The Spirituality Behind Bitcoin.....»»

Wait Until All These New Homebuyers See Their Property Taxes Go Up Next Year To add another chapter to the "our economy is a ponzi scheme bubble that is bound to eventually burst" argument, those who went out and overpaid for property this year may wind up with a hangover in the form up skyrocketing property taxes. We all know that higher real estate prices (hereinafter referred to as "a real estate bubble") are often praised by government and Fed officials as signs of progress for the economy. They're great news for those who already own property and terrible news for those looking to enter the market for the first time. But buyers in 2021 may face even more buyers remorse, on top of overpaying for property: they may soon find out that property taxes are going to increase, an article from The Motley Fool astutely noted this summer.  This once again makes an already-expensive house an additional burden by levying more costs in the form of taxes. Property taxes are determined by the assessed value of a home and multiplying it by your local municipality's tax rate.  Assessments can obviously rise in price as homes do, driving taxes higher.  Homeowners in 2021 are already starting to see these effects, the Fool article writes. An average property tax bill for a single family home went up from $3,561 to $3,719 in 2020, the report noted. Property taxes rose $323 billion, or 5.4%, in 2020, the report notes. It's not unreasonable to assume these taxes will continue to rise at this alarming clip for 2021, as the real estate market continued its "recovery" this year. While homeowners can appeal property tax assessments, the process "isn't easy".  "It's for this reason that homeowners are advised not to max out their budgets when purchasing property," the Fool article hilariously ends by saying. Perhaps someone can inform them that tapping out all lines of credit and maxing out one's budget is the American way...   Tyler Durden Wed, 10/27/2021 - 19:10.....»»

US Coal Stockpiles Slump To Two Decade Low As Power Plant Demand Surges  One of the biggest ironies this year is the transition from fossil fuel generation to green energy has created a global energy crisis that is forcing the U.S., among many other countries, to restart coal-fired power plants ahead of the Northern Hemisphere winter. Coal is roaring back this fall but supplies are not catching up with demand.  According to Bloomberg, US coal supplies dropped to 84.3 million tons in August, the lowest level since 1997.  As of August, about a quarter of all US power generation was derived from coal. As winter approaches, coal-fired power plants will become a more significant percentage of all U.S. power generation.  Power plants are expected to burn 19% more coal this year because soaring natural gas prices have made it uneconomical to produce power. In return, this is forcing generators to burn through coal reserves much quicker and has caught coal producers off guard who cannot bring new coal to the market.  "The ability for the producers to respond is not what the utilities thought it was," Paul Lang, CEO at Arch Resources Inc., said during a conference call Tuesday. "It just doesn't exist anymore." Weeks ago, Ernie Thrasher, CEO of Xcoal Energy & Resources, the largest U.S. exporter of fuel, said demand for coal will remain robust well into 2022. He warned about domestic supply constraints and power companies already "discussing possible grid blackouts this winter."  He said, "They don't see where the fuel is coming from to meet demand," adding that 23% of utilities are switching away from gas to burn more coal. There are not enough coal miners to rapidly increase mining output.  Joe Craft, CEO for Oklahoma-based miner Alliance Resource Partners L.P., warned Monday, "coal stocks for customers are at critically low levels."  Inventory declines came on very quickly as the global energy crisis emerged this year. Stockpile trends were well in line for the first half of the year, but stockpiles began to drop as soon as July rolled around.  S&P Global Market Intelligence data shows Central Appalachia coal prices have surged 39% since the start of the year to $75.50 a ton due to supply constraints.  Matt Preston, director of North American coal markets research for Wood Mackenzie Ltd., said total U.S. inventories could slump by 50 million tons by the end of the year: "Stockpiles are coming down very rapidly," Preston said. "If we have a cold winter, and there has been lots of talk that there could be a cold winter, we could see some issues." With natgas, coal, and oil prices all soaring is a clear signal the green energy transition will take decades, not years. Walking back fossil fuels for unreliable clean energy has been a disaster in Asia and Europe. It could soon cause trouble in the U.S. These power-hungry continents are scrambling to source fossil fuel supplies as stockpiles are well below seasonal trends ahead of cooler weather.  Suppose La Niña conditions produce cooler weather trends in certain parts of the world. In that case, especially, Asia, Europe, and the U.S., coal demand could continue to increase, which would benefit Peabody Energy Corporation's share price.  So far, Peabody's earnings have tripled as coal roars back under a Biden administration.  Tyler Durden Wed, 10/27/2021 - 18:30.....»»

NASA Facing Massive $2.7 Billion Cost Overruns At Its Facilities Authored by Adam Andrzejewski via RealClearPolicy.com, The space race between private companies continues with actor William Shatner flying to the edge of space on Blue Origin’s New Shepard 4 vehicle and  SpaceX recently sending a civilian crew to space. While the competition between Blue Origin and SpaceX heats up, NASA is taking a back seat as it faces billions of dollars in project overruns. While the National Aeronautics and Space Administration manages $40 billion in facility assets, more than 75 percent of it is beyond its design life and NASA faces a deferred maintenance backlog of $2.7 billion as of 2020, according to a recent report on cost overruns from NASA Office of Inspector General. The IG reviewed 20 construction projects and found that six had “significant cost overruns” and 16 took or will take longer to complete than initially planned. It looked at six projects at Glenn Research Center, Kennedy Space Center and Langley Research Center “that were significantly over budget as of June 2021.” Cost increases ranged from $2.2 million for upgrades at Glenn to $36.6 million for repairs and modifications at Kennedy, the report found. The increased costs for two of the projects were attributed to changing requirements, while contract prices for four others were either higher than originally estimated or resulted from disagreements between NASA and the contractor, the IG report found. NASA didn’t provide effective oversight to determine whether the projects met cost, schedule and performance goals, the report found. A second NASA IG report estimated that delays from the Covid-19 pandemic cost nearly $3 billion. Pandemic delays aside, NASA’s cost overruns can’t be accepted as the norm when private industry is passing up our taxpayer-funded space program almost daily. *  *  * The #WasteOfTheDay is presented by the forensic auditors at OpenTheBooks.com. Tyler Durden Wed, 10/27/2021 - 18:10.....»»

