vehicles? That’s a very important part of our strategy,” Mark Fields, who joined Hertz as interim chief executive officer earlier this month, said in an interview. “Tesla is the only manufacturer that can produce EVs at scale.”

The electrification plan, which eventually will encompass almost all of Hertz’s half-million cars and trucks worldwide, is the company’s first big initiative since emerging from bankruptcy in June. And it signals that Hertz’s new owners, Knighthead Capital Management and Certares Management, are intent on shaking up an industry dominated by a handful of large players who are typically slow to change.

This is a win/win situation for Hertz and Tesla. Anyone wishing to rent a vehicle will take a look at Hertz if only for novelty value. For Tesla, it represents a strong try before you buy marketing campaign, they don’t have to pay for. I had both Toyota and Hyundai SUVs when I was house-hunting in Dallas earlier this year and my opinion of both brands was much improved following the experience. For many consumers looking at a minimum of five months wait time for a new Tesla, the chance to drive one on a temporary basis will be a tempting prospect.

One of the corollaries between cryptocurrencies and gold is that, as forms of money, they’re both grounded in the same decentralized concepts that make them useful alternatives to fiat. Gold has obvious impediments to its monetary utility in a modern economy – mainly the fact that it’s difficult to transport. Bitcoin and crypto fixes that. Personally, I find the long-term inflation hedging benefits of crypto to be somewhat less beneficial than many proponents believe. After all, all crypto is endogenous in the sense that it is literally created from nothing and can be borrowed into existence in exactly the same way that modern banks create synthetic “dollars” from nothing when they make loans. A “fractionally reserved” Bitcoin system with endogenous lending could be every bit as inflationary as the current fiat system with the main difference being that there isn’t a government there to pump trillions into the system on a whim. And that’s where the last 18 months and this “faith put” in gold is pretty interesting….

A strange thing happened during COVID. The US government spent $6T to fight off the pandemic. As expected, the huge fiscal stimulus led to a somewhat uncomfortable level of inflation. But here’s where things get interesting – since the start of the pandemic in March 2020 the price of gold is up 6.5%. The price of Bitcoin, on the other hand, is up almost 10X. It’s not just a small difference. It’s an astounding difference. It’s the kind of difference that makes you wonder if people even believe that gold is an inflation hedge.

The Permanent Portfolio with 25% in stocks, 25% in bonds, 25% in cash and 25% in gold has stood the test of time. It is logical to question whether the introduction of new assets should alter the composition of the portfolio. What I find particularly interesting today is there is a simultaneous questioning of the merits of the 60/40 portfolio which is much more popular than the permanent portfolio.  Meanwhile Paul Tudor Jones is touting bitcoin’s status as an inflation hedge. 

Foxconn is among the technology companies targeting EVs as a source of growth beyond low-margin electronics assembly. The Ohio deal is a boon for Foxconn, giving it assembly capacity, equipment and talent, Citigroup analyst Carrie Liu wrote in a recent note. The company is close to deciding the location for a car plant in Europe, Liu said.

The Apple car would be the ultimate prize for every aspiring EV manufacturer. Working in Foxconn’s favor is its strong relationship with the U.S. consumer-electronics giant. The years-long partnership has expanded as Apple has added product categories, and the company now accounts for about 50% of Foxconn’s annual sales.

Any Apple automobile is still years away and the company has suffered setbacks including the recent departure of the head of its car project to Ford Motor Co. An Apple car has for years been somewhat of a paradox -- it’s one of its most hotly anticipated products yet the company has publicly said almost nothing about it.

Foxconn has yet to start sales of any vehicle following the debut of its EV platform last year. It plans to start mass production of Lordstown’s Endurance electric pickup in Ohio in April, according to a person familiar with its schedule.

Even if Apple is not going to produce a car, we are in a new era for the automotive sector. The evolution of the battery drive fuel cycle has lowered the barrier to entry and enables third manufacturing business models.

“We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied, that we have the willingness to allow or clear the way for a Bitcoin futures ETF in the market, and also clear the way for a spot ETF,”

Sonnenshein said in an interview. GBTC currently holds roughly 3.4% of the world’s supply of Bitcoin, according to Grayscale.  The conversion would likely solve a persistent problem for Grayscale: the trust’s discount to net asset value. The product’s price has traded below its underlying Bitcoin holdings for a prolonged period because shares in the vehicle can’t be destroyed in the same way as they can in an ETF. But it could also be seen as a way to sidestep obsolescence, with the advent of Bitcoin ETFs threatening to draw assets away from a product that investors have tolerated due to the lack of an alternative.

Commodity investors are more than familiar with the difficulties presented by investing in futures over the long term. The predictable roll schedule of the US Oil fund, and the trading environment that embedded a contango more often than not, ensured the fund seldom delivered on its promise to track the oil price.

A link to the full report is posted in the Subscriber's Area. 

The metaverse has become the new buzz word for the tech sector so it is worth considering what it in fact means for commerce and social interactions. The lure of the sector is it creates a middle ground where the world of the physical interacts with the online world. Therefore, you can have a digital avatar like one would have in a game but you can also make purchases of both physical and digital items.

The crypto-currency market is double the size of the sub-prime debt in the U.S. on the eve of the financial crisis and poses a threat unless urgently regulated, the Bank of England said.

Crypto assets are now worth $2.3 trillion, about 200% more than at the start of the year. While that’s still a small part of the $250 trillion global financial system, it’s about twice the size of the $1.2 trillion sub-prime real estate debt market in 2008.

“You don’t have to account for a large proportion of the financial sector to trigger financial stability problems,” BOE Deputy Governor Jon Cunliffe said in a speech on Wednesday.

“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice.”

And

About 2.3 million adults in the U.K. alone hold crypto assets, a survey by the Financial Conduct Authority showed. Cunliffe said more people see those assets as an alternative to mainstream investments instead of a gamble, and about half intend to invest more. 

The vast majority of crypto wallets are open for investment/ trading purposes. Buying one crypto to enable trading in others does not contribute to the proliferation of real-world applications. Volume based on that activity is largely irrelevant to the wider world. On the other hand, borrowing against crypto holdings, leveraging up on investments based off crypto holdings and securitising physical assets using cryptos do have real-world applications.

While GACW is initially targeting the OTR sector, which includes mining, the global tire market is much bigger, and the company has plans to enter that too. That said, the initial focus on mining could raise in excess of $20 million in revenue per mine site given the significant numbers of vehicles involved in each mining project.

And while the company may have competitors in the mid-sized market, it does not have any competitors in the global OTR sector.

In addition to this market, the ASW technology can be applied to all vehicles currently using traditional rubber tires, a $322 billion estimated value in 2022.

So far, the company has raised $3 million and has 4 patents with 13 others pending. It is also currently testing its ASW products with mining partners with an evaluation period of between 6 and 12 months. From 2022, it intends to ramp up its production of the ASW product with full commercialization expected in 2023.

“At this point, our plan is to expand our distribution network and really start taking the tire industry by storm,” the company said.

Mining costs are heavily dependent on energy and transportation prices and the cost of complying with increasingly stringent environmental regulations. As those costs rise, the incentive for companies to find alternatives where possible becomes progressively more urgent. Finding a cheaper alternative for a major cost centre, while also mitigating environmental liability represents an attractive sales pitch; if it works. Here is a link to Global Air Cylinder Wheels’ website. 

That seems awfully descriptive of the current era, no? Products that break through reach saturation in record time (see TikTok reaching a billion users in three years, or DTC companies that seem to max out in only a couple of years), while the future of established companies seems to be quagmire in legislators and the courts, even as profits continue to pile up without obvious places to invest. And if the government’s response to the revolution has been disappointing, that also may be because of the revolution itself.

Moreover, to the extent the dystopian picture above is correct — that the real synergy has been between centralized governments and centralized tech companies, to the alarm of both those abroad and in the U.S. — the greater the motivation there is to make the speculative investments that drive the next paradigm, especially if that paradigm operates in direct opposition to the current one. To be sure this framework does imply that crypto is full of scams and on its way to inflating a spectacular bubble, the aftermath of which will be painful for many, but that is both expected and increasingly borne out by the facts as well. What will matter for the future is how much infrastructure — particularly wallet installation — can be built-out in the meantime.

For what it’s worth my suspicion is that the current Installation period for crypto — if that is indeed where we are — has a long ways to run, which is another way of saying most of the economy will remain in the current paradigm for a while longer. The time from the Intel microprocessor to the Dotcom Bubble bursting was 30 years (and, it should be noted, there were a lot of smaller, more localized bubbles along the way); Satoshi Nakamoto only published his paper in 2008. Thirteen years after 1971 was 1984, the year the Mac was introduced; the browser was another 9 years away. It’s one thing to see the future coming; it’s something else entirely to know the timing. On that Perez and I can certainly agree.

