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Labor Action Hits London Tube As UK Transportation Network Grinds To Halt

Labor Action Hits London Tube As UK Transportation Network Grinds To Halt.....»»

Category: smallbizSource: nytAug 19th, 2022

How Amazon Became the Largest Buyer of Renewable Energy in the World

Amazon is now the largest buyer of renewable energy as it races to reach net zero and helps drive an energy boom When Richard and Carson Harkrader first heard that 696 acres of North Carolina farmland had come up for sale, in 2016, one feature of the rolling landscape particularly caught their attention: the power lines that sliced across it as though someone had dog-eared its map. Hard up against the Virginia border, it was a pretty spot—pretty enough that a home builder would eventually take a quarter of the acres for a lakefront subdivision. But for the Harkraders, father-and-daughter operators of Carolina Solar Energy, an independent developer of solar-energy projects, the prettiest thing of all were those heavy-duty transmission lines that arced to the northwest, lacing into the PJM Interconnection, the giant electric grid that dominates the mid-Atlantic. [time-brightcove not-tgx=”true”] “It was kind of a gold rush,” the elder Harkrader says one morning this summer, standing amid the hundreds of thousands of glistening black panels, now known as Hawtree Creek Solar Farm, that follow the curve of the hills and tower over our heads. By midmorning the panels are sending 34 megawatts out to the grid, about the same as 10,000 backyard generators buzzing at once. By noon, it’s 65 megawatts—the maximum the grid will take. “I still think it’s magic,” Harkrader says. “Take sunlight and … boom!” Except the only noise is the occasional creaking of their steel frames, as small motors tilt the panels to follow the arc of the sun across the Carolina sky. About 200 miles north, in Virginia, are the eager buyers of that electric gold: the mega-technology companies, like Amazon, Microsoft, and Google, that operate giant data centers essential to our daily lives, whether we’re ordering on Prime or backing up family photos. Under pressure from customers, employees, and shareholders—and, arguably, out of their own eagerness to reduce emissions—they have been increasingly determined to run these data centers on renewable energy. Once the Harkraders had secured the new solar farm’s preliminary permits and permissions—making a plan to accommodate local deer and joining the crowded “interconnection queue” to plug into the grid—they leased the land to Engie, a French energy giant that builds and operates more than 4,500 megawatts of solar power around the world. And then, before the panels had even arrived on site for installation, Engie in turn struck a deal to sell all the site’s power to a single company: Amazon. That financial and legal arrangement, known as a PPA (power purchase agreement), has been a crucial force in the U.S.’s transition to clean energy. Of the approximately 235 gigawatts of wind and solar capacity now installed on the nation’s grid, nearly one quarter (more than 52 gigawatts) has been contracted by corporations, mostly over the past decade. That vigorous—and notably voluntary—corporate action has boosted a web of wind and solar manufacturers, developers, and operators. It has made renewables cost-competitive and helped grid operators learn to manage systems with more variability. As the modern mortgage made the suburbs, the PPA has made the renewables industry. It bridges the economic needs of renewable–energy developers with the climate goals of corporate executives and shareholders. Solar panels and wind turbines are expensive to build but cheap to operate, given that their fuel—sunlight and fresh air—are free. By guaranteeing the electricity will be sold long before it’s been generated, a PPA gives banks confidence to front the money for construction—especially when there’s a giant corporation guaranteeing the deal. In the way that power grids work, all that electricity isn’t wired directly to these companies’ facilities, but adds more juice to each region as a whole. But the way that PPAs work means the companies can legitimately argue that these giant renewable projects wouldn’t have happened without them. PPAs stitch together developers like the Harkraders, energy operators like Engie, electric grids like PJM, and—above all—the large companies hungry for power from renewable sources. ROGER KISBY—REDUXAmazon delivery trucks line up to enter the Amazon DAX3 delivery station on Jan. 12, 2022 in Chatsworth, California. They also set up the biggest corporate power purchase of all: Amazon has leveraged that ecosystem to go on the largest ever solar and wind shopping spree, buying 15.7 gigawatts globally over the past three years, nearly equal to the prodigious energy demands of the $1.4-trillion company. Like an early shopper on Black Friday, Amazon’s fervor has been felt across the industry—while also giving a glimpse of the incredible growth still to come, with the arrival of $369 billion in federal funds provided by the Inflation Reduction Act (IRA). Understanding this key driver of the past decade of solar and wind development helps us see what is likely to happen next: an unprecedented boom in renewable energy that could form a significant wedge in the broader effort to reduce carbon emissions and limit the warming of the atmosphere. “If it was a market that only waited till something was built—and then you went out and tried to sell the -electricity—these projects wouldn’t get done,” says Harkrader. “People like Amazon, or Microsoft, Walmart, Target—on and on—are standing up and making this market possible. And it’s exploding.” These days, Amazon is the hungriest of all. The behemoth was not the first to buy renewable power for its operations, but it is now buying the most. The plans it has announced, globally, amount to the equivalent of around 250 more Hawtree Creeks, and more or less equal to all the solar generation built in the U.S. last year. The buying spree is part of Amazon’s broader effort to reach “net-zero carbon” by 2040—meaning it will eliminate or offset the carbon emissions from all its operations, including trucks, planes, and manufacturing. That won’t be easy. An estimated two-thirds of American households are Amazon Prime members; it is almost impossible to use the internet without accessing an Amazon data center. Since it announced its climate goal in 2019, Amazon’s emissions have grown 40%—as its sales have grown more than 50%. “The path to achieving some of our goals will be long and complex,” acknowledges Kara Hurst, who leads Amazon’s sustainability efforts. But clean electricity is Amazon’s climate bright spot. With today’s technology—and a fat checkbook—the company has nearly eliminated its use of dirty energy, prioritizing the hard realities of glass and steel over tree planting or tricky accounting, building at a scale that rivals that of many countries. Amazon has catapulted itself to the front ranks of corporate buyers, contracting last year for more than double its nearest competitor, Microsoft. Read More: The Future Is Being Written By Climate Devastation and Green Investment For the past decade, in the absence of major climate legislation and in the face of a complex patchwork of regulations that limited the ability of utility companies to build renewable power, PPAs have done the job. But the IRA—the most substantial piece of climate-focused legislation the U.S. has seen—takes that progress and adds billions of dollars in federal incentives. “It supercharges both the role and the potential for customers to drive even more of this,” says Brynn Baker, senior director at the Clean Energy Buyers Association. The latest predictions are gargantuan. Solar developers expect to install more than 215 gigawatts of capacity over the next five years—40% more than was expected before the IRA, according to a report from the Solar Energy Industries Association and Wood Mackenzie. But electricity is only one segment of carbon emissions, meaning that alone will not be enough to meet the climate goals set by the Paris Agreement. The hope is that the paths established by renewable energy can be applied to harder-to-decarbonize segments, like electric vehicles and manufacturing. Amazon, for example, has announced plans for 100,000 electric delivery vehicles by 2030. “I think we could see even faster progress on transportation than we’ve seen with clean energy on the grid,” says Bill Weihl, executive director of Climate Voice and a former director of sustainability at Facebook. In corporate renewable power purchasing, we can see the narrow path that will need to be expanded into a highway over the next decade. For the Harkraders, Hawtree Creek required years of close attention to bring to fruition: attending county planning meetings, mapping wetlands, and exploring an old cemetery that, in the end, couldn’t be moved (the solar panels wrap around it). But for Charlie Daitch, who spearheads Amazon’s renewable-power purchasing, Hawtree was one row on a very tall spreadsheet. “I have a pretty good map in my head of the portfolio—where are we distributed, maybe not each individual project,” Daitch says from the passenger seat of a rented SUV, barreling across North Carolina, on his first visit to the site. “It’s gotten bigger than that.” JAMIE KELTER DAVIS—BLOOMBERG/GETTY IMAGESAmazon delivery electric vans (EV), built by Rivian Automotive, at charging stations parked outside the Amazon Logistics warehouse in Chicago, Illinois on Thursday, July 21, 2022. Amazon Inc. is starting delivery of packages to US customers using the first of as many as 100,000 electric vans built by Rivian Automotive Inc., which aims to hand over thousands of the vehicles this year. When Amazon announced the “Climate Pledge” in 2019, it set its own target for reaching net-zero carbon emissions by 2040, 10 years ahead of the Paris Agreement. Included in that was an earlier goal: to use 100% renewable energy by 2030. For a company like Amazon, which has a sprawling -infrastructure for moving goods around the world, eliminating emissions is a challenge that stretches across the business. Sustainable aviation fuel and heavy-duty electric trucks are still years, if not decades, away from broad adoption. But wind and solar power are ready now. “Renewables is a place we identified where we could go fast to decarbonize our electricity stack,” adds Daitch, a mechanical engineer by training. Compared with its competitors, Amazon came late to that realization. Walmart announced the first-ever “utility scale” PPA in 2008, with a 153-megawatt wind farm in Texas. At the time, it was a controversial move. “Those early companies that made these commitments did not do so because customers were asking for it,” says Miranda Ballentine, who led Walmart’s sustainability efforts at the time and is now CEO of the Clean Energy Buyers Association. The corporate winds shifted in 2010. That March, Greenpeace called out the technology companies for their energy use. Their report was perfectly timed, coming just days before the first iPad was released—a device that self-evidently depended on the internet behind it. The tech companies went on the defensive. “There is no such thing as a coal-powered data center,” insisted Facebook in a statement. “Every data center plugs into the grid offered by their utility or power provider.” Dirty energy, in other words, wasn’t their problem—it was the grid’s problem. That half-shrug emoji of an argument didn’t last long. The next year, in a joint statement with Greenpeace, Facebook announced a new “preference” for “clean and renewable” energy. Over the next several years, the other tech giants lined up to follow suit. Putting solar panels on the roof or wind turbines in the parking lot was never going to be enough; data centers require too much energy for that, often hundreds of megawatts each. Power purchase agreements give large corporations a way to use renewable energy without having to wait for utilities. “Large off-site power purchase agreements remain the tool that allows you to move more quickly,” says Erin Decker, a consultant at Schneider Electric, one of the leading clean-energy advisers. Big Tech firms are happy to make long-term deals—especially if they can send out a press release. According to the logic of corporate climate action, if a solar farm is built in the desert, it needs to make a sound. “When we think about our renewable-energy strategy, we’re like, ‘Well, how can we tell the most credible story to our customers about what we’re doing?’” says Amazon’s Nat Sahlstrom. “We don’t want to be greenwashing. We don’t want to be chasing investments that aren’t really having an impact.” Most of Amazon’s competitors have already completed the deals that lock them into a decade or more of renewable power. Facebook, now known as Meta, long ago “unfriended coal” and has 7.5 gigawatts of renewables under contract. Google reached 100% renewable electricity in 2017, with over 7 gigawatts procured; its next effort is ensuring its data centers run “24/7” carbon-free, meaning all of its energy all the time comes from renewable sources, rather than, for example, buying excess solar during the day to make up for coal power it needs at night. Apple announced that it had sourced 100% renewable energy for its operations in 2018, with 87% of that in the form of PPAs; the next, far more challenging step is helping its suppliers and manufacturers do the same—a goal it has set for 2030. And Microsoft has nearly 8 gigawatts, 5.8 of which it bought in 2021. Outside of tech, large companies have more catching up to do. “It’s not just Big Tech companies,” says Tyler Espinoza at 3Degrees, a climate-action consultancy. “You have a broad swath of massive corporations that are willing to put their money behind it.” In 2021, Pfizer announced a 15-year contract for 310 megawatts of electricity from a Texas wind farm, enough to power 100% of its North American operations—a gigantic leap from the mere 6% of its global usage previously met by renewables. In August, Ford announced an agreement with a Michigan-based utility for 650 megawatts of solar. But small and medium-sized businesses struggle with the level of complexity, and commitment, that PPAs require. “The power purchase agreement is a wonderful tool for large, fairly sophisticated, high–creditworthy companies to be able to procure clean energy,” says Ballentine, of the Clean Energy Buyers Association. “It is not as easy of a tool for smaller companies.” As long as there are still large corporations eager to sweep up the available inventory of projects, that hasn’t been a great concern. In the first half of 2022, corporations contracted for 9.8 gigawatts of renewable power in the U.S.—a third of which was Amazon’s. But across the board, the challenge is coming to terms with how significant the impact of this renewable-energy purchasing can be on the broader effort to counter climate change. Ballentine, who was in the trenches for Walmart’s early actions, sees a single-mindedness in these corporate actions. “The big ‘why’ is very simple,” she says. “It’s about solving the climate crisis. There is no other reason that a company would set a voluntary zero-carbon energy procurement goal or renewable-energy goal.” Even on a global scale, Amazon’s efforts stand out. The company’s initial Climate Pledge called for 100% renewable energy by 2030. But early in the pandemic, that pace shifted, when Daitch and his colleagues realized they could move much faster than they already were. Yet other aspects of Amazon’s business—like all those trucks and planes—were not going to decarbonize anytime soon. Will Warasila for TIMESolar panels on the 526 acre plot at Hawtree Creek in North Carolina. At the time Amazon had about 1 gigawatt of renewable energy procured. Daitch, who got his start at a traditional energy utility in the Pacific Northwest, working on distribution planning, increased the intensity of his team’s search. Their criteria varied. Wind might work better in Kansas, while solar was preferable in Ohio. Some regions relied heavily on coal power, heightening the impact of any new renewables. But others had crowded—or dysfunctional—processes for connecting new projects to the grid. Generally, Hawtree Creek is emblematic of how the process often works: a local developer who really knows the geography of the state, its electric-transmission network, and the local politics of its counties might respond to Amazon’s solicitation. But once things are under way, they hand the project off to a large energy operator, like Engie. At the end of 2021, Amazon announced a blockbuster purchase: 18 new projects around the world, bringing its total to 12 gigawatts and making Amazon the largest corporate buyer of renewable energy in the world. In April, it added 3.5 more gigawatts. Amazon’s projects dot the map. In Kansas, two wind farms, both finished in 2021, produce more than 500 megawatts of power. In Halifax County, Virginia, 65 miles west of Hawtree Creek, are four more similarly sized solar farms, totaling 261 megawatts of additional energy. In Ohio, more than 2,000 megawatts have been completed or are coming soon—and on, across 134 utility-scale projects in 15 countries. “There’s a flywheel,” says Daitch. “Our commitment, and signal to the market that we are moving at scale, then gets developers ramped up developing more projects. It gets solar manufacturers investing in more plants and production. So there’s that feedback loop.” The past year has tested that presumption as the renewables industry struggled with rising prices and constrained supplies. Making matters worse, in April 2022 solar development ground to nearly a complete halt when the Commerce Department announced an investigation into Chinese companies violating tariffs—raising the threat of retroactive import taxes on even the modules that were already in the U.S. Then in June, the situation reversed, when the Biden Administration invoked the Defense Production Act to increase solar production. By the time industry analysts finished calculating the impact of the investment introduced by the IRA, a sense of giddiness settled in among climate activists. According to analysts at Wood Mackenzie, total investment in renewable energy will reach $1.2 trillion by 2035. In a look at the manufacturing of solar polysilicon, the key component in new panels, Bloomberg-NEF found that by 2025 global capacity will be enough to manufacture 940 gigawatts of panels annually—almost as much as the total 971 gigawatts of solar currently installed around the world. For both corporations and individuals, all this comes back to the broadest goal of reducing emissions sufficiently to counter the effects of climate change. According to an analysis by the International Energy Agency, that means—at least—reaching global net-zero emissions by 2050, on a path that is “narrow but still achievable.” For the past decade, that has looked, frankly, improbable—at least at the pace corporations were going. With the IRA, the U.S. now has a chance. Blum is the author of Tubes and The Weather Machine.....»»

Category: topSource: timeSep 16th, 2022

Bernie Sanders Blocks Proposal Which Would Avoid Rail Strike

Bernie Sanders Blocks Proposal Which Would Avoid Rail Strike Update (1750ET): Sen. Bernie Sanders (I-VT) blocked a Republican effort to require railroad employees and companies to accept recommendations of a nonpartisan panel in order to avoid a strike which, if it goes through, will impact millions of Americans. The GOP resolution - introduced by Senate Health, Education, Labor and Pension Commission Ranking Member Richard Burr (R-NC) and Sen. Roger Wicker (R-MI), would have required railroad workers to adopt the outlines of a labor deal, The Hill reports. According to the Vermont Senator, railroad companies are making 'huge profits' and should treat employees more fairly. "The rail industry has seen huge profits in recent years and last year alone made a record breaking $20 billion in profit," he said. "Last year the CEO of CSX made over $20 million in total compensation while the CEOs of Union Pacific and Norfolk Southern made over $40 million each in total compensation." Sanders contrasted that to freight rail workers who are "entitled to a grand total of zero sick days." According to GOP Senators, their resolution would have avoided a "disastrous" rail strike, which could bring rail travel and freight shipments grinding to a halt across the country. Sen. Minority Leader Mitch McConnell (R-KY) said Democrats were putting the economy at risk. "If a strike occurs and paralyzes food, fertilizer and energy shipments nationwide, it will be because Democrats blocked this bill," he tweeted. Senate Democrats just blocked our bill that would have given railway workers a big raise and prevented a crippling strike and supply chain crisis. If a strike occurs and paralyzes food, fertilizer, and energy shipments nationwide, it will be because Democrats blocked this bill. — Leader McConnell (@LeaderMcConnell) September 14, 2022 The GOP plan would adopt resolutions from President Biden's Presidential Emergency Board, which recommended a 24% wage increase, retroactive to 2020, as well as annual bonuses of $1,000 and additional paid leave. "This is the president’s bipartisan emergency board that he set up that came back with a recommendation to the Biden Administration and said here is the solution to this. It should be adopted," said Burr. Wicker, meanwhile, said that "The last thing we need is a shutdown of this nation’s rail service, both passenger and freight. And yet, that is what we are facing in less than a day and a half from this moment, a massive rail strike that will virtually shut down our economy." According to a GOP aide who spoke with The Hill, Sanders "wants a strike." *  *  * Update (1525ET): So it begins: on Wednesday afternoon, Amtrak said it will cancel all long distance trains starting Thursday, September 15 “to avoid possible passenger disruptions while enroute” as White House-led talks between freight-rail companies and unions continued in a race to avoid a rail-system shutdown Friday.   “Such an interruption could significantly impact intercity passenger rail service, as Amtrak operates almost all of our 21,000 route miles outside the Northeast Corridor on track owned, maintained, and dispatched by freight railroads,” the company said in a statement Wednesday, adding that it has already started phased adjustments which "include canceling all Long Distance trains and could be followed by impacts to most State- Supported routes” “Adjustments are necessary to ensure trains can reach their terminals before freight railroad service interruption if a resolution in negotiations is not reached” The good news: most travel within the Amtrak-owned Northeast Corridor (Boston - New York - Washington) and related branch lines to Albany, N.Y., Harrisburg, Penn,, and Springfield, Mass., would not be affected. Additionally the Acela service is not affected, and only a small number of Northeast Regional departures would be impacted. As reported earlier, about 125,000 freight-rail workers could walk off the job if a deal isn’t reached by Friday’s deadline, with a strike potentially costing the world’s biggest economy more than $2 billion a day. The stoppage would be the largest of its kind since 1992, and it would snarl a wide range of goods transported by rail - from food to metal and auto parts - and threatens travel chaos for thousands of commuters, while sending inflation soaring even more. The White House is considering an emergency decree to keep key goods flowing.     A Biden-appointed board last month issued a set of recommendations to resolve the dispute, including wage increases and better health coverage. But the proposal did not include terms on scheduling, attendance and other issues important to the two unions holding out for a deal, affiliates of the Teamsters Union and of the International Association of Sheet Metal, Air, Rail and Transportation Workers. Together, they represent about 60,000 employees. A rail strike would be “potentially disastrous,” with “dire consequences that will cascade throughout the economy if a strike actually occurs,” Business Roundtable Chief Executive Officer Joshua Bolten told reporters. Supply-chain issues would be “geometrically magnified by the rail strike, and that’s not just the occasional Amazon box showing up two days later than it should -- these are critical materials” such as chlorine to keep water clean that would be delayed, Bolten said. In a letter to Congress, American Trucking Associations President Chris Spear said if all 7,000 long-distance freight trains available in the US stopped running, the country would need an extra 460,000 long-haul trucks daily to make up for the lost capacity, which isn’t possible because of equipment availability and driver shortages. Needless to say, such an outcome would would send the price of diesel to record highs and through substitution, gasoline would follow suit. The trucking industry -- dealing with labor issues of its own -- faces a deficit of 80,000 drivers nationwide, he wrote. While a majority of 12 railroad unions involved in the dispute had reached or were close to achieving tentative agreements with freight carriers as of Monday, members of those unions also would refuse to work unless a deal is reached with the whole group, leaders said.  Ominously, the 4,900 members from District 19 under the International Association of Machinists and Aerospace Workers (IAM) voted against the Tentative Agreement with the National Carriers' Conference Committee (NCCC).  The union members gave leadership the green light to strike if necessary. IAM District 19 said it also agreed to an extension until Sept. 29 to allow negotiations to continue. Labor Secretary Marty Walsh on Wednesday led negotiations between the unions and railroads, with talks continuing through lunch without a break, a Labor Department spokesperson said. * * * Update (1155ET): It's becoming increasingly possible that a major freight rail stoppage could materialize following the news thousands of rail workers rejected labor agreements this morning.  The 4,900 members from District 19 under the International Association of Machinists and Aerospace Workers (IAM) voted against the Tentative Agreement (proposed collective bargaining agreements that have not been ratified) with the National Carriers' Conference Committee (NCCC).  IAM District 19 released the following statement: "The Tentative Agreement has been rejected and the strike authorization vote was approved by IAM District 19 members. Out of respect for other unions in the ratification process, an extension has been agreed to until Sept. 29, 2022 at 12 p.m. ET. This extension will allow us to continue to negotiate changes with the NCCC in the hopes of achieving an agreement our membership would ratify. "IAM freight rail members are skilled professionals who have worked in difficult conditions through a pandemic to make sure essential products get to their destinations. We look forward to continuing that vital work with a fair contract that ensures our members and their families are treated with the respect they deserve for keeping America's goods and resources moving through the pandemic. The IAM is grateful for the support of those working toward a solution as our members and freight rail workers seek equitable agreements." IAM District 19 members are locomotive machinists, track equipment specialists, and maintenance personnel.  This comes as the US Labor Secretary Marty Walsh met with freight railroad companies and union officials Wednesday morning to avert a strike that could result in a nationwide shutdown of the freight rail system as soon as Friday.   * * * By John Gallagher of FreightWaves A joint resolution by U.S. lawmakers aimed at ending the threat of a strike or lockout provides little incentive for avoiding a debilitating shutdown of the nation's railroads, according to a former rail industry legal consultant. Introduced in the Senate on Monday by Roger Wicker, R.-Miss., and Richard Burr, R-N.C., the legislation would adopt the recommendations issued in August by the Presidential Emergency Board (PEB) that were meant to be used as the foundation for a new contract. Such action is supported by major business and shipper groups, including the U.S. Chamber of Commerce and the Fertilizer Institute. But getting a divided Congress to quickly pass such settlement legislation offers little chance of resolving the dispute, according to John Brennan III, a former senior counsel for the Union Pacific Railroad. "Congress is in the unfortunate position of resolving a potential strike on very difficult terms, and what Wicker and Burr are proposing is a cramdown," Brennan told FreightWaves. Brennan pointed out that when the last rail strikes occurred in the early 1990s, Congress passed settlement resolutions within 24 hours. But the partisan divide in Congress today, along with the upcoming midterm elections, could make it difficult to pass settlement legislation before midnight on Thursday, when a work stoppage would be permitted under the law. "Expedited passage of this legislation requires unanimous consent, and one senator or congressman on either side of the aisle looking to gain political points will be able to hold this up — the possibility for theatrics is endless," Brennan said. Another path Congress could have chosen — simply extending the status quo for a certain period — may have offered more chance for an eventual settlement, although this also likely would have received pushback from labor-supportive Democrats, said Brennan, who is also a former chief of staff for the House of Representatives' railroads subcommittee. Delaying a possible strike through congressional action was also opposed by the American Trucking Associations.  "A possible strike or lockout in October or November is arguably worse than one next week — although any disruption will cost the nation billions of dollars of lost productivity," said ATA President and CEO Chris Spear this past week. "Moreover, our members and every other business in America will have to maintain and update contingency plans unless the rail matter is resolved expeditiously." Instead, legislation requiring final-offer arbitration — also known as "baseball" arbitration because of its use in resolving major league contract salary disputes — may have offered the best path toward a fast settlement, according to Brennan. "Decision-making power would be delegated to experienced, independent arbitrators who would choose between a best and final offer from either management or labor — a very scary proposition for both sides, and therefore an incentive to force them to the middle and settle," Brennan said. "The legislation could help to avoid political controversy with the upcoming election looming." The National Railway Labor Conference, which is negotiating on behalf of railroad management, confirmed Tuesday that nine of the 12 unions involved in the contract talks have now come to a tentative agreement based on the PEB's recommendations. However, the two unions that together make up roughly half of the rank-and-file workers covered under the contract — the International Association of Sheet Metal, Air, Rail and Transportation Workers/Transportation Division, and the Brotherhood of Locomotive Engineers and Trainmen — have yet to settle with management. * * *  With that said, the two hold-out rail worker labor unions (noted above) risk causing widespread supply chain chaos if labor agreements with rail freight companies aren't reached by the end of the week. This could mean more than 100,000 rail workers could soon leave the job.  Railroads are set to halt shipments of some commodities, farm goods, and other critical items on Thursday as the industry braces for work stoppages that could begin as early as Friday. If strikes materialize and the nation's freight rail system is disrupted, it could cost the economy a whopping $2 billion daily.   Norfolk Southern Corp. announced plans to halt unit train shipments of bulk commodities on Thursday. The railroad said it would stop receiving automobiles at its loading facilities Wednesday afternoon.  "We are hearing several rail carriers are tentatively planning to wind down shipments," Max Fisher, chief economist at the National Grain and Feed Association, which represents most US grain handlers, told Bloomberg.  Reuters cited Justin Louchheim, the Senior Director of Government Affairs at The Fertilizer Institute, saying most rail freight companies stopped accepting new shipments of ammonia fertilizer and other potentially hazardous materials.  Other railroads are following suit. BNSF Railway Co. and Union Pacific Corp. representatives told Bloomberg they would curtail new shipments.  "We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement," BNSF said in a statement. Fisher said railroads halting new cargoes is a move at ensuring trains aren't stranded if a labor strike materializes.  Other commodities are at risk, such as coal and crude product transports that could interrupt pre-winter stockpiling by utilities, triggering an increase in natural gas demand by power plant generators. Some estimates show railroads account for about a third or more of all US freight, meaning a strike would worsen supply chain snarls that could send inflation higher.  "Almost all ethanol is moved via rail and it is produced in the Midwest," noted Debnil Chowdhury of S&P Global Commodity Insights. "There is no easy substitute for rail and the US government will have to make decisions around blend targets if ethanol movement to demand centers are constrained due to a strike." Besides freight, the strike prospects are about to affect passenger railroad service. An Amtrak spokesperson said seven long-distance routes starting Wednesday across major metro areas, including New York City, Chicago, New Orleans, Los Angeles, and Seattle, would be halted.  The move to suspend service is one sign of the fallout from a labor dispute between unions and freight railroads that could descend into crippling shutdown of the nation's freight rail network as early as Friday. Amtrak said it had begun phased service adjustments to prepare for a potential interruption that could "significantly impact" its service between US cities outside of the Northeastern US between Boston and Washington, DC --Bloomberg The White House announced contingency plans on Tuesday as US Labor Secretary Marty Walsh will meet with railroad and union representatives in Washington on Wednesday morning.  Tyler Durden Wed, 09/14/2022 - 17:49.....»»