Democrats Nix Paid Leave In Latest Cut To Social Spending Package.....»»

Taiwan Is A 'Number One Issue' For The CIA’s New China Center Authored by Dave DeCamp via AntiWar.com,  Now that the CIA has established a new mission that will exclusively focus on China, CIA Deputy Director David Cohen said that Taiwan will be one of the "number-one issues" for the new spy center. "There’s a series of number-one issues with China," Cohen said at an intelligence conference on Sunday. "Taiwan is definitely one of the number one issues with China we are focused on." Cohen’s comments came after President Biden said the US has a "commitment" to defend Taiwan in the event of a Chinese invasion. Although US officials were quick to clarify that Biden’s statement was not a change in policy, hawks in Congress are ready to give the president war powers to fight China over Taiwan. Biden’s comments came against the backdrop of media hysteria over Chinese flights in Taiwan’s air defense identification zone (ADIZ). The ADIZ concept is not covered by any international laws or treaties, and the Chinese warplanes usually enter the southwest corner of the ADIZ, nowhere near the island of Taiwan. But some Western media outlets falsely portrayed these flights as violations of Taiwan’s airspace. The hype over the ADIZ flights has filled Western media with articles predicting an imminent Chinese invasion of Taiwan. Cohen said that the CIA’s job is to find out how Chinese President Xi Jinping is "thinking about Taiwan" and to provide policy makers in Washington with "indicators" of a potential invasion. When announcing the new spy center, CIA Director William Burns called China the "most important geopolitical threat" facing the US. In response to the announcement, China’s ambassador to the US said Washington should drop its "James Bond" theatrics and work towards better relations with Beijing. Tyler Durden Wed, 10/27/2021 - 17:30.....»»

China Urges US To Immediately Lift Sanctions On Taliban As "Economic Chaos" Looms.....»»

Gender "X": US Issues First Passport For People Who Don't Identify As Male Or Female Americans who don't identify as male or female can finally rejoice, after the United States has issued its first passport with an "X" gender designation. Photo illustration by Clarice Bajkowski/The 19th According to a Wednesday statement by the State Department, the "X" designation will likely be offered on a broad basis next year, according to AP. The U.S. special diplomatic envoy for LGBTQ rights, Jessica Stern, called the moves historic and celebratory, saying they bring the government documents in line with the “lived reality” that there is a wider spectrum of human sex characteristics than is reflected in the previous two designations. -AP "When a person obtains identity documents that reflect their true identity, they live with greater dignity and respect," said Stern, who added that her office planned to encourage other nations to embrace the same changes. "We see this as a way of affirming and uplifting the human rights of trans and intersex and gender-nonconforming and nonbinary people everywhere," she said. While the state department has declined to reveal who received the "X" passport, some suspect it may be Dana Zzyym, an 'intersex Colorado resident' who took the State Department  to court in 2015. Zzymm (pronounced Zimm), was denied a passport after refusing to check male or female on an application - instead writing "intersex" above the boxes marked "M" and "F" - and requested an "X" gender designation in a separate letter. Zzyym was born with ambiguous physical sexual characteristics but was raised as a boy and underwent several surgeries that failed to make Zzyym appear fully male, according to court filings. Zzyym served in the Navy as a male but later came to identify as intersex while working and studying at Colorado State University. The department’s denial of Zzyym’s passport prevented Zzyym from being able to travel to a meeting of Organization Intersex International in Mexico. -AP In June, the State Department announced that it would add a third gender designation for nonbinary, intersex and gender-nonconforming people, however it said that due to extensive updates required to their computer systems, it might take a while to fully implement. One department official told AP that the passport application and "X" update to the system would still need to be approved by the Office of Management and Budget, which approves all government forms. Meanwhile, the department no longer requires applicants to provide medical certification if their gender doesn't match what's listed on other identification documents. Tyler Durden Wed, 10/27/2021 - 17:10.....»»