Technology is a constantly moving feast so there is always some portion of the market maturing and another portion evolving. Arguably we are close to the peak of social media proliferation since just about anyone who wants an account has one and the number of legal, regulatory and competitive challenges is only increasing.

Key Points:
• We are now calling for Fire AND Ice. We have been calling for a mid-cycle correction to happen one of two ways:
• Fire: tightening financial conditions as the Fed signals tapering is coming
• Ice: growth disappointment particularly on the earnings side
• We think it’s increasingly likely these scenarios happen together and we get a >10% correction. The Fed will likely announce its taper plans at its next FOMC meeting just as we expect a disappointment in earnings to materialize.

• Earnings Trouble Ahead. A number of companies have flagged serious supply chain issues in off-cycle earnings reports over the past month. Both forward earnings estimates and price de-rated after many of these reports. We think this will be a pervasive dynamic during 3Q reporting season and expect it to trigger downside in earnings revisions at the index level- a headwind for price. Beyond 3Q, we think the earnings risk comes more from (1) the inability of companies to pass on pricing (2) margin risk related more to higher wages and (3) a reversion (lower) in goods consumption

A link to the full report is posted in the Subscriber's Area.

I don’t mind admitting I have been perplexed by the relative strength of Wall Street against a background of rising bond yields. The 5-year is trading above 1%, the 10-year hit 1.6% today and the 30-year is also running ahead. Meanwhile CPI at 5.2% is back at levels not seen since 2007.

The U.S. and China agreed Wednesday that President Joe Biden and President Xi Jinping would meet before the end of the year. It will be a virtual meeting and follows a call between the two leaders that was held in September -- that was their first in seven months.

The virtual summit was announced shortly after White House national security adviser Jake Sullivan met a senior Chinese foreign policy advisor, Yang Jiechi, in Zurich, according to The Wall Street Journal.

"While we expect minimal material improvement in the tone or substance of their relationship in the coming months, we still see investment opportunities on both sides, especially in the areas of capital markets, technology, cybersecurity, and climate change," said strategists led by Mark Haefele, the chief investment officer at UBS Global Wealth Management.

"In our view, investors should avoid taking sides. The best long-term approach is to seek exposure to the different economic cycles, growth opportunities, and sectoral trends offered by both countries," the team at UBS said.

Strategists at the Swiss bank noted speculation around possible topics for discussion included trade, Taiwan, and climate issues.

Churchill’s “Jaw-Jaw is better than “War-War” comes to mind. It also begs the question whether the Biden administration is willing to make concessions on Taiwan’s independence for better trading conditions? That was certainly the case during the initial negotiations with China 50 years ago and not a lot has changed in terms of China’s priorities.

The plan reached between Senate Majority Leader Chuck Schumerand GOP counterpart Mitch McConnell would raise the statutory debt ceiling by $480 billion, according to a Senate aide. The amount would allow the Treasury to meet obligations through Dec. 3, the same day that the current short term government spending bill runs out.

“We’ve reached agreement to extend the debt ceiling through early December,” Schumer announced on the Senate floor Thursday morning.

The news added fuel to a rally in stocks. The S&P 500 Index headed for its biggest three-day advance since April as the risk of an economically devastating tightening in fiscal policy receded for now.

I’m not sold on the idea that investors were waiting with bated breath on the outcome of political negotiations to lift the debt ceiling. The initial furore about debt ceilings was a decade ago. Everyone now understands, it is mostly about political theatre. There is no realistic outcome where the US will renege on its debt obligations.

This November, Bitcoin will undergo the biggest upgrade to its code since SegWit. Taproot (discussed in BIP 340, 341 and 342) introduces what are called Schnorr signatures to Bitcoin. To avoid a very technical discussion, Taproot will improve privacy, scalability and finally implement smart contract functions on Bitcoin.

One of the major benefits of Taproot activation is the fact that multi-signature transactions will become much less data heavy, which blazes a Bitcoin path for smart contract implementation. Many alt coins were designed from the ground up with these improvements in place and therefore drew attention and investment away from Bitcoin. The Bitcoin developers took plenty of time to ensure this upgrade was safe before implementation. Many, including myself, view this as a monumental move for Bitcoin, and it certainly levels the playing field in the smart-contract competition.

And

Along came the Bitcoin Lightning Network. The Lightning Network is a second layer protocol that operates on top of the Bitcoin blockchain. Lightning takes transactions “off-chain.” Basically, bitcoin is removed from the main network and placed into a two-party, multi-signature “channel.” This channel is created between two parties and allows each party to send nearly an unlimited amount of transactions at a very low cost. These transactions happen specifically on the Lightning Network and not on the Bitcoin blockchain. Because these transactions are not approved by Bitcoin nodes or miners, the Bitcoin network is not affected. Upon terminating or closing the Lightning channel, all of the information included in the history of the channel is consolidated and included in a transaction that is then sent to the main Bitcoin blockchain (mainnet) to be recorded.

Twitter recently announced tipping for all iOS users. For this to be possible, Twitter will rely on third-party companies such as Strike that provide the ability to link a Twitter account to a Bitcoin address and a Lightning Network address. The Lightning Network allows tiny amounts of money to be sent instantly to anyone with an address. Twitter CEO Jack Dorsey has been a longtime proponent of Bitcoin and the Lightning Network. Many view this as an elegant solution to many problems faced in the global payment’s ecosystem. Many pro-Bitcoin investors are encouraged to see that such a large social media company is exclusively building on Bitcoin, and this adds to their Bitcoin-only conviction.

What is clear is that Bitcoin Core developers are focused exclusively on improving Bitcoin. Through BIP implementations, layer 2 advancements, and the continued focus on Bitcoin, the largest cryptocurrency is constantly able to compete with newer projects and continues to demand the majority of market share in the cryptosphere. Taproot and Lightning Network will allow bitcoin to remain competitive with other alt coins in terms of functionality, speed and security. Not only is bitcoin the largest cryptocurrency based on market cap, but the upgrades and core developers are working to ensure that bitcoin remains preeminent.

The innovations discussed above greatly enhance the scope of bitcoin to compete with altcoins in the provision of real-world services. It will further act to concentrate user interest in bitcoin and the other larger tokens. The threat of regulation is already doing that to small projects and this development will likely accelerate the trend.

It looks like the government has blinked first. Miners, after months of being ordered to stick closely to capacity limits, are now being ordered to produce as much as they can, people familiar with the matter told Bloomberg News. That should help to take the wind out of surging thermal coal prices and prevent the current crisis from extending into the winter, when sufficient energy supply can be a life-or-death matter.

There is, to be sure, an attempt to make this retreat look like a withdrawal. The latest advice from Beijing’s economic planners last week focuses on protecting individuals but continuing the crackdown on industry, especially when it’s most energy-intensive and polluting. Allowing generators to raise prices to end-users, as is happening in Guangdong province, will also help create a more commercial power market. Electricity consumption controls have even been loosened in a way that would permit potentially unlimited volumes of cheaper renewable power into the market.

The risk, as with the rapidly fading fears over Evergrande, is that Beijing has simply deferred a pressing problem again. If China doesn’t reform a system that refuses to face up to its internal contradictions, the problems of an economy fed by credit and carbon will only fester and grow. 

 

Self sufficiency is Chinese government policy. Coal imports do not gel with that ambition so efforts to defray demand are likely to persist in a piecemeal manner subject to necessity. However, the reality is winters north of the Yangtze River are harsh and most communities rely on coal to heat homes, factories and run electricity.

Despite the pressure to ramp up output, OPEC+ was concerned that a fourth global wave of COVID-19 infections could hit the demand recovery, a source told Reuters a little before the vote.

"The (price) move looks a bit outsized given the ministers just reaffirmed the decision announced in July, but it shows how tight the market is, reinforcing our view of asymmetric price action with risks skewed to the upside at these inventory levels," Barclays said in a note. 

Investors will closely watch Wednesday's crude inventory data from the U.S. Energy Information Administration for further direction.

OPEC has a clear interest in sustaining reasonably high prices but not so high that significant additional supply is encouraged back into the market. At prices above $80, a lot of marginal supply becomes economic and it takes about 6 months to bring significant volumes online.

Under terms of the transaction, Lordstown Motors will sell the Lordstown factory to Foxconn for about $230 million after buying it from GM for just $20 million two years ago. The maker of Apple Inc.’s iPhone will buy $50 million worth of common stock in its new partner and will assemble the Lordstown Endurance electric pickup truck. The deal is contingent on the two sides reaching an agreement on manufacturing the vehicle. Foxconn plans to start mass production in April, according to a person familiar with its schedule. 