Category: smallbizSource: nytSep 14th, 2022

Amtrak Canceling All Long-Distance Trains Ahead Of "Potentially Disastrous" Rail Strike

Amtrak Canceling All Long-Distance Trains Ahead Of "Potentially Disastrous" Rail Strike Update (1525ET): So it begins: on Wednesday afternoon, Amtrak said it will cancel all long distance trains starting Thursday, September 15 “to avoid possible passenger disruptions while enroute” as White House-led talks between freight-rail companies and unions continued in a race to avoid a rail-system shutdown Friday.   “Such an interruption could significantly impact intercity passenger rail service, as Amtrak operates almost all of our 21,000 route miles outside the Northeast Corridor on track owned, maintained, and dispatched by freight railroads,” the company said in a statement Wednesday, adding that it has already started phased adjustments which "include canceling all Long Distance trains and could be followed by impacts to most State- Supported routes” “Adjustments are necessary to ensure trains can reach their terminals before freight railroad service interruption if a resolution in negotiations is not reached” The good news: most travel within the Amtrak-owned Northeast Corridor (Boston - New York - Washington) and related branch lines to Albany, N.Y., Harrisburg, Penn,, and Springfield, Mass., would not be affected. Additionally the Acela service is not affected, and only a small number of Northeast Regional departures would be impacted. As reported earlier, about 125,000 freight-rail workers could walk off the job if a deal isn’t reached by Friday’s deadline, with a strike potentially costing the world’s biggest economy more than $2 billion a day. The stoppage would be the largest of its kind since 1992, and it would snarl a wide range of goods transported by rail - from food to metal and auto parts - and threatens travel chaos for thousands of commuters, while sending inflation soaring even more. The White House is considering an emergency decree to keep key goods flowing.     A Biden-appointed board last month issued a set of recommendations to resolve the dispute, including wage increases and better health coverage. But the proposal did not include terms on scheduling, attendance and other issues important to the two unions holding out for a deal, affiliates of the Teamsters Union and of the International Association of Sheet Metal, Air, Rail and Transportation Workers. Together, they represent about 60,000 employees. A rail strike would be “potentially disastrous,” with “dire consequences that will cascade throughout the economy if a strike actually occurs,” Business Roundtable Chief Executive Officer Joshua Bolten told reporters. Supply-chain issues would be “geometrically magnified by the rail strike, and that’s not just the occasional Amazon box showing up two days later than it should -- these are critical materials” such as chlorine to keep water clean that would be delayed, Bolten said. According to Bloomberg, if all 7,000 long-distance freight trains available in the US stopped running, the country would need an extra 460,000 long-haul trucks daily to make up for the lost capacity, which isn’t possible because of equipment availability and driver shortages, American Trucking Associations President Chris Spear said in a letter to Congress. The trucking industry -- dealing with labor issues of its own -- faces a deficit of 80,000 drivers nationwide, he wrote. Needless to say, a strike would send diesel prices exploding higher, and through substitution, gasoline would follow suit. While a majority of 12 railroad unions involved in the dispute had reached or were close to achieving tentative agreements with freight carriers as of Monday, members of those unions also would refuse to work unless a deal is reached with the whole group, leaders said.  Ominously, the 4,900 members from District 19 under the International Association of Machinists and Aerospace Workers (IAM) voted against the Tentative Agreement with the National Carriers' Conference Committee (NCCC).  The union members gave leadership the green light to strike if necessary. IAM District 19 said it also agreed to an extension until Sept. 29 to allow negotiations to continue. Labor Secretary Marty Walsh on Wednesday led negotiations between the unions and railroads, with talks continuing through lunch without a break, a Labor Department spokesperson said. * * * Update (1155ET): It's becoming increasingly possible that a major freight rail stoppage could materialize following the news thousands of rail workers rejected labor agreements this morning.  The 4,900 members from District 19 under the International Association of Machinists and Aerospace Workers (IAM) voted against the Tentative Agreement (proposed collective bargaining agreements that have not been ratified) with the National Carriers' Conference Committee (NCCC).  IAM District 19 released the following statement: "The Tentative Agreement has been rejected and the strike authorization vote was approved by IAM District 19 members. Out of respect for other unions in the ratification process, an extension has been agreed to until Sept. 29, 2022 at 12 p.m. ET. This extension will allow us to continue to negotiate changes with the NCCC in the hopes of achieving an agreement our membership would ratify. "IAM freight rail members are skilled professionals who have worked in difficult conditions through a pandemic to make sure essential products get to their destinations. We look forward to continuing that vital work with a fair contract that ensures our members and their families are treated with the respect they deserve for keeping America's goods and resources moving through the pandemic. The IAM is grateful for the support of those working toward a solution as our members and freight rail workers seek equitable agreements." IAM District 19 members are locomotive machinists, track equipment specialists, and maintenance personnel.  This comes as the US Labor Secretary Marty Walsh met with freight railroad companies and union officials Wednesday morning to avert a strike that could result in a nationwide shutdown of the freight rail system as soon as Friday.   * * * By John Gallagher of FreightWaves A joint resolution by U.S. lawmakers aimed at ending the threat of a strike or lockout provides little incentive for avoiding a debilitating shutdown of the nation's railroads, according to a former rail industry legal consultant. Introduced in the Senate on Monday by Roger Wicker, R.-Miss., and Richard Burr, R-N.C., the legislation would adopt the recommendations issued in August by the Presidential Emergency Board (PEB) that were meant to be used as the foundation for a new contract. Such action is supported by major business and shipper groups, including the U.S. Chamber of Commerce and the Fertilizer Institute. But getting a divided Congress to quickly pass such settlement legislation offers little chance of resolving the dispute, according to John Brennan III, a former senior counsel for the Union Pacific Railroad. "Congress is in the unfortunate position of resolving a potential strike on very difficult terms, and what Wicker and Burr are proposing is a cramdown," Brennan told FreightWaves. Brennan pointed out that when the last rail strikes occurred in the early 1990s, Congress passed settlement resolutions within 24 hours. But the partisan divide in Congress today, along with the upcoming midterm elections, could make it difficult to pass settlement legislation before midnight on Thursday, when a work stoppage would be permitted under the law. "Expedited passage of this legislation requires unanimous consent, and one senator or congressman on either side of the aisle looking to gain political points will be able to hold this up — the possibility for theatrics is endless," Brennan said. Another path Congress could have chosen — simply extending the status quo for a certain period — may have offered more chance for an eventual settlement, although this also likely would have received pushback from labor-supportive Democrats, said Brennan, who is also a former chief of staff for the House of Representatives' railroads subcommittee. Delaying a possible strike through congressional action was also opposed by the American Trucking Associations.  "A possible strike or lockout in October or November is arguably worse than one next week — although any disruption will cost the nation billions of dollars of lost productivity," said ATA President and CEO Chris Spear this past week. "Moreover, our members and every other business in America will have to maintain and update contingency plans unless the rail matter is resolved expeditiously." Instead, legislation requiring final-offer arbitration — also known as "baseball" arbitration because of its use in resolving major league contract salary disputes — may have offered the best path toward a fast settlement, according to Brennan. "Decision-making power would be delegated to experienced, independent arbitrators who would choose between a best and final offer from either management or labor — a very scary proposition for both sides, and therefore an incentive to force them to the middle and settle," Brennan said. "The legislation could help to avoid political controversy with the upcoming election looming." The National Railway Labor Conference, which is negotiating on behalf of railroad management, confirmed Tuesday that nine of the 12 unions involved in the contract talks have now come to a tentative agreement based on the PEB's recommendations. However, the two unions that together make up roughly half of the rank-and-file workers covered under the contract — the International Association of Sheet Metal, Air, Rail and Transportation Workers/Transportation Division, and the Brotherhood of Locomotive Engineers and Trainmen — have yet to settle with management. * * *  With that said, the two hold-out rail worker labor unions (noted above) risk causing widespread supply chain chaos if labor agreements with rail freight companies aren't reached by the end of the week. This could mean more than 100,000 rail workers could soon leave the job.  Railroads are set to halt shipments of some commodities, farm goods, and other critical items on Thursday as the industry braces for work stoppages that could begin as early as Friday. If strikes materialize and the nation's freight rail system is disrupted, it could cost the economy a whopping $2 billion daily.   Norfolk Southern Corp. announced plans to halt unit train shipments of bulk commodities on Thursday. The railroad said it would stop receiving automobiles at its loading facilities Wednesday afternoon.  "We are hearing several rail carriers are tentatively planning to wind down shipments," Max Fisher, chief economist at the National Grain and Feed Association, which represents most US grain handlers, told Bloomberg.  Reuters cited Justin Louchheim, the Senior Director of Government Affairs at The Fertilizer Institute, saying most rail freight companies stopped accepting new shipments of ammonia fertilizer and other potentially hazardous materials.  Other railroads are following suit. BNSF Railway Co. and Union Pacific Corp. representatives told Bloomberg they would curtail new shipments.  "We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement," BNSF said in a statement. Fisher said railroads halting new cargoes is a move at ensuring trains aren't stranded if a labor strike materializes.  Other commodities are at risk, such as coal and crude product transports that could interrupt pre-winter stockpiling by utilities, triggering an increase in natural gas demand by power plant generators. Some estimates show railroads account for about a third or more of all US freight, meaning a strike would worsen supply chain snarls that could send inflation higher.  "Almost all ethanol is moved via rail and it is produced in the Midwest," noted Debnil Chowdhury of S&P Global Commodity Insights. "There is no easy substitute for rail and the US government will have to make decisions around blend targets if ethanol movement to demand centers are constrained due to a strike." Besides freight, the strike prospects are about to affect passenger railroad service. An Amtrak spokesperson said seven long-distance routes starting Wednesday across major metro areas, including New York City, Chicago, New Orleans, Los Angeles, and Seattle, would be halted.  The move to suspend service is one sign of the fallout from a labor dispute between unions and freight railroads that could descend into crippling shutdown of the nation's freight rail network as early as Friday. Amtrak said it had begun phased service adjustments to prepare for a potential interruption that could "significantly impact" its service between US cities outside of the Northeastern US between Boston and Washington, DC --Bloomberg The White House announced contingency plans on Tuesday as US Labor Secretary Marty Walsh will meet with railroad and union representatives in Washington on Wednesday morning.  Tyler Durden Wed, 09/14/2022 - 15:40.....»»

Category: blogSource: zerohedgeSep 14th, 2022

Rail Union With 4,900 Members Rejects Tentative Agreement As Shutdown Looms

Rail Union With 4,900 Members Rejects Tentative Agreement As Shutdown Looms Update (1155ET): It's becoming increasingly possible that a major freight rail stoppage could materialize following the news thousands of rail workers rejected labor agreements this morning.  The 4,900 members from District 19 under the International Association of Machinists and Aerospace Workers (IAM) voted against the Tentative Agreement (proposed collective bargaining agreements that have not been ratified) with the National Carriers' Conference Committee (NCCC).  IAM District 19 released the following statement: "The Tentative Agreement has been rejected and the strike authorization vote was approved by IAM District 19 members. Out of respect for other unions in the ratification process, an extension has been agreed to until Sept. 29, 2022 at 12 p.m. ET. This extension will allow us to continue to negotiate changes with the NCCC in the hopes of achieving an agreement our membership would ratify. "IAM freight rail members are skilled professionals who have worked in difficult conditions through a pandemic to make sure essential products get to their destinations. We look forward to continuing that vital work with a fair contract that ensures our members and their families are treated with the respect they deserve for keeping America's goods and resources moving through the pandemic. The IAM is grateful for the support of those working toward a solution as our members and freight rail workers seek equitable agreements." IAM District 19 members are locomotive machinists, track equipment specialists, and maintenance personnel.  This comes as the US Labor Secretary Marty Walsh met with freight railroad companies and union officials Wednesday morning to avert a strike that could result in a nationwide shutdown of the freight rail system as soon as Friday.   * * * By John Gallagher of FreightWaves A joint resolution by U.S. lawmakers aimed at ending the threat of a strike or lockout provides little incentive for avoiding a debilitating shutdown of the nation's railroads, according to a former rail industry legal consultant. Introduced in the Senate on Monday by Roger Wicker, R.-Miss., and Richard Burr, R-N.C., the legislation would adopt the recommendations issued in August by the Presidential Emergency Board (PEB) that were meant to be used as the foundation for a new contract. Such action is supported by major business and shipper groups, including the U.S. Chamber of Commerce and the Fertilizer Institute. But getting a divided Congress to quickly pass such settlement legislation offers little chance of resolving the dispute, according to John Brennan III, a former senior counsel for the Union Pacific Railroad. "Congress is in the unfortunate position of resolving a potential strike on very difficult terms, and what Wicker and Burr are proposing is a cramdown," Brennan told FreightWaves. Brennan pointed out that when the last rail strikes occurred in the early 1990s, Congress passed settlement resolutions within 24 hours. But the partisan divide in Congress today, along with the upcoming midterm elections, could make it difficult to pass settlement legislation before midnight on Thursday, when a work stoppage would be permitted under the law. "Expedited passage of this legislation requires unanimous consent, and one senator or congressman on either side of the aisle looking to gain political points will be able to hold this up — the possibility for theatrics is endless," Brennan said. Another path Congress could have chosen — simply extending the status quo for a certain period — may have offered more chance for an eventual settlement, although this also likely would have received pushback from labor-supportive Democrats, said Brennan, who is also a former chief of staff for the House of Representatives' railroads subcommittee. Delaying a possible strike through congressional action was also opposed by the American Trucking Associations.  "A possible strike or lockout in October or November is arguably worse than one next week — although any disruption will cost the nation billions of dollars of lost productivity," said ATA President and CEO Chris Spear this past week. "Moreover, our members and every other business in America will have to maintain and update contingency plans unless the rail matter is resolved expeditiously." Instead, legislation requiring final-offer arbitration — also known as "baseball" arbitration because of its use in resolving major league contract salary disputes — may have offered the best path toward a fast settlement, according to Brennan. "Decision-making power would be delegated to experienced, independent arbitrators who would choose between a best and final offer from either management or labor — a very scary proposition for both sides, and therefore an incentive to force them to the middle and settle," Brennan said. "The legislation could help to avoid political controversy with the upcoming election looming." The National Railway Labor Conference, which is negotiating on behalf of railroad management, confirmed Tuesday that nine of the 12 unions involved in the contract talks have now come to a tentative agreement based on the PEB's recommendations. However, the two unions that together make up roughly half of the rank-and-file workers covered under the contract — the International Association of Sheet Metal, Air, Rail and Transportation Workers/Transportation Division, and the Brotherhood of Locomotive Engineers and Trainmen — have yet to settle with management. * * *  With that said, the two hold-out rail worker labor unions (noted above) risk causing widespread supply chain chaos if labor agreements with rail freight companies aren't reached by the end of the week. This could mean more than 100,000 rail workers could soon leave the job.  Railroads are set to halt shipments of some commodities, farm goods, and other critical items on Thursday as the industry braces for work stoppages that could begin as early as Friday. If strikes materialize and the nation's freight rail system is disrupted, it could cost the economy a whopping $2 billion daily.   Norfolk Southern Corp. announced plans to halt unit train shipments of bulk commodities on Thursday. The railroad said it would stop receiving automobiles at its loading facilities Wednesday afternoon.  "We are hearing several rail carriers are tentatively planning to wind down shipments," Max Fisher, chief economist at the National Grain and Feed Association, which represents most US grain handlers, told Bloomberg.  Reuters cited Justin Louchheim, the Senior Director of Government Affairs at The Fertilizer Institute, saying most rail freight companies stopped accepting new shipments of ammonia fertilizer and other potentially hazardous materials.  Other railroads are following suit. BNSF Railway Co. and Union Pacific Corp. representatives told Bloomberg they would curtail new shipments.  "We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement," BNSF said in a statement. Fisher said railroads halting new cargoes is a move at ensuring trains aren't stranded if a labor strike materializes.  Other commodities are at risk, such as coal and crude product transports that could interrupt pre-winter stockpiling by utilities, triggering an increase in natural gas demand by power plant generators. Some estimates show railroads account for about a third or more of all US freight, meaning a strike would worsen supply chain snarls that could send inflation higher.  "Almost all ethanol is moved via rail and it is produced in the Midwest," noted Debnil Chowdhury of S&P Global Commodity Insights. "There is no easy substitute for rail and the US government will have to make decisions around blend targets if ethanol movement to demand centers are constrained due to a strike." Besides freight, the strike prospects are about to affect passenger railroad service. An Amtrak spokesperson said seven long-distance routes starting Wednesday across major metro areas, including New York City, Chicago, New Orleans, Los Angeles, and Seattle, would be halted.  The move to suspend service is one sign of the fallout from a labor dispute between unions and freight railroads that could descend into crippling shutdown of the nation's freight rail network as early as Friday. Amtrak said it had begun phased service adjustments to prepare for a potential interruption that could "significantly impact" its service between US cities outside of the Northeastern US between Boston and Washington, DC --Bloomberg The White House announced contingency plans on Tuesday as US Labor Secretary Marty Walsh will meet with railroad and union representatives in Washington on Wednesday morning.  Tyler Durden Wed, 09/14/2022 - 11:55.....»»

Category: worldSource: nytSep 14th, 2022

Rail Shutdown Looms Large Even As Congress Steps In

Rail Shutdown Looms Large Even As Congress Steps In By John Gallagher of FreightWaves A joint resolution by U.S. lawmakers aimed at ending the threat of a strike or lockout provides little incentive for avoiding a debilitating shutdown of the nation's railroads, according to a former rail industry legal consultant. Introduced in the Senate on Monday by Roger Wicker, R.-Miss., and Richard Burr, R-N.C., the legislation would adopt the recommendations issued in August by the Presidential Emergency Board (PEB) that were meant to be used as the foundation for a new contract. Such action is supported by major business and shipper groups, including the U.S. Chamber of Commerce and the Fertilizer Institute. But getting a divided Congress to quickly pass such settlement legislation offers little chance of resolving the dispute, according to John Brennan III, a former senior counsel for the Union Pacific Railroad. "Congress is in the unfortunate position of resolving a potential strike on very difficult terms, and what Wicker and Burr are proposing is a cramdown," Brennan told FreightWaves. Brennan pointed out that when the last rail strikes occurred in the early 1990s, Congress passed settlement resolutions within 24 hours. But the partisan divide in Congress today, along with the upcoming midterm elections, could make it difficult to pass settlement legislation before midnight on Thursday when a work stoppage would be permitted under the law. "Expedited passage of this legislation requires unanimous consent, and one senator or congressman on either side of the aisle looking to gain political points will be able to hold this up — the possibility for theatrics is endless," Brennan said. Another path Congress could have chosen — simply extending the status quo for a certain period — may have offered more chance for an eventual settlement, although this also likely would have received pushback from labor-supportive Democrats, said Brennan, who is also a former chief of staff for the House of Representatives' railroads subcommittee. Delaying a possible strike through congressional action was also opposed by the American Trucking Associations.  "A possible strike or lockout in October or November is arguably worse than one next week — although any disruption will cost the nation billions of dollars of lost productivity," said ATA President and CEO Chris Spear this past week. "Moreover, our members and every other business in America will have to maintain and update contingency plans unless the rail matter is resolved expeditiously." Instead, legislation requiring final-offer arbitration — also known as "baseball" arbitration because of its use in resolving major league contract salary disputes — may have offered the best path toward a fast settlement, according to Brennan. "Decision-making power would be delegated to experienced, independent arbitrators who would choose between a best and final offer from either management or labor — a very scary proposition for both sides, and therefore an incentive to force them to the middle and settle," Brennan said. "The legislation could help to avoid political controversy with the upcoming election looming." The National Railway Labor Conference, which is negotiating on behalf of railroad management, confirmed Tuesday that nine of the 12 unions involved in the contract talks have now come to a tentative agreement based on the PEB's recommendations. However, the two unions that together make up roughly half of the rank-and-file workers covered under the contract — the International Association of Sheet Metal, Air, Rail and Transportation Workers/Transportation Division, and the Brotherhood of Locomotive Engineers and Trainmen — have yet to settle with management. * * *  With that said, the two hold-out rail worker labor unions (noted above) risk causing widespread supply chain chaos if labor agreements with rail freight companies aren't reached by the end of the week. This could mean more than 100,000 rail workers could soon leave the job.  Railroads are set to halt shipments of some commodities, farm goods, and other critical items on Thursday as the industry braces for work stoppages that could begin as early as Friday. If strikes materialize and the nation's freight rail system is disrupted, it could cost the economy a whopping $2 billion daily.   Norfolk Southern Corp. announced plans to halt unit train shipments of bulk commodities on Thursday. The railroad said it would stop receiving automobiles at its loading facilities Wednesday afternoon.  "We are hearing several rail carriers are tentatively planning to wind down shipments," Max Fisher, chief economist at the National Grain and Feed Association, which represents most US grain handlers, told Bloomberg.  Reuters cited Justin Louchheim, the Senior Director of Government Affairs at The Fertilizer Institute, saying most rail freight companies stopped accepting new shipments of ammonia fertilizer and other potentially hazardous materials.  Other railroads are following suit. BNSF Railway Co. and Union Pacific Corp. representatives told Bloomberg they would curtail new shipments.  "We must take actions to prepare for the eventuality of a labor strike if the remaining unions cannot come to an agreement," BNSF said in a statement. Fisher said railroads halting new cargoes is a move at ensuring trains aren't stranded if a labor strike materializes.  Other commodities are at risk, such as coal and crude product transports that could interrupt pre-winter stockpiling by utilities, triggering an increase in natural gas demand by power plant generators. Some estimates show railroads account for about a third or more of all US freight, meaning a strike would worsen supply chain snarls that could send inflation higher.  "Almost all ethanol is moved via rail and it is produced in the Midwest," noted Debnil Chowdhury of S&P Global Commodity Insights. "There is no easy substitute for rail and the US government will have to make decisions around blend targets if ethanol movement to demand centers are constrained due to a strike." Besides freight, the strike prospects are about to affect passenger railroad service. An Amtrak spokesperson said seven long-distance routes starting Wednesday across major metro areas, including New York City, Chicago, New Orleans, Los Angeles, and Seattle, would be halted.  The move to suspend service is one sign of the fallout from a labor dispute between unions and freight railroads that could descend into crippling shutdown of the nation's freight rail network as early as Friday. Amtrak said it had begun phased service adjustments to prepare for a potential interruption that could "significantly impact" its service between US cities outside of the Northeastern US between Boston and Washington, DC --Bloomberg The White House announced contingency plans on Tuesday as US Labor Secretary Marty Walsh will meet with railroad and union representatives in Washington on Wednesday morning.  Tyler Durden Wed, 09/14/2022 - 10:05.....»»

Category: smallbizSource: nytSep 14th, 2022

White House Readies "Emergency Decree" As Nationwide Rail Strike Looms

White House Readies 'Emergency Decree' As Nationwide Rail Strike Looms Update (1144ET): President Biden and senior administration officials are working with others in the transportation industry, including truckers, shippers, and air freight, for "contingency plans" if a rail shutdown materializes at the end of the week, a White House official told Bloomberg.  The administration is trying to understand what supply chains could be disrupted the most -- and how to utilize other forms of transportation to ensure commodities and consumer goods continue to flow across the country.  More than 100,000 railroad workers could walk off the job on Friday if freight-rail companies and unions don't reach labor agreements.  We noted that 29% of all US freight moves on the rails. Half the cargo is bulk commodities, such as energy, food, chemicals, metals, and wood productions -- the other half is shipping containers of consumer goods.  A work stoppage would cost the US economy $2 billion per day in supply chain disruptions. It wouldn't be the best optics for the Biden administration ahead of the midterm elections.  * * * The Biden administration held talks with freight-rail companies and unions to avert more than 100,000 railroad workers walking off the job if contracts weren't agreed upon by the end of the week, according to Bloomberg.  President Biden's involvement in stalled labor talks indicates just how serious the White House is taking the possibility of a work stoppage. Most of the railroad unions involved in contract disputes have reached agreements or were very close (as of Monday), while two unions totaling more than 100,000 workers are prepared to strike on Friday if contracts aren't signed.  Bloomberg said a union-affiliated person close to the negotiations noted some progress at the bargaining table Monday, but the unions and railroads still can't agree on letting workers take unpaid time off for doctor's appointments without being penalized.  A strike ahead of the midterm elections in November would be a huge political risk for Biden and Democrats. A work stoppage would result in increased nationwide supply-chain chaos. Biden has promised the nation to be the most pro-union president ever -- so optics would be very sour if a strike were allowed.  Most of the 12 railroad unions have reached or finalized tentative agreements with BNSF Railway, CSX Corp., Kansas City Southern, Norfolk Southern Corp., and Union Pacific Corp. via collective bargaining. Two unions, the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail and Transportation Workers, accounting for more than 100,000 workers, are still holding out while negotiating.  On Monday, freight-rail companies initiated "contingency plans" for the possibility of a controlled rail network shutdown if labor disputes weren't resolved.  Amtrak warned passengers that interruptions could begin today on its national network as it removes trains on three long-distance routes "to avoid possible passenger disruptions while on route ... these adjustments are necessary to ensure trains can reach their terminals prior to freight railroad service interruption if a resolution in negotiations is not reached," Amtrak said in a statement.  The Association of American Railroads warned a freight railroad shutdown could "devastate" Amtrak operations. This would likely mean tens of thousands, if not more, daily commuters could experience travel disruptions if a work stoppage occurred.  Railroad Strike: 57k worker, soon as Friday. -suspension of some longer routes for passengers starting today -up to $2b per day cost to economy daily, although rerouting some cargo & passengers via alt carriers will be attempted. — Diane Swonk (@DianeSwonk) September 13, 2022 We explained Monday a strike would cost the US economy $2 billion per day and result in supply chain disruptions for shipments of commodities, such as grains, fertilizer, and energy, along with consumer goods.  "Coal would stop," said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC, the biggest US exporter. "No coal is going to move until these guys go back to work." Source: Bloomberg  Iowa Republican Chuck Grassley tweeted that President Biden needs to tell the unions to find a resolution, and "if he can't, Congress must." "There is a role for Congress if in fact they fail to reach an agreement," House Majority Leader Steny Hoyer told Bloomberg. "We can pass legislation if needed," he said.  Congress can delay or halt a rail stoppage and it would probably be in the best interest of Democrats for optical reasons ahead of the midterm elections.  Tyler Durden Tue, 09/13/2022 - 11:44.....»»

