Thursday, March 28, 2024

Elon Musk Predicts, Not Just UBI But A 'Universal High Income'

Mr. Musk predicts many things, many of them interesting. This could be one of them depending on punctuation. If he is thinking about a universal high, income we've been there, done that with Brave New World's soma but if it's UHI, without the comma we should see if there is anything leading to this conclusion beyond Elon's natural and/or ketamine-induced optimism.

From Fortune magazine, November 6, 2023:

Elon Musk says AI will remove need for jobs and create ‘universal high income.’ But workers don’t want to wait for robots to get financial relief

Good morning!

While speaking at the U.K.’s inaugural A.I. Safety Summit last week, serial founder, investor, and CEO Elon Musk predicted that AI would inevitably remove the need for all jobs. 

“It’s hard to say exactly what that moment is, but there will come a point where no job is needed,” Musk told U.K. Prime Minister Rishi Sunak. “You can have a job if you want to have a job, or sort of personal satisfaction, but the AI will be able to do everything.”

That may sound alarming to many, and even Musk joked that he wasn’t sure “if that makes people comfortable or uncomfortable.” But Musk’s perspective was apparently more positive, describing his vision as a “protopian” future with AI.

“I think everyone will have access to this magic genie, and you’re able to ask any question. It’ll be certainly bigger for education. It’ll be the best tutor,” he said. “And there will be no shortage of goods and services. It will be an age of abundance.”

He also suggested AI will lead to a  “universal high income,” an apparent superior to universal basic income, which other Silicon Valley figures like Sam Altman and Mark Zuckerberg have advocated for. “We won’t have universal basic income. We’ll have universal high income,” Musk said, without clarifying how the two differ. “In some sense, it’ll be somewhat of a leveler, an equalizer.”

Musk’s preference for “universal high income” may signal a departure from his previous stance on universal basic income. In 2018, he posted on X that universal income “will be necessary over time if AI takes over most human jobs.” While disclosing that Tesla was working on a robot during a company presentation on AI in 2021, he expressed a similar sentiment and acknowledged the robot would likely replace human jobs.

Musk could also be falling in line with his peers who’ve recently criticized universal income. In a 5,200-word “Techno-Optimist Manifesto” released in mid-October, VC investor Marc Andreessen said universal basic income would “turn people into zoo animals to be farmed by the state,” writing that “man was not meant to be farmed; man was meant to be useful, to be productive, to be proud.”

....MUCH MORE

In January we visited Sam Altman on this question, no mention on how high:
OpenAI Is Looking At Universal Basic Income For Workers Displaced By AI (plus Henry George stops by)

And on soma, some quotes from the book via Huxley.com:

"All the advantages of Christianity and alcohol; none of their defects."

somasomasoma

"..there is always soma, delicious soma, half a gramme for a half-holiday, a gramme for a week-end, two grammes for a trip to the gorgeous East, three for a dark eternity on the moon..."

somasomasoma

"Benito was notoriously good-natured. People said of him that he could have got through life without ever touching soma. The malice and bad tempers from which other people had to take holidays never afflicted him. Reality for Benito was always sunny."
somasomasoma

"you do look glum! What you need is a gramme of soma."
somasomasoma

"Soma was served with the coffee. Lenina took two half-gramme tablets and Henry three."
somasomasoma

"the warm, the richly coloured, the infinitely friendly world of soma-holiday. How kind, how good-looking, how delightfully amusing every one was! "

And many more.

Wood Mackenzie: "Over 20% of the World’s Oil Refining Capacity Is at Risk of Closure"

 From OilPrice, March 28:

  • Weakening refining margins and carbon taxes put a fifth of global refining capacity at risk.
  • Europe and China face the highest closure risk due to declining demand and environmental regulations.
  • The rise of electric vehicles and biofuels is transforming the industry, potentially leading to widespread refinery closures.

More than 20% of the total global refining capacity is at some risk of closure as refining margins are set to weaken alongside demand, while carbon taxes could also burden many refiners, Wood Mackenzie has said in a recent report.