Lordstown shares jumped as much as 12% in late New York trading Thursday. During regular trading hours, the stock rose 8.4%, closing at $7.98 after Bloomberg had earlier reported a deal was in the works. It’s still down 60% for the year.

The accord gives both companies something they badly need. Lordstown Motors gets a partner that will hasten the startup’s move into large-scale production, which will help lower the high costs required to make EVs. Foxconn gets a plant in North America where it can build its open-source electric vehicle platform and do contract manufacturing for partners like Fisker Inc.

Perhaps another way of thinking about this deal is Foxconn will get some valuable experience in building electric vehicles. It will have time to work through the kinks of producing large products at scale.

On November 24th I began a series of reviews of longer-term themes which will be updated on the first Friday of every month going forward. The last was on May 7th. These reviews can be found via the search bar using the term “Secular Themes Review”

Supply Inelasticity Meets Rising Demand was the phrase David coined to explain the last commodity-led bull market. After decades of underinvestment in commodity supply infrastructure, the market was not prepared for the massive swell of new demand from China; as it leaped from economic obscurity into one of the largest economies in the world. A decade of investment in new production was needed to supply China and that crested ahead of the credit crisis in 2008.

Today, we also have extreme example of supply inelasticity, and demand is breaking records for all manner of goods and services. The factors contributing to these trends are quite different from a decade though. Some will be resolved relatively quickly. Others will take years.

Invesco Solar ETF (TAN) falls as much as 6.5% intraday, the most since May 4, amid growing investor jitters about China’s real estate crackdown potentially sparking a financial contagion. 

Among individual stocks, JinkoSolar down as much as 10.6% during the session, Beam Global -9%, Daqo New Energy -10%, First Solar-9.3%, Canadian Solar -7.8%

China is by far the largest manufacturer of solar panels. Silica is a major component for the sector and production is being hampered by electricity supply disruptions. That’s taking a toll on the solar sector. At the same time the upward pressure on government bond yields threatens the business model of many domestic installation businesses.

“Moral hazard and a ‘can’t-lose’ attitude from investors only raise the risk of a larger fragility shock before year end,” the strategists wrote in a client note Tuesday. “Adding further uncertainty to the outlook is the looming Fed taper and general hawkish turn away from the measures prompted by the Covid shock.”

The strategists joined their counterparts at Morgan Stanley in urging investors to remain vigilant after last week, when the S&P 500 reversed losses to snap two weeks of declines.  

Stocks are down for a second day Tuesday, with tech shares leading the decline amid a spike in Treasury yields. The S&P 500 has lost 3.7% in September, putting it on course for its worst month in exactly a year. 

On Friday I discussed the overly comfortable view that potential problems are so large that outsized liquidity injections are inevitable, so there is no need to sell. Inflation and rising yields punctured that fallacy today. The 5-year yield broke about the psychological 1% level and reintroduced the prospect of debt servicing costs and stagflation to the financial community.

Dear Eoin, could you kindly update us on Rolls Royce, e.g.: Worth buying more on this surge? Sell and buy back on inevitable dip after rumours regarding nuclear reactor subside? Thank you very much, very best, 

Thank you for this question which may be of interest to other subscribers. Rolls Royce is a potential beneficiary from the UK’s decision to exclude Chinese companies from its nuclear sector. That’s been a bullish factor for the share recently, not least as uranium investments have broken out. The additional news that it has sold ITP Aero unit for £1.5 billion also helped to support the share.

“As battery researchers, it’s vital to address the root problems in the system," says Shirley Meng, the corresponding author. "For silicon anodes, we know that one of the big issues is the liquid electrolyte interface instability. We needed a totally different approach."

This new approach involved making some tweaks to the way the silicon anode is put together, with the scientists eliminating carbon and binders that are normally used, and opting for a cheaper form of micro-silicon that undergoes less processing. A sulfide-based solid electrolyte was then introduced to carry the charge, and the resulting battery proved extremely stable, by avoiding the damaging interactions at the anode.

The novel silicone all-solid-state battery is described as safe, long-lasting and energy dense. A lab-scale full cell was shown to be capable of 500 charge and discharge cycles while retaining 80 percent of its capacity, demonstrating the stabilizing effects of the new design.

It seems like there is a new battery innovation touted every day. What’s particularly relevant is the time lines to commercialisation are seldom mentioned.

Dear Eoin, Many thanks for your comment on inflation as a solution for the massive public debts. In these circumstances how would you structure your portfolio? In which sectors would you invest your funds?

Thank you for this question which may be of interest to subscribers. This is a very big question because the stocks that have done best over the last decade have benefitted enormously from the massive availability of liquidity and very low rates. Divesting from the best performers runs contrary to most people’s instinct to run their winners so monitoring the consistency of their price action is particularly relevant to all portfolios over the next decade.

Think, you may find interesting this Financial Times story that looks into the longer-term consequences of Evergrande saga - https://on.ft.com/3io45gH (open link). It seems that the Chinese real estate market finally (at long, long last) is crumbling, not without help of the country leaders. If it is so and given the fact that the property market accounts for 29% of the Chinese GDP (and land sales to developers, for the third of local governments’ revenues), the economic growth seems to slow dramatically in the coming years. What could be implications, in your view? We all remember that China and its industrialization were the major drivers of the global commodities supercycle in the 21st century. Also, every time China has got into trouble, the Communist party used the same recipe “more investments in infrastructure and construction, more leverage. If now China and its property sector grow much more slowly, not to mention possible contraction of the latter, it will need much less metals and materials, and also possibly less gas (to power plants and send it to homes) and even oil (fewer working trucks and construction equipment). What do you think?

Thank you for this informative email which may be of interest to the Collective. Here is a section from the FT article:

An even more consequential trend for China’s political economy is the collapse in land sales by local governments, which fell 90 per cent year on year in the first 12 days of September, official figures show. Such land sales generate about one-third of local government revenues, which in turn are used to help pay the principal and interest on some $8.4tn in debt issued by several thousand local government financing vehicles. LGFVs act as an often unseen dynamo for the broader economy; they raise capital through bond issuance that is then used to fund vast infrastructure projects.

The property market has funded local governments for decades. Without a solid trend of land sales municipal governments face bankruptcy. There is just no way the central government can let that happen. The first order solution will be to avert contagion into the rest of the property market following Evergrande’s demise.

SEC Chair Gary Gensler drew first blood last week. On Friday, Coinbase quietly abandoned the lending product, announcing the move in a short update to a months-old blog post.

“Crypto lending might be the easiest way for the SEC to get its hooks into the industry, but it’s very clear they’re looking at cryptocurrencies themselves,” said Tyler Gellasch, a former counsel at the SEC who heads the Healthy Markets Association, whose members include large asset managers. If many cryptocurrencies are deemed securities, exchanges such as Coinbase and the rest of the crypto industry “will not be able to make money the way they do today.”

Crypto lending incumbents, such as BlockFi Inc. and Celsius Network Inc., have already garnered more than $35 billion in deposits of traditional cryptocurrencies such as Bitcoin, as well as stablecoins, whose values are pegged at $1 and are considered a replacement for fiat money.

Crypto industry executives have said they suspect rival firms in the traditional finance industry, such as large banks, are responsible for pushing regulators.

In a September “Ask Me Anything” event with customers, Celsius Network Chief Executive Officer Alex Mashinsky said he believed bank executives had called the SEC and state regulators to complain about crypto lending firms.

“We have to work twice as hard because these guys have the largest lobbyists working for them at both at the state and the federal level,” Mashinsky said. “We’ll prevail. The fight is over all the money in the world, right?”

When the chairman of the SEC talks about the cryptocurrencies in the same terms as the myriad number of competing currencies in the USA ahead of the Civil War, that’s not good news for the sector. It suggests the freewheeling days of launching a token for any purpose one can dream of are numbered. 

An example of an autonomous weapon in use today is the Israeli Harpy drone, which is programmed to fly to a particular area, hunt for specific targets, and then destroy them using a high-explosive warhead nicknamed “Fire and Forget.” But a far more provocative example is illustrated in the dystopian short film Slaughterbots, which tells the story of bird-sized drones that can actively seek out a particular person and shoot a small amount of dynamite point-blank through that person’s skull. These drones fly themselves and are too small and nimble to be easily caught, stopped, or destroyed.