Category: smallbizSource: nytSep 13th, 2022

Clorox Reports Q4 and FY22 Results, Provides FY23 Outlook and Announces Streamlined Operating Model

OAKLAND, Calif., Aug. 3, 2022 /PRNewswire/ -- The Clorox Company (NYSE:CLX) today reported results for the fourth quarter and fiscal year 2022, which ended June 30, 2022. Fourth-Quarter Fiscal Year 2022 Summary The following is a summary of key fourth-quarter results. All comparisons are with the fourth quarter of fiscal year 2021 unless otherwise stated. Net sales of $1.8 billion were flat versus the year-ago quarter, as lower shipments were offset by the benefit of pricing. Organic sales1 were up 1%. The three-year average growth rate for net sales was 3%. Gross margin of 37.1% was flat versus the year-ago quarter, due mainly to ongoing elevated commodity costs and manufacturing and logistics costs, offset by the benefits of pricing and cost savings initiatives. Diluted net earnings per share (diluted EPS) increased 4% to 81 cents from 78 cents in the year-ago quarter, reflecting the previous year's 17-cent noncash charge in connection with investments and related arrangements made with a Professional Products business unit supplier. This was partially offset by a 12-cent charge in the current period related to investments in the company's long-term strategic digital capabilities and productivity enhancements. Adjusted EPS1 decreased 2% to 93 cents versus 95 cents in the year-ago quarter, driven mainly by a higher effective tax rate, partially offset by lower advertising. "Over this quarter and the fiscal year, we navigated through challenging operating conditions by taking pro-active steps to rebuild margin and invest in the areas of the business that would best position Clorox for long-term success. This has allowed us to report results in line with our expectations and deliver another quarter of sequential margin improvement," said CEO Linda Rendle. "The streamlined operating model we announced today to create a faster, simpler company is designed to increase efficiency, move decision-making closer to consumers and customers, and enable us to better meet their needs. This is another important step in implementing our IGNITE strategy of reimagining how we work, complementing the digital transformation initiative that's already underway. "Looking to fiscal year 2023, the environment remains difficult, with consumer behaviors adapting to ongoing inflation as well as continued normalization in our cleaning and disinfecting portfolio. We're addressing these challenges head-on while taking steps to keep our categories healthy and offer superior consumer value. Guided by our IGNITE strategy, we're confident that, despite these headwinds, our actions will position us well to deliver profitable growth over time and build a stronger, more resilient company."  This press release includes certain non-GAAP financial measures. See "Non-GAAP Financial Information" at the end of this press release for more details.   Strategic and Operational Highlights The following are highlights of business and ESG achievements in the fourth quarter: Delivered net sales growth in three of four reportable segments. Continued to execute cost-justified pricing actions across the vast majority of the portfolio. Launched first direct-to-consumer online platform for the Clorox brand in July. Expanded Brita partnership program — which provides products to municipalities as a short-term solution to lead in drinking water — to include 25 municipalities, reducing reliance on single-use plastic bottled water. Launched Healthy Parks Project, a multiyear investment in environmental justice through a partnership with city parks in communities where Clorox operates. Named to 100 Best Corporate Citizens list by 3BL Media, 2022 50 Out Front list of the Best Places to Work for Women & Diverse Managers by Diversity MBA (ranking No. 10) and Best Employers for Diversity 2022 list by Forbes and Statista (ranking No. 8 out of 500 companies). Key Segment Results The following is a summary of key fourth-quarter results by reportable segment. All comparisons are with the fourth quarter of fiscal year 2021, unless otherwise stated. Health and Wellness (Cleaning; Professional Products; Vitamins, Minerals and Supplements)              Net sales decreased 5%, with lower sales in all three businesses. The decrease was driven by 18 points of lower volume, which was partially offset by 13 points of favorable price mix. Cleaning sales decreased, driven by the continued normalization of consumer demand and reduction in retailer inventories of disinfecting wipes, which were partially offset by favorable price mix. Professional Products sales decreased, primarily as the result of reduced demand in the commercial cleaning sector due to low office occupancy rates and a tight labor market for cleaning professionals. VMS sales decreased, primarily due to the ongoing shift away from noncore brands and a reduction in retailer inventories. Segment pretax earnings increased 650%, driven by the previous year's noncash charge to the Professional Products business. On an adjusted basis2, segment pretax earnings increased 206%, primarily reflecting lower advertising investments. Household (Bags and Wraps; Grilling; Cat Litter) Net sales increased 4%, reflecting increases in two of three businesses. Growth was driven primarily by 8 points of favorable price mix, which was partially offset by 4 points of lower volume. Bags and Wraps sales increased, driven by the benefit of pricing and volume growth due to distribution gains behind innovation such as Glad ForceFlex Plus with Clorox trash bags and the brand's experiential platform in the new Cherry Blossom scent. Grilling sales decreased as a result of normalization of consumer demand and poor weather conditions at the start of the grilling season. Cat Litter sales increased, primarily due to the benefit of pricing, the strength of the Fresh Step Outstretch innovation and continued growth in the e-commerce channel. Segment pretax earnings decreased 12%, primarily due to higher manufacturing and logistics costs and higher commodity costs, partially offset by the benefits of pricing and cost savings initiatives. Lifestyle (Food; Natural Personal Care; Water Filtration) Net sales increased 1%, reflecting growth in two of three businesses. The increase was driven primarily by 4 points of favorable price mix, which was partially offset by 3 points of lower volume. Food sales increased, driven primarily by the benefit of pricing and expanding consumer usage of bottled Hidden Valley Ranch beyond its core purpose as a salad dressing. Natural Personal Care sales decreased, due mainly to lower shipments caused by supply chain disruptions. Water Filtration sales increased, supported by innovation. Introduction of the Brita Tahoe pitcher with a newly designed indicator and the relaunch of the lead-reducing Elite filter helped the business reach its highest household penetration in eight years. Segment pretax earnings decreased 33%, mainly due to higher commodity costs and manufacturing and logistics costs. International (Sales Outside the U.S.) Net sales increased 4%, driven by 13 points of favorable price mix, which was partially offset by 8 points of unfavorable foreign exchange rates and 1 point of lower volume. Organic sales growth was 12%. Segment pretax earnings were flat, driven by the benefit of pricing, which was offset by higher commodity costs and higher manufacturing and logistics costs. 1 Organic sales growth/(decrease) and adjusted EPS are non-GAAP measures. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures. 2 Adjusted pretax earnings for the Health and Wellness segment is a non-GAAP measure. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures.   Fiscal Year 2022 Summary The following is a summary of key fiscal year 2022 results. All comparisons are to fiscal year 2021. Net sales decreased 3% (2% organic sales decrease) primarily due to 5 points of lower volume and 1 point of unfavorable foreign exchange rates, partially offset by 3 points of favorable price mix. The three-year average growth rate for net sales was 5%. Gross margin decreased 780 basis points to 35.8% from 43.6% in the year-ago period. The decrease was driven by higher manufacturing and logistics costs, increased commodity costs, and unfavorable mix, which were partially offset by the benefits of pricing and cost savings initiatives. Diluted EPS decreased 33% to $3.73 from $5.58 due to lower sales and gross margin, the one-time, noncash remeasurement gain recognized on the previously held equity interest in the Saudi joint venture in the prior period and investments in the company's long-term strategic digital capabilities and productivity enhancements. These factors were partially offset by the noncash impairment charges on assets held by the VMS business in the prior period. Adjusted EPS decreased 43% to $4.10 from $7.25, mainly driven by lower sales and gross margin, partially offset by lower advertising investments. Net cash provided by operations was $786 million, compared to $1.3 billion in fiscal year 2021, representing a 38% decrease. Streamlined Operating Model to Improve Margins and Drive Growth As part of its journey to Reimagine Work — one of the key pillars of its IGNITE strategy — Clorox is announcing a streamlined operating model to create a simpler, faster company. The operating model, which the company will begin implementing in the first quarter of fiscal year 2023, is designed to increase efficiency as well as move decision-making closer to consumers and customers in order to better anticipate and meet their needs. The new operating model is expected to generate ongoing annual savings of approximately $75 million to $100 million, with benefits beginning in fiscal year 2023. The company expects selling and administrative expenses to be approximately 13% of sales over time as a result of the changes and its ongoing productivity efforts. It also expects to take a charge in connection with the new operating model of approximately $75 million to $100 million over fiscal years 2023 and 2024, with approximately $35 million, or about 20 cents, to be recognized in fiscal year 2023, mostly in other income and expense. Fiscal Year 2023 Outlook Net sales are expected to be down 4% to up 2% compared to the prior year. Organic sales are expected to be down 3% to up 3%. Gross margin is expected to increase by about 200 basis points, primarily due to the combined benefit of pricing, cost savings and supply chain optimization, offset by continued cost inflation. Selling and administrative expenses are expected to be between 15% and 16% of net sales, which includes about 1.5 points of impact from the company's strategic investments in digital capabilities and productivity enhancements. Advertising and sales promotion spending is expected to be about 10% of net sales, reflecting the company's ongoing commitment to invest behind its brands. The company's effective tax rate is expected to be about 24%, with the year-over-year increase primarily reflecting lower excess tax benefits from equity compensation. Diluted EPS is expected to be between $3.10 and $3.47, or a decrease between 17% and 7%, respectively. Adjusted EPS is expected to be between $3.85 and $4.22, or a decrease of 6% to an increase of 3%, respectively. It reflects continued normalization of demand in parts of the portfolio that saw the most significant surge over the last two years and progress rebuilding gross margin. It also reflects the company's long-standing commitment to continue investing in its brands as well as a return to more normalized levels of incentive compensation and a higher effective tax rate. To provide greater visibility into the underlying operating performance of the business, adjusted EPS outlook excludes the long-term strategic investment in digital capabilities and productivity enhancements, estimated to be about 55 cents, and an estimated 20-cent charge related to the streamlined operating model announced today. Clorox Earnings Conference Call Schedule At approximately 4:15 p.m. ET today, Clorox will post prepared management remarks regarding its fourth-quarter and fiscal year 2022 results. At 5 p.m. ET today, the company will host a live Q&A audio webcast with CEO Linda Rendle and Chief Financial Officer Kevin Jacobsen to discuss the results. Links to the live (and archived) webcast, press release and prepared remarks can be found at Clorox Quarterly Results. For More Detailed Financial Information Visit the company's Quarterly Results for the following:  Supplemental unaudited volume and sales growth information Supplemental unaudited gross margin driver information Supplemental unaudited cash flow information and free cash flow reconciliation Supplemental unaudited reconciliation of earnings before interest and taxes (EBIT) and adjusted EBIT Supplemental unaudited reconciliation of adjusted earnings per share Note: Percentage and basis-point, or point, changes noted in this press release are calculated based on rounded numbers, except for per-share data and the effective tax rate. The Clorox Company The Clorox Company (NYSE: CLX) is a leading multinational manufacturer and marketer of consumer and professional products with about 9,000 employees worldwide and fiscal year 2022 sales of $7.1 billion. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products; Pine-Sol® cleaners; Liquid-Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags and wraps; Kingsford® grilling products; Hidden Valley® dressings and sauces; Brita® water-filtration products; Burt's Bees® natural personal care products; and RenewLife®, Rainbow Light®, Natural Vitality CALM™, and NeoCell® vitamins, minerals and supplements. The company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and Clorox Healthcare® brand names. More than 80% of the company's sales are generated from brands that hold the No. 1 or No. 2 market share positions in their categories. Clorox is a signatory of the United Nations Global Compact and the Ellen MacArthur Foundation's New Plastics Economy Global Commitment. The company has been broadly recognized for its corporate responsibility efforts, included on the Barron's 2022 100 Most Sustainable Companies list, 2022 Bloomberg Gender-Equality Index, the Human Rights Campaign's 2022 Corporate Equality Index and the 2022 Parity.org Best Places for Women to Advance list, among others. For more information, visit TheCloroxCompany.com and follow the company on Twitter at @CloroxCo. CLX-F Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, among others, statements related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic, and the related responses of governments, consumers, customers, suppliers, employees and the company, on our business, operations, employees, financial condition and results of operations, and any such forward-looking statements, whether concerning the COVID-19 pandemic or otherwise, involve risks, assumptions and uncertainties. Except for historical information, statements about future volumes, sales, organic sales growth, foreign currencies, costs, cost savings, margins, earnings, earnings per share, diluted earnings per share, foreign currency exchange rates, tax rates, cash flows, plans, objectives, expectations, growth or profitability are forward-looking statements based on management's estimates, beliefs, assumptions and projections. Words such as "could," "may," "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "will," "predicts," and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic and financial performance are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed. Important factors that could affect performance and cause results to differ materially from management's expectations are described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021, as updated from time to time in the company's Securities and Exchange Commission filings. These factors include, but are not limited to: intense competition in the company's markets; the impact of the changing retail environment, including the growth of alternative retail channels and business models, and changing consumer preferences; the impact of COVID-19 on the availability of, and efficiency of the supply, manufacturing and distribution systems for, the company's products, including any significant disruption to such systems; on the demand for the company's products; and on worldwide, regional and local adverse economic conditions, including increased risk of inflation; volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services; risks related to supply chain issues and product shortages as a result of increased supply chain dependencies due to an expanded supplier network and a reliance on certain single-source suppliers; risks relating to the significant increase in demand for disinfecting and other products due to the COVID-19 pandemic continuing; dependence on key customers and risks related to customer consolidation and ordering patterns; risks related to the company's use of and reliance on information technology systems, including potential security breaches, cyber-attacks, privacy breaches or data breaches that result in the unauthorized disclosure of consumer, customer, employee or company information, or service interruptions, especially at a time when a large number of the company's employees are working remotely and accessing its technology infrastructure remotely; the ability of the company to drive sales growth, increase prices and market share, grow its product categories and manage favorable product and geographic mix; risks relating to acquisitions, new ventures and divestitures, and associated costs; and the ability to complete announced transactions and, if completed, integration costs and potential contingent liabilities related to those transactions; risks related to the ability of the company to achieve anticipated results and cost savings from the streamlined operating model; the company's ability to maintain its business reputation and the reputation of its brands and products; lower revenue, increased costs or reputational harm resulting from government actions and compliance with regulations, or any material costs imposed by changes in regulation; the ability of the company to successfully manage global political, legal, tax and regulatory risks, including changes in regulatory or administrative activity; the operations of the company and its suppliers being subject to disruption by events beyond the company's control, including work stoppages, cyber-attacks, weather events or natural disasters, political instability or uncertainty, disease outbreaks or pandemics, such as COVID-19, and terrorism; risks related to international operations and international trade, including foreign currency fluctuations, such as devaluations, and foreign currency exchange rate controls; changes in governmental policies, including trade, travel or immigration restrictions, new or additional tariffs, and price or other controls; labor claims and civil unrest; inflationary pressures, particularly in Argentina; impact of the United Kingdom's exit from the European Union; potential negative impact and liabilities from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach; widespread health emergencies, such as COVID-19; and the possibility of nationalization, expropriation of assets or other government action; the impact of macroeconomic and geopolitical trends and events, including the unfolding situation in Ukraine and its regional and global ramifications and effects on inflation; the ability of the company to innovate and to develop and introduce commercially successful products, or expand into adjacent categories and countries; the impact of product liability claims, labor claims and other legal, governmental or tax proceedings, including in foreign jurisdictions and in connection with any product recalls; implement and generate cost savings and efficiencies, and successfully implement its business strategies; the accuracy of the company's estimates and assumptions on which its financial projections, including any sales or earnings guidance or outlook it may provide from time to time, are based; risks related to additional increases in the estimated fair value of The Procter & Gamble Company's interest in the Glad business; the performance of strategic alliances and other business relationships; the company's ability to attract and retain key personnel; the impact of environmental, social, and governance issues, including those related to climate change and sustainability on our sales, operating costs or reputation; environmental matters, including costs associated with the remediation and monitoring of past contamination, and possible increases in costs resulting from actions by relevant regulators, and the handling and/or transportation of hazardous substances; the company's ability to effectively utilize, assert and defend its intellectual property rights, and any infringement or claimed infringement by the company of third-party intellectual property rights; the effect of the company's indebtedness and credit rating on its business operations and financial results and the company's ability to access capital markets and other funding sources; the company's ability to pay and declare dividends or repurchase its stock in the future; the impacts of potential stockholder activism; and risks related to any litigation associated with the exclusive forum provision in the company's bylaws. The company's forward-looking statements in this press release are based on management's current views, beliefs, assumptions and expectations regarding future events and speak only as of the date of this press release. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. Non-GAAP Financial Information This press release contains non-GAAP financial information related to organic sales growth/(decrease) and adjusted EPS for the fourth quarter of fiscal year 2022 and for fiscal year 2022; Health and Wellness adjusted segment pretax earnings increase for the fourth quarter of fiscal year 2022; and organic sales growth/(decrease) and adjusted EPS outlook for fiscal year 2023. Clorox defines organic sales growth/(decrease) as GAAP net sales growth/(decrease) excluding the effect of foreign exchange rate changes and any acquisitions or divestitures. Organic sales growth/(decrease) outlook for fiscal year 2023 excludes the impact of unfavorable foreign currency exchange rate changes, which the company currently expects to reduce GAAP net sales growth/(decrease) by about 1.5 percentage points. Management believes that the presentation of organic sales growth/(decrease) is useful to investors because it excludes sales from any acquisitions and divestitures, which results in a comparison of sales only from the businesses that the company was operating and expects to continue to operate throughout the relevant periods, and the company's estimate of the impact of foreign exchange rate changes, which are difficult to predict and out of the control of the company and management. However, organic sales growth/(decrease) may not be the same as similar measures provided by other companies due to potential differences in methods of calculation or differences in which items are incorporated into these adjustments. Adjusted EPS is defined as diluted earnings per share that excludes or has otherwise been adjusted for significant items that are nonrecurring or unusual. The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. Adjusted EPS is supplemental information that management uses to help evaluate the company's historical and prospective financial performance on a consistent basis over time. Management believes that by adjusting for certain items affecting comparability of performance over time, such as asset impairments, charges related to the streamlined operating model, charges related to digital capabilities and productivity enhancements investment, significant losses/(gains) related to acquisitions, and other nonrecurring or unusual items, investors and management are able to gain additional insight into the company's underlying operating performance on a consistent basis over time. However, adjusted EPS may not be the same as similar measures provided by other companies due to potential differences in methods of calculation or differences in which items are incorporated into these adjustments. Adjusted segment pretax earnings increase is defined as an increase in earnings (losses) before income taxes excluding the impact of certain nonrecurring or unusual items. Adjusted segment pretax earnings increase of the Health and Wellness segment for the fourth quarter of fiscal year 2022 was 206%, which reflects a deduction of 444% related to the impact of $28 noncash impairment charges in the fourth quarter of fiscal year 2021 from the 650% GAAP pretax earnings increase of the Health and Wellness segment for the fourth quarter of fiscal year 2022. The percentage changes are versus the year-ago period. Management believes that the presentation of the adjusted segment pretax earnings increase for the Health and Wellness segment is useful to investors to assess operating performance on a consistent basis by removing the impact of charges it believes do not directly reflect the performance of the segment's underlying operations. The reconciliation tables below refer to the equivalent GAAP measures adjusted as applicable for the following items: Digital Capabilities and Productivity Enhancements Investment  As announced in August 2021, the company plans to invest approximately $500 million over a five-year period in transformative technologies and processes. This investment, which began in the first quarter of fiscal year 2022, includes replacement of the company's enterprise resource planning system and transitioning to a cloud-based platform as well as the implementation of a suite of other digital technologies. Together it is expected that these implementations will generate efficiencies and transform the company's operations in the areas of supply chain, digital commerce, innovation, brand building and more over the long term.    Of the total $500 million investment, approximately 55% is expected to represent incremental operating costs primarily recorded within selling and administrative expenses to be adjusted from reported EPS for purposes of disclosing adjusted EPS over the course of the next five years. Approximately 70% of these incremental operating costs are expected to be related to the implementation of the ERP, with the remaining costs primarily related to the implementation of complementary technologies.   Due to the nature, scope and magnitude of this investment, these costs are considered by management to represent incremental transformational costs above the historical normal level of spending for information technology to support operations. Since these strategic investments, including incremental operating costs, will cease at the end of the investment period, are not expected to recur in the foreseeable future, and are not considered representative of the company's underlying operating performance, the company's management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company's operations and is useful for period-over-period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.  Streamlined Operating Model As announced today, Clorox will begin to implement a streamlined operating model in the first quarter of fiscal year 2023. As a result, the company expects to incur costs of approximately $75 million to $100 million over fiscal years 2023 and 2024, with approximately $35 million, or about 20 cents, to be recognized in fiscal year 2023, primarily within other income and expense. The following tables provide reconciliations of organic sales growth/(decrease) (non-GAAP) to net sales growth/(decrease), the most comparable GAAP measure: Three Months Ended June 30, 2022 Percentage change versus the year-ago period Health and Wellness Household Lifestyle International Total.....»»

Category: earningsSource: benzingaAug 3rd, 2022

Logistics Warehouse Activity May Cool As Interest Rates Heat Up

Logistics Warehouse Activity May Cool As Interest Rates Heat Up By Mark Solomon of FreightWaves Nothing in the second-quarter data indicates that the 12-year bull market for U.S. logistics warehousing, and the trends of e-commerce growth and the need for businesses to maintain high inventory levels that have driven the surge, are close to ending.  The industrial construction pipeline hit an unprecedented 699 million square feet in the quarter, up 112% from pre-pandemic levels and 177% above the 10-year average, according to Cushman & Wakefield, a real estate services firm. New leasing activity for the year is tracking to exceed 800 million square feet, which would mark only the second year ever at such a lofty perch, Cushman said.  Nationwide vacancy rates plunged in the quarter to 3.1%, 120 basis points below a year ago, according to Cushman data. Every U.S. region that Cushman canvasses reported under 4% vacancy rates for the second consecutive quarter. Twenty markets reported vacancy rates of less than 2%. In Chicago, the country’s largest industrial market with more than 1.2 billion square feet of inventory, 8.1 million square feet were developed, the greatest second-quarter completion total in the market’s history, according to Colliers International Group Inc, a real estate services firm. According to Colliers data, 20 projects totaling 8.1 million square feet commenced during the quarter in the Chicago market. Colliers said that the Chicago market experienced in the quarter an uptick in vacancy rates for speculative development, where projects are undertaken with no formal end-user commitment, as well as a drop in leasing activity for the category. However, those changes reflect how tight the market has become and are likely more of a blip on the radar than a meaningful trend. Two weeks into the third quarter, though, anecdotal evidence is pointing to a break in the action. Institutional investors who have pumped billions of dollars into the industrial market in search of higher yields in a low interest rate environment have hit the pause button, concerned about how to price real estate returns in an environment of higher interest rates and of the future direction of borrowing costs with the Federal Reserve in aggressive tightening mode.  Jack Rosenberg, Colliers’ Chicago-based national director of logistics and transportation who represents industrial tenants, said that “cap rates,” which determine the annual return on a property’s investment by dividing its value with its net operating income, have begun to creep up due to the higher cost of money. A higher cap rate means the investment will likely yield less than it would have if interest rates were lower.   Lack of clarity into the speed, extent and duration of rate hikes will slow, if not stop, development, Rosenberg said. That’s because no one knows what cap rates will look like in 12 to 18 months when the project is leased and is ready to be sold. One major developer and a significant investor, neither of whom Rosenberg would identify, are in “pencils down” mode, industry lingo for a corporate pause. Projects slated to begin this fall are being pushed into next spring. In the meantime, sale prices per square foot have been dropping, and buyers are requesting changes in their favor to contractual terms of projects currently under contract. The angst over the Fed’s actions extends to developers as well. Lisa DeNight, national industrial research director at Newmark Group, a real estate services firm, said higher capital costs are leading some developers to halt or abandon projects. Some developers are even selling development sites. Unsurprisingly, “new construction starts have begun to slow, but still remain historically elevated,” she said. A different cycle This isn’t the first rate tightening cycle the industrial market has managed through since 2010. What’s different about this cycle is that it dovetails with construction cost inflation, labor shortages and long lead times for materials due to continued global supply chain disruptions.  As bottlenecks ease and commodity prices decline due to market expectations that higher rates will curtail end demand, more supply will hit the markets and will do so at lower prices. However, that won’t occur until 2023 at the earliest, according to Newmark. The average permitting and construction process for new industrial projects is taking five months longer than it did in 2019, DeNight said, and the average order lead times for a critical commodity like roofing materials remain at 30 to 50 weeks. Progress on obtaining necessary building permits continues to be hamstrung by understaffed local governments. “Every stage of the construction timeline has been hampered by two years of challenges that are unlikely to subside during the balance of 2022,” DeNight said. Despite higher rates, most projects now underway will be seen through to completion, said John Morris, Americas president of industrial & logistics for real estate services firm CBRE Group Inc. Morris said that the 12- to 18-month lead time for end-to-end project completions means that it will take five or six quarters for the impact of rate hikes to be dramatically felt in the industrial market. For now, occupier demand remains strong as e-commerce sales stay elevated and as tenants ensure they can occupy facilities ahead of the peak holiday season. Overall occupier demand is about 95% of what it was at this time a year ago, Morris said. Any slowdown will come from the supply side and not from demand, he said.  Rosenberg said that none of his clients have indicated they are putting their leasing needs on hold, although he acknowledged that the people he works directly with are typically the last to know if a project is being shelved. Carolyn Salzer, Americas head of logistics and industrial research at Cushman, said the supply-demand scales continue to favor lessors. “Right now, there just isn’t enough space out there for occupiers in general,” Salzer said. “What we have heard is that if a tenant needs to be in a market, they will make it work.”  Tenants will have more leverage should supply begin to exceed demand, which, if it happens, will be a 2023 story,  she added. The variable in all this is whether higher rates will trigger a recession, which could trigger a sustainable drop in consumer demand. Should consumers pull back, occupiers’ appetites will dull quickly, leading to a decline in rents and an increase in vacancy rates. However, should the economy avoid a contraction and new development continues to slow, then competition for available space is likely to surge and rents will soar.   The many crosscurrents buffeting industrial real estate have produced a degree of murkiness that stakeholders are unaccustomed to. When asked for directional clarity, Rosenberg replied, “I’ll say, ‘Who the hell knows’ because nobody knows.” Tyler Durden Sun, 07/17/2022 - 17:30.....»»

Category: blogSource: zerohedgeJul 17th, 2022

Factors Likely to Decide PVH Corp"s (PVH) Fate in Q1 Earnings

PVH Corp's (PVH) Q1 performance is likely to have gained from brand strength and digital demand. However, supply-chain woes and rising inflation are likely to have been concerning. PVH Corporation PVH is expected to register year-over-year top and bottom-line declines when it reports first-quarter fiscal 2022 results  on Jun 1. The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at $1.58 per share, suggesting decline of 17.7% from the year-ago quarter’s reported figure. The consensus mark for earnings has been unchanged in the past 30 days. The consensus mark for quarterly revenues is pinned at $2.1 billion, indicating decline of 0.03% from the prior-year reported number.In the last reported quarter, the company delivered an earnings surprise of 43.4%. Its bottom line surpassed estimates by 83.8%, on average, over the trailing four quarters.Factors to NotePVH Corp has been gaining from brand strength, particularly Calvin Klein and Tommy Hilfiger driven by robust consumer demand. Some other notable efforts, including Calvin Klein’s spring collection launch and all-together campaign, global Tommy Jeans AAPE by A Bathing Ape collaboration as well as partnership with the online game platform Roblox, are likely to have acted as upsides. These, along with continued momentum in the international unit, are likely to have aided the company’s performance in the fiscal first quarter.PVH has been witnessing momentum in the digital business as customers shifted to online purchases. A solid online show, investments in omni-channel capabilities, improved inventory and better customer engagement bodes well. The company’s initiatives to expand its direct-to-consumer digital business and strengthen its network with third-party digital partners are expected to have contributed to digital sales growth in the fiscal first quarter.However, PVH Corp has been witnessing uncertainty stemming from the war in Ukraine and other macroeconomic challenges, including inflation and continued impacts of the COVID-19 pandemic. Supply-chain disruptions, including transportation shortages, labor shortages and port congestion are likely to have led to production and delivery delays across stores and online. Also, continued sluggishness in the North America unit remains concerning.On its last earnings call, management expected first-quarter fiscal 2022 revenues to remain flat year over year (up 4% on a cc basis). This compares unfavorably with 55% growth (up 46% on a cc basis) reported in the prior year. The outlook also includes a 5% reduction each for the exit of the Heritage Brands Retail business along with a 1% reduction stemming from temporary store closures and the halt of commercial activities in Russia and Belarus, as well as lower wholesale shipments to Ukraine. The bottom line was envisioned to be $1.55-$1.60 per share, whereas it reported $1.92 on a non-GAAP basis in the year-ago quarter.Molson Coors Beverage Company Price and EPS Surprise   Molson Coors Beverage Company price-eps-surprise | Molson Coors Beverage Company QuoteZacks ModelOur proven model does not conclusively predict an earnings beat for PVH Corp this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.PVH Corp has a Zacks Rank #3 and an Earnings ESP of 0.00%.Stocks With Favorable CombinationHere are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:WillScot Mobile Mini WSC currently has an Earnings ESP of +3.51% and a Zacks Rank #2. WSC is anticipated to register top-line growth when it reports second-quarter 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.2 billion, indicating an improvement of 13.8% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.Also, the Zacks Consensus Estimate for WillScot Mobile Mini’s bottom line moved up 11.5% in the past 30 days at $2.29 per share. The metric reflects growth of 107.1% from the year-ago quarter. WSC has delivered an earnings beat of 7.4%, on average, in the trailing four quarters.lululemon athletica LULU has an Earnings ESP of +0.28% and a Zacks Rank of 3 at present. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2022. The Zacks Consensus Estimate for quarterly earnings moved up 2.1% to $1.43 per share in the past 30 days, suggesting an increase of 23.3% from the year-ago quarter’s reported number.Lululemon’s top line is also expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.55 billion, which suggests a rise of 26% from the figure reported in the prior-year quarter. LULU has delivered an earnings beat of 0.3%, on average, in the trailing four quarters.Vail Resorts MTN has an Earnings ESP of +1.00% and it currently sports a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2022. The Zacks Consensus Estimate for quarterly earnings moved up 0.3% in the past 30 days to $9.13 per share, suggesting 35.9% growth from the year-ago quarter’s reported number.Vail Resorts’ top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.15 billion, which suggests a rise of nearly 29.7% from the figure reported in the prior-year quarter. MTN has delivered an earnings beat of 1.7%, on average, in the trailing four quarters.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report lululemon athletica inc. (LULU): Free Stock Analysis Report WillScot Mobile Mini Holdings Corp. (WSC): Free Stock Analysis Report PVH Corp. (PVH): Free Stock Analysis Report Vail Resorts, Inc. (MTN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 31st, 2022