Overall, based on expected net cash margins in 2030, Wood Mackenzie has identified 121 out of 465 screened refining sites “at some risk of closure”. This represents a cumulative 20.2 million bpd of refining capacity, or 21.6% of the global capacity last year, WoodMac’s analysis showed.

The energy consultancy sees refiners in Europe and China at higher risk of shutting down because of worsened economics.  

European refineries will see their net cash margins decline from 2030 due to the unwinding of free allowances for carbon emissions, while transport fuel demand in developed countries is expected to begin to decline from next year onwards, according to WoodMac’s analysis....

....MUCH MORE

So short or long the refiners? Where's the opportunity?

Same fact set, two possible conclusions. It's like the old joke about the two shoe sellers sent to Kenya in the early years of the last century:

1) "Terrible market, nobody wears shoes here".
2) "Wonderful market, nobody wears shoes here".

"Get Ready for the Robotic Fish Revolution"

I've been meaning to post on the CIA's Catfish Charlie for a few years. This is probably as good a time as any.

First up, from Hakai Magazine, March 25:

Scientists say swarms of robotic fish could soon make traditional underwater research vehicles obsolete. 

Human technology has long drawn inspiration from the natural world: The first airplanes were modeled after birds. The designer of Velcro was inspired by the irksome burrs he often had to pick off his dog. And in recent years, engineers eager to explore the world’s oceans have been taking cues from the creatures that do it best: fish.

Around the world, researchers developing robots that look and swim like fish say their aquatic automatons are cheaper, easier to use, and less disruptive to sea life than the remotely operated vehicles (ROVs) scientists use today. In a recent review of the technology’s advances, scientists claim only a few technical problems stand in the way of a robotic fish revolution.

Over the past few decades, engineers have designed prototype robotic fish for a variety of purposes. While some are built to carry out specific tasks—such as tricking other fish in a lab, simulating fish hydrodynamics, or gathering plastics from the ocean—the majority are designed to traverse the seas while collecting data. These robotic explorers are typically equipped with video cameras to document any life forms they encounter and sensors to measure depth, temperature, and acidity. Some of these machines—including a robotic catfish named Charlie, developed by the CIA—can even take and store water samples.

While modern ROVs can already do all these tasks and more, the review’s authors argue that robotic fish will be the tools of the future.

“The jobs done by existing [ROVs] can be done by robotic fish,” says Weicheng Cui, a marine engineer at Westlake University in China and a coauthor of the review. And “what cannot be done by existing ROVs may [also] be done by robotic fish.”

Since the invention of the first tethered ROV in 1953—a contraption named Poodle—scientists have increasingly relied on ROVs to help them reach parts of the ocean that are too deep or dangerous for scuba divers. ROVs can go to depths that divers can’t reach, spend a virtually unlimited amount of time there, and bring back specimens, both living and not, from their trips.

While ROVs have been a boon for science, most models are large and expensive. The ROVs used by scientific organizations, such as the Monterey Bay Aquarium Research Institute (MBARI), the Woods Hole Oceanographic Institution, the Schmidt Ocean Institute, and OceanX, can weigh nearly as much as a rhinoceros and cost millions of dollars. Such large, high-end ROVs also require a crane to deploy and must be tethered to a mother ship while in the water....

....MUCH MORE

From the Central Intelligence Agency:

Artifacts
Robot Fish "Charlie" 

And from IEEE Spectrum, February 26, 2021:

Meet Catfish Charlie, the CIA’s Robotic Spy
The evolution of underwater robots from smart torpedoes to surveillance fish  

"This article appears in the March 2021 print issue as “Catfish, Robot, Swimmer, Spy.”"

"Tesla deliveries face hit from China slowdown, soft demand" (TSLA)

We saw in Monday's "Goldman Hints That Tesla May Have Some Negative FCF Quarters Ahead (TSLA)": 

....Tesla is between growth waves; new products a key consideration: According to the comments from its last earnings call, Tesla is currently between two growth waves, and expects notably lower growth in 2024....

But it appears management is more focused on being one of the 10 survivors in the auto manufacturing business than on going all out to goose 2024 sales.