These “slaughterbots” are not merely the stuff of fiction. One such drone nearly killed the president of Venezuela in 2018, and could be built today by an experienced hobbyist for less than $1,000. All of the parts are available for purchase online, and all open-source technologies are available for download. This is an unintended consequence of AI and robotics becoming more accessible and inexpensive. Imagine, a $1,000 political assassin! And this is not a far-fetched danger for the future but a clear and present danger.

We have witnessed how quickly AI has advanced, and these advancements will accelerate the near-term future of autonomous weapons. Not only will these killer robots become more intelligent, more precise, faster, and cheaper; they will also learn new capabilities, such as how to form swarms with teamwork and redundancy, making their missions virtually unstoppable. A swarm of 10,000 drones that could wipe out half a city could theoretically cost as little as $10 million.

If the cost to the aggressor is reduced, that’s a problem for regular civilians. That’s really not good news and suggests the toll in terms of casualties in future wars will be considerably higher than anything seen in a century.

When Lucid Motors first announced its Air sedan would return 517 miles (832 km) on a single charge, it sounded too good to be true. But Lucid didn't think so, having hired an independent test firm to run it through the EPA cycle. A year and change later, Lucid's best-in-market electric car range stands. The official EPA numbers are out and show that the first 2022 Air models will all surpass the 405-mile (652 km) EPA benchmark set by the 2021 Tesla Model S Long Range, with the longest-distance variants breaking 500 miles.

The gauntlet has been thrown down. The Lucid vehicle has a longer range and charges faster than Tesla’s best in class vehicle. Right now, it costs about double what a Tesla does and deliveries are only just starting but the equivalent of an electric vehicle arms race is beginning.

The pandemic exposed a “structural gap” between chip production and demand, and the disruption from the virus has only exacerbated the imbalance, Keogh said. But it hasn’t been all bad for automakers.

Tight inventory has led to soaring prices and minimal incentive spending, padding the companies’ bottom lines. That helped Volkswagen’s U.S. business turn a profit in 2020 for the first time in eight years, Keogh said, following a revamp of its lineup from sedans to SUVs.

When semiconductor shortages eventually ease, Volkswagen plans to keep fewer cars on dealer lots, because it has proved to be more profitable for manufacturers and dealers, Keogh said.

“Going back to the days of having 100 to 120 days’ supply is not going to happen,” he said. “Now, people have 30 to 40 days’ supply and it’s working quite fine. Somewhere in that 40 to 50-day camp would be a beautiful thing.”

Does anyone remember all the talk about building resilience into the supply chain after the pandemic. The reality seems to be very different. Companies have found limited supply is working just fine for their businesses and they are achieving better prices than they thought imaginable only a couple of years ago.

Hope you are well in Dallas.

I have a question: why do you often mention that we have MMT in action right now?

MMT is not a policy adopted by government or central banks. They don’t “do mmt”

MMT is a theoretical framework that tries to explain how the monetary system works in a freely convertible and fiat currency system in which we have been living for 50 years now (and it explains it correctly to a large part in my opinion). it’s not the “policy ode making debt”. Isn’t it?

When you mention “MMT in action” you likely refer to the government demand for goods, services and the grant of subsidies / social securities payment / medicare /unemployment benefit to people etc. along with the debt issuance “to pay for” this spending. Finally the FED buying the government debt to “ease” the monetary conditions (the QE vs tapering).

But this is not “MMT”. Government spending has always existed and it is the second largest component of a country GDP (after “C” , private consumption). Look at the development of the US federal debt since the early 80es to the almost USD 28tn in 2021 / today. It does not matter who administered the country (super conservative or super liberal), they have all managed to expand the debt. And the market has always absorbed the “debt”. Have they been “doing MMT” for 40 years?

Thank you for your regular market updates... always appreciated

Thank you for this email which I believe will be of interest to the Collective. I agree there is nothing “modern” about MMT. Governments have a natural proclivity to spend and the freedom of fiat currencies inevitably leads to high debt loads. In that regard, the sustainability of debt regimes has been on a downward trajectory for a long time and people have been worrying about it for just as long. The bigger question is whether anything has really changed? 

That’s putting manufacturers in an unexpected competition with service employers for workers. Amazon likes to quote its average starting wage of $17 an hour at fulfillment centers in Michigan that comes with a host of benefits, a package that's likely better than a lot of entry-level or lower-tier manufacturing jobs for similar work. Thursday, Amazon upped the ante again, announcing that it will pay for some U.S. employees to get four-year college degrees.

A whole host of retailers pay $15 an hour or more — Walgreens announced it would do just that last month — and offer working conditions that are likely more comfortable and less hazardous than being on a factory floor. Would you rather make $15 an hour working at a sawmill or inside a Home Depot?

This is one reason manufacturers will end up embracing automation: They just can’t find a way to make jobs good enough to attract the workers they need relative to their ever-escalating service economy competition.

Service employers have spent the past several years improving the nature of their jobs, doing everything from increasing pay and benefits packages to relaxing dress codes and offering more flexible schedules. Manufacturing employers are realizing that they now have to do the same. They've got arguably an even heavier lift in front of them, given the riskier, more physically demanding nature of many of the jobs — and if they can’t manage to pull it off with humans, they might have to do it with robots.

Higher wages and the rising cost of compliance encourage automation. Low interest rates and abundant credit enable automation. Technology companies respond to both these trends by profiting from innovation.

The debacle highlights how cryptocurrency investors can profit from hoaxes. And with no central authority overseeing them, it’s unclear what companies can do in response. The statement included what was purported to be a quote from Walmart’s chief executive officer and resembled the official statements that public companies use to announce news to the market. 

While hoaxes that move asset prices crop up in financial markets from time to time, cryptocurrencies would seem to provide particularly fertile ground for deceivers. Unlike stocks, trading is mostly untraceable -- scammers leave few tracks for regulators. It takes very little to influence trading of notoriously volatile assets in the space. Traders have become conditioned to expect hysterical price reactions to the flimsiest news -- when, say, Elon Musk namechecks a project on Twitter.

Like many companies, Walmart has indeed expressed interest in cryptocurrencies and blockchain, however. The Bentonville, Arkansas-based retailer advertised a position earlier this year to develop a blockchain strategy. The position is responsible for “developing the digital currency strategy and product roadmap” and identifying “crypto-related investment and partnerships,” according to an August job posting on the company’s website. 

Cryptocurrencies are completely unregulated. I don’t think most investors/traders fully comprehend what that means. Essentially, anything goes and it is hard to pin down exactly what is and is not enforceable by law. That has created a wild west environment where every dirty trick that has been regulated out of the conventional markets has found new life in the crypto world. The fact so many floor traders from the money markets have found a new lease of life in the crypto markets is a testament to that fact.

The development suggests Evergrande has regulatory backing to negotiate with creditors on a piecemeal basis, as it tries to ease a cash crunch that has unnerved investors in China’s $12 trillion bond market. While the company’s main banks had discussed setting up a creditor committee as recently as last week to consolidate repayment decisions, lenders and regulators have decided to give Evergrande more time to solve its liquidity crisis before taking more drastic measures, people familiar with the matter said. 

Evergrande’s complex web of obligations to banks, bondholders, suppliers and homeowners has become one of the biggest sources of financial risk in the world’s second-largest economy. While China’s government has publicly urged the company to solve its debt problems, officials have yet to spell out whether they would allow a major debt restructuring or bankruptcy. Speculation over Evergrande’s fate has fueled outsized swings in its shares and bonds, with the latter rising from record lows on Thursday. 

Some lenders have indicated a willingness to be flexible on payment deadlines. Bloomberg reported last month that China Minsheng Banking Corp., China Zheshang Bank Co. and Shanghai Pudong Development Bank Co. had agreed to give Evergrande extensions on some project loans. Citic Trust, one of the developer’s biggest non-bank lenders, has given preliminary approval to a three-month extension on loans that were due in August, a person familiar with the matter said.

China Evergrande might yet default, but it is increasingly likely that the measures currently being taken will not result is a systemic crisis for the financial sector. That’s not a statement about the stock market since many of the most troubled property developer stocks carry low weightings but it should help to lend some confidence to investors worried about the trajectory of the economic recovery.

On November 24th I began a series of reviews of longer-term themes which will be updated on the first Friday of every month going forward. The last was on May 7th. These reviews can be found via the search bar using the term “Secular Themes Review”.

If it walks like a duck and quacks like a duck, it must be a duck. Wall Street is behaving like it is in a bubble. The most important thing is the bubble is still inflating.

Visa's head of crypto, Cuy Sheffield, said in a blog post that the main purpose behind Visa's purchase was to learn more about the growing market. "We think NFTs will play an important role in the future of retail, social media, entertainment and commerce," Sheffield wrote. "To help our clients and partners participate, we need a firsthand understanding of the infrastructure requirements for a global brand to purchase, store, and leverage an NFT."