A Global Oil Shortage Is Inevitable Authored by Tsvetana Paraskova via OilPrice.com, While oil and gas companies come under pressure to reduce production, the world’s thirst for new supply is only growing  Without a significant uptick in investment, demand for oil and gas will surpass supply in the not-so-distant future This disconnect between the political desire for less fossil fuels and the global hunger for fossil fuels could drive the price of oil up to $100 Chronic underinvestment in new oil supply since the 2015 crisis and the pressure on oil and gas companies to curb emissions and even “keep it in the ground” will likely lead to peak global oil production earlier than previously expected, analysts say.  This would be a welcome development for green energy advocates, net-zero agendas, and the planet if it weren’t for one simple fact: oil demand is rebounding from the pandemic-driven slump and will set a new average annual record as soon as next year.   The energy transition and the various government plans for net-zero emissions have prompted analysts to forecast that peak oil demand would occur earlier than expected just a few years ago. However, as current investment trends in oil and gas stand, global oil supply could peak sooner than global oil demand, opening a supply gap that would lead to increased volatility on the oil market, with spikes in prices, and, potentially, structurally higher oil prices by the middle of this decade and beyond.  Supply Could Peak Before Demand “On current trends, global oil supply is likely to peak even earlier than demand,” Morgan Stanley’s research department wrote in a note this week carried by Reuters.   “The planet puts boundaries on the amount of carbon that can safely be emitted. Therefore, oil consumption needs to peak,” analysts at Morgan Stanley said. The problem with the world is that oil consumption - wishful thinking, investor pressure, and all - is not peaking. Nor will it peak until the end of this decade at the earliest, according to most estimates.  OPEC expects global oil demand to continue to grow into the mid-2030s to 108 million barrels per day (bpd), after which it is set to plateau until 2045, as per the cartel’s latest annual outlook.  Some other analysts expect peak demand at some point in the late 2020s.  Investment in new supply, however, is severely lagging global oil demand growth. Demand is growing again after the 2020 COVID crisis and, contrary to some expectations from early 2020 that the world’s oil consumption would never return to pre-pandemic levels, demand is currently just a few months away from hitting and exceeding those levels.  Supply Gap Is Looming In Just A Few Years Supply, on the other hand, looks constrained beyond the OPEC+ deal horizon.  New investment last year slumped to a decade-and-a-half low. Last year, global upstream investment sank to a 15-year low of $350 billion, according to estimates by Wood Mackenzie from earlier this year.  Investment is not expected to materially pick up this year, either, despite $80 oil. That’s because supermajors stick to capital discipline and pledge net-zero emission targets, part of which some of them plan to reach by curbing investment and developments in non-core little-profitable new oil projects.  U.S. shale, for its part, is not rushing this time to “drill themselves into oblivion,” as Harold Hamm said in 2017, as American producers look to finally reward shareholders after years of plowing cash flows into drilling and chasing production growth.  Considering that oil demand will still grow, at least for a few more years, underinvestment in new supply would be a major problem in the medium and long term.  Despite the energy transition, demand will not just vanish, and new supply will be needed for years to come to replace declining production and reserves.  The oil industry will need massive investments over the next 25 years in order to meet demand, according to OPEC. The industry will need cumulative long-term upstream, midstream, and downstream oil-related investments of $11.8 trillion by 2045, OPEC says. Patrick Pouyanné, chief executive at France’s TotalEnergies, said at the Energy Intelligence Forum this month that oil prices would “rocket to the roof” by 2030 if the industry were to stop investments in new supply, as some scenarios for net-zero by 2050 suggest. “If we stop investing in 2020, we leave all these resources in the ground ... and then the price will rocket to the roof. And even in developed countries, it will be a big issue,” Pouyanné said.  $100 Oil Is No Longer An Outrageous Prediction  A triple-digit oil price is no longer an outrageous prediction as it would have been in early 2020.   Francisco Blanch, global head of commodities and derivatives research at Bank of America, expects oil to hit $100 by September 2022, or even earlier if this winter is much colder than expected.  Demand is coming back, while we have seen severe underinvestment in supply the last 18 months, Blanch told Bloomberg at the end of September.    “The underinvestment problem cannot be solved easily, and at the same time we have surging demand,” he said.  “We are moving into a straightjacket for energy, we don’t want to use coal, we want to use less and less gas, we want to move away from oil,” Blanch told Bloomberg.  While oil is unlikely to sit at triple digits for a sustained period of time, underinvestment has become “a multi-year problem” for the industry, Blanch noted.  Even if oil doesn’t stay at $100 a barrel, a supply crunch down the road would nevertheless move the floor under oil prices higher and lead to unsustainable price spikes. As much as climate activists want a stop to investment in new supply, the industry and the world cannot afford it because oil demand continues to grow.   Tyler Durden Wed, 10/27/2021 - 16:50.....»»

Billionaires To Fund "Anti-Disinformation" Media Companies To "Restore Social Trust" Authored by Katabella Roberts via The Epoch Times, Billionaires Reid Hoffman and George Soros are backing a public benefit corporation that will provide funding to new media companies aimed at tackling disinformation online and restoring social trust. Good Information Inc. launched on Tuesday and is being led by former Democratic strategist Tara McGowan who previously ran a progressive non-profit called ACRONYM, which was backed by LinkedIn founder Hoffman. Others contributing to the multi-million seed effort include investors Ken and Jen Duda, and Incite Ventures. In a press release on Oct. 26, Good Information Inc said its aim is to “restore social trust” and “strengthen democracy” by “investing in solutions that counter disinformation and increase the flow of good information online.” “America is currently in the throes of a disinformation epidemic that is threatening public health, social trust, and democracy around the world. Good Information Inc. believes there is un-met audience demand for fact-based information, especially in local markets that have lost many of their legacy local news sources in recent years, and among audiences that are being left behind by evolving media business models,” the corporation said in a statement. Good Information Inc. will be investing in media outlets that provide customers with trusted and fact-based information, as well as local community news, particularly in markets where there are little to no local news outlets reaching online communities. The company said that an “increasingly decentralized media environment, anti-democracy forces, and networks of bad actors” have resulted in “dangerous consequences,” noting that 96 million Americans believe the election was stolen from former President Donald Trump, while 89 million Americans believe voter fraud is a major problem. Trump has maintained that there was “massive voter fraud” in the 2020 elections. “Good information that upholds the truth, common sense, and shared values of a society is the lifeblood of democracy, and orchestrated disinformation—fueled and amplified by bias-driven algorithms—is its greatest threat. The disinformation crisis we are facing in America today is increasing polarization and eroding our trust in each other, which is having a corrosive effect on our democracy, jeopardizing public health, and destabilizing our economy,” founder and CEO McGowan said in a statement. “This is no longer a political dispute about the truth, but the direct result of unregulated business models that are putting whole communities around the world at risk, and putting democracy around the world in peril.” McGowan’s former progressive non-profit, ACRONYM, ran one of the biggest digital campaigns—costing $100 million—aimed at convincing millions of Americans to vote against Donald Trump in the 2020 elections, Fast Company reports. One of the companies ACRONYM invested in, called Shadow, produced the vote tabulation app used in the Iowa caucuses and contributed to the delayed reporting of the results following a string of technical issues. McGowan later apologized for the incident, telling Axios that the Shadow team, “made an enormous mistake that has dire consequences in this election and so we want to own that.” As its first major investment, Good Information Inc. has officially acquired Courier Newsroom, a civic media company composed of eight state-based news outlets. Pat Kreitlow, who co-founded Courier’s Wisconsin news outlet UpNorthNews, said in a statement that the company is “extremely happy to be the first investment of Good Information’s portfolio.” “We are seeing unparalleled threats to our country’s democracy and a free press today—threats so grave that the long-running fight against misinformation seems almost quaint as we confront outright disinformation from people preying upon Americans fears and anxieties to push their own agenda or profit margins,” Kreitlow said. Tyler Durden Wed, 10/27/2021 - 15:46.....»»