One example is yesterday's announcement with the world's largest battery maker (via MarketWatch):

Tesla joins forces with Chinese battery maker CATL, and it’s a ‘game changer’ for this analyst 
The news comes as Wall Street continues to dial down expectations for Tesla’s first-quarter sales

Tesla Inc. is joining forces with Chinese EV battery maker CATL, which would be a “game changer” for the U.S.-based EV maker as it works to launch a vehicle costing about $25,000 and suffers through another volley of lowered expectations for its quarterly sales.

“The U.S. is an under-penetrated EV market in need of high quality, cheap battery tech. China is a highly penetrated EV market with an oversupply of batteries,” Adam Jonas at Morgan Stanley said in a note Wednesday.

“The [U.S. Environmental Protection Agency] has ambitious EV goals but must consider national security issues. Tesla-CATL could be a game changer.”....

....MUCH MORE

Tesla has been relentless about driving down costs, which gives the company the ability to lower prices for their customers. And at the moment costs and prices are the driving forces in the EV industry and to date we've only heard Elon and Stellantis talking about this reality. 

And the headline story from Reuters via Yahoo Finance, March 28:

Tesla is expected to report sluggish first-quarter deliveries next week as the boost from its price cuts wanes and the U.S. automaker grapples with strong competition for buyers in a slowing electric-vehicle market.

After years of rapid sales growth that helped turn it into the world's most valuable automaker, Tesla is bracing for a slowdown in 2024.

The company has been slow to refresh its aging models at a time high interest rates have sapped consumer appetite for big-ticket items and rivals in China, the world's largest auto market, are rolling out cheap models.

"Tesla may be witnessing price-cut fatigue with consumers and may be testing profitability levels that the company may not find acceptable," Morgan Stanley analyst Adam Jonas said in a report to clients earlier this month.

"Such conditions may not significantly improve near-term given the age of Tesla's product line-up."

The dour expectations have sent Tesla's shares down nearly 28% so far this year, making them the worst performer in the S&P 500 index.

Tesla is expected to deliver 458,500 vehicles in the quarter to March 31, according to 17 analysts polled by Visible Alpha....

....MUCH MORE

Yesterday BYD reported some very good numbers but missed expectations, guided lower and the stock was down 7.4% at one point, SCMP via MSN, March 27:

BYD’s annual earnings surge 81% to all-time high on record EV deliveries, warns of weak consumer demand and global headwinds

 

"London Insurers Face Baltimore Bridge Payouts Worth Billions"

From Bloomberg, March 27:

  • Claims seen between $1 billion and $3 billion: Barclays
  • Lloyd’s of London marine insurers seen as most exposed
Insurers face claims of as much as $3 billion following Tuesday’s collapse of the Francis Scott Key Bridge in Baltimore, with firms on the Lloyd’s of London market most exposed, Barclays Plc analysts said....
*****
.... Insurance risk will be spread across firms due it being syndicated, the Barclays analysts said, noting the policy was led by AXA XL. Other major marine reinsurers include Hannover Re, Swiss Re AG, Munich Re and RenaissanceRe. The significant involvement of Lloyd’s of London may make smaller London Market reinsurers comparatively more exposed, they added....

....MORE

Capital Markets: "Waller Pushes on Open Door: Push for Patience Lifts the Dollar, Complicating Japanese Efforts"

From Marc Chandler at Bannockburn Global Forex:

Overview: Comments by Fed Governor Waller, urging patience on rates and wanting more evidence that price pressures are moderating has helped the greenback extend its recent gains. The yen is the notable exception as the fear of intervention has restrained the dollar bulls. Poor German data, including a sharp 1.9% drop in February retail sales, the fourth consecutive monthly decline, underscored the euro's negative divergence, and the single currency was sold to new lows for the month below $1.0780. The Antipodeans and Scandis are leading the G10 currencies lower with 0.6%-0.8% losses. Emerging market currencies are mostly lower. The South Korean won, and Taiwanese dollar are exceptions with miniscule gains.