S&P Futures Jump Above 4,000 As Fed Fears Fade

S&P Futures Jump Above 4,000 As Fed Fears Fade After yesterday's post-FOMC ramp which sent stocks higher after the Fed's Minutes were less hawkish than feared and also hinted at a timeline for the Fed's upcoming pause (and easing), US index futures initially swung between gains and losses on Thursday as investors weighed the "good news" from the Fed against downbeat remarks on the Chinese economy from premier Li who warned that China would struggle to post a positive GDP print this quarter coupled with Apple’s conservative outlook. Eventually, however, bullish sentiment prevailed and even with Tech stocks underperforming following yesterday's disappointing earnings from Nvidia, e-mini futures rose to session highs as of 715am, and traded up 0.6% above 4,000 for the first time since May 18, while Nasdaq 100 futures were up 0.2% after earlier dropping as much as 0.8%. The tech-heavy index is down 27% this year. Treasury yields and the dollar slipped. Fed policy makers indicated their aggressive set of moves could leave them with flexibility to shift gears later if needed. Investors took some comfort from the Fed minutes that didn’t show an even more aggressive path being mapped to tackle elevated prices, though central banks remain steadfast in their resolve to douse inflation. Still, volatility has spiked as the risk of a US recession, the impact from China’s lockdowns and the war in Ukraine simmer. While the Fed minutes “provided investors with a temporary relief, today’s mixed price action on stocks mostly shows that major bearish leverages linger,” said Pierre Veyret, a technical analyst at ActivTrades in London. “The war in eastern Europe and concerns about the Chinese economy still add stress to market sentiment,” he wrote in a report. “Investors will want to see evidence of improvements regarding the pressure coming from rising prices.” “We expect key market drivers to continue to be centered around inflation and how central banks react; global growth concerns and how China gets to grip with its zero-Covid policy; and the geopolitical conflict between Russia and Ukraine,” said Fraser Lundie, head of fixed income for public markets at Federated Hermes Limited. “Positive news flow on any of these market drivers could sharply improve risk sentiment; however, there is a broad range of scenarios that could play out in the meantime.” In premarket trading, shares in Apple dropped 1.4% after a report said that the tech giant is planning to keep iPhone production flat in 2022, disappointing expectations for a ~10% increase. The company also said it was raising salaries in the US by 10% or more as it faces a tight labor market and unionization efforts. In other premarket moves, Nvidia dropped 5.3% as the biggest US chipmaker by market value gave a disappointing sales forecast. Software company Snowflake slumped 14%, while meme stock GameStop Corp. fell 2.9%. Among gainers, Twitter Inc. jumped 5.2% after billionaire Elon Musk dropped plans to partially fund his purchase of the company with a margin loan tied to his Tesla stake and increased the size of the deal’s equity component to $33.5 billion. Other notable premarket movers include: Shares of Alibaba and Baidu rise following results, sending other US-listed Chinese stocks higher in US premarket trading. Alibaba shares shot up as much as 4.5% after reporting fourth- quarter revenue and earnings that beat analyst expectations. Lululemon’s (LULU US) stock gains 2.4% in premarket trading as Morgan Stanley raised its recommendation to overweight, suggesting that the business can be more resilient through headwinds than what the market is expecting. Macy’s (M US) shares gain 15% in premarket trading after Co. increases its adjusted earnings per share guidance for the full fiscal year Williams-Sonoma (WSM US) shares jumped as much as 9.6% in premarket trading after 1Q sales beat estimates. The retailer was helped by its exposure to more affluent customers, but analysts cautioned that it may be difficult to maintain the sales momentum amid macroeconomic challenges. Nutanix (NTNX US) shares shed about a third of their value in US premarket trading as analysts slashed their price targets on the cloud platform provider after its forecast disappointed. US airline stocks rise in premarket trading on Thursday, after Southwest and JetBlue provided upbeat outlooks for the second-quarter. LUV up 1.5% premarket, after raising its second-quarter operating revenue growth forecast. JBLU up 2% after saying it expects second-quarter revenue at or above high end of previous guidance. Cryptocurrency-tied stocks fall in premarket trading as Bitcoin snaps two days of gains. Coinbase -2.6%; Marathon Digital -2.3%; Riot Blockchain -1.2%. Bitcoin drops 1.9% at 6:11 am in New York, trading at $29,209.88. It’s time to buy the dip in stocks after a steep global selloff in equity markets, according to Citi strategists. Meanwhile, Fidelity International Chief Executive Officer Anne Richards said the risk of a recession has increased and markets are likely to remain volatile, the latest dire warning on the outlook at the World Economic Forum. “If inflation gets tame enough over summer, there may not be continued raising of rates,” Carol Pepper, Pepper International chief executive officer, said on Bloomberg TV, adding that investors should look to buy tech stocks after the selloff. “Stagflation, I just don’t think that’s going to happen anymore. I think we are going to be in a situation where inflation will start tapering down and then we will start going into a more normalized market.” In Europe, the Stoxx Europe 600 Index rose 0.3%, pare some of their earlier gains but remain in the green, led by gains for retail, consumer and energy stocks. IBEX outperforms, adding 0.6%, FTSE MIB is flat but underperforms peers. Retailers, energy and consumer products are the strongest-performing sectors, with energy shares outperforming for the second day as oil climbed amid data that showed a further decrease in US crude and gasoline stockpiles. Here are the most notable European movers: Auto Trader rises as much as 3.5% after its full-year results beat consensus expectations on both top- and bottom-lines. Galp climbs as much as 4.1% as RBC upgrades to outperform, saying the stock might catch up with the rest of the sector after “materially” underperforming peers in recent years. Rightmove rises as much as 1.5% after Shore upgrades to hold from sell, saying the stock has reached an “appropriate” level following a 27% decline this year. FirstGroup soars as much as 16% after the bus and train operator said it received a takeover approach from I Squared Capital Advisors and is currently evaluating the offer. United Utilities declines as much as 8.9% as company reports a fall in adjusted pretax profit. Jefferies says full-year guidance implies a materially-below consensus adjusted net income view. Johnson Matthey falls as much as 7.5% after the company reported results and said it expects operating performance in the current fiscal year to be in the lower half of the consensus range. BT drops as much as 5.7% after the telecom operator said the UK will review French telecom tycoon Patrick Drahi’s increased stake in the company under the National Security and Investment Act. JD Sports drops as much as 12% as the departure of Peter Cowgill as executive chairman is disappointing, according to Shore Capital. Earlier in the session, Asian stocks were mixed as traders assessed China’s emergency meeting on the economy and Federal Reserve minutes that struck a less hawkish note than markets had expected.  The MSCI Asia Pacific Index was little changed after fluctuating between gains and losses of about 0.6% as technology stocks slid. South Korean stocks dipped after the central bank raised interest rates by 25 basis points as expected. Chinese shares eked out a small advance after a nationwide emergency meeting on Wednesday offered little in terms of additional stimulus. The benchmark CSI 300 Index headed for a weekly drop of more than 2%, despite authorities’ vows to support an economy hit by Covid-19 lockdowns. Investors took some comfort from Fed minutes in which policy makers indicated their aggressive set of moves could leave them with flexibility to shift gears later if needed. Still, Asia’s benchmark headed for a weekly loss amid concerns over China’s lockdowns and the possibility of a US recession. “The coming months are ripe for a re-pricing of assets across the board with a further shake-down in risk assets as term and credit premia start to feature prominently,” Vishnu Varathan, the head of economics and strategy at Mizuho Bank, wrote in a research note.  Japanese stocks closed mixed after minutes from the Federal Reserve’s latest policy meeting reassured investors while Premier Li Keqiang made downbeat comments on China’s economy. The Topix rose 0.1% to close at 1,877.58, while the Nikkei declined 0.3% to 26,604.84. Toyota Motor Corp. contributed the most to the Topix gain, increasing 1.9%. Out of 2,171 shares in the index, 1,171 rose and 898 fell, while 102 were unchanged. In Australia, the S&P/ASX 200 index fell 0.7% to close at 7,105.90 as all sectors tumbled except for technology. Miners contributed the most to the benchmark’s decline. Whitehaven slumped after peer New Hope cut its coal output targets. Appen soared after confirming a takeover approach from Telus and said it’s in talks to improve the terms of the proposal. Appen shares were placed in a trading halt later in the session. In New Zealand, the S&P/NZX 50 index fell 0.6% to 11,102.84. India’s key stock indexes snapped three sessions of decline to post their first advance this week on recovery in banking and metals shares. The S&P BSE Sensex rose 0.9% to 54,252.53 in Mumbai, while the NSE Nifty 50 Index advanced by a similar measure. Both benchmarks posted their biggest single-day gain since May 20 as monthly derivative contracts expired today. All but one of the 19 sector sub-indexes compiled by BSE Ltd. gained.  HDFC Bank and ICICI Bank provided the biggest boosts to the two indexes, rising 3% and 2.2%, respectively. Of the 30 shares in the Sensex, 24 rose and 6 fell. As the quarterly earnings season winds up, among the 45 Nifty companies that have so far reported results, 18 have trailed estimates and 27 met or exceeded expectations. Aluminum firm Hindalco Industries is scheduled to post its numbers later today. In FX, the Bloomberg Dollar fell 0.3%, edging back toward the lowest level since April 26 touched Tuesday. The yen jumped to an intraday high after the head of the Bank of Japan said policymakers could manage an exit from their decades-long monetary policy, and that U.S. rate rises would not necessarily keep the yen weak. Commodity currencies including the Australian dollar fell as China’s Premier Li Keqiang offered a bleak outlook on domestic growth. The Chinese economy is in some respects faring worse than in 2020 when the pandemic started, he said. Central banks were busy overnight: Russia’s central bank delivered its third interest-rate reduction in just over a month and said borrowing costs can fall further still, as it looks to stem a rally in the ruble and unwinds the financial defenses in place since the invasion of Ukraine. The Bank of Korea raised its key interest rate on Thursday as newly installed Governor Rhee Chang-yong demonstrated his intention to tackle inflation at his first policy meeting since taking the helm. New Zealand’s central bank has also shown its commitment this week to combat surging prices. In rates, Treasuries bull-steepen amid similar price action in bunds and many other European markets and gains for US equity index futures. Yields richer by ~3bp across front-end of the curve, steepening 2s10 by ~2bp, 5s30s by ~3bp; 10-year yields rose 2bps to 2.76%, keeps pace with bund while outperforming gilts. 2- and 5-year yields reached lowest levels in more than a month, remain below 50-DMAs. US auction cycle concludes with 7-year note sale, while economic data includes 1Q GDP revision. Bund, Treasury and gilt curves all bull-steepen. Peripheral spreads tighten to Germany with 10y BTP/Bund narrowing 5.1bps to 194.6bps. The US weekly auction calendar ends with a $42BN 7-year auction today which follows 2- and 5-year sales that produced mixed demand metrics, however both have richened from auction levels. WI 7-year yield at ~2.735% is ~17bp richer than April’s, which tailed by 1.7bp. IG dollar issuance slate includes Bank of Nova Scotia 3Y covered SOFR; issuance so far this week remains short of $20b forecast, is expected to remain subdued until after US Memorial Day. In commodities,  WTI trades within Wednesday’s range, adding 0.6% to around $111. Spot gold falls roughly $7 to trade around $1,846/oz. Cryptocurrencies decline, Bitcoin drops 2.5% to below $29,000.  Looking at the day ahead now, and data releases from the US include the second estimate of Q1 GDP, the weekly initial jobless claims, pending home sales for April, and the Kansas City Fed’s manufacturing index for May. Meanwhile in Italy, there’s the consumer confidence index for May. From central banks, we’ll hear from Fed Vice Chair Brainard, the ECB’s Centeno and de Cos, and also get decisions from the Central Bank of Russia and the Central Bank of Turkey. Finally, earnings releases include Costco and Royal Bank of Canada. Market Snapshot S&P 500 futures little changed at 3,974.25 STOXX Europe 600 up 0.2% to 435.16 MXAP little changed at 163.17 MXAPJ down 0.3% to 529.83 Nikkei down 0.3% to 26,604.84 Topix little changed at 1,877.58 Hang Seng Index down 0.3% to 20,116.20 Shanghai Composite up 0.5% to 3,123.11 Sensex up 0.4% to 53,975.57 Australia S&P/ASX 200 down 0.7% to 7,105.88 Kospi down 0.2% to 2,612.45 German 10Y yield little changed at 0.90% Euro little changed at $1.0679 Brent Futures up 0.5% to $114.55/bbl Gold spot down 0.3% to $1,847.94 U.S. Dollar Index little changed at 102.11 Top Overnight News from Bloomberg Federal Reserve officials agreed at their gathering this month that they need to raise interest rates in half-point steps at their next two meetings, continuing an aggressive set of moves that would leave them with flexibility to shift gears later if needed. Russia’s central bank delivered its third interest-rate reduction in just over a month and said borrowing costs can fall further still, halting a rally in the ruble as it unwinds the financial defenses in place since the invasion of Ukraine. China’s trade-weighted yuan fell below 100 for the first time in seven months as Premier Li Keqiang’s bearish comments added to concerns that the economy may miss its growth target by a wide margin this year. Bank of Japan Governor Haruhiko Kuroda said interest rate increases by the Federal Reserve won’t necessarily cause the yen to weaken, saying various factors affect the currency market. A more detailed breakdown of global markets courtesy of Newsquawk Asia-Pac stocks were indecisive as risk appetite waned despite the positive handover from Wall St where the major indices extended on gains post-FOMC minutes after the risk event passed and contained no hawkish surprises. ASX 200 failed to hold on to opening gains as weakness in mining names, consumer stocks and defensives overshadowed the advances in tech and financials, while capex data was mixed with the headline private capital expenditure at a surprise contraction for Q1. Nikkei 225 faded early gains but downside was stemmed with Japan set to reopen to tourists on June 6th. Hang Seng and Shanghai Comp were mixed with early pressure after Premier Li warned the economy was worse in some aspects than in 2020 when the pandemic began, although he stated that China will unveil detailed implementation rules for a pro-growth policy package before the end of the month, while the PBoC issued a notice to promote credit lending to small firms and the MoF announced cash subsidies to Chinese airlines. Top Asian News PBoC issued a notice to promote credit lending to small firms and is to boost financial institutions' confidence to lend to small firms, according to Reuters. BoK raised its base rate by 25bps to 1.75%, as expected, via unanimous decision. BoK raised its 2022 inflation forecast to 4.5% from 3.1% and raised its 2023 forecast to 2.9% from 2.0%, while it sees GDP growth of 2.7% this year and 2.4% next year. BoK said consumer price inflation is to remain high in the 5% range for some time and sees it as warranted to conduct monetary policy with more focus on inflation, according to Reuters. Morgan Stanley has lowered China's 2022 GDP estimate to 3.2% from 4.2%. CSPC Drops After Earnings, Covid Impact to Weigh: Street Wrap China Builder Greenland’s Near-Term Bonds Set for Record Drops Debt Is Top Priority for Diokno as New Philippine Finance Chief European bourses are firmer across the board, Euro Stoxx 50 +0.7%, but remain within initial ranges in what has been a relatively contained session with much of northern-Europe away. Stateside, US futures are relatively contained, ES +0.2%, with newsflow thin and on familiar themes following yesterday's minutes and before PCE on Friday.  Apple (AAPL) is reportedly planning on having a 220mln (exp. ~240mln) iPhone production target for 2022, via Bloomberg. -1.4% in  the pre-market. Baidu Inc (BIDU) Q1 2022 (CNY): non-GAAP EPS 11.22 (exp. 5.39), Revenue 28.4bln (exp. 27.82bln). +4.5% in the pre-market. UK CMA is assessing whether Google's (GOOG) practises in parts of advertisement technology may distort competition. Top European News UK Chancellor Sunak's package today is likely to top GBP 30bln, according to sources via The Times; Chancellor will confirm that the package will be funded in part by windfall tax on oil & gas firms likely to come into effect in the autumn. Subsequently, UK Gov't sources are downplaying the idea that the overall support package is worth GBP 30bln, via Times' Swinford; told it is a very big intervention. UK car production declined 11.3% Y/Y to 60,554 units in April, according to the SMMT. British Bus Firm FirstGroup Gets Takeover Bid from I Squared Citi Strategists Say Buy the Dip in Stocks on ‘Healthy’ Returns The Reasons to Worry Just Keep Piling Up for Davos Executives UK Unveils Plan to Boost Aviation Industry, Passenger Rights Pakistan Mulls Gas Import Deal With Countries Including Russia FX Dollar drifts post FOMC minutes that reaffirm guidance for 50bp hikes in June and July, but nothing more aggressive, DXY slips into lower range around 102.00 vs 102.450 midweek peak. Yen outperforms after BoJ Governor Kuroda outlines exit strategy via a combination of tightening and balance sheet reduction, when the time comes; USD/JPY closer to 126.50 than 127.50 where 1.13bln option expiries start and end at 127.60. Rest of G10, bar Swedish Crown rangebound ahead of US data, with Loonie looking for independent direction via Canadian retail sales, USD/CAD inside 1.2850-00; Cable surpassing 1.2600 following reports that the cost of living package from UK Chancellor Sunak could top GBP 30bln. Lira hits new YTD low before CBRT and Rouble weaker following top end of range 300bp cut from CBR. Yuan halts retreat from recovery peaks ahead of key technical level, 6.7800 for USD/CNH. Fixed Income Debt wanes after early rebound on Ascension Day lifted Bunds beyond technical resistance levels to 154.74 vs 153.57 low. Gilts fall from grace between 119.17-118.19 parameters amidst concerns that a large UK cost of living support package could leave funding shortfall. US Treasuries remain firm, but off peaks for the 10 year T-note at 120-31 ahead of GDP, IJC, Pending Home Sales and 7 year supply. Commodities Crude benchmarks inch higher in relatively quiet newsflow as familiar themes dominate; though reports that EU officials are considering splitting the oil embargo has drawn attention. Currently WTI and Brent lie in proximity to USD 111/bbl and USD 115/bbl respectively; within USD 1.50/bbl ranges. Russian Deputy PM Novak expects 2022 oil output 480-500mln/T (prev. 524mln/T YY), via Ria. Spot gold is similarly contained around the USD 1850/oz mark, though its parameters are modestly more pronounced at circa. USD 13/oz Central Banks CBR (May, Emergency Meeting): Key Rate 11.00% (exp. ~11.00/12.00%, prev. 14.00%); holds open the prospect of further reductions at upcoming meetings. BoJ's Kuroda says, when exiting easy policy, they will likely combine rate hike and balance sheet reduction through specific means, timing to be dependent on developments at that point; FOMC rate hike may not necessarily result in a weaker JPY or outflows of funds from Japan if it affects US stock prices, via Reuters. US Event Calendar 08:30: 1Q PCE Core QoQ, est. 5.2%, prior 5.2% 08:30: 1Q Personal Consumption, est. 2.8%, prior 2.7% 08:30: May Continuing Claims, est. 1.31m, prior 1.32m 08:30: 1Q GDP Price Index, est. 8.0%, prior 8.0% 08:30: May Initial Jobless Claims, est. 215,000, prior 218,000 08:30: 1Q GDP Annualized QoQ, est. -1.3%, prior -1.4% 10:00: April Pending Home Sales YoY, est. -8.0%, prior -8.9% 10:00: April Pending Home Sales (MoM), est. -2.0%, prior -1.2% 11:00: May Kansas City Fed Manf. Activity, est. 18, prior 25 DB's Jim Reid concludes the overnight wrap A reminder that our latest monthly survey is now live, where we try to ask questions that aren’t easy to derive from market pricing. This time we ask if you think the Fed would be willing to push the economy into recession in order to get inflation back to target. We also ask whether you think there are still bubbles in markets and whether equities have bottomed out yet. And there’s another on which is the best asset class to hedge against inflation. The more people that fill it in the more useful so all help from readers is very welcome. The link is here. For markets it’s been a relatively quiet session over the last 24 hours compared to the recent bout of cross-asset volatility. The main event was the release of the May FOMC minutes, which had the potential to upend that calm given the amount of policy parameters currently being debated by the Fed. But in reality they came and went without much fanfare, and failed to inject much life into afternoon markets or the debate around the near-term path of policy. As far as what they did say, they confirmed the line from the meeting itself that the FOMC is ready to move the policy to a neutral position to fight the current inflationary scourge, with agreement that 50bp hikes were appropriate at the next couple of meetings. That rapid move to neutral would leave the Fed well-positioned to judge the outlook and appropriate next steps for policy by the end of the year, and markets were relieved by the lack of further hawkishness, with the S&P 500 extending its modest gains following the release to end the day up +0.95%. As the Chair said at the meeting, and has been echoed by other Fed officials since, the minutes noted that the hawkish shift in Fed communications have already had a noticeable effect on financial conditions, with Fed staff pointing out that “conditions had tightened by historically large amounts since the beginning of the year.” Meanwhile on QT, which the Fed outlined their plans for at the May meeting, the minutes expressed some trepidation about market liquidity and potential “unanticipated effects on financial market conditions” as a result, but did not offer potential remedies. With the minutes not living up to hawkish fears alongside growing concerns about a potential recession, investors continued to dial back the likelihood of more aggressive tightening, with Fed funds futures moving the rate priced in by the December meeting to 2.64%, which is the lowest in nearly a month and down from its peak of 2.88% on May 3. So we’ve taken out nearly a full 25bp hike by now, which is the biggest reversal in monetary policy expectations this year since Russia’s invasion of Ukraine began. That decline came ahead of the minutes and also saw markets pare back the chances of two consecutive +50bp hikes, with the amount of hikes priced over the next two meetings falling under 100bps for only the second time since the May FOMC. Yields on 10yr Treasuries held fairly steady, only coming down -0.5bps to 2.745%. Ahead of the Fed minutes, markets had already been on track to record a steady performance, and the S&P 500 (+0.95%) extended its existing gains in the US afternoon. That now brings the index’s gains for the week as a whole to +1.98%, so leaving it on track to end a run of 7 consecutive weekly declines, assuming it can hold onto that over the next 48 hours, and futures this morning are only down -0.13%. That said, we’ve seen plenty of volatility in recent weeks, and after 3 days so far this is the first week in over two months where the S&P hasn’t seen a fall of more than -1% in a single session, so let’s see what today and tomorrow bring. In terms of the specific moves yesterday, it was a fairly broad advance, but consumer discretionary stocks (+2.78%) and other cyclical industries led the way, with defensives instead seeing a much more muted performance. Tech stocks outperformed, and the NASDAQ (+1.51%) came off its 18-month low, as did the FANG+ index (+1.99%). Over in Europe, equities also recorded a decent advance, with the STOXX 600 gaining +0.63%, whilst bonds continued to rally as well, with yields on 10yr bunds (-1.5bps) OATs (-1.5bps) and BTPs (-2.7bps) all moving lower. These gains for sovereign bonds have come as investors have grown increasingly relaxed about inflation in recent weeks, with the 10yr German breakeven falling a further -4.2bps to 2.23% yesterday, its lowest level since early March and down from a peak of 2.98% at the start of May. Bear in mind that the speed of the decline in the German 10yr breakeven over the last 3-4 weeks has been faster than that seen during the initial wave of the Covid pandemic, so a big shift in inflation expectations for the decade ahead in a short space of time that’s reversed the bulk of the move higher following Russia’s invasion of Ukraine. Nor is that simply concentrated over the next few years, since the 5y5y forward inflation swaps for the Euro Area looking at inflation over the five years starting in five years’ time has come down from aa peak of 2.49% earlier this month to 2.07% by the close last night, so almost back to the ECB’s target. To be fair there’s been a similar move lower in US breakevens too, and this morning the 10yr US breakeven is down to a 3-month low of 2.56%. That decline in inflation expectations has come as investors have ratcheted up their expectations about future ECB tightening. Yesterday, the amount of tightening priced in by the July meeting ticked up a further +0.2bps to 32.7bps, its highest to date, and implying some chance that they’ll move by more than just 25bps. We heard from a number of additional speakers too over the last 24 hours, including Vice President de Guindos who said in a Bloomberg interview that the schedule for rate hikes outlined by President Lagarde was “very sensible”, and that the question of larger hikes would “depend on the outlook”. Overnight in Asia, equities are fluctuating this morning after China’s Premier Li Keqiang struck a downbeat note on the economy yesterday. Indeed, he said that the difficulties facing the Chinese economy “to a certain extent are greater than when the epidemic hit us severely in 2020”. As a reminder, our own economist’s forecasts for GDP growth this year are at +3.3%, which if realised would be the slowest in 46 years apart from 2020 when Covid first took off. Against that backdrop, there’s been a fairly muted performance, and whilst the Shanghai Composite (+0.65%) and the CSI 300 (+0.60%) have pared back initial losses to move higher on the day, the Hang Seng (-0.13%) has lost ground and the Nikkei (+0.07%) is only just in positive territory. We’ve also seen the Kospi (-0.08%) give up its initial gains overnight after the Bank of Korea moved to hike interest rates once again, with a 25bp rise in their policy rate to 1.75%, in line with expectations. That came as they raised their inflation forecasts, now expecting CPI this year at 4.5%, up from 3.1% previously. At the same time they also slashed their growth forecast to 2.7%, down from 3.0% previously. There wasn’t much in the way of data yesterday, though we did get the preliminary reading for US durable goods orders in April. They grew by +0.4% (vs. +0.6% expected), although the previous month was revised down to +0.6% (vs. +1.1% previously). Core capital goods orders were also up +0.3% (vs. +0.5% expected). To the day ahead now, and data releases from the US include the second estimate of Q1 GDP, the weekly initial jobless claims, pending home sales for April, and the Kansas City Fed’s manufacturing index for May. Meanwhile in Italy, there’s the consumer confidence index for May. From central banks, we’ll hear from Fed Vice Chair Brainard, the ECB’s Centeno and de Cos, and also get decisions from the Central Bank of Russia and the Central Bank of Turkey. Finally, earnings releases include Costco and Royal Bank of Canada. Tyler Durden Thu, 05/26/2022 - 07:50.....»»

Category: dealsSource: nytMay 26th, 2022

PVH Corp (PVH) Dips 37.6% in a Year: Can Growth Efforts Aid?