Bond Market Screams Fed Policy Error, Sparks Huge Value-To-Growth Rotation In Stocks Stocks were very mixed today with Nasdaq (growth-dominant) soaring as Small Caps (value-dominant) slumped. As the day wore on and various headlines came out of Washington, all somewhat reducing the scale of the fiscal stimulus, stocks all began to fade. The Dow and S&P tumbled into the red and even Nasdaq gave back most of its gains in the last few minutes... The Russell 2000 / Nasdaq 100 pair is now back at 6 week lows (and critical level over the last 3 months)... ...appears to have found its way back to the old correlation regime with real yields plunging... Source: Bloomberg Biggest growth outperformance of value since June today, with Value at its weakest relative to growth in a month... Source: Bloomberg Rent The Runway routed... Twitter twatted... Trump's Social Media SPAC surged... And HOOD was hammered back below its IPO price near record lows... The bond market was where the big action was today as yields collapsed at the long-end and surge at the short-end (30Y -10bps, 2Y +5bps).... Source: Bloomberg Rate-hike expectations are soaring with 1.5 hikes priced in by Sept 2022 and 2.3 hikes priced in by Dec 2022... Source: Bloomberg 30Y yields were monkeyhammered back below 2.00%... Source: Bloomberg This is happening as specs are the most short bonds this year... Source: Bloomberg The big bond bear short-squeeze begins... The yield curve (5s30s) flattened dramatically again today, back below 80bps, screaming that a Fed policy error is on its way... Source: Bloomberg And if you thought 2Y TSY yields were blowing out (topping 50bps today), here's Canada (after they shifted significantly hawkish today)... Source: Bloomberg The plunge in real yields also suggests Gold has room to run from here to around $2000... Source: Bloomberg The dollar ended unchanged after a choppy session, but remains the recent narrow range... Source: Bloomberg Cryptos crashed today with Bitcoin clubbed like a baby seal back below $60,000... Source: Bloomberg Ethereum fell back to, and found support at, $4000... Source: Bloomberg After the usual puke at 0830ET (London Fix), gold rallied all the way back to $1800... Oil suffered its biggest drop in over a month on Iran nuke talk headlines and a big crude inventory build... Finally, as stocks push to ever higher record highs, US economic growth expectations are plunging with The Atlanta Fed's forecast getting close to contraction... Source: Bloomberg Tyler Durden Wed, 10/27/2021 - 16:00.....»»

Flood Of SHIBA INU Buyers Crashes Coinbase Tens of millions of Coinbase users were locked out of their accounts around 3:30 pm ET when Shiba Inu (SHIB), the Ethereum-based Dogecoin copycat altcoin which has a total circulating supply of 1 quadrillion (meant to be an intentional contrast to Bitcoin's 21MM token scarcity) and which was already about up 60% for the day (and up a few million % in the past year), saw a relentless flood of buy orders... .... resulting in a crash in Coinbase - which now has a market cap of $65BN and still yet can't operate during a traffic spike - and this "welcome" message: At that moment, the token which is basically a spoof of Dogecoin (and just as valuable), had reached a market cap of over $30 billion, making it bigger than Doge. So powerful was the scramble to participate in the relentless upward SHIB momentum, it was the reason for today's drop in Bitcoin and Ethereum, both of which tumbled overnight when the latest buying spree commenced... ... and which soared higher the moment Coinbase went down as accounts couldn't sell the two largest cryptos to buy what is by definition a joke altcoin. That said SHIB, like DOGE, may be a "joke" crypto but that hardly matters to anyone who bought it and held at any time in the past few weeks/months and held: their profits at this moment are greater than any other asset class in the world right now. Tyler Durden Wed, 10/27/2021 - 16:30.....»»