He also said Visa wanted to signal its support for the creators, collectors and artists who are developing NFT commerce, as well as to “collect an NFT that symbolizes the excitement and opportunity of this particular cultural moment.” 

Sheffield further compared NFTs to the early days of e-commerce in which small businesses were empowered to sell online and reach customers worldwide. "We can envision a future in which your crypto address becomes as important as your mailing address," Sheffield wrote.

Visa paid $150,000 for a soundbite. If they are trying to make a market in nonfungible tokens that’s a small price to pay. It’s a sector that is exploding with interested counterparties. 

An interesting way to look at the Bitcoin price.

https://clockworkpartners.com/price/

Thanks for this insightful graphic which may be of interest to subscribers. Here is a section from the commentary:

The left chart displays the relationship between bitcoin's price on a given day (vertical axis) and four years before that day (horizontal axis). The right chart displays the trajectory of bitcoin's price vs. time. The radial axis (logarithmic) represents price in dollars per coin. The angle represents time (four years per cycle).

In both charts, each day is represented by a pink dot and the most recent day's dot is displayed within a blue circle. Price data are from Bevand and Coin Metrics.

Has anyone ever suffered a loss by purchasing bitcoin with dollars and holding it for four or more years? Will anyone?

From humble beginnings that resembled soggy pork back in 2009, to the classic steaks and rib-eyes we've seen pop up in the last few years, lab-grown meat has come along in leaps and bounds. The most sophisticated examples use bioprinting to "print" living cells, which are nurtured to grow and differentiate into different cell types, ultimately building up into the tissues of the desired animal.

The Osaka University team used two types of stem cells harvested from Wagyu cows as their starting point, bovine satellite cells and adipose-derived stem cells. These cells were incubated and coaxed into becoming the different cell types needed to form individual fibers for muscle, fat and blood vessels. These were then arranged into a 3D stack to resemble the high intramuscular fat content of Wagyu, better known as marbling, or sashi in Japan.

I tend to think of lab-grown meats in the same terms as lab-grown diamonds. They are technically the same thing as the naturally occurring variety but it is very difficult to convince consumers of that fact. Nevertheless, lab-grown diamonds have carved out an important niche in the precious stones sector and particularly in the market for smaller sizes.

Iron ore’s revival came after it lost about a quarter of its value in the past month, as China’s push to curb steel production hammered demand. But steel and other industrial commodities have rebounded this week, after China’s count of daily Covid cases fell back to zero and central bankers vowed to step up support for the real economy. Coking coal in China hit a record on Tuesday, while copper has also recovered amid signs that Chinese consumers are on a buying spree. 

“Iron ore just cannot be the only one lagging while everything else in steel space is massively bid,” Xiaoyu Zhu, a metals trader at StoneX Financial Inc., said by email. “After the price spike in coal products in the last two days, it’s hard for iron ore to stay quiet.”
 

Steel is as essential to economic development as it has ever been and that makes it a important component of global economic revival. The challenge for China is they have vast oversupply of manufacturing capacity for the alloy and rationalising it is an erstwhile priority.

For example, Collins found that, according to 19 survey respondents so far, Facebook is offering an average annual salary of $109,526 with a massive signing bonus of $79,737 for employees in technical roles like iOS or full stack developer, or software or network engineer.

By comparison, according to 31 survey respondents, Google is paying recent graduates in tech roles an average of $107,000 annualized salary with an average signing bonus of $27,327.

And Microsoft was offering new grads a $107,455 annualized salary with a $26,591 signing bonus, according to 22 respondents.

Looking at the self-reported salary and bonus data by job title, Collins found that software engineers and developers are out-earning their peers in user experience design and sales engineering by tens of thousands, annually.

And even though government salaries are presumed to be much lower than those in the private sector, working in tech in a government office will score entry-level engineers and developers a slightly better salary, on average, than working for a seed- or Series A-stage startup, the survey suggests.

There has been a great deal of commentary in the media about the starting salaries of graduates in the financial sector.

In some respects, it is a matter of supply and demand. The financial sector is now competing for the same graduates as tech companies and are being forced to pay up.

China's MingYang Smart Energy has announced an offshore wind turbine even bigger than GE's monstrous Haliade-X. The MySE 16.0-242 is a 16-megawatt, 242-meter-tall (794-ft) behemoth capable of powering 20,000 homes per unit over a 25-year service life.

The stats on these renewable-energy colossi are getting pretty crazy. When MingYang's new turbine first spins up in prototype form next year, its three 118-m (387-ft) blades will sweep a 46,000-sq-m (495,140-sq-ft) area bigger than six soccer fields.

Every year, each one expected to generate 80 GWh of electricity. That's 45 percent more than the company's MySE 11.0-203, from just a 19 percent increase in diameter. No wonder these things keep getting bigger; the bigger they get, the better they seem to work, and the fewer expensive installation projects need to be undertaken to develop the same capacity.

The overall result should be a drop in offshore wind energy production prices – a sorely needed drop, too. Current levelized costs of energy, as estimated by the US Energy Information Administration for new energy generation assets going live in 2026, place offshore wind as the most expensive way of generating a megawatt-hour right now, at US$120.52, where ultra-supercritical coal is more like $72.78 and standalone solar is around $32.78 before subsidies.

Obviously, wind fills in gaps that solar can't, and it'll be a crucial part of the energy mix going forward. Scaling the industry up with these mammoth turbines is the key reason why industry experts are predicting that the cost of offshore wind will drop by between 37 and 49 percent by 2050, as reported by Renew Economy.

MingYang says the MySE 16.0-242 is just the start of its "new 15MW+ offshore product platform," and that it's capable of operating installed to the sea floor or on a floating base. The full prototype will be built in 2022, installed and into operation by 2023. Commercial production is slated to begin in the first half of 2024.

The challenge for the wind sector is that many of the best locations have been taken up by turbines that are not nearly as powerful as the models currently being marketed. In many respects the wind sector is suffering from the same dilemma as the oil sector. How do you introduce new technology to an area where you have already sunk significant resources?

Asset managers have been trying to persuade regulators to green-light bitcoin ETFs for nearly 10 years. So far, the SEC has rejected or delayed a decision on the funds. The regulator has taken a cautious approach to regulating the volatile crypto market. The digital assets have boomed in popularity with amateur traders and a growing number of professional money managers.

Speaking at the Aspen Security Forum, Mr. Gensler said issuers who structure ETFs under the Investment Company Act of 1940 would help protect investors from illicit activities. The decades-old law is a more stringent set of guidelines that usually apply to mutual funds. For example, it requires an independent board and gives a fund the ability to stop accepting new money -- something most ETFs can't do.

"I look forward to the staff's review of such filings, particularly if those are limited to these CME-traded bitcoin futures," Mr. Gensler added. CME Group Inc.'s bitcoin futures contracts started trading in late 2017.

Unlike crypto exchanges, trading venues such as CME have agreements with the SEC, giving the regulator greater oversight.

Despite the additional safeguards, investors in such funds would have to deal with issues associated with trading futures, as well as the risks around cryptocurrencies.

Todd Rosenbluth, head of ETF and mutual-fund research at CFRA, warned that futures-based ETFs rarely replicate the performance of the underlying market they track. The reason is pricing fluctuations between futures contracts and the spot market, especially if demand for the asset or commodity is expected to change significantly in the future. There are also costs associated with rolling over contracts when they expire.

"It's likely that some of the investors who gravitate toward these products will either be disappointed in the performance or unaware of the risks they are taking," Mr. Rosenbluth said.

Futures based ETFs do not typically adopt sophisticated measures to tackle control roll costs. That leaves them open to be exploited by short sellers when the predictable contract expiries occur and contributes to their underperforming the market. The US Oil Fund’s dismal performance relative to the oil prices is a good example of this tendency.

Still, it’s probably too soon to declare an end to the shortage. Outbreaks of the delta variant of Covid-19 and the long-term efficacy of vaccines make predictions even harder than usual. Some chip analysts have said that reports of weakness are primarily seasonal and that sales will pick up through next year.

Shortages also vary by part. So even if you can walk into a store and find plenty of laptops, you’ll still struggle to get a new car or a video game console. In some cases, chip delivery times are longer than 20 weeks, the longest wait in at least four years.

But as I wrote last month, the pandemic rush to computers and printers won’t repeat itself. Once a worker or student buys a laptop, they don’t need another one for several years. Retailers are offering extensive discounts on nearly every PC-related category, with the exception of graphics cards. (It’s still a good time to be in the games business.)