PVH Corp (PVH) continues to reel under inflation, supply-chain issues and higher logistic costs. However, brand strength, a solid online show and other strategic endeavors remain upsides. PVH Corporation PVH continues to grapple with uncertainty due to the war in Ukraine and other macroeconomic challenges, including inflation, continued impacts of the COVID-19 pandemic, supply-chain and logistic disruptions resulting in delivery delays, and a lack of inventory availability for stores and digital businesses. Also, higher freight and logistic costs remain concerning.As a result, management expects fiscal 2022 revenues to increase 2-3% year over year (up 6-7% on a cc basis). This compares unfavorably with 25% growth (up 26% on a cc basis) reported in the prior year. The outlook also includes a 2% reduction each for the exit of the Heritage Brands Retail business, temporary store closures and a halt of commercial activities in Russia and Belarus, and lower wholesale shipments to Ukraine. The bottom line is expected to be $9.00 per share, whereas it reported $13.25 and $10.15 on a GAAP and non-GAAP basis, respectively, in the prior year.For first-quarter fiscal 2022, management expects flat year-over-year revenues (up 4% on a cc basis). This compares unfavorably with 55% growth (up 46% on a cc basis) reported in the prior year. The outlook also includes a 5% reduction each for the exit of the Heritage Brands Retail business, a 1% reduction stemming from temporary store closures and the halt of commercial activities in Russia and Belarus, and lower wholesale shipments to Ukraine. The bottom line is likely to be $1.55-$1.60 per share, whereas it reported $1.92 on a non-GAAP basis in the year-ago quarter.PVH Corp's North America unit has been performing poorly for a while now. Despite the increased focus on streamlining the North American business, the unit is likely to remain drab as international tourism is not expected to return to growth in fiscal 2022. This, along with the ongoing supply-chain pressures and logistic delays, is expected to continue to hurt the North America business.For fiscal 2022, management expects elevated freight and logistic costs, continued uncertainty related to the new COVID-19 variant Omicron, and supply-chain disruptions, including transportation shortages, labor shortages and port congestion. These might lead to production and delivery delays across stores and online. Image Source: Zacks Investment Research Consequently, the stock slumped 37.6% in the past year compared with the industry’s decline of 28.5%.Efforts to Counter HurdlesPVH Corp has been long gaining from strength in Calvin Klein and Tommy Hilfiger, as well as solid online show and improved customer engagement. Its recently announced multi-year strategy, PVH+ Plan, to drive sustainable growth bodes well.The company's Tommy Hilfiger and Calvin Klein brands continued to perform well in fourth-quarter fiscal 2021, driven by robust consumer demand. Calvin Klein launched its spring collection in the quarter and the all-together campaign, featuring an international cast, including Jennie Kim, and Euphoria star Dominic Fike.The Tommy Hilfiger brand benefitted from a solid performance in its global Tommy Jeans AAPE by A Bathing Ape collaboration, along with a higher sell-through rate and AURs. The brand also ventured into the metaverse via a partnership with the online game platform Roblox. Going forward, management remains confident about the underlying power of Calvin Klein and Tommy Hilfiger brands, which position it for success amid the ever-changing consumer landscape.The Zacks Rank #3 (Hold) company has been witnessing an impressive performance in the digital platform as customers have shifted to online purchases. Revenues in the digital channel rose 10% year over year in the quarter under review, accounting for nearly 25% of the total revenues. Investments in omni-channel capabilities and improved inventory bode well. The company is on track with the expansion of the direct-to-consumer digital business and strengthening its network with third-party digital partners.Also, its newly launched PVH+ plan mainly aims at accelerating growth via boosting its core strengths, and connecting Calvin Klein and TOMMY HILFIGER brands with the consumers through five major drivers. These drivers are — win with product, win with consumer engagement, win in the digitally-led marketplace, develop a demand and data-driven operating model, and drive efficiencies and invest in growth. The company expects to strengthen its presence in the global demand spaces, wherein its iconic labels resonate well with consumers.Management reinforces the Calvin Klein and Tommy Hilfiger brands so that these can cater to consumers’ needs in new and engaging ways. PVH is focused on fueling digital growth by developing a holistic distribution strategy for Calvin Klein and TOMMY HILFIGER, driven by digital and direct-to-consumer channels and wholesale partnerships.Moreover, PVH Corp looks to develop a demand and data-driven operating model, with a systematic and repeatable product creation model. The model will put consumers first, thus leveraging data to offer fresh products. Also, PVH focuses on boosting efficiencies to be cost-competitive, and, in turn, reinvest in strategic plans.All said, a VGM Score of B and a long-term earnings growth rate of 6% raise optimism in the stock.Stocks to ConsiderSome better-ranked stocks from the same industry are Delta Apparel DLA, Oxford Industries OXM and GIII Apparel Group GIII.GIII Apparel, a manufacturer, designer and distributor of apparel and accessories, presently sports a Zacks Rank #1 (Strong Buy). GIL has a trailing four-quarter earnings surprise of 160.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales and earnings suggests growth of 8.7% and 5.2% from the year-ago period’s reported numbers, respectively.Oxford Industries, which is involved in designing, sourcing, marketing and distributing products bearing the trademarks of its owned and licensed brands, currently flaunts a Zacks Rank #1. OXM has a trailing four-quarter earnings surprise of 96.7%, on average.The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.Delta Apparel, a manufacturer of knitwear products, currently has a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 95.5%, on average.The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers. Special Report: The Top 5 IPOs for Your Portfolio Today, you have a chance to get in on the ground floor of one of the best investment opportunities of the year. As the world continues to benefit from an ever-evolving internet, a handful of innovative tech companies are on the brink of reaping immense rewards - and you can put yourself in a position to cash in. One is set to disrupt the online communication industry. Brilliantly designed for creating online communities, this stock is poised to explode when made public. With the strength of our economy and record amounts of cash flooding into IPOs, you don’t want to miss this opportunity.>>See Zacks’ Hottest IPOs NowWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PVH Corp. (PVH): Free Stock Analysis Report GIII Apparel Group, LTD. (GIII): Free Stock Analysis Report Oxford Industries, Inc. (OXM): Free Stock Analysis Report Delta Apparel, Inc. (DLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 11th, 2022

Poor Rail Service Threatens US Economy, Shippers Tell Federal Regulators

Poor Rail Service Threatens US Economy, Shippers Tell Federal Regulators By Bill Stephens of Trains.com, Utilities are worried that the slowdown in coal deliveries could threaten U.S. electricity supply and destabilize the power grid. A BNSF train climbs Edelstein Hill near Chillicothe, Ill. Chemical producers say erratic rail service has forced them to curtail production of essentials like chlorine used to treat public drinking water systems and the plastics used in medical products. And one of the nation’s largest retailers of diesel fuel, renewable diesel, ethanol, and diesel exhaust fluid says Union Pacific’s plan to cut its shipments by 50% will create fuel shortages, bring trucking to a halt, and raise prices at the pump. Those were among the shipper concerns raised on Wednesday during a second day of hearings on railroad service problems that have been created by a shortage of train crews. “The nation’s supply chains are in a dire situation today because of this. And it’s not getting better, it’s getting worse. And the longer it goes on, the worse it’s going to get,” Ross Corthell, chair of the National Industrial Transportation League’s rail committee, told the Surface Transportation Board. He adds: “I don’t want to be doomsday, but it’s critical to our national security at some point in time. We have to be able to move commodities. And it’s becoming more and more challenging every day.” Shippers complained about how lengthy delays, erratic service, and missed switches forced them to curtail or halt production or shift some shipments to more expensive trucks. Some products, such as chlorine and coal, have no alternative to rail. “We need to move coal and right now it’s just not happening,” says Katie Mills, a lawyer for the National Mining Association. Shameek Konar, CEO of Pilot Travel Centers, says UP’s plan to restrict traffic as a way to ease congestion will squeeze already tight supplies of diesel fuel nationwide, and particularly of renewable diesel fuel required in California. UP initially asked Pilot to curtail its shipments by 26%, but subsequently said it would have to reduce its carloads by 50% or face railroad-imposed embargoes, Konar says. Unlike some shippers, who ordered extra cars as cycle times increased on UP, Pilot’s car fleet has held steady since January. UP gave Pilot a week to voluntarily reduce shipments but has not yet issued an embargo, Konar says. Pilot outlined the situation in a filing to the board last week. Eric Gehringer, UP’s executive vice president of operations, says the railroad continues to work with customers like Pilot to fully understand their car supply and shipment needs. “We’re still working through those details,” he says. “So we’re not pressuring them, saying you have to be at this level by this date. We’re still in the collaborative phase of ‘How can we do this together?’ ” STB steps up criticism STB Chairman Martin J. Oberman, who criticized CSX Transportation and Norfolk Southern officials in the first day of hearings, on Wednesday scolded BNSF Railway and UP for not maintaining a cushion of employees to handle a surge in traffic. Oberman pointed to June 2021 letters from BNSF CEO Katie Farmer and UP CEO Lance Fritz, who both offered assurances that their railroads would have enough crews to meet rising demand. Instead, both railroads have been holding a rising number of trains per day for a lack of crews and locomotives. Railroad officials apologized and said they were working as quickly as possible to hire crews and to pull locomotives out of storage. The railroads attributed their service problems to a combination factors: Traffic that rebounded faster than expected from pandemic lows; tangles in other links in the global supply chain, including ports, trucking, and warehouses; lower than anticipated return of furloughed crew members; higher than expected attrition of train crews and conductor trainees; and the struggle to hire conductors in a tight job market. BNSF aims to hire 1,700 conductors this year; UP says it will hire 1,400. “As BNSF has made clear in our communication with the board and to our customers, we’re not here to make excuses,” says Matt Garland, BNSF’s vice president of transportation. “Our service is our responsibility and we simply have not met our customer expectations in recent months.” BNSF expects service to be choppy over the next 30 days, but within 60 days should start to show signs of improvement as conductor trainees are deployed across the system, Garland told the board. UP’s terminals are fluid, he says, but main lines are congested due to excess car inventory. As UP’s customers have put 30,000 more cars into the system as the railroad slowed down, UP has had to run 70 to 90 additional trains per day. And that compounded congestion that feeds on itself by requiring more crews and more locomotives. “With the amount of congestion currently on the network, it will likely take us the better half of the year to decongest the network, assuming minimal variability on the network in addition to our customers’ crucial help in taking private cars off the network,” Gehringer says, based on the railroad’s recovery from similar events in 2014, 2017, and 2019. Board member Robert Primus was critical of UP’s use of embargoes, which he said are far and away higher than the rest of the industry. And he said it shows UP is penalizing its customers for the railroad’s inability to provide efficient and reliable service. Gehringer said UP only resorts to embargoes after lengthy discussions with customers and doesn’t restrict traffic if congestion at a customer facility or local serving is a result of UP service failures. BNSF defended its controversial Hi-Viz attendance policy, which is designed to boost crew availability. Crews can still use vacation and personal days, Garland says, and more than 90% of crews have earned points for good attendance since the policy was implemented this year. And he disputed labor union claims that the attendance policy has led to a wave of resignations. Attrition is slightly higher than normal, Garland says, but most of the 300 engineers and conductors who have left recently had not worked a shift in the past six months. KCS to the rescue? With UP and BNSF traffic snarled in the busy Houston terminal, Kansas City Southern has offered use of its crews to move dead trains parked on main lines. KCS, which was singled out for providing good service and was not required to attend the STB hearing, made the offer in a Friday letter to the STB. “Union Pacific understands the severity of the situation and is working hard to restore service to the levels our customers expect,” Gehringer says. The congestion has hurt the operation of KCS cross-border traffic that relies on long segments of trackage rights, mostly on UP, through Houston and across south Texas. On average, KCS has had to use two crews — instead of one — to move traffic between Beaumont and Kendleton, west of Houston. “To help resolve the Houston congestion problems, KCS has actually offered its crews on several occasions to move BNSF and UP trains that lacked crews off the main line so that KCS trains can pass,” John Orr, executive vice president of operations, wrote to the board. “We have also moved our interchange with BNSF for some auto traffic from the Robstown/Corpus Christi area to Rosenberg, just west of Houston, so BNSF has to expend fewer crews from their over-taxed crew base.” Orr suggested that the STB might consider granting KCS temporary trackage rights so that it and other railroads could bypass Houston congestion to reach the border at Laredo, Texas. “Can we do something to ease the congestion in Houston, at least … as a temporary measure if not a permanent one,” Oberman asked. UP and BNSF were unaware of the KCS filing but said they’d follow up. Gehringer was surprised about KCS’s claims, saying UP has spent $250 million in the last two years to extend tracks in its Englewood and Settegast yards in Houston, which are fed by a triple-track main. And Garland said BNSF and UP collaborate well every day to move traffic through Houston. Oberman asked the railroads to work together. “Really, you need to pull out all the stops,” he says. More PSR criticism For a second day, shippers and rail labor criticized the railroads’ implementation of the low-cost Precision Scheduled Railroading operating model and blamed it for cuts in personnel, yards, locomotives, and local service. The NIT League’s Corthell disputed railroads’ claims that their PSR implementations had been flawless, noting that local service complaints were brought to the board in 2019 – when CSX and NS both said their service was at record levels of reliability. And while railroads have blamed their service failures on crew availability and power, Corthell says the problem did not begin during the pandemic. “The problem started before COVID and it has its roots in the financial model known as Precision Scheduled Railroading, or PSR,” Corthell says. “And yes, I did say financial model.” Railroads have reduced local service in pursuit of lower operating ratios, Corthell says, and have continued to miss scheduled switches at an alarming rate. “Precision Scheduled Railroading has proven to be anything but precise at origin and destination,” he says. Unions representing mechanical and signal workers told the board that railroads are cannibalizing stored locomotives to keep active units in service and claimed that shop forces, car inspectors, and signal maintainers are spread too thin. Many have resigned due to working conditions, they said, including machinists with 10 to 20 years experience who have left Railroad Retirement benefits behind. “The problem is not inherently with a scheduled railroad, but a ruthless cost-cutting business model,” says labor lawyer Richard Edelman. Canadian Pacific, which like Canadian National and KCS was not required to attend the hearing, defended PSR. James Clements, the railway’s senior vice president of strategic planning and technology transformation, says CP has grown and run well despite disruptions over the past three years. The railway’s improved financial performance since adopting PSR in 2012 allowed it to invest in track upgrades, longer sidings, centralized traffic control, and yards that can handle longer trains. “We have built what I would call the foundation upon which you operate the PSR model,” Clements says, noting improvements in the railway’s service and customer satisfaction. Primus thanked CP and CN for attending. “You guys weren’t on the firing squad list to be here, and yet you came,” he says. But he was critical of Farmer and Fritz for not attending. Tyler Durden Sat, 05/07/2022 - 18:40.....»»

Category: blogSource: zerohedgeMay 7th, 2022

Parts Of Spanish Economy Grind To A Halt After Five-Day Nationwide Truckers" Strike

Parts Of Spanish Economy Grind To A Halt After Five-Day Nationwide Truckers' Strike Authored by Nick Cobrishley via NakedCapitalism.com, Like the Trudeau government, Pedro Sánchez’s ruling coalition blames the truckers’ strike on far-right elements while blaming Putin for record-high gas prices and decades-high inflation in Spain. Spain’s already struggling economy is in a bind after an indefinite strike by truck drivers has brought a number of key industries to a halt. Called by the Platform for the Defense of Road Transport of Merchandise, the strike began on Monday and is being followed by an estimated 85% of smaller truck companies and self-employed truckers. They are protesting surging fuel prices, unfair competition by larger companies and poor working conditions. Growing Shortages By Trending Stock News ReportLarge logistics hubs such as Mercamadrid have been operating at half capacity for the past three days, with a drop of as much as 60% in the arrival of products such as fruit, vegetables, fish and shellfish. In Catalonia, where I’m writing this from, the problems seem to be less pronounced. Barcelona’s wholesale market Mercabarna has been receiving 11% less fish and 33% less vegetables, in particular eggplant, zucchini and peppers. As one might expect, panic buying has also exacerbated the shortages. The main flashpoints are in southern and northern parts of the country, in regions such as Galicia and Andalusia. Some Cantabrian fishing fleets announced on Tuesday that they would halt their activity altogether as there was no way of guaranteeing that their haul would make it to market. The same is happening with fruit growers in the south of Spain. On Wednesday afternoon, the dairy industry confirmed that it will stop working as of Thursday because it cannot supply itself or distribute its products. Some factories have also been forced to close due to a shortage of components. They include a sugar refinery belonging to Azucarera in Jerez de la Frontera and two steel manufacturing plants, one belonging to Arcelor Mittal in Asturias and the other to Acerinox in Los Barrios (Cádiz). An Opel factory in Zaragoza has also stopped its Line 1, where the Citroën C3 Aircross and the Opel Crossland are assembled, due to supply problems. Ports have also been hit hard, as wsws reports: Throughout Spain, major ports are not fully functioning. The port of Bilbao, one of the main entry points in northern Spain, is paralysed. “By road, no commodity is leaving the port of Bilbao, no one works in Santurtzi, the port is stopped 100 percent. No truck is loading,” a spokesperson for the Association of Self-Employed Carriers of the port of Bilbao told news agency EFE. In Algeciras port, one of the world’s busiest transshipment hubs, the Algeciras Bay Container Transport Association, with a fleet of 1,000 trucks, is supporting the strike. Pickets have taken place outside key logistics hubs, preventing non-striking truckers from reaching their pickup point. In some places violence has erupted. According to El Mundo, 1,700 trucks had already been vandalized by Thursday afternoon. At a picket line in the industrial zone in San Fernando de Henares, Madrid, two strikers were reportedly injured, one seriously, after an undercover policeman opened fire when one of them resisted arrest. The striker, aged 33, was rushed to hospital in serious condition with a gunshot wound to his abdomen. The Sánchez government has responded to the crisis by bolstering security at logistics centers across Spain and reinforcing police units on the country’s road network to guarantee the supply of essential goods and the right to work of carriers who do not support the strike. In total, the Government has deployed 24,000 additional police officers. It is also following the by now dog-eared script of painting all the protestors as far-right agitators. It is the same playbook used by the Trudeau government in Canada against the so-called freedom truckers, as well as the governments of France, Germany, Austria and Italy against the anti-vaccine passport movements in their respective countries. Sánchez has referred to the members of the Platform for the Defense of Road Transport of Merchandise as “ultras who are replacing the spoken word with sticks, nails and stones.” According to the Minister of Transport, Mobility and Urban Agenda, Raquel Sánchez, the strike is not having much impact while “it is quite clear” that Spain’s resurgent far-right political party VOX is behind the movement. The organizers behind the platform deny the allegations. But Spain’s far-right party VOX is lending its support to the movement. Whether this is out of pure political opportunism on the part of VOX or something more sinister is at work is hard to ascertain. Support for VOX, which has already participated in a number of coalition governments at the city and regional level, is on the rise while support for the PSOE’s junior partner in government, PODEMOS, is on the decline. As economic conditions deteriorate in Spain, the chances of a right-wing coalition including VOX winning the next elections, in 2023, will grow. One thing that is clear is that the strikers have plenty of justifiable grievances, the most notable of which are record-high petrol prices and decades-high inflation. The trucker industry is exceptionally vulnerable to sharp rises in fuel prices. At many gas stations gasoline prices have already crossed the 2 euros a liter threshold. In February, the consumer price index in Spain clocked in at 7.6%, the highest level in 33 years and higher than just about any other Western European country with the exception of Belgium. Blaming Putin for Everything Sánchez recently took a leaf out of Joe Biden and Nancy Pelosi’s book by trying to pin all the blame for surging energy prices on Russia’s invasion of Ukraine. “We have to tell the truth and not confuse citizens. Inflation and rising energy prices are the sole responsibility of Vladimir Putin and his illegal war in Ukraine,” he told parliament. It is a desperate, intelligence-insulting ruse and as far as I can tell most people are not buying it. As the graph below (courtesy of Trading Economics) shows, Spain’s consumer price index CPI has been rising steadily since early 2021, a full year before Russia’s invasion of Ukraine: The PSOE-Podemos government is also escalating the use of violence against striking truckers, just months after deploying armored cars and rubber bullet-firing police squads against striking metalworkers in Cadiz. The truckers are not just riled about rising fuel prices. As one trucker told me, freelance drivers just can’t compete with the larger companies, which can stockpile fuel and get big discounts on spare parts. Meanwhile the freelancers and smaller companies pay full whack. This allows larger companies to offer lower rates, pricing smaller companies out of the market. Here’s a brief selection of some of the truckers’ other demands: A blanket prohibition of the contracting of good transport services (by road) at below operating costs. This is to try to prevent larger companies from pricing smaller operators out of the market. Limit the subcontracting of the transportation contracts to a single contractor. Establish direct liability to the main shipper in case of non-payment of services to the carrier, giving arbitration boards the legal capacity to exercise direct action against the main shipper. Maximum payment term of 30 days for transportation services, by law. Prohibition by law of the loading and unloading by truck owner operators and freelancers who drive their vehicles. A new law requiring and limiting the loading and unloading of trucks to a maximum time of 1 hour from arrival, or from the agreed time. Legislation prohibiting large road haulage companies from hiring bogus self employed workers (i.e. workers who only work for one company but are treated as freelancers) to drive their trucks. Construction of new rest areas that cater to the current flow of vehicles throughout the road network. It is inadmissible that sanctions are being imposed for exceeding driving times, when the reason for said excess is motivated by the lack of safe places to take breaks. Small businesses and self-employed workers, not just in Spain but across advanced economies, have been at the sharp end of the economic impact of the lockdowns and their myriad knock-on effects. Now, their margins are being squeezed ever tighter by rising inflation while procuring many basic goods is becoming more and more difficult. The story differs from country to country, depending on the extent to which the government in place has supported small businesses and the self-employed through the lockdowns. In Spain, the support was minimal and largely consisted of emergency loans. According to a recent report by the Bank of Spain, more than a third of self-employed workers lost 46% of their earnings during the first year of the pandemic and had only managed to recoup 17% of those earnings by November 2021. Earnings for small businesses, many of them in the tourism and hospitality sector, slumped by €60 billion in 2020 due to the pandemic. Many small businesses have had to take on new debt just to weather the lockdowns and now face an uphill climb trying to pay it all back. It’s a similar story in the UK, where a third of small businesses are now classed as highly indebted, more than twice the number before the COVID-19 pandemic, according to the Bank of England. To compound matters, many governments are beginning to hike taxes or social security on small businesses and self-employed workers. In Spain, any self-employed worker earning more than €1,100 a month will soon have to pay a lot more in social security contributions. This is the crux: as prices of energy and basic goods surge into the stratosphere, cash-starved governments are increasing taxes and/or social security contributions for many self employed workers and small businesses. For many, it could be the final straw. Tyler Durden Sat, 03/19/2022 - 09:20.....»»

Category: blogSource: zerohedgeMar 19th, 2022

Telecom Stock Roundup: Verizon to Power Smart Glass, AT&T"s EC Approval & More

While Verizon (VZ) will deliver an immersive AR experience in the sports and gaming arena, AT&T (T) secures an unconditional antitrust clearance from the European Commission for WarnerMedia sale. Over the past week, U.S. telecom stocks have witnessed a steady downtrend as the industry appeared to be on a collision course with the aviation sector due to the potential interference of the C-Band spectrum with aviation safety standards. With the C-Band spectrum for 5G expansion slated to take off on Jan 5, the Federal Aviation Administration (“FAA”) has released a ‘Safety Alert for Operators’. The alert includes recommended action in the form of ‘Notice To Air Missions’, primarily based on restrictions issued earlier by the FAA. This, in turn, is likely to significantly affect air cargo and commercial air travel at most of the biggest airports and highest traffic destinations across the country, with airlines warning that about 4% of daily flights are likely to be delayed, canceled, or diverted.     The FAA has raised concerns that the commercial launch of the C-band wireless service in the 3.7-3.98 GHz frequency band could cause the airwaves to interfere with radar or radio altimeter signals that measure the distance between the aircraft and ground. Data from these devices are fed to the cockpit safety system that helps pilots gauge the air safety metrics and prevent mid-air collision, avoid crashes and ensure a safe landing. Consequently, the FAA has issued certain flight restrictions that would prevent pilots from operating the automatic landing option and other cockpit systems during inclement weather conditions. This has put the transportation industry and the broader economy in jeopardy. Although the FCC has argued that both systems could safely co-exist, the impasse is unlikely to resolve anytime soon, fueling uncertainty within the industry.Notable company-specific news that grabbed the spotlight over the past week includes Verizon Communications Inc.’s VZ collaboration with Vuzix and AT&T Inc.’s T approval from European Commission for WarnerMedia sale. Also, Telefónica, S.A. TEF has decided to retrench 2,700 workers in Spain and Vodafone Group Public Limited Company VOD has launched a 5G mobile broadband device.Meanwhile, the U.S. Court of Appeals has supported an FCC move to open up 1,200 MHz of spectrum in the 6GHz band for unlicensed use. The court approval is likely to witness a proliferation of Wi-Fi standards as demand to connect more devices to the network rises exponentially. This, in turn, will facilitate enterprises and service providers to support emerging applications and ensure all connected devices perform at optimum levels.Recap of the Week’s Most Important Stories1.     Verizon recently inked a definitive agreement for an undisclosed amount with Vuzix to deliver an immersive augmented reality (AR) experience in the sports and gaming arena. The first-of-its-kind offering is likely to sow the seeds for future endeavors related to the commercialization of AR technology in various domains.  Per the deal, Vuzix will aim to leverage Verizon’s 5G and edge computing technologies for AR experience in its Shield smart glass. The collaboration is the culmination of a proof-of-concept program that was completed earlier this year, which demonstrated the power of Verizon's 5G and edge computing platform on Vuzix smart glasses in terms of improved response time, longer battery life and increased computing capacity.      2.     AT&T’s game-changing deal with Discovery, Inc. for the divesture of its WarnerMedia business recently got a big boost, with the European Commission granting unconditional antitrust clearance for the transaction. AT&T expects the merger to be completed by mid-2022. The transaction aims to spin off the carrier’s media assets and merge them with the complementary assets of Discovery.The antitrust clearance enables both the companies to move a step closer to the formation of Warner Bros. Discovery, a premium entertainment firm with enviable media content under a single platform. Post completion of the deal, AT&T will receive $43 billion in a combination of cash and debt securities and will own 71% of the new entity, while Discovery will own the remainder. The transaction is expected to enable the carrier to trim its huge debt burden and focus on core businesses. The separation of the media assets is likely to offer the company an opportunity to better align its communications business with a focused total return capital allocation strategy.3.    Telefónica has inked an agreement with local labor unions in Spain to retrench about 15% of its domestic workforce. The strategic decision is aimed at reducing operating costs, lowering debt and improving cash flow for extensive 5G deployment and upgrade of existing network infrastructure.The company is reportedly the third-largest telecom firm in Europe, with a global employee count of approximately 114,000. Telefonica will cut about 2,700 jobs from an estimated workforce of 18,500 in Spain. The voluntary severance package is likely to yield annual savings of more than 230 million euros from 2023. In addition, it is likely to generate positive cash flow in 2022 as the employees exit during the first quarter.4.    Vodafone recently announced the launch of its first-ever 5G mobile broadband device — 5G MiFi. This innovative offering has been specifically designed to cater to the connectivity requirements of customers ‘on the go’. The touchscreen device from Vodafone is ideal for supporting the connectivity of small businesses and it can also be used in the home premises. It is equipped with a simple web interface. It boasts an exceptional 8.5-hour battery life that enables customers to seamlessly share Wi-Fi with up to 32 users or devices, backed by hassle-free configuration.  Price PerformanceThe following table shows the price movement of some of the major telecom stocks over the past week and six months.Image Source: Zacks Investment ResearchIn the past five trading days, Juniper gained the most, with its stock rising 5.4%. Bandwidth has declined the most, with its stock falling 3.1%.Over the past six months, Arista has been the best performer, with its stock appreciating 37.8%, while Bandwidth has declined the most, with its stock falling 94.9%.Over the past six months, the Zacks Telecommunications Services industry has declined 9.1%, while the S&P 500 has rallied 10.8%.Image Source: Zacks Investment ResearchWhat’s Next in the Telecom Space?In addition to 5G deployments and product launches, all eyes will remain glued to how the new year unfurls for the industry and how the administration aims to address the potential deadlock between the aviation and telecom industry. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report Verizon Communications Inc. (VZ): Free Stock Analysis Report Vodafone Group PLC (VOD): Free Stock Analysis Report Telefonica SA (TEF): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksJan 2nd, 2022