How Long Until Supply Chains Finally Normalize: Three Things To Watch Earlier today, Morgan Stanley showed that more than inflation, more than concerns about the historic labor crisis, definitely more than covid, one thing has preoccupied the minds of most management teams this quarter: "supply chain issues", a topic which has seen an explosion of mentions on Q3 earnings calls. But while by now everyone is aware that the global supply-chain shock is truly historic and getting worse by the day, with used car prices rising sharply again and over 30 million tons of cargo waiting outside US ports ahead of the holiday season, few have considered what realistically could normalize these frayed supply chains. To address this topic, in a research report published overnight, Goldman's economists assessed the three key drivers of supply chain normalization and their most likely timing: improved chip supply driven by post-Delta factory restarts (4Q21) and eventually by expanded production capacity (2H22 and 2023); improved US labor supply (4Q21 and 1H22); and the wind-down of US port congestion (2H22). And speaking of used car prices, in the first 15 days of October, the Manheim used vehicle index surged 8.3% due to yet another global supply shock: this time due to Delta-variant factory shutdowns in Southeast Asia and elsewhere. Here, in a rare mea culpa, the Goldman economists admit that while previously they had expected improved microchip availability by 1H22 on the back of normalizing Japanese automotive shipments (post-factory fire) and a US supply response, with these catalysts now behind us — the Naka factory in Japan resumed normal shipments activity in July and US semiconductor plant hours jumped to 73 hours per week in the first half of the year vs. 46 in 2019 — Goldman now expects a "more extended timeline." So with that demonstration of how thoroughly unpredictable the non-linear cascading consequences of such s diffuse, global phenomenon as international production pathways and supply chains are, Goldman proceeds to assess the three key drivers of supply chain normalization listed above, their likely timing, and the key indicators to track progress. We start by reviewing one unique aspect of the global semiconductor industry that sets it apart from most other manufacturing and services industries of today’s economy: outside of Southeast Asian plant shutdowns, both output and capacity utilization have already returned to quite elevated levels. So while the supply of dress shirts and haircuts is likely to rise sharply if demand returns, higher utilization of existing semiconductor capacity is not a viable path toward resolving the chip shortage. Additionally, much needed moderation in US and global goods demand has alleviated (and will continue to alleviate) goods-sector imbalances. As shown in the left panel of the next chart, real retail spending has already normalized in major foreign economies. And while it picked back up domestically in August and September, US goods consumption has nonetheless declined by 5% since March. That said, from the perspective of the key bottlenecks contributing to inflation, demand for consumer electronics, business tech, and other semiconductor-intensive products has remained elevated—both globally and in the US (right chart above). Furthermore, one should hardly expect the increased digitization of society and consumer preferences to reverse post-pandemic: Goldman's equity analysts forecast demand for semiconductor-intensive consumer goods to remain strong in 2022 (smartphones +4% after +12% in 2021, autos +5% after +6%, PCs -12% after +28% cumulatively in 2020 and 2021). So returning to supply constraints, here is a summary of the three key resolution channels in turn (global chip production, US labor supply, reduced port congestion). Channel 1, Step 1: Improved Chip Supply from East Asia Reboot Goldman's expected timeline: 4Q21 Key indicators to watch: Effective Lockdown Indices (ELI) particularly in Malaysia, Vietnam, Mainland China, and Taiwan East Asian industrial production and exports of semiconductors, electrical components, and consumer electronics Automaker commentary on near-term chip availability China industrial policy, with respect to power cuts and the Delta variant Early- and mid-month trade reports (Japan, Taiwan, and Korea) As shown in the next chart, three supply shocks weighed heavily on auto production this year, starting in February with severe winter storms and power outages in the southern United States and followed by a March fire at the Renesas automotive chip factory in Naka, Japan. While the plant was fully rebuilt in Q2 and auto production was set to return to near-normal levels in Q3, the arrival of the Delta variant and “zero covid” policies in some East Asian economies combined to produce another sharp drop in US semiconductor supply. The red line in the same exhibit shows the mid-year stepdown in automotive semiconductor units imported from key East Asian suppliers (data derived from granular Census trade records that include unit counts). Looking ahead, there are several key drivers for optimism, starting with the vaccination-led drop in infection rates (chart below, left and center). As a result, lockdown severity is also now approaching pre-Delta levels in both Malaysia and Vietnam (right panel). Going forward, it's important to track the semiconductor output and trade statistics of these key suppliers, as well as closely watch Chinese output and export data to monitor possible disruptions to chip or consumer goods supplies, for example related to power cuts or covid restrictions. For example, imports of integrated circuits from Vietnam and semiconductor devices and diodes from Malaysia declined 34% year-on-year in August, but Chinese production has so far remained firm. These developments coupled with better near-term production commentary from General Motors and Toyota, would argue for some microchip relief in Q4, and Goldman estimates the removal of this supply bottleneck could return US auto production to or near the 10-11mn SAAR range achieved in late 2020 (vs. 7.8mn in September and 8.6mn in Q3). Increases beyond that pace would likely require additional supply improvements, in part because today’s smart cars utilize more and more automotive systems with microchips and in part because of the continued mix shift towards SUVs and electric vehicles (EVs), both of which are relatively chip-intensive. The next chart plots the ratio of global automotive semiconductor shipments to global vehicle production (both on a unit basis.) The secular increase in chip intensity continued in 2021 and suggests demand for automotive semiconductors will continue to rise even with flattish unit vehicle demand. Channel 1, Step 2: Improved Chip Supply from New Capacity Goldman's expected timeline: 2H22, with a more normal environment in 2023 Key indicators to watch: Global semiconductor shipments, particularly automotive: Microcontroller Units (MCUs), power semiconductor, analog devices GS equity research forecasts for semiconductor capacity growth 2022 auto production forecasts (GS equity research, IHS) US industrial production of computers, communication equipment, and semiconductors Foreign production and US imports of auto and consumer electronics A key step towards easing supply constraints and lowering core goods prices is the build out of global microchip production capacity. But despite the dramatic impact of the chip shortages on US economic output and consumer prices, automotive semiconductor capex only rose back above the 2019 pace in Q3 And with 2-3 quarter lags between equipment capex and chip production—and several-year lead times for new foundries—the rise in capex to above-normal levels in Q4 may not meaningfully boost chip supply until the second half of next year. Reasons for the slow and restrained capex response include the long lead times and high fixed costs of new foundries and the likelihood that downstream industries will shift production away from the semis currently in short supply—many of which are older generation products to begin with. High industry concentration is another factor contributing to restrained capital deployment in the face of very strong near-term demand. With Goldman analysts tracking capacity growth of just 5-10% per year in 2021-22 among the semiconductor industries that supply the auto and consumer electronics sectors, and with consumer demand for these products also likely growing at that horizon and given the rising semiconductor content of motor vehicles, Goldman expects chip supply to remain constrained through at least mid-2022. This reduces the scope for automakers to sustain above-normal production, and restock heavily depleted vehicle inventories. Accordingly, Goldman also expects auto dealer inventories to remain very low through mid-2022. Channel 2: Improved US Labor Supply Goldman's expected timeline: Q421 and 1H22 Key indicators to watch: Payrolls, particularly manufacturing and transportation JOLTS, particularly manufacturing and transportation Industrial production of consumer goods, excluding autos and high tech Supplier deliveries components of ISMs and regional Fed surveys Labor force participation rate Labor shortages are another important bottleneck, but labor supply constraints are expected to ease substantially in coming months for several reasons. First, the September expiration of unemployment insurance benefits will boost Q4 job growth by around 1.0 million according to Goldman economists. Second, workers who have left their jobs because of child care concerns to return to work now that schools have reopened. Third, virus concerns will continue to fade as vaccinations increase further and infection rates fall—this would encourage some of the 2-3 million individuals staying away from the workplace because of health concerns to return to the job market. Taken together, Goldman expects total employment to increase by about 4mn workers by end-2022, a 2.7% boost to non-farm payroll employment. As shown in Exhibit 11, labor demand in these industries is 5.1% and 0.9% above pre-pandemic levels in transportation and manufacturing, respectively. With job openings and wages at new highs for factory and transportation jobs, these labor shortages should ease gradually as the sectors draw workers from lower-paid services industries Channel 3: Unwind of Port Congestion Expected timeline: 1H22 Key indicators to watch: Transportation payrolls, particularly in the marine cargo handling, support activities for transportation, couriers and messengers, and warehousing and storage sectors Ships at anchor and inbound container traffic at US ports Shipments component of the Cass Freight Index US ex-auto manufacturing production US imports of cars and consumer goods Real retail inventories, excluding autos Shipping delays and port congestion are also important bottlenecks for seaborne consumer products like furniture and sporting goods—semiconductors and high-value electronics generally arrive via airfreight. Stranded cargo at the Port of Los Angeles has surged to record highs (left panel of Exhibit 12) due to elevated trade volume—container inflows into US ports are 25% above pre-pandemic levels (see right panel)—and ongoing shortages of transportation-sector labor. We don’t expect significant near-term capacity growth in the goods shipping sector because bottlenecks currently constrain multiple modes of transportation. For example, if ports increased their capacity but the truck-driver shortage is not resolved, total shipping times could remain little changed. Moreover, to the extent transportation companies view shipping demand as temporarily elevated, they are unlikely to boost capacity meaningfully in the near-term. We instead see two other drivers behind an expected easing in shipping and transportation constraints in the first half of 2022. First, demand is seasonally weaker in the fall and winter, bottoming out in February after the Chinese New Year when it is typically about 15-20% below August levels. If port throughput maintains the August not-seasonally-adjusted pace, the seasonal moderation in demand would help clear the backlog. Second, and as discussed in more detail here and in Exhibit 3, we expect US import volumes to normalize somewhat due to waning fiscal stimulus and a consumer rotation back toward services consumption. Inflation and Fed Implications As an aside, since any delays in supply chain normalization means higher prices, Goldman has once again boosted its sequential inflation assumptions for Q4 and early 2022 to reflect these continued upward price pressures, having done so already every month since April. The bank now forecasts year-on-year core PCE inflation of 4.3% at year-end, 3.0% in June 2022, and 2.15% in December 2022 (vs. 4.25%, 2.7% and 2.0% previously). This slower resolution of supply constraints means that year-on-year inflation will be higher in the immediate aftermath of tapering than we had previously expected. While we expect inflation to be on a sharp downward trajectory at that point and to continue falling through the end of the year, this higher-for-longer path increases the risk of an earlier hike in 2022. Tyler Durden Wed, 10/27/2021 - 15:27.....»»