Semiconductors have an outsized impact on inflationary measures these days because of the reliance of the automotive sector on microcontrollers. Transportation represents 15.7% of the CPI figure and 9.8% of the PCE figure.

“Typically we look at that as more of a strong-handed rally, which implies that the leverage portion of the rally comes later,” Ouellette, FRNT’s co-founder and chief executive officer, said on Bloomberg’s “QuickTake Stock” streaming program. “If that is the case, those $100,000 targets are very reasonable, I’d suggest. The last time we saw a move of this little leverage, we were pointing towards $20,000, and we didn’t really see the leverage come into the market in an aggressive way until we got to $40,000, which took us to $65,000.”

This is how all bull markets evolve. When prices are just breaking out there is no evidence that the price is about to multiply so few people are invested. As evidence becomes apparent more people are willing to commit funds. By the time prices accelerate people are jockeying to buy as much as they can because there is already so much evidence to support the bull market hypothesis. That final stage is usually when the most leverage is present.

The potential transaction is the latest example of U.S. buyers eyeing U.K. aerospace. Cobham Ltd., the U.K. defense contractor that was acquired by U.S. private equity firm Advent International Corp. in early 2020, has made a 2.6 billion-pound buyout approach for Ultra Electronics Holding Plc. The government scrutinized the first Cobham deal and said it would do the same for the Ultra proposal. TransDigm completed the acquisition of Cobham’s communications and navigation division in January, after competing with buyout funds for the unit.

The company’s balance sheet could support a deal of around $10 billion, analyst Sheila Kahyaoglu of Jefferies, told clients Wednesday. The deal could be funded in the debt market, but leaves a tight window and may require $1 billion of equity, she wrote in a report, adding: “This could have been one reason for an over the top bid if financing was not arranged yet.”

The UK has a world class aeronautics industry that is trading at fire sale prices because of the massive decline in civilian plane traffic. The pandemic has created a dislocation on par with 9/11 but has lasted for 18 months instead of 2 months. That’s forced companies to trim growth expectations and to sell off non-core assets in an effort to survive. That’s creating an opportunity for better capitalised longer-term investors.

40 minutes but really good (essential) analysis of where we are now with the virus. Martenson has been an excellent guide throughout. One for the collective perhaps. 

Thank you for this informative video. The primary points are that the delta variant is much more transmissible that previous versions of the novel coronavirus but it is less deadly. That stands up to logic. If the transmissibility is indeed anything approaching that of chickpox, everyone will be exposed to the delta variant in a short period of time. The UK’s high case count but low death count confirm it is less deadly. India’s experience, as the country where delta evolved, suggests a rapid flare up of cases and equally rapid decline as something approaching herd immunity is reached.

Hackers returned about half of the $610 million or so they pilfered Tuesday in what was likely one of the biggest cryptocurrency thefts on record in the burgeoning DeFi sector. 

In an unusual twist, the online thieves pledged to return the entire amount stole from a decentralized finance, or DeFi, a protocol known as PolyNetwork that lets users swap tokens across multiple blockchains. 

In a message the unidentified hackers said that they “just dumped all the assets,” adding, “hacking for good, I did save the project.” About $258 million has been returned so far, according to Tom Robinson, co-founder of blockchain forensics firm Elliptic.

Even more brazen, the hackers are asking for donations as a reward for returning the funds. So far, they’ve garnered $200, Robinson said.

The hackers also posted a Q&A online, explaining motivations for the attack as “for fun:).” The online pirates said they took the funds “to keep it safe” after spotting a bug. The hackers ended the missive saying they will be impossible to trace. “I prefer to stay in the dark and save the world.” 

Elliptic, as well as scores of cryptocurrency exchanges and trackers, have been on the hunt for the hackers. Thousands of people were affected by the attack, PolyNetwork said in a letter posted Tuesday on Twitter.

“This demonstrates that even if you can steal crypto assets, laundering them and cashing out is extremely difficult, due to the transparency of the blockchain and the use of blockchain analytics,” Robinson said. “In this case the hacker concluded that the safest option was just to return the stolen assets.”

DeFi apps -- which let people lend, borrow and trade coins without using intermediaries -- have become frequent targets of attacks lately, as they gain in popularity. Some $156 million was netted from DeFi-related hacks in the first five months of the year, surpassing the $129 million stolen in such attacks through all of 2020, according to crypto security firm CipherTrace.

The risk of having one’s tokens stolen while they are sitting on an exchange is never zero. The fact these hackers are willing to give the money back is novel but it also helps to highlight the risks. The big difference on this occasion is this kind of news seems to have lost its ability to heavily influence the price of cryptocurrencies.

I wondered if you had come across HydrogenOne. The Investment Trust came to market on 30 July.  The trust has not yet invested in any assets but its website outlines what it sees as its worldwide "investable universe" of assets and also describes in outline how it will identify potential investments. Sir Jim Ratcliffe and INEOS have a stake.

What I found particularly interesting and enlightening is that they have produced a "bluffers guide" to hydrogen which is attached (and is also on their website). Subscribers might also find this useful.

https://hydrogenonecapital.com/ and 
https://hydrogenonecapitalgrowthplc.com/ (for investor info)

Thank you for this informative email which I’m sure will be of interest to the Collective. I have added HydrogenOne Capital Growth Plc to the Chart Library.

Here is a section from the report:

We expect material green hydrogen manufacturing to commence, particularly in around the high-quality wind resources in the North Sea (UK, Netherlands, Denmark), the wind and solar resources of Southern Europe, Middle East and Australia. We expect many of these activities to be clustered around industrial zones and ports, with off-takers in incumbent hydrogen[1]consuming sectors and centralised bus and truck fleets.

Hydrogen fuel cells have been deployed at commercial scale in selective transport applications, such as fork lift, city buses, and portable power generators. We expect to see rapid build out of these applications to continue, particularly in the multiple countries and cities that have committed to early phase out of ICE transport. Much of this hydrogen will be derived from dedicated hydrogen hubs, which will have offtake agreements and supply logistics configured to specific transport fleets, industrial sites and other customers.

2025-2030.
In this timeframe, we expect to see the emergence of larger clean hydrogen manufacturing sites, with a more rapid pace in growth in green hydrogen ahead of other sources, at 500MW or larger scale. As intermittent and seasonal renewable energy grows in the overall mix, the requirement for energy storage for system buffering will be met by geological storage of hydrogen and Compresses Air Energy Storage (CAES). Blending technologies and mandates to distribute hydrogen via modified natural gas infrastructure will become widespread.

Hydrogen should be more widely available to short term contracted and spot market customers at this time.

We expect to see the deployment at scale of hydrogen used for building-scale heat and power (“CHP”), and hydrogen burned in modified turbines at large scale power plants, which are in the pilot stage today. A wider uptake of hydrogen in trucks, trains and shipping will come alongside the buildout of HRS. We expect to see hydrogen introduced more widely by blending with natural gas in modified natural gas grids.

2030 and beyond.
In the longer term, once single hydrogen production projects have been scaled up to 1GW and beyond, and distributed projects have been successfully built-in industrial centers and ports, we expect that hydrogen use will move into the public consumer areas. At this point fuel cells could be economic for passenger vehicles, particularly heavy applications such as SUVs. Hydrogen will likely have been rigorously tested in the aerospace industry and hydrogen powered aircraft could be in mainstream use, either in fuel cells for turboprop, or via synthetic fuels in jets.

Arber and his team, including Dr. Shiran Shapira, developed the drug based on a molecule that the professor has been studying for 25 years called CD24, which is naturally present in the body.

and

Arber noted that another breakthrough element of this treatment is its delivery.

“We are employing exosomes, very small vesicles derived from the membrane of the cells which are responsible for the exchange of information between them,” he said.

“By managing to deliver them exactly where they are needed, we avoid many side effects,” he added.

The team is now ready to launch the last phase of the study.

“As promising as the findings of the first phases of a treatment can be, no one can be sure of anything until results are compared to the ones of patients who receive a placebo,” he said.

Some 155 coronavirus patients will take part in the study. Two-thirds of them will be administered the drug, and one-third a placebo.

The study will be conducted in Israel and it might be also carried out in other places if the number of patients in the country will not suffice.

“We hope to complete it by the end of the year,” Arber said.

If the results are confirmed, he vowed that the treatment can be made available relatively quickly and at a low cost.

“In addition, a success could pave the wave to treat many other diseases,” he concluded.

Many doctors have stated that using wartime phraseology to talk about the efforts to treat the coronavirus are unhelpful. However, there is one important crossover worth considering. Wars tend to result in significant technological acceleration.