Equities in the Asia Pacific region are mixed. Japan, South Korea, and Taiwan markets fell, while China, Australia, and India are higher. Europe's Stoxx 600 is rising for its fourth consecutive session, and if this is maintained, it would be the longest advance in two months. US index futures are nursing small losses after yesterday's gains. European bond yields are 2-5 bp higher, with peripheral premiums widening slightly. The 10-year US Treasury yield is up three basis points to 4.22%. The two-year US yield is up almost six basis points to 4.63%. The Fed funds futures have shaved the odds of a June cut and pared the extent of this year's reduction. Despite higher yields and a firmer dollar, gold is firm, knocking on $2200. May WTI is in a $81.50-$82.00 range. The week's high was set on Monday near $82.50....

....MUCH MORE

Wednesday, March 27, 2024

"Once High-Flying Bankers in Hong Kong Become a Lost Generation"

From Bloomberg, March 24:

Finance professionals with Chinese expertise were highly sought after five years ago. Now, job security is vanishing as deals dry up. 

When Eric Li lost his job after his family-office employer relocated away from Hong Kong, he knew he’d be facing a tough job market. He had no idea how hard it would be.

Seventeen months on, Li is still searching. The bills are piling up — nearly HK$60,000 ($7,700) a month for rent and HK$1 million annually for his kids’ education. The worst part though is the fear, and gradual acceptance, that this is not even rock bottom.

Just five years ago, finance industry professionals with Chinese expertise like Li were sought after by firms from UBS Group AG to Citigroup Inc. Initial public offerings by companies like Xiaomi Corp. and Meituan bolstered Hong Kong’s status as a financial nexus rivaling New York. Their efforts helped to generate more than $6 trillion in market value of mainland Chinese firms listed in Hong Kong and the US.

Now US-China geopolitical tensions have fractured capital markets. Hong Kong IPOs have dried up as stock prices slump and economic prospects wane. President Xi Jinping’s push to step up data security and financial-market regulation has made it harder for Chinese companies to acquire assets or list overseas.

“I thought that China’s upward trajectory and the tighter ties between domestic and global financial markets was a norm — now I realize it might have been just a blip,” said Li, who has also worked at Citigroup. “That’s a scary thought.”

Nowhere is that pain more pronounced than in Hong Kong, the center of such deal brokering. The damage is underscored by the barrage of layoffs by Wall Street firms, the retreat of global capital into the world’s second-largest economy, and the city’s diminishing role as an international financial center.

The number of non-entry-level finance workers looking for jobs in Hong Kong is “in the hundreds,” based on the applicants who work with recruitment executive John Mullally.

“It’s a fragile enough market,” said Mullally, managing director at Robert Walters. “There are more cuts to come.”

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup have made several rounds of job reductions in Asia over the past 18 months.

One banker who was made redundant by Goldman Sachs said it led her and her peers to evaluate whether to stay in Hong Kong — and even the industry. The drop in IPOs flowing from China means banks will need to consider restructuring across Asia because staff numbers that have risen through past hiring are no longer justified, she said.....

....MUCH MORE

We are already hearing the stories, probably apocryphal, that bankers, too ashamed to tell their families they are unemployed, dress up and head out every morning to idle the day away before returning home.

I say probably apocryphal because similar tales have been told during every major down-turn, all around the world.

Related:

"How has this $25 billion fund beaten the S&P 500? Patience — and preparing for ‘the next big thing.’" (NVDA)

This is the best explanation of what NVDA was and was flashing to the market eight years ago that you are likely to find. There is something about getting on the right side of a trend or a trade or a company that, even though things are guaranteed to change, having the inertia of your default position, which is "In" makes things easier. 

You just stay "In". It happened to John Templeton when he went "In" to Japan at 2 or 3 times earnings, it happened with Google as the advertising business took on a life of its own, it happened with Apple, starting with the computers, "The cult of the Mac"  making it easier to stay "In" with the introduction of the iPhone.

One case where it didn't work out, and one that seemed to have the necessary creativity and marketing was Sony: sound systems to televisions to the Walkman to...what? PlayStation? 
They lost their way. 

But three out of four ain't bad and if you are hitting .750 in the big leagues, you are worth $100-200-300 million per year to the adoring fans.