California Shuts Down Another In-N-Out Burger For Refusing To Be "Vaccine Police".....»»

Congested Port Of LA Receiving Empty Containers From Gulf, Southeast By Lori Ann LaRocco of FreightWaves, American Shipper is reporting another wrinkle facing the Port of Los Angeles as it tries to clear the massive congestion. Thousands of additional empty containers are en route to the Port of Los Angeles from East Coast and Gulf Coast ports.   Over the last couple of weeks, up to 2,000 empty containers originating from the ports of Charleston, South Carolina; Savannah, Georgia; New Orleans and Houston were headed to the Port of Los Angeles to be loaded onto vessels. These containers were requested by the carriers and will create more burden for the port terminals to receive local trucks trying to unload their own empty containers. “The biggest hurdle we see in the market is the inability to return empty containers,” said Weston LaBar, head of strategy at Cargomatic. “This congests our carrier and customer yards and adds to the chassis shortage. Ultimately this can delay the ability to pick up imports due to the shortage in chassis availability and yard space.  “We have customers whose warehouses can receive goods; however, the lack of chassis and space in their yards due to the stranded empties impacts the ability to keep a delivery cadence.” The phenomenon of containers traveling from other ports to Los Angeles is not a new one. Local truckers tell American Shipper the port is known to be the “empty container dumping ground in the country.” “Even containers from Port Rupert [in British Columbia, Canada] have made their way down to Los Angeles via rail,” said one trucker who requested anonymity. “This is making a bad situation worse. There is a finite number of slots to return empties. How can we pick up empties if we can’t unload our chassis?” The reason for the carriers moving containers from the East Coast either by truck or rail to the West Coast is time. The LA trade route to China is faster than the maritime routes from the East Coast and Gulf Coast ports. Despite the claims of 24/7 ports by the Biden administration, the Port of Los Angeles is still in talks with the various port stakeholders to seek participation. In an effort to expand service, the port is opening gates at 7 a.m. PT and on weekends so truck drivers can return empty containers and pick up loaded boxes.  But because of the lack of warehouses open during the flex time and on weekends, coupled with the container restrictions that are imposed by the terminals at the order of the ocean carriers, appointments are being left unused. According to the Port of Los Angeles, 50% of weekend appointments have been left open and 30% of weekday appointments remain unused. The Harbor Trucking Association says the surge of extra containers will only add to the already stressed system. “We are trying to free up chassis, but we can’t because we are competing with these additional empties contracted by the ocean carriers,” said Matt Schrap, Harbor Trucking Association CEO. “This is not helpful for the supply chain.” The acceptance of empty containers at the Port of Los Angeles is on a first-come, first-served basis. That means if the terminal hits its empty container allotment at noon and a trucker arrives at 12:05 p.m., he or she will be turned away with a full chassis and cannot pick up a loaded container. This photo given to American Shipper by port sources illustrates the unused truck appointments. The photo was taken from the APM Terminal at 7:38 a.m. PT at the Port of Los Angeles last Wednesday. It was a flex gate and opened at 7 a.m. The first appointment was a Walmart tuck at 9:45 a.m.      “We’ve been more successful than the market at threading this needle for our customers,” said LaBar. “But an increase in empties coming from the East Coast, Gulf Coast and even Canadian ports should be a cause for concern for everyone servicing and using the Southern California ports.”  Tyler Durden Wed, 10/27/2021 - 13:52.....»»