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead One year ago, when looking at the 20 most popular stories of 2020, we said that the year would be a very tough act to follow as there "could not have been more regime shifts, volatility moments, and memes than 2020." And yet despite the exceedingly high bar for 2021, the year did not disappoint and proved to be a successful contender, and if judging by the sheer breadth of narratives, stories, surprises, plot twists and unexpected developments, 2021 was even more memorable and event-filled than 2020. Where does one start? While covid was the story of 2020, the pandemic that emerged out of a (Fauci-funded) genetic lab team in Wuhan, China dominated newsflow, politics and capital markets for the second year in a row. And while the biggest plot twist of 2020 was Biden's victory over Trump in the presidential election (it took the pandemic lockdowns and mail-in ballots to hand the outcome to Biden), largely thanks to Covid, Biden failed to hold to his biggest presidential promise of defeating covid, and not only did he admit in late 2021 that there is "no Federal solution" to covid waving a white flag of surrender less than a year into his presidency, but following the recent emergence of the Xi, pardon Omicron variant, the number of covid cases in the US has just shattered all records. The silver lining is not only that deaths and hospitalizations have failed to follow the number of cases, but that the scaremongering narrative itself is starting to melt in response to growing grassroots discontent with vaccine after vaccine and booster after booster, which by now it is clear, do nothing to contain the pandemic. And now that it is clear that omicron is about as mild as a moderate case of the flu, the hope has finally emerged that this latest strain will finally kill off the pandemic as it becomes the dominant, rapidly-spreading variant, leading to worldwide herd immunity thanks to the immune system's natural response. Yes, it may mean billions less in revenue for Pfizer and Moderna, but it will be a colossal victory for the entire world. The second biggest story of 2021 was undoubtedly the scourge of soaring inflation, which contrary to macrotourist predictions that it would prove "transitory", refused to do so and kept rising, and rising, and rising, until it hit levels not seen since the Volcker galloping inflation days of the 1980s. The only difference of course is that back then, the Fed Funds rate hit 20%. Now it is at 0%, and any attempts to hike aggressively will lead to a horrific market crash, something the Fed knows very well. Whether this was due to supply-chain blockages and a lack of goods and services pushing prices higher, or due to massive stimulus pushing demand for goods - and also prices - higher, or simply the result of a record injection of central bank liquidity into the system, is irrelevant but what does matter is that it got so bad that even Biden, facing a mauling for his Democratic party in next year's midterm elections, freaked out about soaring prices and pushed hard to lower the price of gasoline, ordering releases from the US Strategic Petroleum Reserve and vowing to punish energy companies that dare to make a profit, while ordering Powell to contain the surge in prices even if means the market is hit. Unfortunately for Biden, the market will be hit even as inflation still remain red hot for much of the coming year. And speaking of markets, while 2022 may be a year when the piper finally gets paid, 2021 was yet another blockbuster year for risk assets, largely on the back of the continued global response to the 2020 covid pandemic, when as we wrote last year, we saw "the official arrival of global Helicopter Money, tens of trillions in fiscal and monetary stimulus, an overhaul of the global economy punctuated by an unprecedented explosion in world debt, an Orwellian crackdown on civil liberties by governments everywhere, and ultimately set the scene for what even the World Economic Forum called simply "The Great Reset." Yes, the staggering liquidity injections that started in 2020, continued throughout 2021 and the final tally is that after $3 trillion in emergency liquidity injections in the immediate aftermath of the pandemic to stabilize the world, the Fed injected almost $2 trillion in the subsequent period, of which $1.5 trillion in 2021, a year where economists were "puzzled" why inflation was soaring. This, of course, excludes the tens of trillions of monetary stimulus injected by other central banks as well as the boundless fiscal stimulus that was greenlighted with the launch of helicopter money (i.e., MMT) in 2020. It's also why with inflation running red hot and real rates the lowest they have ever been, everyone was forced to rush into the "safety" of stocks (or stonks as they came to be known among GenZ), and why after last year's torrid stock market returns, the S&P rose another 27% in 2021 and up a staggering 114% from the March 2020 lows, in the process trouncing all previous mega-rallies (including those in 1929, 1938, 1974 and 2009)... ... making this the third consecutive year of double-digit returns. This reminds us of something we said last year: "it's almost as if the world's richest asset owners requested the covid pandemic." A year later, we got confirmation for this rhetorical statement, when we calculated that in the 18 months since the covid pandemic, the richest 1% of US society have seen their net worth increase by over $30 trillion. As a result, the US is now officially a banana republic where the middle 60% of US households by income - a measure economists use as a definition of the middle class - saw their combined assets drop from 26.7% to 26.6% of national wealth as of June, the lowest in Federal Reserve data, while for the first time the super rich had a bigger share, at 27%. Yes, the 1% now own more wealth than the entire US middle class, a definition traditionally reserve for kleptocracies and despotic African banana republics. It wasn't just the rich, however: politicians the world over would benefit from the transition from QE to outright helicopter money and MMT which made the over monetization of deficits widely accepted in the blink of an eye. The common theme here is simple: no matter what happens, capital markets can never again be allowed to drop, regardless of the cost or how much more debt has to be incurred. Indeed, as we look back at the news barrage over the past year, and past decade for that matter, the one thing that becomes especially clear amid the constant din of markets, of politics, of social upheaval and geopolitical strife - and now pandemics -  in fact a world that is so flooded with constant conflicting newsflow and changing storylines that many now say it has become virtually impossible to even try to predict the future, is that despite the people's desire for change, for something original and untried, the world's established forces will not allow it and will fight to preserve the broken status quo at any price - even global coordinated shutdowns - which is perhaps why it always boils down to one thing - capital markets, that bedrock of Western capitalism and the "modern way of life", where control, even if it means central planning the likes of which have not been seen since the days of the USSR, and an upward trajectory must be preserved at all costs, as the alternative is a global, socio-economic collapse. And since it is the daily gyrations of stocks that sway popular moods the interplay between capital markets and politics has never been more profound or more consequential. The more powerful message here is the implicit realization and admission by politicians, not just Trump who had a penchant of tweeting about the S&P every time it rose, but also his peers on both sides of the aisle, that the stock market is now seen as the consummate barometer of one's political achievements and approval. Which is also why capital markets are now, more than ever, a political tool whose purpose is no longer to distribute capital efficiently and discount the future, but to manipulate voter sentiments far more efficiently than any fake Russian election interference attempt ever could. Which brings us back to 2021 and the past decade, which was best summarized by a recent Bill Blain article who said that "the last 10-years has been a story of massive central banking distortion to address the 2008 crisis. Now central banks face the consequences and are trapped. The distortion can’t go uncorrected indefinitely." He is right: the distortion will eventually collapse especially if the Fed follows through with its attempt rate hikes some time in mid-2020, but so far the establishment and the "top 1%" have been successful - perhaps the correct word is lucky - in preserving the value of risk assets: on the back of the Fed's firehose of liquidity the S&P500 returned an impressive 27% in 2021, following a 15.5% return in 2020 and 28.50% in 2019. It did so by staging the greatest rally off all time from the March lows, surpassing all of the 4 greatest rallies off the lows of the past century (1929,1938, 1974, and 2009). Yet this continued can-kicking by the establishment - all of which was made possible by the covid pandemic and lockdowns which served as an all too convenient scapegoat for the unprecedented response that served to propel risk assets (and fiat alternatives such as gold and bitcoin) to all time highs - has come with a price... and an increasingly higher price in fact. As even Bank of America CIO Michael Hartnett admits, Fed's response to the the pandemic "worsened inequality" as the value of financial assets - Wall Street -  relative to economy - Main Street - hit all-time high of 6.3x. And while the Fed was the dynamo that has propelled markets higher ever since the Lehman collapse, last year certainly had its share of breakout moments. Here is a sampling. Gamestop and the emergence of meme stonks and the daytrading apes: In January markets were hypnotized by the massive trading volumes, rolling short squeezes and surging share prices of unremarkable established companies such as consoles retailer GameStop and cinema chain AMC and various other micro and midcap names. What began as a discussion on untapped value at GameStop on Reddit months earlier by Keith Gill, better known as Roaring Kitty, morphed into a hedge fund-orchestrated, crowdsourced effort to squeeze out the short position held by a hedge fund, Melvin Capital. The momentum flooded through the retail market, where daytraders shunned stocks and bought massive out of the money calls, sparking rampant "gamma squeezes" in the process forcing some brokers to curb trading. Robinhood, a popular broker for day traders and Citadel's most lucrative "subsidiary", required a cash injection to withstand the demands placed on it by its clearing house. The company IPOed later in the year only to see its shares collapse as it emerged its business model was disappointing hollow absent constant retail euphoria. Ultimately, the market received a crash course in the power of retail investors on a mission. Ultimately, "retail favorite" stocks ended the year on a subdued note as the trading frenzy from earlier in the year petered out, but despite underperforming the S&P500, retail traders still outperformed hedge funds by more than 100%. Failed seven-year Treasury auction:  Whereas auctions of seven-year US government debt generally spark interest only among specialists, on on February 25 2021, one such typically boring event sparked shockwaves across financial markets, as the weakest demand on record hit prices across the whole spectrum of Treasury bonds. The five-, seven- and 10-year notes all fell sharply in price. Researchers at the Federal Reserve called it a “flash event”; we called it a "catastrophic, tailing" auction, the closest thing the US has had to a failed Trasury auction. The flare-up, as the FT put it, reflects one of the most pressing investor concerns of the year: inflation. At the time, fund managers were just starting to realize that consumer price rises were back with a vengeance — a huge threat to the bond market which still remembers the dire days of the Volcker Fed when inflation was about as high as it is today but the 30Y was trading around 15%. The February auaction also illustrated that the world’s most important market was far less liquid and not as structurally robust as investors had hoped. It was an extreme example of a long-running issue: since the financial crisis the traditional providers of liquidity, a group of 24 Wall Street banks, have pulled back because of higher costs associated with post-2008 capital requirements, while leaving liquidity provision to the Fed. Those banks, in their reduced role, as well as the hedge funds and high-frequency traders that have stepped into their place, have tended to withdraw in moments of market volatility. Needless to say, with the Fed now tapering its record QE, we expect many more such "flash" episodes in the bond market in the year ahead. The arch ego of Archegos: In March 2021 several banks received a brutal reminder that some of family offices, which manage some $6 trillion in wealth of successful billionaires and entrepreneurs and which have minimal reporting requirements, take risks that would make the most serrated hedge fund manager wince, when Bill Hwang’s Archegos Capital Management imploded in spectacular style. As we learned in late March when several high-flying stocks suddenly collapsed, Hwang - a former protege of fabled hedge fund group Tiger Management - had built up a vast pile of leverage using opaque Total Return Swaps with a handful of banks to boost bets on a small number of stocks (the same banks were quite happy to help despite Hwang’s having been barred from US markets in 2013 over allegations of an insider-trading scheme, as he paid generously for the privilege of borrowing the banks' balance sheet). When one of Archegos more recent bets, ViacomCBS, suddenly tumbled it set off a liquidation cascade that left banks including Credit Suisse and Nomura with billions of dollars in losses. Conveniently, as the FT noted, the damage was contained to the banks rather than leaking across financial markets, but the episode sparked a rethink among banks over how to treat these clients and how much leverage to extend. The second coming of cryptos: After hitting an all time high in late 2017 and subsequently slumping into a "crypto winter", cryptocurrencies enjoyed a huge rebound in early 2021 which sent their prices soaring amid fears of galloping inflation (as shown below, and contrary to some financial speculation, the crypto space has traditionally been a hedge either to too much liquidity or a hedge to too much inflation). As a result, Bitcoin rose to a series of new record highs that culminated at just below $62,000, nearly three times higher than their previous all time high. But the smooth ride came to a halt in May when China’s crackdown on the cryptocurrency and its production, or “mining”, sparked the first serious crash of 2021. The price of bitcoin then collapsed as much as 30% on May 19, hitting a low of $30,000 amid a liquidation of levered positions in chaotic trading conditions following a warning from Chinese authorities of tighter curbs ahead. A public acceptance by Tesla chief and crypto cheerleader Elon Musk of the industry’s environmental impact added to the declines. However, as with all previous crypto crashes, this one too proved transitory, and prices resumed their upward trajectory in late September when investors started to price in the launch of futures-based bitcoin exchange traded funds in the US. The launch of these contracts subsequently pushed bitcoin to a new all-time high in early November before prices stumbled again in early December, this time due to a rise in institutional ownership when an overall drop in the market dragged down cryptos as well. That demonstrated the growing linkage between Wall Street and cryptocurrencies, due to the growing sway of large investors in digital markets. China's common prosperity crash: China’s education and tech sectors were one of the perennial Wall Street darlings. Companies such as New Oriental, TAL Education as well as Alibaba and Didi had come to be worth billions of dollars after highly publicized US stock market flotations. So when Beijing effectively outlawed swaths of the country’s for-profit education industry in July 2021, followed by draconian anti-trust regulations on the country's fintech names (where Xi Jinping also meant to teach the country's billionaire class a lesson who is truly in charge), the short-term market impact was brutal. Beijing’s initial measures emerged as part of a wider effort to make education more affordable as part of president Xi Jinping’s drive for "common prosperity" but that quickly raised questions over whether growth prospects across corporate China are countered by the capacity of the government to overhaul entire business models overnight. Sure enough, volatility stemming from the education sector was soon overshadowed by another set of government reforms related to common prosperity, a crackdown on leverage across the real estate sector where the biggest casualty was Evergrande, the world’s most indebted developer. The company, whose boss was not long ago China's 2nd richest man, was engulfed by a liquidity crisis in the summer that eventually resulted in a default in early December. Still, as the FT notes, China continues to draw in huge amounts of foreign capital, pushing the Chinese yuan to end 2021 at the strongest level since May 2018, a major hurdle to China's attempts to kickstart its slowing economy, and surely a precursor to even more monetary easing. Natgas hyperinflation: Natural gas supplanted crude oil as the world’s most important commodity in October and December as prices exploded to unprecedented levels and the world scrambled for scarce supplies amid the developed world's catastrophic transition to "green" energy. The crunch was particularly acute in Europe, which has become increasingly reliant on imports. Futures linked to TTF, the region’s wholesale gas price, hit a record €137 per megawatt hour in early October, rising more than 75%. In Asia, spot liquefied natural gas prices briefly passed the equivalent of more than $320 a barrel of oil in October. (At the time, Brent crude was trading at $80). A number of factors contributed, including rising demand as pandemic restrictions eased, supply disruptions in the LNG market and weather-induced shortfalls in renewable energy. In Europe, this was aggravated by plunging export volumes from Gazprom, Russia’s state-backed monopoly pipeline supplier, amid a bitter political fight over the launch of the Nordstream 2 pipeline. And with delays to the Nord Stream 2 gas pipeline from Russia to Germany, analysts say the European gas market - where storage is only 66% full - a cold snap or supply disruption away from another price spike Turkey's (latest) currency crisis:  As the FT's Jonathan Wheatley writes, Recep Tayyip Erdogan was once a source of strength for the Turkish lira, and in his first five years in power from 2003, the currency rallied from TL1.6 per US dollar to near parity at TL1.2. But those days are long gone, as Erdogan's bizarre fascination with unorthodox economics, namely the theory that lower rates lead to lower inflation also known as "Erdoganomics", has sparked a historic collapse in the: having traded at about TL7 to the dollar in February, it has since fallen beyond TL17, making it the worst performing currency of 2021. The lira’s defining moment in 2021 came on November 18 when the central bank, in spite of soaring inflation, cut its policy rate for the third time since September, at Erdogan’s behest (any central banker in Turkey who disagrees with "Erdoganomics" is promptly fired and replaced with an ideological puppet). The lira recovered some of its losses in late December when Erdogan came up with the "brilliant" idea of erecting the infamous "doom loop" which ties Turkey's balance sheet to its currency. It has worked for now (the lira surged from TL18 against the dollar to TL12, but this particular band aid solution will only last so long). The lira’s problems are not only Erdogan’s doing. A strengthening dollar, rising oil prices, the relentless covid pandemic and weak growth in developing economies have been bad for other emerging market currencies, too, but as long as Erdogan is in charge, shorting the lira remains the best trade entering 2022. While these, and many more, stories provided a diversion from the boring existence of centrally-planned markets, we are confident that the trends observed in recent years will continue: coming years will be marked by even bigger government (because only more government can "fix" problems created by government), higher stock prices and dollar debasement (because only more Fed intervention can "fix" the problems created by the Fed), and a policy flip from monetary and QE to fiscal & MMT, all of which will keep inflation at scorching levels, much to the persistent confusion of economists everywhere. Of course, we said much of this last year as well, but while we got most trends right, we were wrong about one thing: we were confident that China's aggressive roll out of the digital yuan would be a bang - or as we put it "it is very likely that while 2020 was an insane year, it may prove to be just an appetizer to the shockwaves that will be unleashed in 2021 when we see the first stage of the most historic overhaul of the fiat payment system in history" - however it turned out to be a whimper. A big reason for that was that the initial reception of the "revolutionary" currency was nothing short of disastrous, with Chinese admitting they were "not at all excited" about the prospect of yet one more surveillance mechanism for Beijing, because that's really what digital currencies are: a way for central banks everywhere to micromanage and scrutinize every single transaction, allowing the powers that be to demonetize any one person - or whole groups - with the flick of a switch. Then again, while digital money may not have made its triumphant arrival in 2021, we are confident that the launch date has merely been pushed back to 2022 when the rollout of the next monetary revolution is expected to begin in earnest. Here we should again note one thing: in a world undergoing historic transformations, any free press must be throttled and controlled, and over the past year we have seen unprecedented efforts by legacy media and its corporate owners, as well as the new "social media" overlords do everything in their power to stifle independent thought. For us it had been especially "personal" on more than one occasions. Last January, Twitter suspended our account because we dared to challenge the conventional narrative about the source of the Wuhan virus. It was only six months later that Twitter apologized, and set us free, admitting it had made a mistake. Yet barely had twitter readmitted us, when something even more unprecedented happened: for the first time ever (to our knowledge) Google - the world's largest online ad provider and monopoly - demonetized our website not because of any complaints about our writing but because of the contents of our comment section. It then held us hostage until we agreed to implement some prerequisite screening and moderation of the comments section. Google's action was followed by the likes of PayPal, Amazon, and many other financial and ad platforms, who rushed to demonetize and suspend us simply because they disagreed with what we had to say. This was a stark lesson in how quickly an ad-funded business can disintegrate in this world which resembles the dystopia of 1984 more and more each day, and we have since taken measures. One year ago, for the first time in our 13 year history, we launched a paid version of our website, which is entirely ad and moderation free, and offers readers a variety of premium content. It wasn't our intention to make this transformation but unfortunately we know which way the wind is blowing and it is only a matter of time before the gatekeepers of online ad spending block us again. As such, if we are to have any hope in continuing it will come directly from you, our readers. We will keep the free website running for as long as possible, but we are certain that it is only a matter of time before the hammer falls as the censorship bandwagon rolls out much more aggressively in the coming year. That said, whether the story of 2022, and the next decade for that matter, is one of helicopter or digital money, of (hyper)inflation or deflation: what is key, and what we learned in the past decade, is that the status quo will throw anything at the problem to kick the can, it will certainly not let any crisis go to waste... even the deadliest pandemic in over a century. And while many already knew that, the events of 2021 made it clear to a fault that not even a modest market correction can be tolerated going forward. After all, if central banks aim to punish all selling, then the logical outcome is to buy everything, and investors, traders and speculators did just that armed with the clearest backstop guarantee from the Fed, which in the deapths of the covid crash crossed the Rubicon when it formally nationalized the bond market as it started buying both investment grade bonds and junk bond ETFs in the open market. As such it is no longer even a debatable issue if the Fed will buy stocks after the next crash - the only question is when. Meanwhile, for all those lamenting the relentless coverage of politics in a financial blog, why finance appears to have taken a secondary role, and why the political "narrative" has taken a dominant role for financial analysts, the past year showed vividly why that is the case: in a world where markets gyrated, and "rotated" from value stocks to growth and vice versa, purely on speculation of how big the next stimulus out of Washington will be, the narrative over Biden's trillions proved to be one of the biggest market moving events for much of the year. And with the Biden stimulus plan off the table for now, the Fed will find it very difficult to tighten financial conditions, especially if it does so just as the economy is slowing. Here we like to remind readers of one of our favorite charts: every financial crisis is the result of Fed tightening. As for predictions about the future, as the past two years so vividly showed, when it comes to actual surprises and all true "black swans", it won't be what anyone had expected. And so while many themes, both in the political and financial realm, did get some accelerated closure courtesy of China's covid pandemic, dramatic changes in 2021 persisted, and will continue to manifest themselves in often violent and unexpected ways - from the ongoing record polarization in the US political arena, to "populist" upheavals around the developed world, to the gradual transition to a global Universal Basic (i.e., socialized) Income regime, to China's ongoing fight with preserving stability in its gargantuan financial system which is now two and a half times the size of the US. As always, we thank all of our readers for making this website - which has never seen one dollar of outside funding (and despite amusing recurring allegations, has certainly never seen a ruble from the KGB either, although now that the entire Russian hysteria episode is over, those allegations have finally quieted down), and has never spent one dollar on marketing - a small (or not so small) part of your daily routine. Which also brings us to another critical topic: that of fake news, and something we - and others who do not comply with the established narrative - have been accused of. While we find the narrative of fake news laughable, after all every single article in this website is backed by facts and links to outside sources, it is clearly a dangerous development, and a very slippery slope that the entire developed world is pushing for what is, when stripped of fancy jargon, internet censorship under the guise of protecting the average person from "dangerous, fake information." It's also why we are preparing for the next onslaught against independent thought and why we had no choice but to roll out a premium version of this website. In addition to the other themes noted above, we expect the crackdown on free speech to accelerate in the coming year when key midterm elections will be held, especially as the following list of Top 20 articles for 2021 reveals, many of the most popular articles in the past year were precisely those which the conventional media would not touch out of fear of repercussions, which in turn allowed the alternative media to continue to flourish in an orchestrated information vacuum and take significant market share from the established outlets by covering topics which the public relations arm of established media outlets refused to do, in the process earning itself the derogatory "fake news" condemnation. We are grateful that our readers - who hit a new record high in 2021 - have realized it is incumbent upon them to decide what is, and isn't "fake news." * * * And so, before we get into the details of what has now become an annual tradition for the last day of the year, those who wish to jog down memory lane, can refresh our most popular articles for every year during our no longer that brief, almost 11-year existence, starting with 2009 and continuing with 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020. So without further ado, here are the articles that you, our readers, found to be the most engaging, interesting and popular based on the number of hits, during the past year. In 20th spot with 600,000 reads, was an article that touched on one of the most defining features of the market: the reflation theme the sparked a massive rally at the start of the year courtesy of the surprise outcome in the Georgia Senate race, where Democrats ended up wining both seats up for grabs, effectively giving the Dems a majority in both the House and the Senate, where despite the even, 50-seat split, Kamala Harris would cast the winning tie-breaker vote to pursue a historic fiscal stimulus. And sure enough, as we described in "Bitcoin Surges To Record High, Stocks & Bonds Battered As Dems Look Set To Take Both Georgia Senate Seats", with trillions in "stimmies" flooding both the economy and the market, not only did retail traders enjoy unprecedented returns when trading meme "stonks" and forcing short squeezes that crippled numerous hedge funds, but expectations of sharply higher inflation also helped push bitcoin and the entire crypto sector to new all time highs, which in turn legitimized the product across institutional investors and helped it reach a market cap north of $3 trillion.  In 19th spot, over 613,000 readers were thrilled to read at the start of September that "Biden Unveils Most Severe COVID Actions Yet: Mandates Vax For All Federal Workers, Contractors, & Large Private Companies." Of course, just a few weeks later much of Biden's mandate would be struck down in courts, where it is now headed to a decision by SCOTUS, while the constantly shifting "scientific" goal posts mean that just a few months later the latest set of CDC regulations have seen regulators and officials reverse the constant drone of fearmongering and are now even seeking to cut back on the duration of quarantine and other lockdown measures amid a public mood that is growing increasingly hostile to the government response. One of the defining political events of 2021 was the so-called "Jan 6 Insurrection", which the for America's conservatives was blown wildly out of proportion yet which the leftist media and Democrats in Congress have been periodically trying to push to the front pages in hopes of distracting from the growing list of failures of the Obama admin. Yet as we asked back in January, "Why Was Founder Of Far-Left BLM Group Filming Inside Capitol As Police Shot Protester?" No less than 614,000 readers found this question worthy of a response. Since then many more questions have emerged surrounding this event, many of which focus on what role the FBI had in organizing and encouraging this event, including the use of various informants and instigators. For now, a response will have to wait at least until the mid-term elections of 2022 when Republicans are expected to sweep one if not both chambers. Linked to the above, the 17th most read article of 2021 with 617,000 views, was an article we published on the very same day, which detailed that "Armed Protesters Begin To Arrive At State Capitols Around The Nation." At the end of the day, it was much ado about nothing and all protests concluded peacefully and without incident: perhaps the FBI was simply spread too thin? 2021 was a year defined by various waves of the covid pandemic which hammered poor Americans forced to hunker down at home and missing on pay, and crippled countless small mom and pop businesses. And yet, it was also a bonanza for a handful of pharma companies such as Pfizer and Moderna which made billions from the sale of "vaccines" which we now know do little if anything to halt the spread of the virus, and are instead now being pitched as palliatives, preventing a far worse clinical outcome. The same pharma companies also benefited from an unconditional indemnity, which surely would come in useful when the full side-effects of their mRNA-based therapies became apparent. One such condition to emerge was myocarditis among a subset of the vaxxed. And while the vaccines continue to be broadly rolled out across most developed nations, one place that said enough was Sweden. As over 620,000 readers found out in "Sweden Suspends Moderna Shot Indefinitely After Vaxxed Patients Develop Crippling Heart Condition", not every country was willing to use its citizens as experimental guniea pigs. This was enough to make the article the 16th most read on these pages, but perhaps in light of the (lack of) debate over the pros and cons of the covid vaccines, this should have been the most read article this year? Moving on to the 15th most popular article, 628,000 readers were shocked to learn that "Chase Bank Cancels General Mike Flynn's Credit Cards." The action, which was taken by the largest US bank due to "reputational risk" echoed a broad push by tech giants to deplatform and silence dissenting voices by literally freezing them out of the financial system. In the end, following widespread blowback from millions of Americans, JPMorgan reversed, and reactivated Flynn's cards saying the action was made in error, but unfortunately this is just one example of how those in power can lock out any dissenters with the flick of a switch. And while democrats cheer such deplatforming today, the political winds are fickle, and we doubt they will be as excited once they find themselves on the receiving end of such actions. And speaking of censorship and media blackouts, few terms sparked greater response from those in power than the term Ivermectin. Viewed by millions as a cheap, effective alternative to offerings from the pharmaceutical complex, social networks did everything in their power to silence any mention of a drug which the Journal of Antibiotics said in 2017 was an "enigmatic multifaceted ‘wonder’ drug which continues to surprise and exceed expectations." Nowhere was this more obvious than in the discussion of how widespread use of Ivermectin beat Covid in India, the topic of the 14th most popular article of 2021 "India's Ivermectin Blackout" which was read by over 653,000 readers. Unfortunately, while vaccines continue to fail upward and now some countries are now pushing with a 4th, 5th and even 6th vaccine, Ivermectin remains a dirty word. There was more covid coverage in the 13th most popular article of 2021, "Surprise Surprise - Fauci Lied Again": Rand Paul Reacts To Wuhan Bombshell" which was viewed no less than 725,000 times. Paul's reaction came following a report which revealed that Anthony Fauci's NIAID and its parent, the NIH, funded Gain-of-Function research in Wuhan, China, strongly hinting that the emergence of covid was the result of illicit US funding. Not that long ago, Fauci had called Paul a 'liar' for accusing him of funding the risky research, in which viruses are genetically modified or otherwise altered to make them more transmissible to humans. And while we could say that Paul got the last laugh, Fauci still remains Biden's top covid advisor, which may explain why one year after Biden vowed he would shut down the pandemic, the number of new cases just hit a new all time high. One hope we have for 2022 is that people will finally open their eyes... 2021 was not just about covid - soaring prices and relentless inflation were one of the most poignant topics. It got so bad that Biden's approval rating - and that of Democrats in general - tumbled toward the end of the year, putting their mid-term ambitions in jeopardy, as the public mood soured dramatically in response to the explosion in prices. And while one can debate whether it was due to supply-issues, such as the collapse in trans-pacific supply chains and the chronic lack of labor to grow the US infrastructure, or due to roaring demand sparked by trillions in fiscal stimulus, but when the "Big Short" Michael Burry warned that hyperinflation is coming, the people listened, and with over 731,000 reads, the 12th most popular article of 2021 was "Michael Burry Warns Weimar Hyperinflation Is Coming."  Of course, Burry did not say anything we haven't warned about for the past 12 years, but at least he got the people's attention, and even mainstream names such as Twitter founder Jack Dorsey agreed with him, predicting that bitcoin will be what is left after the dollar has collapsed. While hyperinflation may will be the endgame, the question remains: when. For the 11th most read article of 2021, we go back to a topic touched upon moments ago when we addressed the full-blown media campaign seeking to discredit Ivermectin, in this case via the D-grade liberal tabloid Rolling Stone (whose modern incarnation is sadly a pale shadow of the legend that house Hunter S. Thompson's unforgettable dispatches) which published the very definition of fake news when it called Ivermectin a "horse dewormer" and claimed that, according to a hospital employee, people were overdosing on it. Just a few hours later, the article was retracted as we explained in "Rolling Stone Issues 'Update' After Horse Dewormer Hit-Piece Debunked" and over 812,000 readers found out that pretty much everything had been a fabrication. But of course, by then it was too late, and the reputation of Ivermectin as a potential covid cure had been further tarnished, much to the relief of the pharma giants who had a carte blanche to sell their experimental wares. The 10th most popular article of 2021 brings us to another issue that had split America down the middle, namely the story surrounding Kyle Rittenhouse and the full-blown media campaign that declared the teenager guilty, even when eventually proven innocent. Just days before the dramatic acquittal, we learned that "FBI Sat On Bombshell Footage From Kyle Rittenhouse Shooting", which was read by over 822,000 readers. It was unfortunate to learn that once again the scandal-plagued FBI stood at the center of yet another attempt at mass misinformation, and we can only hope that one day this "deep state" agency will be overhauled from its core, or better yet, shut down completely. As for Kyle, he will have the last laugh: according to unconfirmed rumors, his numerous legal settlements with various media outlets will be in the tens if not hundreds of millions of dollars.  And from the great US social schism, we again go back to Covid for the 9th most popular article of 2021, which described the terrifying details of one of the most draconian responses to covid in the entire world: that of Australia. Over 900,000 readers were stunned to read that the "Australian Army Begins Transferring COVID-Positive Cases, Contacts To Quarantine Camps." Alas, the latest surge in Australian cases to nosebleed, record highs merely confirms that this unprecedented government lockdown - including masks and vaccines - is nothing more than an exercise in how far government can treat its population as a herd of sheep without provoking a violent response.  The 8th most popular article of 2021 looks at the market insanity of early 2021 when, at the end of January, we saw some of the most-shorted, "meme" stocks explode higher as the Reddit daytrading horde fixed their sights on a handful of hedge funds and spent billions in stimmies in an attempt to force unprecedented ramps. That was the case with "GME Soars 75% After-Hours, Erases Losses After Liquidity-Constrained Robinhood Lifts Trading Ban", which profiled the daytrading craze that gave an entire generation the feeling that it too could win in these manipulated capital markets. Then again, judging by the waning retail interest, it is possible that the excitement of the daytrading army is fading as rapidly as it first emerged, and that absent more "stimmies" markets will remain the playground of the rich and central banks. Kyle Rittenhouse may soon be a very rich man after the ordeal he went through, but the media's mission of further polarizing US society succeeded, and millions of Americans will never accept that the teenager was innocent. It's also why with just over 1 million reads, the 7th most read article on Zero Hedge this year was that "Portland Rittenhouse Protest Escalates Into Riot." Luckily, this is not a mid-term election year and there were no moneyed interests seeking to prolong this particular riot, unlike what happened in the summer of 2020... and what we are very much afraid will again happen next year when very critical elections are on deck.  With just over 1.03 million views, the 6th most popular post focused on a viral Twitter thread on Friday from Dr Robert Laone, which laid out a disturbing trend; the most-vaccinated countries in the world are experiencing  a surge in COVID-19 cases, while the least-vaccinated countries were not. As we originally discussed in ""This Is Worrying Me Quite A Bit": mRNA Vaccine Inventor Shares Viral Thread Showing COVID Surge In Most-Vaxxed Countries", this trend has only accelerated in recent weeks with the emergence of the Omicron strain. Unfortunately, instead of engaging in a constructive discussion to see why the science keeps failing again and again, Twitter's response was chilling: with just days left in 2021, it suspended the account of Dr. Malone, one of the inventors of mRNA technology. Which brings to mind something Aaron Rogers said: "If science can't be questioned it's not science anymore it's propaganda & that's the truth." In a year that was marked a flurry of domestic fiascoes by the Biden administration, it is easy to forget that the aged president was also responsible for the biggest US foreign policy disaster since Vietnam, when the botched evacuation of Afghanistan made the US laughing stock of the world after 12 US servicemembers were killed. So it's probably not surprising that over 1.1 million readers were stunned to watch what happened next, which we profiled in the 5th most popular post of 2021, where in response to the Afghan trajedy, "Biden Delivers Surreal Press Conference, Vows To Hunt Down Isis, Blames Trump." One person watching the Biden presser was Xi Jinping, who may have once harbored doubts about reclaiming Taiwan but certainly does not any more. The 4th most popular article of 2021 again has to do with with covid, and specifically the increasingly bizarre clinical response to the disease. As we detailed in "Something Really Strange Is Happening At Hospitals All Over America" while emergency rooms were overflowing, it certainly wasn't from covid cases. Even more curiously, one of the primary ailments leading to an onslaught on ERs across the nation was heart-related issues, whether arrhytmia, cardiac incidents or general heart conditions. We hope that one day there will be a candid discussion on this topic, but until then it remains one of the topics seen as taboo by the mainstream media and the deplatforming overlords, so we'll just leave it at that. We previously discussed the anti-Ivermectin narrative that dominated the mainstream press throughout 2021 and the 3rd most popular article of the year may hold clues as to why: in late September, pharma giant Pfizer and one of the two companies to peddle an mRNA based vaccine, announced that it's launching an accelerated Phase 2/3 trial for a COVID prophylactic pill designed to ward off COVID in those may have come in contact with the disease. And, as we described in "Pfizer Launches Final Study For COVID Drug That's Suspiciously Similar To 'Horse Paste'," 1.75 million readers learned that Pfizer's drug shared at least one mechanism of action as Ivermectin - an anti-parasitic used in humans for decades, which functions as a protease inhibitor against Covid-19, which researchers speculate "could be the biophysical basis behind its antiviral efficiency." Surely, this too was just another huge coincidence. In the second most popular article of 2021, almost 2 million readers discovered (to their "shock") that Fauci and the rest of Biden's COVID advisors were proven wrong about "the science" of COVID vaccines yet again. After telling Americans that vaccines offer better protection than natural infection, a new study out of Israel suggested the opposite is true: natural infection offers a much better shield against the delta variant than vaccines, something we profiled in "This Ends The Debate' - Israeli Study Shows Natural Immunity 13x More Effective Than Vaccines At Stopping Delta." We were right about one thing: anyone who dared to suggest that natural immunity was indeed more effective than vaccines was promptly canceled and censored, and all debate almost instantly ended. Since then we have had tens of millions of "breakout" cases where vaccinated people catch covid again, while any discussion why those with natural immunity do much better remains under lock and key. It may come as a surprise to many that the most read article of 2021 was not about covid, or Biden, or inflation, or China, or even the extremely polarized US congress (and/or society), but was about one of the most long-suffering topics on these pages: precious metals and their prices. Yes, back in February the retail mania briefly targeted silver and as millions of reddit daytraders piled in in hopes of squeezing the precious metal higher, the price of silver surged higher only to tumble just as quickly as it has risen as the seller(s) once again proved more powerful than the buyers. We described this in "Silver Futures Soar 8%, Rise Above $29 As Reddit Hordes Pile In", an article which some 2.4 million gold and silver bugs read with hope, only to see their favorite precious metals slump for much of the rest of the year. And yes, the fact that both gold and silver ended the year sharply lower than where they started even though inflation hit the highest level in 40 years, remains one of the great mysteries of 2021. With all that behind us, and as we wave goodbye to another bizarre, exciting, surreal year, what lies in store for 2022, and the next decade? We don't know: as frequent and not so frequent readers are aware, we do not pretend to be able to predict the future and we don't try despite endless allegations that we constantly predict the collapse of civilization: we leave the predicting to the "smartest people in the room" who year after year have been consistently wrong about everything, and never more so than in 2021 (even the Fed admitted it is clueless when Powell said it was time to retire the term "transitory"), which destroyed the reputation of central banks, of economists, of conventional media and the professional "polling" and "strategist" class forever, not to mention all those "scientists" who made a mockery of the "expertise class" with their bungled response to the covid pandemic. We merely observe, find what is unexpected, entertaining, amusing, surprising or grotesque in an increasingly bizarre, sad, and increasingly crazy world, and then just write about it. We do know, however, that after a record $30 trillion in stimulus was conjured out of thin air by the world's central banks and politicians in the past two years, the attempt to reverse this monetary and fiscal firehose in a world addicted to trillions in newly created liquidity now that central banks are freaking out after finally getting ot the inflation they were hoping to create for so long, will end in tears. We are confident, however, that in the end it will be the very final backstoppers of the status quo regime, the central banking emperors of the New Normal, who will eventually be revealed as fully naked. When that happens and what happens after is anyone's guess. But, as we have promised - and delivered - every year for the past 13, we will be there to document every aspect of it. Finally, and as always, we wish all our readers the best of luck in 2022, with much success in trading and every other avenue of life. We bid farewell to 2021 with our traditional and unwavering year-end promise: Zero Hedge will be there each and every day - usually with a cynical smile - helping readers expose, unravel and comprehend the fallacy, fiction, fraud and farce that defines every aspect of our increasingly broken system. Tyler Durden Sun, 01/02/2022 - 03:44.....»»