From MarketWatch, March 27:

Tech stocks have been on a wild ride over the past few years, but the Franklin DynaTech Fund has performed very well over long cycles. Here’s how it might get in early on another transformational business cycle.

If you consider yourself a long-term investor, then the past few years have provided you with a lesson on how important it is to be patient.

Matt Moberg co-manages the $25 billion Franklin DynaTech Fund with Rupert H. Johnson Jr., who serves as the vice chair of Franklin Resources and helped found the fund in 1968.

“You have to be a long-term holder if you want to invest in innovation,” Moberg said during an interview with MarketWatch. He pointed to Nvidia Corp. NVDA , the fund’s largest holding, as an example. Moberg and Johnson first purchased shares of Nvidia for the fund in 2016.

“You need to have a 10-year view, not a three-year view,” he said, adding that concerns over Federal Reserve policy or economic events were more important to investors with shorter outlooks.

Back to Nvidia: From the end of 2016 through the end of 2022, the stock rose 455%. Great. But during 2022, Nvidia’s shares took a 50% dive. What more evidence do you need that a long-term investor must remain committed for many years?

Nvidia’s stock more than tripled in 2023. So far in 2024 it has risen another 92%. Here’s a look at numbers that might be comforting to long-term investors who are considering Nvidia even now.

Moberg said that when he and Johnson decided to buy Nvidia shares in 2016, he could not have predicted that the company, which had been a market leader for PC video cards, would wind up dominating the market for the graphics processing units installed by data centers to support their corporate clients’ deployment of generative-artificial-intelligence technology.

“You do not know when new innovations are going to hit, but you want to be prepared,” he said.

When discussing the top holdings of the fund, he said: “Our top 10 looks a lot like other peoples’ top 10s. The game is to find stocks earlier in the cycle.”

Here are the largest 10 holdings (out of 95) of the Franklin DynaTech Fund as of Feb. 29, according to Morningstar:

Company Ticker % of Franklin DynaTech Fund as of Feb. 29 End of quarter during which shares were first purchased by the fund
Nvidia Corp. NVDA 11.4% 6/30/2016
Microsoft Corp. MSFT 7.6% 6/30/2015
Amazon.com Inc. AMZN 7.3% 6/30/2007
Alphabet Inc. Class A GOOGL 3.7% 9/30/2004
ServiceNow Inc. NOW 3.6% 6/30/2012
Mastercard Incorporated Class A MA 3.3% 3/31/2008
ASML Holding NV ADR ASML 3.0% 9/30/2012
Meta Platforms Inc Class A META 3.0% 7/31/2023
Synopsys Inc. SNPS 2.9% 12/31/2018
Cadence Design Systems Inc. CDNS 2.9% 12/31/2016
Source: Morningstar

Moberg said that turnover within the portfolio is normally between 20% and 25% each year, and that the typical stock is held for four to five years. But among the largest 10 holdings, five have been held more than 10 years.

Looking ahead when selecting stocks
Moberg said that he and Johnson were “trying to find S-curves for adoption” among companies already showing accelerating paces for the growth of sales and earnings. Then they dig deeper to decide whether or not the company has “a long growth runway” springing from innovative products or services....

....Further ahead — a possible innovation wave
Keeping in mind that the type of innovation that has helped Nvidia dominate the GPU space is impossible to predict, Moberg provided an example of an industry that might be riding another wave of world-changing innovation: genomic medicine.

“We do not know when genomics will hit. Last year, more drugs were approved than over the previous five years. You want to be well positioned for when growth will happen,” he said....

....MUCH MORE

Also at MarketWatch, March 9:

25 of the best-performing stocks in the S&P 500 appear to be better values than they were a year ago. Nvidia is one of them.