Billionaire Tax Dead After Manchin Opposition.....»»

Dan Loeb Urges Breakup Of Energy Giant Shell 'To Cut Carbon Output & Increase Shareholder Returns' After saving investors by pulling off double-digit returns in Q3, while the overall market experienced weakness and volatility, Dan Loeb’s hedge fund Third Point is now in the business of saving the planet too it seems. Having taken a large stake in Royal Dutch Shell PLC, Loeb is urging the oil giant to separate into multiple companies to retain and attract investors as many flee stocks seen as environmentally unfriendly. Shell is one of the cheapest large cap stocks in the world, trading at under 4x next year’s EBITDA and ~8x earnings at “strip” prices. It also trades at a ~35% discount on most metrics to peers ExxonMobil and Chevron despite Shell’s higher quality and more sustainable business mix. Compared to its peers, Shell generates a much larger percentage of its cash flow and earnings from stable businesses that have a major role to play in the energy transition. According to the latest letter to investors, Third Point believes Shell should consider creating at least two stand-alone companies: one with legacy businesses such as refining that would provide steady cash flow and another that houses renewables and other units requiring substantial investment. "For example, a standalone legacy energy business (upstream, refining and chemicals) could slow capex beyond what it has already promised, sell assets, and prioritize return of cash to shareholders (which can be reallocated by the market into low-carbon areas of the economy),” the letter reads. And a standalone LNG/Renewables/Marketing business could combine “modest cash returns with aggressive investment in renewables and other carbon reduction technologies,” with the business benefiting from a “much lower cost of capital.” Crucially, Loeb wants people to know this is not just about the money, claiming in the letter that if Shell pursues this type of strategy it would probably lead to an “acceleration of carbon dioxide reduction as well as significantly increased returns for shareholders," adding that he sees opportunity for “improvement across the board.” The billionaire hedge fund manager praises Shell’s reduction in refineries, from owning 54 in 2004 to only 5 by year-end 2021, as a “remarkable accomplishment," and says Shell is positioned to return capital “earlier and more aggressively than peers,” due to its “massive” dividend cut and asset sales. Many ESG investors employ a strategy of buying companies that already have a clean bill of health. A lesson from our prior engagements is that it is often most impactful to invest in companies where the opportunity for positive change is the greatest. While daunting, there is perhaps no bigger ESG opportunity than in “Big Oil”, and specifically, at Royal Dutch Shell. We are early in our engagement with the company but are confident that Shell’s board and management can formulate a plan to accelerate decarbonization while simultaneously improving returns for its long-suffering shareholders. Royal Dutch Shell ADRs, traded on the NYSE, spiked on the report... Finally, amid all the current soaring/record energy costs around the globe, Bloomberg's Javier Blas sums up the farcical virtue-signaling (and hypocrisy) being seen by activist investors when it comes to fossil fuels... We better get oil demand peaking, and soon, and then falling even faster, because oil capex is effectively over. Activist investors are taking over Big Oil, and they want their cash, and quickly (and save the planet, that too...) #OOTT — Javier Blas (@JavierBlas) October 27, 2021 As Blackstone Inc. co-founder Stephen Schwarzman warned this week at a conference in Saudi Arabia: “We’re going to end up with a real shortage of energy,” he said. “And when you have a shortage it’s just going to cost more and it’s probably going to cost a lot more. And when that happens you’re going to get very unhappy people around the world, in the emerging markets in particular.” *  *  * Full Third Point letter below: Third Point Q3 2021 Investo... by Zerohedge Tyler Durden Wed, 10/27/2021 - 14:07.....»»

What's Really Driving The Crazy Rally In Commodity Prices? Submitted by Stuart Burns of Oilprice.com Bulls are pointing to the surging metals prices as evidence a supercycle is alive and well. However, no one but a snake oil salesman would suggest that what we are seeing is anything healthy. The 10-year commodities boom seen earlier this century, for example, was driven by rapid industrialization in China, a long-term expansion that lifted hundreds of millions out of poverty. Energy costs drive supply constraints But the current surge in prices is a result of energy markets driving supply-side constraints. Apart from the chaos that is the current global energy market, it’s China’s energy crisis that is principally driving metals prices higher. However, China is far from alone in facing an energy crisis. Multiple other clouds are gathering. Some are short-term, such as coal and natural gas supplies. Others are longer-term, such as explored in a Financial Times post this week. Property market challenges in China The precarious state of China’s property market and the longer-term push by Beijing to pivot the economy away from construction toward consumption. The impact of China’s property market on the last supercycle and the current metals market cannot be overestimated. Even today, China’s property sector accounts for an estimated 30% of the country’s near $15 trillion economy, the Financial Times reports, Construction alone accounts for about half of China’s steel consumption. Some metals, like copper, cobalt, nickel, and lithium, hold promise in the longer term due to rising demand from electrification. There is evidence to suggest this will simply supplant demand from a dwindling construction sector. William Jackson, chief emerging markets economist at Capital Economics, is quoted as saying “China’s property sector is right at the end of a boom period,” which would have profound consequences for suppliers of products like iron ore, coking coal, and metals used in construction, like copper and aluminum. The impact is not going to be uniform across the commodities sector, some metals will find alternative applications, like electrification. Commodities like agricultural products will continue to see increasing demand from a rising global population and rising living standards. But global GDP growth will feel the effect of a smaller Chinese property sector in the years to come. According to the IMF, China delivered 28% of all global output growth between 2013 and 2018, the Financial Times states. If China’s property sector accounted for one-third of that, the sector was responsible for more than 9% of worldwide growth worldwide over that period. The road ahead The current logistics and supply-side constraints, while immensely painful, will prove relatively short-lived. We are already seeing steel prices softening. While non-ferrous metals have put in a burst of bullish gains this month, these will likely ease next year, too. Of more profound and far-reaching impact will be a sharp retraction in China’s construction sector. That would have ramifications and undermine many sectors, such as iron ore, for the rest of the decade. It would also impact economies like Brazil, South Africa, and Australia, which are so reliant on the Chinese construction market. Tyler Durden Wed, 10/27/2021 - 14:27.....»»