Category: personnelSource: nytJan 2nd, 2022

Democrats Blocking Senate Bill That Bans Imports Made With Uyghur Slave Labor

Democrats Blocking Senate Bill That Bans Imports Made With Uyghur Slave Labor GOP China hawks are lashing out at Senate Democrats for their latest "concessions to the Chinese Communist Party" - which also threatens to halt Congressional approval for the $740 billion National Defense Authorization Act. Sen. Marco Rubio wants to see a "controversial" amendment added, which his office is saying Dems are blocking based on false pretenses based on procedural issues, that would ban any imports from China that are suspected of being produced with Uyghur slave labor. However supporters say it shouldn't be a source of controversy at all given several human rights groups support it, and it should be consistent with the Biden administration's general human rights stance on China. "Today we have American corporations using slaves in China," Sen. Rubio told Fox News on Thursday, highlighting the fundamental issue. China News Service via Getty Images The Uyghur Forced Labor Prevention Act targets "Goods manufactured or produced in Xinjiang" which "shall not be entitled to entry into the United States unless Customs and Border Protection (1) determines that the goods were not manufactured by convict labor, forced labor, or indentured labor under penal sanctions; and (2) reports such a determination to Congress and to the public," according to the bill summary. The action springs from widespread reports over the past couple years that the Chinese state has placed some one million ethnic Uyghur Muslims in a network of Communist 'reeducation' and forced labor camps. Beijing officials have admitted to the existence of such facilities, but while US leaders have condemned the "slave camps" - China's government has presented them as merely tantamount to job training and assistance programs, or a halfway house of sorts.  According to details of a last minute blockage of the human rights amendment, the Free Beacon writes, "But Democrats excluded the amendment from a vote late Wednesday night, after members of the party privately objected to it, sources told the Free Beacon. Earlier in the evening, Democrats tried to use a procedural mechanism that would have allowed a vote on the act but stripped it from the final appropriations bill, according to a hotline memo from Senate leadership. Ironically, the move appears connected to the Biden admin trying to preserve it's futile "climate agenda", which in the end will sacrifice the United States' human rights stance in China:  The pushback from Senate Democrats comes amid efforts by senior Biden administration officials to quietly kill the bill over concerns it will hinder the White House's climate agenda and limit solar panel imports from China. Presidential climate envoy John Kerry, among others, has been lobbying House members against the bill, the Free Beacon reported last month. Senator Rubio on @FoxNews: Today we have American corporations using slaves in China pic.twitter.com/ce5L75FdoS — Senator Rubio Press (@SenRubioPress) December 2, 2021 However, each side is now blaming the other amid conflicting accounts of precisely why it's being blocked, with Democrat leaders downplaying their actions as merely based on technicalities, blaming improper Republican procedural methods and rule-breaking. Importantly, as the report underscores of the Uyghur dominant Xinjiang province, "The region is also the world's largest producer of solar panel components, an industry that human rights groups say is rife with Uyghur slave labor." Tyler Durden Thu, 12/02/2021 - 19:00.....»»

Category: personnelSource: nytDec 2nd, 2021

Generation PMCA 3Q21 Commentary: Right Place Wrong Time

Generation PMCA commentary for the third quarter ended September 2021, titled, “Right Place Wrong Time.” Q3 2021 hedge fund letters, conferences and more Right Place Wrong Time Being in the wrong place at the right time is usually just an inconvenience or in market parlance a missed opportunity. In the wrong place at the wrong […] Generation PMCA commentary for the third quarter ended September 2021, titled, “Right Place Wrong Time.” if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Series in PDF Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Right Place Wrong Time Being in the wrong place at the right time is usually just an inconvenience or in market parlance a missed opportunity. In the wrong place at the wrong time, you're likely a victim of poor circumstances. For an investor, a poor selection coupled with an unforeseen shock. The opposite—right place at the right time—implies luck. Right place at the wrong time, according to a certain someone’s significant other, means she’s always waiting for someone who’s invariably late. More than a mere inconvenience. While some of our equity selections have recently been operating on their own schedules, and our timing appears off, we still feel we’re in the right places. The adage ‘better late than never’ comes to mind. Fund manager Bruce Berkowitz once quipped that he suffered from premature accumulation. We have felt similarly over the last few months because many of our positions have either lagged or declined outright despite fundamentals that we believe remain intact. Of course, when our positions are zigging while the markets are zagging, we reexamine our assumptions to ensure we are correctly positioned. We believe that only one of our securities suffered permanent impairment relative to our initial appraisal and we realized a loss because we saw better opportunities for the proceeds. We remain confident in our assessments of our other holdings. They trade well below our estimated FMVs (Fair Market Values) implying substantial upside potential. Though we don’t know when the market will come to its senses and see what we see. Regarding the market in general, we feel like the little boy that cried correction. Though he kept calling for it, and was eventually correct, his too frequent calls were ignored. The S&P 500 is at a ceiling in our TRACTM work. From this level, it’s either moving on to the next ceiling, about 30% higher, or returning to its recent floor, over 20% lower. Neither event must take place all at once. However, with the market’s FMV currently lower, the likelihood of a material rise from today’s levels is low. We expect sideways or downward price action for an extended period until underlying values catch up. And, with the absence of the typical wall of worry, any exogenous shock could lead to a rapid decline. Global Traffic Jam Speaking of poor timing, the concept of Just-in-Time inventories, designed to promote efficiencies, contributed to inefficiencies over the last year. Everyone encountered an IKEA (‘Swedish for out of stock’) problem. Demand has simply overwhelmed supply. With the economy essentially closed in the spring of last year, production was scaled back (i.e., a supply squeeze) only to require a substantial ramp-up over the last year as demand surged from massive government stimulus and vaccines which allowed for widespread reopening and a leap in consumer confidence. But this about-face created a logjam. Delivery times have been near record highs which has fueled higher costs and, in turn, increased prices. In the meantime, companies are adapting, finding other sources of supplies, different means of transportation, and implementing productivity enhancing measures. While this does not occur overnight, the congestion will dissipate. The market must believe this is all transitory too because it hasn’t impacted the overall indexes. This, despite staffing shortages which, for example, has caused FedEx to reroute packages and airlines to cancel flights. Companies have had to boost pay for overtime and raise wages to attract new employees. There has been a record backlog of ships at ports because of staffing constraints and calls for the U.S. National Guard to loan terminals which would assist in moving goods. Rolling blackouts due to power shortages in China led to production slowdowns. For diversification purposes, some companies moved a portion of their manufacturing to Vietnam, only to have to cope with Covid related shutdowns. Despite these cost pressures, demand has been overpowering because profit margins remain at all-time highs. The usual semiconductor deficit is a result of excess demand, spurred by work-from-home and advances in digitalization which increased the need for electronic components at a time when supply hasn’t been sufficient to fulfill needs. Since the length of time between ordering a semiconductor chip and taking delivery rose to a record high, nearly double the norm, new plants are being built, many in the U.S. being subsidized by the government. Nearly 30 new fabs will be under construction shortly in various jurisdictions, which is more than opened in the last 5 years combined. Looks like an eventual overshoot. Time Heals All The pendulum will swing in the other direction. The scarcity issues facing us now will beget surpluses. Look no further than the PPE shortages at the outset of the pandemic which were quickly met by increased production ultimately creating surpluses, even with demand still high. A capital goods spending cycle is clearly upon us as companies expand production which also bodes well for continued economic growth. Some of the issues will immediately halt. How about the crazy story of Tapestry (maker of Coach purses and other brands) announcing it’ll stop destroying returned product? Apparently, employees were hacking up merchandise and tossing it. That’s one way of creating a supply constraint, and a PR nightmare. Used car prices hit another record high—the normal ebb and flow gone. Prices have been leaping higher. But with production of new cars expected to be back to near normal over the next several months, used car prices should moderate. Commodity prices have surged too as inventories haven’t been sufficient to keep up with demand. However, nothing cures scarcity better than higher prices which encourages production. These constraints have pushed U.S. inflation to the highest since the mid '90s. While some argue it’s a monetary phenomenon, as central banks have poured money into the system, it appears to us more related to the overall supply/demand imbalances. A step-up in demand for raw materials and labour, when ports became congested, simultaneously increased shipping costs, and led to other logistical bottlenecks, all of which combined to ignite prices. Housing prices have also lifted materially. Single-family home prices in the U.S. have risen by a record 19.7% in the last year because of ever-growing demand (spurred by demographics, the shift to work-from-home, and low rates) and, perhaps more importantly, a dearth of listings. While construction costs are up, house prices have outpaced so new builds will in due course help level off prices. That’ll be the Economics 101 feedback loop between prices/costs and supply/demand at work. Core PCE, the broadest inflation measure, was 3.6% for September, moderating since the April highs, a positive sign. Since supply disruptions are beginning to alleviate, it bodes well for a further diminution of inflationary pressures especially since most of the rise in inflation is attributable to durable goods which have suffered the brunt of the bottlenecks. As consumer spending moves from goods back towards services, this should help too. Though growth rates should slow, we are still experiencing an economic boom. Look no further than global air traffic which, astonishingly, is running virtually at 2019 levels. The March of Time Watching inflation is important because it directly impacts our pocketbooks in the short term and our real-spending power over time. Not only because inflation erodes purchasing power but because it also influences the level of interest rates which affects the valuations of financial assets. Longer-term interest rates are likely heading higher, not just because they’re coming off a really low base or inflation is rising. Serious supply and demand dynamics in the bond market are in-play. Fewer bonds will be bought (tapering) by the Fed, who’s been buying, a previously inconceivable, 60% of all U.S. 10-year Treasury issuances. Yet extremely elevated deficit spending still requires massive government bond offerings, at a time when foreigners and individuals have been disinterested in bonds at such low yields. Increasing rates will be necessary to attract buyers (i.e., create demand). Interest rates should remain relatively low though. Primarily because inflation should remain low as a result of poor demographics (nearly every developed country’s birth rate isn’t sufficient to generate population growth), the strength of the U.S. dollar which is disinflationary, and high government debt. These factors should temper economic growth rates. Q3 U.S. GDP grew by only 2% over last year. Aggregate demand may be weakening just when supply constraints are diminishing. On a good note, lesser growth may bode well for an extended economic cycle with low interest rates and relatively high market valuations as the Fed may not need to quell growth. On the other hand, debt laden Japan’s growth rate was so slow since 2008 that it slipped into recession 5 times while the U.S. suffered only once. For a Bad Time Call… Speculators have been winning big, but it almost never ends well. Right now, speculation is still running hot—too hot. Call option purchases (the right to buy shares at a set price for a fixed period) have leaped. Investment dealers, making markets as counterparties on the other side of the call option trades, buy sufficient shares in the open market to offset (i.e., hedge) their positions. As stocks run higher, and call option prices increase, higher amounts of shares are bought. Tesla’s run-up to recent highs is a good example as call-option buying was extreme and a disproportionate amount of buying was attributable to dealer hedging. On a related side note, Tesla ran to about 43x book value recently. In our TRACTM work that’s one break point, or about 20% below, the 55x book value level that only a small number of mature companies have ever achieved because it is mathematically unsustainable since a company cannot produce a return on equity capital sufficient to maintain that valuation level. Historically, share prices invariably have materially suffered thereafter until underlying fundamentals catch up. This is probably not lost on Elon Musk who has tweeted about the overvaluation of Tesla and just sold billions of dollars of shares. Insiders at other companies have been concerned about their share prices too which has led to an uptick in overall insider selling. Meanwhile, use of margin debt as a percent of GDP is at an all-time high of 4%, about 25% higher than at the market peaks in 2000 and 2007. Purchases of leveraged ETFs are at highs too. U.S. equity issuances (IPOs/SPACs) are also at all-time highs as a percent of GDP. The record addition of supply of shares should cause problems for the stock market, especially if demand for shares suddenly wanes if interest rates spike, profit margins shrink, or an unforeseen negative event occurs. Stock ownership generally has reached a high (50% of household assets) which doesn’t bode well for stock market returns when other asset classes shine again. The NASDAQ is extremely overbought. Similar levels in the recent past have led to double-digit declines. The fact that so much of the major indexes are now concentrated in so few companies could hurt too. Worrisome, Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), and Meta Platforms Inc (NASDAQ:FB) (Facebook) are all at ceilings or have given “sell signals” in our TRACTM work. Buyout valuations paid by private equity firms has doubled over the last 10 years to levels that don’t make economic sense. Cryptocurrencies may have found a permanent role in the financial system; however, demand is too frothy. Just talk to teenagers or Uber drivers. Since it’s in weak hands, demand already running rampant, prices well above cost of producing coins, and supply virtually unlimited as new cryptos keep cropping up, prices could collapse. The overall hype should soon wither. While markets have already ignored the rise in 10-year Treasury yields, further increases could be harmful. Headline risk from inflation worsening in the short term, and rates rising further in reaction, could spoil the party. Valuations of growth companies are the most vulnerable to rising rates given their higher multiples and the more pronounced impact on cash flows which are further out in time. The forward-12-month S&P 500 earnings multiple is just about 30% above its 10-year average. The earnings yield less the inflation rate is at all-time lows. Earnings estimates themselves are likely too high, which is typically the case. Growth expectations are way above trend as analysts extrapolate the recent spectacular growth. But growth must moderate, if only because the comparison over time becomes much more challenging than last year’s trough. The added boost we’ve experienced from lowered tax rates and share repurchases should disappear too. Profit margins should eventually be negatively impacted. Not just from less sales growth but also from escalating costs, particularly on the labour front. Wage pressures are likely, and productivity may drop for a period, if companies cannot hire qualified workers. Job openings have skyrocketed, and job cuts haven’t been this low since 1997. Teens who’ve just graduated high school in California are training to drive trucks. This may be positive for teen employment but yikes! And global oil inventories have been plummeting. The inventory situation is expected to worsen which could lead to $100, or higher, oil prices, a level that would not be favourable for the economy. Investors generally are still expecting above-average returns for U.S. stocks over the next several years. Meanwhile, since valuations are so high, models that have been historically accurate predicting 10-year returns point to negligible returns. Our Strategy We continue to hedge (by shorting U.S. stock market ETFs in Growth accounts or holding inverse ETFs in registered or long-only accounts) principally because valuations have only been this high on 4 occasions in the last 50 years. Since we are not concerned about a recession, and the bear market that usually accompanies one, we’d like nothing better than to cover our hedges after a meaningful market correction. We sleep well at night knowing that we are partially hedged and that our holdings are growing, high-quality companies that, unlike the overall market, trade at substantial discounts to our estimates of FMV. The track record of most of our holdings shows steadily rising earnings over the last several years. And we foresee further growth ahead. Securities that are already detached from FMV can fall even further away if sentiment worsens. However, it doesn’t mean the companies are worse off, only that they’re temporarily losing the popularity contest. While the prices of our Chinese holdings have not gotten materially worse since last quarter, these holdings are still a drag on the portfolios. Since the ones we own are dominant high-quality companies, now trading at less than 40 cents-on-the-dollar in our view—a 60% off sale, we continue to wait for the end of the bear market in these shares. The entire KWEB, a Chinese Internet/technology ETF, is down 54% since February. Meanwhile, economic growth in China is expected to be 5% annually for the next several years, outpacing the U.S. which is expected to grow by less than 2% per year. By 2030, China should have the largest consuming middle class globally. The Chinese growth engine remains attractive. And the companies we hold continue to grow. With valuations so attractive and the stocks nearly universally shunned, we believe a new uptrend should be close. Our Portfolios The following descriptions of the holdings in our managed accounts are intended only to explain the reasons that we have made, and continue to hold, these investments in the accounts we manage for you and are not intended as advice or recommendations with respect to purchasing, selling or holding the securities described. Below, we discuss each of our new holdings and updates on key holdings if there have been material developments. All Cap Portfolios - Recent Developments for Key Holdings Our All Cap portfolios combine selections from our large cap strategy (Global Insight) with our best small and medium cap ideas. We generally prefer large cap companies for their superior liquidity and lower volatility. Importantly, they tend to recover back to their fair values much faster than smaller stocks, so they can be traded more frequently for enhanced returns. The smaller cap positions are less liquid holdings which are potentially more volatile; however, we hold these positions because they are cheaper, trading far below our FMV estimates making their risk/reward profiles favourable. There were no material changes in our smaller cap holdings recently. All Cap Portfolios - Changes In the last few months, we made several changes within our large cap positions all summarized in the Global Insight section below. Global Insight (Large Cap) Portfolios - Recent Developments for Key Holdings Global Insight represents our large cap model (typically with market caps over $5 billion at the time of purchase but may include those in the $2-5 billion range) where portfolios are managed Long/Short or Long only. A complete description of the Global Insight Model is available on our website. Our target for our large cap positions is more than a 20% return per year over a 2-year period, though some may rise toward our FMV estimates sooner should the market react to more quickly reduce their undervaluations. Or, some may be eliminated if they decline and breach TRAC floors. At an average of about 60 cents-on-the-dollar versus our FMV estimates, our Global Insight holdings appear much cheaper, in aggregate, than the overall market. Global Insight (Large Cap) Portfolios - Changes In the last few months, we made several changes within our large cap positions. We bought Altice USA Inc (NYSE:ATUS) and American Eagle Outfitters Inc (NYSE:AEO). We sold Wells Fargo & Co (NYSE:WFC) as it achieved or FMV estimate and TAL Education Group (NYSE:TAL) as it became clear we erred in our assessment once the Chinese government essentially eliminated for-profit education and other opportunities provide better reward vs. risk. Altice USA provides broadband, telephone, and television services to nearly 5 million customers across 21 states. Altice saw a surge in subscribers and plan upgrades with the increase in work from home. As people have returned to work, subscriber growth has slowed and become tougher to predict. At the same time, Altice is upgrading its network, leading to higher capital expenditures, lower free cash flow, and a moderation in share repurchases. Trading at over $35 at the end of last year, shares now trade near $17. We believe investors have become too focused on near-term subscriber trends and not the attractive long-term metrics of the business. Altice should generate close to $1.5 billion in free cash flow and see solid subscriber growth as network upgrades and fresh marketing initiatives bear fruit. Not unlike its peers, Altice carries a large debt-load. Though, management expects debt to decline even as spending accelerates and there are no material debt maturities before 2025. Our FMV estimate is $40. We believe there are numerous avenues for Altice to close the gap between its current share price and its intrinsic value. With large insider ownership already, a management-led buyout would not surprise us. American Eagle Outfitters is a vastly different company than it was just a few years ago. Gone are the days of chasing sales and market share. Management is now laser-focused on cash flow generation, return on investment, and total shareholder return (i.e., stock appreciation, dividends, and share buybacks). Its intimate apparel Aerie brand has metrics that top the retail field and is now close to 50% of revenue, on track to exceed $2 billion in revenue. Meanwhile, American Eagle continues to dominate denim. Years of investments in logistics and its supply chain are paying off. With disruptions everywhere, Eagle’s in-house logistics operations are now a major competitive advantage, enabling the company to achieve higher sales and margins on far less inventory. Our FMV estimate is $35. Income Holdings High-yield corporate bond yields have climbed slightly but at 4.4% remain near all-time lows. Our income holdings have an average current annual yield (income we receive as a percent of current market value of income securities held) of about 5%. Though most of our income holdings - bonds, preferred shares, REITs, and income funds—trade below our FMV estimates, attractive new income opportunities are still not easily found. We have our sights on several securities; however, we believe more attractive entry price points should avail themselves in the months ahead, either as rates rise and bond yields decline or as share prices correct, whether on a case-by-case basis or because of an overall market setback. We recently purchased, VICI Properties, one of the largest U.S. REITs, whose properties include 60 leading casinos (e.g., Caesar’s Palace, MGM, Mirage). Leases are long term with built-in escalators, provide high margins, required capital expenditures are low, and lease renewals are all but guaranteed as the behemoth tenants can’t simply relocate. It yields 5.1% and our FMV estimate is $39, well above the price. We also bought FS KKR Capital, one of the largest U.S. BDCs (business development corp.). The company utilizes its own investment-grade balance sheet (it borrowed $1.25 billion recently at 2.5%) to lend, mostly on a senior-secured basis, mainly to private middle-market U.S. companies. Despite delivering several good quarters recently, it trades at just over a 20% discount to its net asset value and sports an 11.6% dividend yield. All in Good Time We remain concerned about several factors, primarily high market valuations, which could trigger a market decline and reestablish a wall of worry. The average S&P 500 high-to-low annual decline since 1980 has been about 14%. In the last year, it’s only suffered just shy of a 6% correction. Prices have risen too far above underlying values and should revert. Many of our holdings, in contrast, have gone in the other direction, already enduring their own bear markets. We don’t expect to be right all the time. Nor do we need to be, to have respectable performance. But we’ve suffered unduly recently. We can’t turn back time and alter our selections. And we certainly don’t wish to rush time. Time is precious. But we do believe that good things happen to those who wait. And we will continue to wait patiently, biding our time, because our process is designed to select out-of-favour securities, the ones that are underappreciated but whose quality businesses we expect to advance, causing the disconnect between prices and values to alleviate, all in good time. We look forward to recovering from our recent lull and notes from clients stating, “It’s about time!” Randall Abramson, CFA Herb Abramson Generation PMCA Corp. Updated on Nov 26, 2021, 2:09 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 26th, 2021