As noted in "I Have Heard Of This Nvidia You Speak Of (first call for a $10 trillion market cap) NVDA": 

*In 2015 we started using a boilerplate intro to the company, here's a 2016 version saying "Focus on the AI/Machine Learning":
NVIDIA: Don't Buy the Stock For The Autonomous Car Stuff (or virtual reality) NVDA; TSLA; IBM

The stock is up $2.21 (+2.64%) at $85.85. [divide that by 4 to account for the stock split in 2021]
Yesterday the usually very reliable Investor's Business Daily headlined a story "Nvidia Upgraded On Growth In Car, Cloud, Virtual Reality Fields". As we say in our standard intro to the stock:
Before we go any further, our NVIDIA boilerplate:  
We make very few calls on individual names on the blog but this one is special. 
They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
 
Not just another pretty face.  
Or food delivery app.

The company was doing the R&D in these different areas and was so attuned to what "might" be, that when the opportunity arose they were right there.

 Now the question is: Is the double top for real (implying a fall to the last major unfilled gap at 660-ish) or is it the start of a series of bounces against resistance before breaking through to the upside?

NVDA NVIDIA Corporation daily Stock Chart

A reminder, that February decline-then-gap-up was the lead-up and reaction to the earnings release that everyone knew would be very good but was an absolute blowout. Everyone knows the next report is going to be very good but....

"Speculative Finance and Predatory Abstraction: On Jonas Eika’s 'After the Sun'"

What the heck is this? I read it twice, looking for either a punch line or a cosmic truth and, not sure if I missed one or both, ended up back here at the blog.

From the Los Angeles Review of Books, March 16:

IN THE CONTEMPORARY WORLD, we endure not only wars, pandemics, and climate emergencies but also the growing devastation wrought by speculative financial capitalism. We see its ever-increasing influence in the proliferation of derivative trading and in the rise of volatile cryptocurrencies. But when speculation becomes the dominant modality of contemporary capitalism, what happens to speculative fiction? How do the formal properties and narrative tropes of speculative fiction offer unique ways to interrogate the abstract and virtual aspects of finance, alongside their material instantiations?

Speculative fiction can assist in reimagining the market as a distinct social actor. It can reveal the underlying forces that inflict violence through what I call “predatory abstraction.” It helps us respond to the futures presented by speculative finance in ways that counter its damaging abstractions. It can engender skepticism towards the techno-optimistic outlook we tend to embrace and, at the same time, reclaim the future as an alternative to the present by being structurally appropriated by speculative financial forces.

These financial forces exert structural control in shaping the trajectory of the future, potentially altering the course of the future to align with their speculative interests or objectives, which are geared towards profit maximization and the elimination of alternative possibilities. In brief, speculative finance suppresses alternative futures, while speculative fiction multiplies and reveals alternative possibilities. As the future is increasingly closed off from new potentialities, the present appears to resemble a sort of financial temporal prison. Thus, speculative fiction performs the very task that speculative finance seeks to evade: it exposes the contradictions inherent in financial speculation and reveals the latent possibilities concealed within the present.

How can we express the realities and dynamics of speculative finance within literary narratives? Which works delve into the speculative aspects of financial capitalism and criticize its impact on how we live? Jonas Eika’s After the Sun (2021; originally published as Efter Solen in 2018), a collection of short stories that explore the impact of financial systems on characters’ thoughts, emotions, and bodies, presents one example of this kind of speculative fiction. In After the Sun, we can trace the aesthetic manifestation of the implosion of speculative finance.

Translated from Danish by Sherilyn Nicolette Hellberg, After the Sun has received prestigious accolades including the Nordic Council Literature Prize, the Michael Strunge Prize, the Montana Prize for Fiction, and the Blixen Literary Award. In 2022, it was long-listed for both the International Booker Prize and the Republic of Consciousness Prize. Furthermore, the book’s short story “Me, Rory and Aurora” has been honored recently with the 2023 O. Henry Prize.

After the Sun primarily interrogates themes of economics and tenderness, examining the effects of speculative financial capitalism on our intimate lives. Notably, it places its focus on the dystopian present rather than a distant future, providing a representation of speculative finance that defamiliarizes it. In this regard, the first story, “Alvin,” is particularly intriguing: it explores the impact of financial derivatives on both bodies and psyches. In the story, a Danish IT consultant living in Málaga, Spain, travels to Copenhagen to implement software for another bank. However, upon his arrival at Kongens Nytorv, he discovers that the bank has collapsed, as if it had exploded. Shocked by the inexplicable destruction of his workplace, he heads to the nearest café where he meets the enigmatic Alvin, a “young man, mid-twenties, short dark hair parted to one side, tall forehead, round rimless glasses.” While the narrator is employed in the traditional banking sector, Alvin, in contrast, delves into trading derivatives and operates within a realm of financial capitalism that might seem like speculative fiction, even though it is very much a reality.