Humanity will have about a 50% chance of staying below the 1.5°C threshold called for by the Paris Agreement if CO₂ emissions from 2020 onwards remain below 500 billion tons. At the current rate of emissions, that carbon budget would be used up in about 13 years. If the rate doesn’t come down, the planet will warm more than 1.5°C.

“Our opportunity to avoid even more catastrophic impacts has an expiration date,” said Helen Mountford, vice president of climate and economics at the World Resources Institute. “The report implies that this decade is truly our last chance to take the actions necessary to limit temperature rise to 1.5°C. If we collectively fail to rapidly curb greenhouse gas emissions in the 2020s, that goal will slip out of reach.”

The new publication lands in the middle of the ramp-up to COP26, to be held in Glasgow in November. A global deal to pursue faster emission cuts would depend on poor countries securing $100 billion a year in climate finance from rich countries, something envisioned in previous climate agreements
but not yet achieved. National governments would also need to agree to rules governing the trading of emissions permits, to ensure those moving faster towards cuts are rewarded for doing
so.

The amplification of worries about the trajectory of the “climate emergency” has been building well in advance of the publication of this report. There is a clear set of policies being adopted to ensure much of the existing industrial base is going to have to fund the construction of alternative infrastructure.

In the short term, Chinese leaders have an incentive to maintain strict controls at least through next year: They don’t want any major outbreaks derailing the Winter Olympics or clouding a once-in-five-year Party Congress at which President Xi Jinping is expected to get a third term in office. The problem, however, is the rising economic and political costs in maintaining that policy indefinitely, particularly as the virus spawns new variants that can breach restrictions more easily.

“China will have to pivot from its containment strategy, sooner or later -- you can stay Covid Zero for a while, but you can’t stay Covid Zero forever, because the virus swoops in before you know it,” said Chen Zhengming, an epidemiology professor at the University of Oxford. “My worry is that they won’t actively pursue a tactic change as Covid Zero has become an entrenched mentality. Especially when you hold officials accountable, no one dares to go easy on the outbreak.”

Right now it’s nearly taboo in China to even suggest a different approach. In a commentary published over the weekend by a health news app run by the official People’s Daily newspaper, former health minister Gao Qiang called for stronger measures to keep the virus out of China while blasting the U.S.,
U.K. and other countries for easing too early.

“Their sole reliance on vaccination and pursuit of the so-called ‘co-existence with the virus’ have led to a resurgence of the virus,” he wrote. “This is a misstep in Covid decision-making caused by the deficiencies in their political mechanism and the result of upholding individualism.”

China’s spreading lockdowns are already having an economic impact as coastal manufacturing centres deal with a sudden shortage of workers. The longer lockdown orders remain in place the greater the potential the government will need to provide additional monetary assistance.

On November 24th I began a series of reviews of longer-term themes which will be updated on the first Friday of every month going forward. The last was on May 7th. These reviews can be found via the search bar using the term “Secular Themes Review”.

We are 17 months on from the panic low in 2020. At this stage it is quite normal to marvel at the speed of the advance and worry that the pace can’t possibly be sustained. The abiding sentiment is something like “surely, the world is not nearly as good as it was before the pandemic and therefore how on earth can prices be so high?”.

The world is not as good as it was before, millions of people have been deeply inconvenienced and many are traumatized by the events of the last 17 months. The counter argument is the quantity of money in circulation has only been matched during wartime and that has helped to inflate the price of everything. That’s the key to the argument. Having spent so much to achieve this recovery does anyone really believe central banks are going to endanger it? So where do we go from here?

EIP-1559 has excited people because it will destroy or "burn" ether - the cryptocurrency of the network.

Miners do not receive the base fee; otherwise, they could artificially congest the network to keep the fee high. It's destroyed instead.

Some investors believe the fact that the supply of ether will be limited by burning could cause explosive price growth.

But the influence on price is far from certain, developers say. It also depends on things like transaction volumes, which determine how big gas fees are and so how much ether is destroyed.

"Until it's deployed, we don't know exactly what the effect will be in terms of ether burned," Ben Edgington, an ethereum developer at ConsenSys, said.

Reducing supply is beneficial for the price provided there is sufficient demand. The actions being taken to reduce uncertainty about transaction fees are a small step towards building confidence in the network.

Manmade global temperature increases can only be limited to 2°C if significant additional efforts are undertaken to become carbon-free in 2100

Is the limit of 2°C enough? To keep the global warming below 2°C had long been regarded as the right target measure to limit the most dangerous risks. More recently, 1.5°C has been considered safer, which requires rapid, far-reaching, and unprecedented changes across all aspects of society.

I posted a podcast featuring Jeremy Grantham a few weeks ago. He is a very vocal advocate for decarbonisation but he also echoed this prediction that limiting emissions to 2% was nowhere near enough. He also opined that the trend of climate change is irreversible anyway. Those are two extremely important considerations. 

less crackpot epidemiology, more market analysis please

Thank you for this email. I have never considered myself a crackpot but who does? The reality today is there is a war going on for the hearts and minds of the global population. A connected world has not allowed every voice to be heard, only the loudest and best funded. The raw appeal of emotional rhetoric animates the online mob in the same way as it has always done for crowds of agitated people.

I agree there is crackpot epidemiology everywhere but there is far less commentary on crackpot epistemology. The basis of reason and thought are under outright attack today and the other side is winning.

Anyone who questions the prescribed narrative on the response to the virus, environment, race, entitlement, sexuality and any of a host of topics is vilified, cancelled and/or doxed. Crowds are powerful discriminatory and are vicious towards doubters. That hasn’t changed but the crowds are bigger today and physical proximity is not a limiting factor.

In this service my role is to lay out what I believe are relevant considerations for a rational investor as we act as judges at an international beauty competition.

Would be very interested in your thoughts for positioning an investment portfolio (retirement monies) at this point in time. It is increasingly difficult for me to envision what could spark a leg up in the US equity markets in the near term. A leg down at some point feels more probable, yet I am not one for market timing. Nevertheless, increased uncertainty and volatility look to be on the menu for an extended period of time as the markets and Fed wrestle with the curtailing of the liquidity which has fueled the market's run. Is simply pruning equity positions and building cash the most reasonable course of action?

The FullerTreacy service is outstanding and all the more valuable at times like these. Thank you for your thoughts.

Thank you for this question and I am delighted you are enjoying the service. I write a long form summary of my views on the first Friday of every month so I will take this topic up again there.

The big question for investors is how long will the steady rise in the stock market persist? It’s easy to be derailed by valuations and predictions of imminent doom. Instead, let’s focus on consistency and money flows.

China may have questioned the ethics of for-profit tutoring companies in the past. But it did not really act until the enterprises were flooded with speculative venture capital money.

The government saw that as investors hijacking its state-dominant education sector with huge amounts of capital. And so it put a stop to that liquidity train. 

The market-oriented Chicago school of economics acknowledges that a benevolent dictatorship — with the assistance of cumbersome bureaucracy — can be as efficient for social and economic development as a well-ordered competitive marketplace. China — which sees itself as a benevolent authoritarian regime — has tried to maintain efficient capital markets. Now, it’s having second thoughts. In Beijing’s view, hot money is not heading where officials want it to go. Indeed, it was on the point of creating competing power centers that could rival the central government. 

So what can be read from these tea leaves? Stay away from where the hot money is going. Sooner or later, China will curb that enthusiasm and send the sectors into a crash landing. 

The primary aim of an authoritarian regime is to sustain single party rule. Everything else comes after that. China’s administration understands that online forums of any kind represent a point where state control can end. They are also keen to ensure that capital flows only to favoured sectors. Absolute control and the micromanagement it engenders, were some of the primary arguments against the potential success of communist regimes. It remains to be seen how far this trend of increasing authoritarianism will go.

Axie Infinity is tapping into the growing play-to-earn trend, which essentially means making money to play games. But instead of high-fidelity esports tournaments and multi-million-dollar Twitch live streams, the economics of Axie is built into the game. 

Each Axie, for example, is worth real money. Same for the AXS token and the Smooth Love Potion (SLP) token, which you also need to breed more Axies. Essentially, every in-game earnable can be resold for cash, and all you need to do to pick up said earnables is simply play the game. 

The money earned is sometimes enough to pay the bills too, with many players in the Philippines effectively able to make a living wage from playing the game. And as the protocol’s mounting treasury shows, these same players are also keeping Axie Infinity afloat during this summer’s bearish crypto slump. 

I pay attention to computer gaming business models because they represent a window into how the emerging sector sees value creation. The free to play model has been around for a while not and sale of downloadable content and “skins” has exploded. Axie Infinity is a significant iteration of that model.