Rabobank: We"re About To Add A $1.8 Trillion Stimmy To A Logistics Network That Can"t Take It... Then We Are Really In Deep Ship

Rabobank: We're About To Add A $1.8 Trillion Stimmy To A Logistics Network That Can't Take It... Then We Are Really In Deep Ship By Michael Every of Rabobank The White House just reiterated its concerns at the monopoly global carriers hold over shipping: “This lack of competition leaves American businesses at the mercy of just three alliances. Retailers are charged fees for their container remaining on the docks, even if there is no way to move their containers. If the alliances decide to not accept exports, agricultural exporters will not be able to fulfil their contracts, and farmers’ perishable products may be left to rot.” It also argues laws do not require basic transparency of detention and demurrage fees carriers charge. This is why our ‘In Deep Ship’ report stressed the US has historically resisted such scenarios: as W. L. Marvin argued in 1903, “A nation which is reaching out for the commercial mastery of the world cannot long suffer nine-tenths of its ocean-carrying to be monopolized by its foreign rivals.” More so when it has military control of the oceans but allows others to make the money from them. In July 2020, the CSIS’s ‘Hidden Harbours’ argued: “The time is long overdue for the US to reinvigorate its maritime industries…The private-sector maritime industry cannot do this alone…The US and allied governments must bring to bear substantial and sustained political action, policies, and financial support. To do anything less is to cede control of the world’s maritime industry and global supply chains to China, and perhaps to force the US and its allies to enter their own ‘century of shame.’” An October 2021 Forbes op-ed bewailed the ‘Dwindling US Merchant Fleet is a Crisis Waiting to Happen’, stating mandating “a certain percentage of imports and exports be carried on US-flagged vessels.” As ‘In Deep Ship’ noted, the first Congressional legislation in 1789 was a 10% tariff on British shipping to build US industry and its maritime marine: it worked brilliantly. This week, the White House says the Federal Maritime Commission (FMC) should “use all of the tools at its disposal to ensure free and fair competition,” and while the three carrier alliances receive statutory immunity from antitrust laws, the FMC can challenge those agreements if they “produce an unreasonable reduction in transportation service or an unreasonable increase in transportation cost or…substantially lessen competition.” That sounds like the White House backs the ‘Ocean Shipping Reform Act 2021’, which could flip demurrage charges from importers to the port or carrier: imagine if they were the ones facing massive bills, rather than massive profits. The carriers respond they are not to blame, and there is a shortage of trucks, chassis, truckers, rail, and warehouses. There is indeed – and truck drivers aside, they are also seeing vast profits by *not* investing more to resolve it. Welcome to capitalism. The key point is we are not going to see a quick ‘return to normal’. A key fallacy of neoclassical economics is that ‘things mean revert’: covid has seen disruption to supply chains, so when Covid goes, supply chains will ‘revert’. But supply chains are complex, non-linear, dynamic systems with emergent --and political-- properties. You can reach tipping points where they spiral upwards or downwards. If the US acts politically, the disruption could be deflationary, if shipping charges plunge, or inflationary, if carriers stop servicing US ports – and the US has no merchant marine to fill the gap. If the US does not act, we see structurally higher prices. Now, this is not the same as y/y inflation rates. If the price of bread leaps from $1 to $2, that is 100% inflation. If it then goes up to $2.20, it is 10% inflation. If it then goes back to $2.10 it is deflation, as is going to $2.09 and $2.08 in following years. Yet anyone thinking that after a massive price spike, such ‘deflation’ means things are back to normal in a staple like bread needs their neoclassical head examined. In an actual complex, non-linear, dynamic system with emergent --and political—properties, wheat prices are soaring due to high fertilizer prices; most non-Russian oil exporters are major wheat importers, and want oil to move with wheat; and as oil moves higher, so does natural gas; and so does fertiliser; and then so does wheat. This system reverts with ‘Arab Springs’ among those who buy oil and wheat. Which is a segue to the financial economy’s tenuous relationship to the real one. Bloomberg notes ‘Getting Inflation Right Is a Make-or-Break Trade on Wall Street’, which got inflation wrong this year by never having visited a warehouse or port. “After a three-decade hiatus, anxiety about rising consumer prices is testing the analytical skills of money managers and professional traders like nothing since the short-lived pandemic panic…For people working in finance, it’s a moment of extreme career risk - or a chance to be a hero to their bosses and their clients if they get it right. Many have never been here before.” Of course they haven’t. The last three episodes were 1948, when the US economy readjusted to post-WW2 demand vs. the shift from military to civilian production; the 1970’s oil shocks; and the pre-GFC commodity surge. Right now we have a mix of all three – with the caveat the US doesn’t have any civilian production. Bond-meister Mohamed El-Erian on CNBC today argues while current inflationary pressure is led by deficient supply relative to demand, only part will likely prove transitory, while part may prove more persistent “due to longer-term structural changes in the economy…company after company is rewiring their supply chain to prioritize resilience over efficiency…US labor force participation is stuck at a low 61.6% even as unemployment benefits have expired, suggesting that people’s propensity to work may have changed…Survey-based inflation expectations are not well anchored; both short and long-term expectations compiled by the New York Federal Reserve have already risen above 4%. Companies are warning about inflationary pressures well into next year and potentially beyond.” He notes market-based expectations remain better anchored, but says this is distorted by the Fed. There is a very valid argument Fed QE has actually raised, not lowered yields via stimulus: but in the ECB’s case this is clearly the reverse with peripheral bonds – what if the Fed is now acting like the ECB, repressing yields, and what if it stops via tapering and rate hikes? El-Erian nonetheless argues the Fed has to do to so to deal with the non-transitory inflation pressures that are building. I share this view not because it is gospel, but because it underlines what Bloomberg said: getting this right is make or break, “many have never been here before,” and it offers huge volatility and pain either way. One wonders what the Fed Chair, whose name we should find out today, will think of an inflation dilemma which separates the wheat from the chaff. They will also note the CBO have scored the White House’s Build Back Better bill as adding $367bn to the federal deficit over time, as the legislation comes up for a vote. If it fails, we move closer to a deflationary tipping point after an inflationary interregnum; if it passes, we add a $1.8 trillion stimulus on to a logistics network that can’t take it (and a Japanese promise of a record near $500bn package to boot): then we are really in Deep Ship. The two events may even be linked: if the BBB bill passes, I would wager Powell’s odds improve; if it fails, won’t the Democratic Progressives want some hope and change elsewhere, like the Fed? Happy Friday. Tyler Durden Fri, 11/19/2021 - 09:56.....»»

Category: worldSource: nytNov 19th, 2021

Technicolor: Third Quarter 2021 Results

PRESS RELEASE Technicolor: Third Quarter 2021 Results Significant demand for original content and high-performance broadband products but continuing supply constraints resulting from the pandemic Technicolor on track to meet its 2021 and 2022 guidance Paris (France), November 04, 2021 – Technicolor (PARIS:TCH, OTCQX:TCLRY) is today announcing its results for the third quarter of 2021. Richard Moat, Chief Executive Officer of Technicolor, stated: "Technicolor benefited from strong and growing demand across all activities during the third quarter of 2021. Results are robust, and demonstrate significant profitability improvement, reflecting our disciplined operational focus. Demand for creative VFX artistry and technology continues to improve across media and entertainment, boosted by the increasing desire for original content. Live action production is ramping up as expected, with almost all of our 2021 Visual Effects and Animation pipeline committed, and more than 75% of our 2022 pipeline. Revenue and profitability in DVD Services was ahead of expectations, driven by higher-than-anticipated strength in back catalog, and ongoing growth in supply chain activity. In Connected Home, despite very strong demand in North America and in Eurasia, revenue has been impacted by component shortages, leading to sales being pushed into 2022. However, our customers are now committing on volumes and have agreed on pass through contracts to secure components supply. Based on business activity for the first nine months and the continued successful optimization of its businesses, the Group is confirming its outlook for 2021 and 2022." Technicolor delivered a positive third quarter 2021, and a significant improvement in profitability, despite supply constraint challenges affecting both Connecting Home and Technicolor Creative Studios. For the first nine months of the year, Technicolor reported: Revenues of €2,050 million, a (4.4)% decrease at constant exchange rate, negatively impacted by key component shortages, which prevented the business from fully servicing its growing demand and despite a strong recovery in Visual Effects and Animation; Adjusted EBITDA of €176 million, up 71.3% at constant rate, reflecting operational and financial improvements, mainly in Technicolor Creative Studios; Adjusted EBITA of €46 million, representing a robust €111 million year-on-year improvement at current exchange rate; Free cash flow (before financial results and tax) from continuing operations of €(206) million, representing a €72 million year-on-year improvement at current exchange rate. All Technicolor activities are benefiting from sustained market demand Technicolor Creative Studios has an almost full committed revenue pipeline for Film & Episodic Visual Effects and Animation & Games for the remainder of 2021. The division continued to be awarded multiple new projects and, as a result, around 75% of its 2022 pipeline is also committed. Adjusted EBITDA and Adjusted EBITA are also benefiting from the positive impact of operating efficiencies. Connected Home revenues were down (13.1)% year-on-year at constant exchange rate as a result of unprecedented logistics challenges and key component shortages, which have slowed delivery capacity. At the same time, there has been very strong worldwide market demand, with customers committing on volumes until the end of 2022 and agreeing on pass through contracts to secure component supply. This situation is expected to continue well into 2022. DVD Services revenues are driven by continued higher than expected back catalog sales and ongoing growth in non-disc related supply chain activity. Profitability improvement has benefited from the acceleration of cost saving actions, and higher activity in freight and logistics despite continued labor and material cost pressures. The Group is on track to achieve the c. €115 million cost savings planned for calendar year 2021, with €75 million cost savings realized in the first 9 months. The target of delivering a cumulative €325 million in savings by the end of 2022 is confirmed. Based on business activity for the first 9 months, the Group is reiterating the outlook presented in its FY 2020 results press release issued on March 11, 2021. Third quarter 2021 results and forward outlook – key highlights   Third Quarter YTD September     In € million  2021  2020  Atcurrentrate  Atconstantrate  2021  2020  Atcurrentrate  Atconstantrate      Revenues from continuing operations 690 798 (13.4)% (14.6)% 2,050 2,230 (8.1)% (4.4)%   Adjusted EBITDA from continuing operations 76 53 +42.8% +41.4% 176 106 +66.6% +71.3%   As a % of revenues 11.0% 6.7%     8.6% 4.7%       Adjusted EBITA from continuing operations 31 2 na na 46 (65) na na   Free Cash Flow from continuing before Tax & Financial 3 (35) na na (206) (278) +26.0% +22.1%   End of September 2021 year-to-date Group key indicators for continuing operations: Revenues of €2,050 million were down (4.4)% at constant rate compared to the prior year, reflecting: A strong performance in Technicolor Creative Studios, up c.18% at constant rate, driven by (i) demand for VFX technology, and (ii) a continued strong performance in Advertising and Animation & Games; A (13)% decrease in Connected Home sales mainly due to supply constraints and transportation delays, but revenue growth in DVD Services. Adjusted EBITDA of €176 million was up 71.3% at constant rate. This reflects operational improvements particularly in Technicolor Creative Studios and DVD Services. The Adjusted EBITDA margin for the Group expanded from 4.7% to 8.6%, with Technicolor Creative Studios and DVD Services reporting a significant margin improvement compared to end of September 2020 year-to-date. Adjusted EBITA of €46 million represents a €111 million year-on-year improvement at current rate. This resulted from the EBITDA increase and the positive impact of efficiency measures, in particular lower D&A, following lower equipment spend for Technicolor Creative Studios and lower IP depreciation for DVD Services. Restructuring costs amounted to €(31) million at current rate, including €(15) million year-to-date in DVD Services driven by footprint rationalization. The change in working capital of €(240) million reflects Connected Home payment terms normalization that occurred in first half 2021. The key component shortage has, however, created a risk of unfinished goods inventory build-up that the group is addressing through active cooperation with its clients and suppliers. Free cash flow1 (before financial results and tax) from continuing operations of €(206) million represents a €72 million year-on-year improvement at current rate, driven mainly by profitability improvement in Technicolor Creative Studios, and the ongoing implementation of our cost transformation program. Free cash flow1 in the third quarter alone was €3m, representing a €38m improvement at current rate compared to third quarter 2020's free cash flow of €(35) million. Net debt at nominal value amounts to €1,258 million, and IFRS net debt amounts to €1,183 million. The difference mainly relates to the mark-to-market debt valuation, and will be reversed through non-cash interest charges over the life of the debt. Outlook Demand for Technicolor's products and services, in particular Connected Home broadband boxes and Technicolor Creative Studios VFX technology, is expected to continue to grow significantly throughout the remainder of the year and into 2022. Connected Home will continue to be impacted by key component delivery and pricing challenges in the fourth quarter and in 2022. Nonetheless, efficiency measures, progressive improvements in delivery and constant discussions with both suppliers and customers should help compensate these negative factors. After achieving €171 million of cost savings in 2020, the Group will continue to drive efficiency, and is maintaining its target of a total of €325 million in run rate cost savings by the end of 2022, with €115 million coming in 2021. Technicolor confirms its operating guidance for Adjusted EBITDA, Adjusted EBITA and FCF in 2021 and 2022. As communicated in the first quarter results, 2021 guidance and updated 2022 guidance are as follows: In 2021: Revenues from continuing operations broadly stable versus 2020; Adjusted EBITDA of around €270 million; Adjusted EBITA of around €60 million; Continuing FCF before financial results and tax at around breakeven; Net debt to Adjusted EBITDA covenant ratio below 4x level at year end. In 2022: Adjusted EBITDA of €385 million; Adjusted EBITA of €180 million; Continuing FCF before financial results and tax at around €230 million.  Continuing Operations – post IFRS 16         € million, FYE Dec post IFRS-16   2020    2021e 2022e        Adjusted EBITDA from continuing operations 167  270  385   Adjusted EBITA from continuing operations  (56)   60  180    Continuing FCF before financial results and tax  (124)   c.0 230    The 2021 and 2022 objectives are calculated assuming constant exchange rates. In 2022, the cumulative impact of foreign exchange fluctuations and change in Group perimeter as a result of the sale of Post Production will be €(40) million on Adjusted EBITDA and €(23) million on Adjusted EBITA. As of the end of the third quarter 2021, IFRS16 impacts Technicolor's KPIs as follows: Adjusted EBITDA improved by €38 million and decreased by €15 million vs. the impact in the first 9 months of 2020; Adjusted EBITA improved by €10 million and increased by €2 million vs. the impact in the first 9 months of 2020; FCF before financial results and tax improved by €50 million, but decreased by €(7) million vs. the impact in the first 9 months of 2020; Capital leases (principal repayment and interest) cash out totaled c. €10 million and decreased by €11 million vs. the impact in the first 9 months of 2020. Segment Review – Third quarter 2021 Results Highlights   Third Quarter Change QoQ YTD September Change YoY Technicolor Creative Studios* 2021  2020  At current rate  At constant rate  2021  2020  At current rate  At constant rate  In € million Revenues 157 111 +41.2% +37.9% 452 390 +15.9% +17.9% Adj. EBITDA 33 (2) na na 74 0 na na As a % of revenues +21.3% (1.5)%     +16.4% +0.1%     Adj. EBITA 16 (24) na na 22 (75) na na As a % of revenues +10.1% (21.1)%     +4.8% (19.2)%     (*) including Post Production Technicolor Creative Studios revenues amounted to €157 million in the third quarter of 2021, up 37.9% at constant rate and 41.2% at current rate quarter-on-quarter. The division is benefiting from a surge in demand for original content in the Film & Episodic VFX and Animation & Games service lines, combined with an outstanding performance from the Advertising service line. Adjusted EBITDA amounted to €33 million, up €35 million quarter-on-quarter at constant rate, and Adjusted EBITA was €16 million, up €40 million year-on-year, as a result of higher margin volume growth in conjunction with permanent cost reduction measures. Business Highlights Film & Episodic Visual Effects: Revenues in the third quarter more than doubled year-on-year, as the business continued to recover from pandemic-related impacts. During the quarter, VFX teams worked on over 20 theatrical films, including The Lion King prequel (Disney), The Little Mermaid (Disney), Resident Evil: Welcome to Raccoon City (Constantin Film / Sony), Sonic the Hedgehog 2 (Paramount), and Transformers: Rise of the Beasts (Paramount); and Over 35 Episodic and/or Streaming projects, including Chip 'n' Dale: Rescue Rangers (Disney+), Foundation (Skydance/Apple TV+), Hawkeye (Marvel/Disney+) Vikings: Valhalla (MGM/Netflix), and The Wheel of Time (Amazon/Sony). In September, MPC and Mikros announced an alliance of their episodic and film divisions. Mikros, a French company with over 35 years in the VFX industry, has been a Technicolor brand since 2015. The combined studios will operate under the MPC Episodic brand and will continue to service the French entertainment industry. After the end of the quarter, MPC Film received an HPA Award nomination for Outstanding Visual Effects - Theatrical Feature for its work on Legendary's Godzilla vs. Kong. Advertising: Double-digit growth as momentum continues to build, particularly with repeat direct-to-brand business with major advertisers. During the third quarter, Technicolor's Advertising businesses delivered approximately 660 commercials, while winning several prestigious industry awards such as: Seven Creative Circle Awards, including The Mill winning Gold for Most Creative Post Production Company; Four Kinsale Shark Awards, including MPC taking Gold for Best CGI/Visual Effects for its contribution to Burberry ‘Festive'; and MPC winning Gold for VFX for their work on Vasen ‘Professional Makes Greatness' at Shots Awards Asia Pacific. Notable projects delivered in the quarter include LEGO's latest global ‘Rebuild the World' campaign (MPC), Nike's latest ‘Play New' campaign featuring Megan The Stallion (The Mill), and Pentakill: Lost Chapter: An Interactive Album Experience - a metaverse concert for Riot Games (The Mill). Technicolor Creative Studios announced in September the launch of a global network of Creative Hubs, hosting The Mill and MPC brands in co-located studios, beginning in London and New York City. In conjunction with this announcement, Technicolor Creative Studioshave appointed Josh Mandel and Mark Benson, CEOs of The Mill and MPC respectively, to co-lead the Advertising offering globally. Animation & Games: Significant double-digit growth year-on-year driven by strong volume across all business units. Feature: Mikros is in production on Paramount's The Tiger's Apprentice and GCI Film's Ozi, while beginning to ramp-up production on four additional feature films. Episodic: During the quarter, Mikros completed work on Disney Junior's brand-new Halloween special, Mickey's Tale of Two Witches, and continues to work on multiple episodic series, including ALVINNN!!! and the Chipmunks (M6), The Croods: Family Tree (DreamWorks/Hulu/Peacock), Gus – the Itsy Bitsy Knight (TF1), Kamp Koral: SpongeBob's Under Years (Nickelodeon/Paramount+), Mickey Mouse Funhouse (Disney), Mira, Royal Detective (Wild Canary/Disney), Rugrats (Nickelodeon/Paramount+) and Star Trek: Prodigy (Nickelodeon/Paramount+). Games: Technicolor Games contributed to recent AAA releases like NBA 2K22 (2K), FIFA 22 (EA), and NHL 22 (EA). In October, the Division announced the appointment of Jeaneane Falkler as the President of Technicolor Games, a newly created position to lead growth in the games sector. Covid-19 situation update Abiding by evolving local and national government regulations and in consultation with local business leadership, Technicolor Creative Studios continues to adjust capacity limits, on-premise protocols, and remote work policies and support on a local basis to ensure the safety of our talent, clients and others. The pandemic continues to affect both immigration and travel, negatively impacting the industry's ability to attract talent to locations where the demand for talent exceeds local supply. Furthermore, immigration policy changes in Canada and in the U.K. & Europe as a result of Brexit are also having an adverse impact on the acquisition of talent. To support its strong backlog, Technicolor Creative Studios continues to invest in its Academies across multiple locations as a strategy to generate new talent pipelines into the business as well as the industry as a whole. ###   Third Quarter Change QoQ YTD September Change YoY Connected Home 2021  2020  At current rate  At constant rate  2021  2020  At current rate  At constant rate  In € million Revenues 330 488 (32.4)% (33.9)% 1,100 1,327 (17.1)% (13.1)% Adj. EBITDA 17 31 (45.5)% (50.9)% 73 85 (13.6)% (11.0)% As a % of revenues +5.1% +6.3%     +6.7% +6.4%     Adj. EBITA 1 15 (90.7)% na 31 35 (12.9)% (13.0)% As a % of revenues +0.4% +3.0%     +2.8% +2.7%     Connected Home revenues totaled €330 million in the third quarter 2021, down c. 34% quarter-on-quarter at constant rate. However, the worldwide semiconductor/key component crisis, combined with supply chain dislocation, has further deteriorated during the third quarter, creating renewed challenges for the Connected Home business: Continued difficulties in obtaining components, delaying production to final customers; Challenges with logistics from Asia, extending delivery times to our customers; Cost increases across multiple categories of components and logistics. The division has intensified its collaboration with clients and suppliers to maximize deliveries, and to mitigate potential profitability and working capital impacts. New wins and product launches are driven by better user experience in the home with Wi-Fi 6, while innovation is coming with new technologies in the field of sound and far-field voice. Public announcements for the quarter were: The next-generation Wi-Fi 6-enabled Super Wi-Fi boosters with Alexa built-in as part of the latest Vodafone UK Pro Broadband offering; The deployment of SKY Connect, a next generation set-top box (STB) based on Android TV and integrating Google Assistant far-field voice technology for Sky Brazil; The deployment of next-generation Android TV set-top boxes for TIM, enabling Italian consumers to access premium broadcast and OTT Services; The U+tv Soundbar Black, a high-end, multi-service home-entertainment platform developed in partnership with HARMAN's Embedded Audio group and LGU Plus, with Dolby Vision and Dolby Atmos sound experience. Adjusted EBITDA amounted to €17 million in the third quarter 2021, or 5.1% of revenue, down €(16) million at constant rate due the sales shortfall and higher component prices, partially offset by reductions in OPEX. Year-to-date Adjusted EBITDA was €73 million, down €(9) million. Adjusted EBITA in the third quarter of €1 million decreased by €(15) million compared to the prior year at constant rate. Business highlights Americas North America: Revenues were down due to supply constraints and transportation delays despite continued increased demand from cable operators. The division aims to continue to secure new wins and grow share in Tier II and Tier III customer groups in both Broadband and Android TV. The latter has been a strong growth area during 2021. Latin America: Demand is up across the region due to key wins in Wifi 6 on both DOCSIS and Fiber, but revenues were down in Q3 due to global supply constraints. Eurasia Europe, Middle East & Africa: DOCSIS and Fiber demand and supply remained strong whilst sales of legacy technologies like DSL reduced sequentially. Video demand remained stable whilst highly constrained by IC components supply. DOCSIS 3.1. revenues continued growing strongly in the region; among new projects launched there was the Wi-Fi 6 DOCSIS product with Vodafone. Asia Pacific: Demand remained strong for BB and Video, though highly constrained by SOCs and ICs. The division continues to focus on selective investments in key customers, platform-based products and partnerships optimizing fixed costs that will lead to improved margins over the year.  Revenue Breakdown for Connected Home   Third Quarter YTD September In € million 2021 2020 % Change* 2021 2020 % Change* Total revenues 330 488 (33.9)% 1,100 1,327 (13.1)% By region Americas: 212 327 (36.9)% 729 902 (15.3)%   -        North America 185 282 (36.2)% 633 745 (11.5)%   -        Latin America 27 45 (41.0)% 96 157 (33.2)%     Eurasia: 118 161 (27.8)% 371 425 (8.2)% -        Europe, Middle East and Africa 63 92 (33.2)% 218 246 (6.3)% -        Asia-Pacific 55 69 (20.6)% 153 179 (11.0)% By product Video 137 187 (28.2)% 415 505 (14.0)%   Broadband 193 302 (37.4)% 685 822 (12.5)% (*) Change at constant rate ###   Third Quarter Change QoQ YTD September Change YoY DVD Services 2021  2020  At current rate  At constant rate  2021  2020  At current rate  At constant rate  In € million Revenues 198 193 +2.5% +3.6% 481 495 (2.9)% +1.2% Adj. EBITDA 29.....»»

Category: earningsSource: benzingaNov 4th, 2021

Group Of 160 Republicans Urge Biden To Fix Supply Chain Crisis Before Considering More Social Spending

Group Of 160 Republicans Urge Biden To Fix Supply Chain Crisis Before Considering More Social Spending Authored by Katabella Roberts via The Epoch Times, A group of 160 Republican lawmakers have sent a letter to President Joe Biden urging him to “reevaluate his priorities” and address the supply chain and ports crisis in the United States before considering additional social spending. The letter was led and signed by Rep. Sam Graves (R-Mo.), the ranking member on the Transportation and Infrastructure Committee, and also signed by lawmakers including House Minority Leader Kevin McCarthy, among others. McCarthy shared the letter on Twitter on Oct. 21, writing, “Mr. President, it’s time for you to reevaluate your priorities. We must address our supply chain and ports crisis before Congress considers any additional social spending and taxation legislation.” “As House Republicans, we write because we refuse to stand by and watch as your administration dilutes America’s ability to ensure the safe and efficient movement of goods, people, and services throughout our transportation network,” the letter reads. “House Republicans have repeatedly demonstrated a willingness to work on bipartisan solutions to improve our infrastructure. We regret that our efforts have been spurned as Speaker [Nancy] Pelosi, Majority Leader [Chuck] Schumer, and your Administration use infrastructure as a Trojan horse to push radical policies that make it more difficult and expensive for families to find or afford basic goods and for businesses to continue the long road to recovery from the pandemic,” it adds. Industries across the United States are facing acute bottlenecks in supply chains, such as material and worker shortages as well as the skyrocketing prices of materials, driven by the COVID-19 pandemic. These issues have also impacted consumers who are now faced with empty shelves and higher prices on top of rising inflation levels. About 250,000 containers of goods are currently stacked up on the docks due to delayed pickups, from chassis shortages and a lack of space in rail yards and warehouses, and that is causing dozens of ships to back up at anchor outside the port, Reuters reports. “We must address the global supply chain and ports crisis before Congress even considers additional social spending and taxation legislation. Our priority right now should be strengthening our nation’s economy and increasing our global competitiveness,” the letter continues. The Biden administration has been focused heavily on pushing through two major spending bills: a bipartisan infrastructure bill worth $1.2 trillion that was passed by the Senate in August. That bill is currently being held up in the House as some progressive Democrats said it will only be passed if the Senate approves the $3.5 trillion social and climate spending bill. The letter goes on to accuse the Biden administration of further fueling the current crisis by raising energy costs and triggering inflation through “reckless unchecked spending” and “attacking American businesses.” “Ironically it is now the private sector that you are calling on to ‘step up’ and fix the supply chain problems,” it adds. President Biden on Oct. 13 threatened to “call out” private companies who fail to assist his administration and step up to address the global supply chain bottlenecks. “If the private sector doesn’t step up, we’re going to call them out and ask them to act,” the president said in remarks at the White House. “All of these goods won’t move by themselves. For the positive impact to be felt all across the country and by all of you at home, we need major retailers who ordered the goods and the freight movers who take the goods from the ships to factories and to stores to step up as well,” Biden said. The White House says it has received confirmation from UPS, FedEx, Walmart, Target, Samsung, and other companies, as well as the Port of Los Angeles, to increase the number of shifts to deal with a backlog of container ships, labor shortages, and warehousing issues. “We urge you to call on your congressional allies to halt discussions on a budget reconciliation bill that aims to reshape the social fabric of this country and instead work on real infrastructure solutions that focus on moving goods and people safely and efficiently,” the letter adds. Tyler Durden Thu, 10/21/2021 - 12:45.....»»

Category: blogSource: zerohedgeOct 21st, 2021