Putin Tells Gazprom To "Gradually" Raise Gas Volumes To Europe Starting Nov 8 The Kremlin's daily cat and mouse game with European energy prices resumed today, when several weeks after saying essentially the same thing - with no tangible results - on Wednesday Russian President Vladimir Putin told Gazprom PJSC to turn to refilling its European gas storage facilities from Nov. 8, once the gas producer completes its domestic gas reinjection campaign. “I would ask you, once you have finished your work to refill Russian underground storages on or by November 8, to start gradual and planned work to raise gas volumes in your inventories in Europe: in Austria and Germany,” Putin told Gazprom Chief Executive Officer Alexey Miller Wednesday. The move “will allow you to meet your contract obligations stably and rhythmically, to supply your European partners with gas in the autumn-winter period and, among other things, create a more favorable situation in the European energy market,” Putin said at a meeting broadcast on state television. While the news will certainly be welcome to Europe, where a historic energy crisis has sent electricity prices to record levels and fears that a cold winter will lead to even more pain, we would not hold our breath: after all, Putin promised to push out European deliveries several weeks ago only to see even lower nat gas transit via the Yamal pipeline. To be sure, Putin has been very clear in laying out Russia's ask to save Europe: activate the Nord Stream 2 pipeline. As long as Europe's bureaucrats refuse to comply, any hope that electricity costs will slide in the coming weeks will be at best - pardon the pun - a pipe dream.   Tyler Durden Wed, 10/27/2021 - 14:45.....»»

Loonie Soars After Bank of Canada Ends QE Early, Accelerates Rate Hike Timing To Mid-2022 Another day, another hawkish surprise from a developed central bank. While nobody expected the Bank of Canada to hike rates today despite soaring inflation, the BOC did surprise most most traders when it announced it is ending its bond buying stimulus program, and accelerated the potential timing of future interest rate increases amid worries that supply disruptions are driving up inflation. In a policy statement on Wednesday, Canadian central bankers led by Governor Tiff Macklem announced they would stop growing holdings of Canadian government bonds, ending a quantitative easing program that has poured hundreds of billions into the financial system since the start of the Covid-19 pandemic, to wit: "The Bank is ending quantitative easing (QE) and moving into the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds." Then again, one look at the BOC's balance sheet makes one wonder just how long this QE halt will survive... The Bank of Canada will release details of how it will implement the “reinvestment phase’’ of bond purchases in a market notice at 10:30 a.m. That will be a situation where it acquires bonds only to offset maturities, keeping overall holdings and stimulus constant. Most recently, weekly bond purchases had been C$2 billion. BOC head Macklem will also provide more insight into his policy decision at an 11 a.m. press conference. In any case, the BOC also signaled it could be ready to hike borrowing costs as early as April, as supply constraints limit the economy’s ability to grow without fueling inflation. Macklem maintained his pledge not to raise the benchmark overnight policy rate until the recovery is complete, but officials now believe that will happen in the “middle quarters’’ of 2022, bringing it forward from the second half of next year as previously thought. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s projection, this happens sometime in the middle quarters of 2022. In light of the progress made in the economic recovery, the Governing Council has decided to end quantitative easing and keep its overall holdings of Government of Canada bonds roughly constant. The language will reinforce market expectations the Bank of Canada is poised to quickly pivot to a tightening cycle amid growing price pressures. Investors are anticipating the Canadian central bank will start raising interest rates within the next six months, with markets pricing in four rate hikes next year. The Bank of Canada has been using two major tools to keep borrowing costs low: maintaining its policy interest rate near zero and buying up Canadian government bonds from investors to keep longer-term borrowing costs in check. The benchmark interest rate was left unchanged at 0.25% on Wednesday. The central bank has increased its bond holdings by about C$350 billion since the start of the pandemic. “Shortages of manufacturing inputs, transportation bottlenecks, and difficulties in matching jobs to workers are limiting the economy’s productive capacity,’’ the BOC said adding that “although the impact and persistence of these supply factors are hard to quantify, the output gap is likely to be narrower than the bank had forecast.’’ The more hawkish tone at the bank on Wednesday comes even amid a less rosy outlook for the economy. The central bank cut its growth estimates for both 2021 and 2022, but officials said much of that reflects worse-than-expected supply disruptions in the global economy. Because of those disruptions, the Bank of Canada marked down estimates of “supply’’ by more than their downward revisions to output. That means the central bank now sees less excess capacity in the economy, and less reason to accommodate demand with cheap borrowing costs.  The build-up of inflationary pressures also appears to be testing the Bank of Canada’s patience. The Bank of Canada revised higher its forecasts for inflation -- to 3.4% in both 2021 and 2022. This means that the BOC is joining the Fed in tightening into a stagflation. “The main forces pushing up prices -- higher energy prices and pandemic-related supply bottlenecks -- now appear to be stronger and more persistent than expected,’’ policy makers said. “The bank is closely watching inflation expectations and labor costs to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.” In the accompanying Monetary Policy Report that contains the Bank of Canada’s new forecasts, policy makers also said upside risks to inflation have become a greater concern because price increases are above the central bank’s 1% to 3% control range. In response to the surprise announcement, the Canadian Dollar soared as much as 0.6%, rising to 1.2309 against the USD... ... while the Canadian 2Y yield spiked more than 24bps above 1.00%... ... in a day defined by violent treasury moves, first in the UK and now in Canada. Tyler Durden Wed, 10/27/2021 - 10:16.....»»