The company is also planning on bringing more of the component production in-house, including major pieces such as the body panel stampings, the spokesman added. These parts were being handled by an external supplier.

The Casa Grande City Council approved the plans to expand the nearly 1 million-square-foot space in March. The first phase of the factory, which cost around $700 million to construct, went up in a record 12 months after breaking ground. Lucid has said that it wants to expand production capacity from around 30,000 vehicles per year to up to 400,000.

Lucid has had a long, sometimes tenuous road to the public market. The company first set its sights on bringing an electric sedan to production as early as 2018, but it quickly hit funding challenges that pushed this timeline further and further back. Lucid received major funding in 2018 with a $1 billion investment from Saudi Arabia’s sovereign wealth fund, which continued to be its largest shareholder throughout Lucid’s merger with special purpose acquisition company Churchill Capital IV Corp.

That merger hit a bit of a hiccup last week when the company failed to garner a sufficient number of votes on a key proposal — likely due to the rise of retail traders and malfunctioning spam filters, executives said in an investor call.

The adage that imitation is the sincerest form of flattery is particularly true for the electric car market. Tesla’s success in both creating a product people want and monopolising the sale of carbon credits, often directly to is competitors, has bred a large number of imitators.

This lack of long-term protection against infection means that herd immunity is probably impossible and that the virus will become endemic and continue to circulate in human populations. If this happens and the disease then stabilises, such that case numbers are constant across the population, neither increasing nor decreasing, it will have reached what’s called an “endemic equilibrium”.

So is this what we’re now witnessing? Possibly. One of the basic models of how infectious disease cases change over time is called an SIR model, which looks at how many people are susceptible to a disease, infectious with it or have recovered from it (and so are immune) at any one time.

With this model, cases increase rapidly at the start of an epidemic as lots of people are susceptible, become infected, and go on to infect other susceptible people. But as infections mount, over time fewer people are susceptible and more have recovered. The rate of growth therefore decelerates, the epidemic reaches its peak, and then case numbers decline to an endemic equilibrium point, where they remain roughly stable.

A leaked CDC document has been circulating today with a claim that the Delta variant is as contagious as chickenpox. That news is enough to make anyone worried. The fact that this variant is also more likely to result in acute sickness is doubly worrying. With 110,000 confirmed breakthrough cases in the USA there is a palpable sense of worry that news is about to get worse. Meanwhile, the UK’s number of cases has peaked and is falling quickly. That should act as at least a partial salve to those worries.

A resurgence of virus infections thanks to the delta variant is likely to mean sustained demand for vaccines around the world. Further, it is widely expected that many people could require booster shoots to bolster the immunity gained in the initial round of immunizations.

Pfizer said in a presentation accompanying its earnings release that emerging real-world data “suggests immunity against infection and symptomatic disease may wane,” underscoring the need for boosters.

The company said regulators will determine “whether, and which, populations to recommend booster,” and that they will likely first focus on those with compromised immune systems and older adults.

The ideal business model for any pharmaceutical company is to develop a treatment for an unmet but dire chronic condition. Diabetes is the perfect example. There is no cure and treatments are both necessary and tend to increase in magnitude as the disease progresses. Each patient represents a growing cashflow for as long as they live following a diagnosis. Viagra was also a blockbuster because it catered to an unmet need but did not cure it. 

Bitcoin rose above $40,000 for the first time since June as a flurry of short-covering intensified a rally apparently sparked by speculation over Amazon.com Inc.’s involvement in the crypto industry.

A job posting from the retail giant seeking an executive to develop the company’s “digital currency and blockchain strategy” stirred questions among analysts over whether the move could eventually lead to Amazon accepting Bitcoin as a method of payment.

As the largest digital token gained on the speculation, investors rushing to cover bearish bets fueled the rally, with the coin at one point up more than 17% on Monday to $40,545, its highest since June 15. More than $950 million of crypto shorts were liquidated on Monday, the most since May 19, according to data from Bybt.com.

“The extent of the jump was probably driven by over-leveraged shorts,” said Vijay Ayyar, head of Asia Pacific at crypto exchange Luno in Singapore, while adding the rumors over Amazon likely had a role to play, too.

This weekend produced a bevy of crypto pundits who turned out to lend the ailing market a helping hand. Elon Musk, Cathie Wood and Jack Dorsey all provided arguments for why prices should rise. The CEO of MicroStrategy has also been progressively more vocal about his bullish position. The potential for Amazon to become more active in the sector has already encouraged even more participation. 

“It’s going to be worse before it gets better,” with shutdowns and staff disruptions increasing in Asia, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. “Places like Vietnam that largely avoided locking down cannot maintain an open posture. With vaccinations painfully slow, I assume more shutdowns in factories, with the ripple effects felt elsewhere.”

Trade in goods has been a rare buffer for the Covid-ravaged global economy -- especially for export-heavy Asian countries -- but the latest reports show cracks in this growth pillar. The delta variant-driven surge has hit Southeast Asia especially hard, underscoring the delicate choices for policy makers who are balancing vaccination drives and mobility restrictions while trying to keep their economies afloat.

The manufacturing pain is especially acute in Vietnam, where officials have taken drastic steps to ensure factories can continue operating. In some instances, electronics and tech companies have had workers sleep overnight on-site.

The garment industry, with lower profits and more workers, hasn’t been able to replicate that effort. Feng Tay Enterprise Co., Pou Chen Corp. and Sports Gear Co. are among manufacturers that have suspended some operations in Vietnam.

My 13-year-old informed Mrs. Treacy yesterday last night that they had to go to the Nike store because the shoes she wants for school were sold out online. Her rationale was most people begin shopping for school in August so now was the time to make the purchase. They dutifully made the journey and secured the shoes while witnessing numerous kids making Snapchat videos with their purchases.

For many others, the potential outweighs the downsides. With almost half its 1.3 billion people accessing the internet via smartphones, a bet on Zomato represents optimism that India’s tech upstarts could go the way of the U.S. or China, particularly as India’s internet infrastructure remains nascent and consumers are just getting used to buying online.

“This is how it is supposed to work. Nine out of 10 will fail,” Goyal, who is barred from commenting in the run-up to the listing, said in an earlier interview. “But the one that thrives will be a spectacular success.”

Fund-Raising Blitz
In previous conversations, Goyal recounted how he first got the idea for an online service when, as a math and computer science student at the Indian Institute of Technology, he was particularly frustrated with a pizza order. His resolve strengthened after he graduated and joined Bain, where he saw colleagues in the company cafeteria skimming the limited menu and talking longingly about food at nearby restaurants.

Goyal and Chaddah started uploading menus of neighborhood cafes and restaurants onto the company intranet, with phone numbers. That was a huge hit with coworkers, driving a weekend venture they christened foodiebay.com. After his wife got a teaching job at Delhi University, Goyal quit to pursue
entrepreneurship full-time, shrugging off the onset of the global financial crisis.

In the India of a decade ago, entrepreneurship was frowned upon and Goyal didn’t tell his parents -- both teachers -- until much later. In the first year, the startup began by listing thousands of restaurants in India’s six biggest cities. Then came an email from entrepreneur-turned-investor Sanjeev Bikhchandani, who invested $1 million through his Info Edge India Ltd.

4G is having the same effect on the Indian economy as it has had everywhere else. The spectrum of online services available has increased significantly which is benefitting the banking, entertainment and nascent social sectors. Food delivery services have sprung up everywhere mobile broadband access becomes available. India is no different.

Chief Executive Officer Peter Wennink said that trend, which he called “technological sovereignty,” will also boost orders. The company has historically underestimated how quickly the industry would grow in the past 15 years and Wennink said it’s working to boost manufacturing to keep up.

“Clearly we’ve seen in 2021, the reaction of the industry at large, the electronic industry, to the Covid year,” he said, predicting that “the catch up effect that will stretch into 2022.”

ASML is also discussing ways of increasing supply capacity of both its new and older machines, including increasing headcount and floorspace. Longer term, demand will be driven by advanced chips needed to run artificial intelligence and high-powered computing as well as the proliferation of sensors needed for gadgets like connected home appliances.

The shares rose as much as 4.6% to 609.40 euros in Amsterdam. The stock has jumped 51% this year. That compares with a 20% gain on the Stoxx 600 Technology Index.

New technologies that will rely on faster 5G networks in devices from laptops to cars to home appliances will drive 35% growth in the company’s logic business this year, as the less advanced chips that help run sensors in these devices see higher demand, Wennink said.

ASML has a monopoly in the production of chip manufacturing technology. That puts the company in a special position to benefit from increasing demand. With that kind of advantage one might reasonably ask what can go wrong?