 “Derivatives,” Alvin says. “I don’t speculate about the future, I trade it.” He explains that derivatives and derivative capital have thoroughly conditioned the economy. Although illegal before 1970, derivative capital now “grossly exceed[s] the capital that came from the production and sale of goods and services, including stocks.” In brief, derivative capital represents a form of speculation devoid of genuine human labor—an undertaking where commodity prices, as articulated by Alvin, are nothing more than “ghosts from the future.”....

....MUCH MORE

"Elon Musk Says Grok AI Will Be Available to All Premium Subscribers on X ‘Later This Week’"

Which, adjusting for Mr. Musk's optimism, could mean "as late as the end of April."

From New Delhi's Gadgets 360, March 27:

Elon Musk Says Grok AI Will Be Available to All Premium Subscribers on X ‘Later This Week’
So far, xAI’s chatbot Grok was only available to the Premium+ subscribers of X (formerly known as Twitter).

Elon Musk, the owner of X (formerly known as Twitter), announced on Wednesday that Grok AI, an artificial intelligence (AI)-powered chatbot made by xAI, will be made available to all Premium subscribers of the platform. The move comes just days after the billionaire made its large language model (LLM) Grok-1 available in open source. So far, the AI chatbot was only bundled with the most expensive subscription plan Premium+, but now it is being added to the Premium tier as well. The Basic tier will still not be able to access Grok AI.

Musk made the announcement via a post on X where he said, “Later this week, Grok will be enabled for all premium subscribers (not just premium+).” While he did not specify the exact date when this will be rolled out, it is believed to be made available before April. Currently, the chatbot is available in 48 countries including India, and all of the regions are likely to get the expansion of Grok to the Premium tier....

....MUCH MORE

The Congressional Trade Tracker ETF Has Outperformed The S&P 500 By 9 percentage Points In The Last Year (NANC)

Specifically it's the Unusual Whales Subversive Democratic Trading ETF

Up 40.88% to 31.59% for the index.

The ETF tracking the Republican's trades (KRUZ) is underperforming. 

Here's NANC vs. the index vs. KRUZ via BigCharts:

This bit of esoterica was prompted by a headline at MarketBeat this morning:

The Most Bought AI Stock by Congress Isn’t NVIDIA 

Key Points

  • NVIDIA is a hot stock for active Congressional investors, but it isn't the number one AI stock.
  • Microsoft is the most bought AI stock —and stock purchased overall — among Congress members this year. 
  • Both stocks are led by analysts who see double-digit upside to come. 

NVIDIA NASDAQ: NVDA ushered in a new age with the surge of AI and its lean into full-stack AI services. The company's leadership position is reflected in its results and stock price, which is still advancing. Members of Congress are on board the NVIDIA freight train, but it isn't the most bought AI stock for the group. That title goes to Microsoft NASDAQ: MSFT, which has a commanding lead over the No. 2 AI stock, NVIDIA. 

More Congress members bought NVIDIA than Microsoft, but that is where the dominance ends for this tech stock. 10 members made 17 purchases of NVIDIA totaling about $3.186 million, while eight members made 24 trades in Microsoft totaling about $31.7 million nearly 10 times as much. If that doesn't register as an opportunity for investors, they aren't listening hard enough.

Which Members of Congress Are Buying NVIDIA and Microsoft?

Who's buying NVIDIA? Members on both sides of the aisle from both houses bought NVIDIA. But Democrats, specifically Nancy Pelosi, purchased the bulk of shares. Representative Pelosi bought more than $1 million in late November, just before the stock price began to rally and double. Other members of note include Representatives Pete Sessions (R-TX) and Kathy Manning (D-NC), as well as Senator Markwayne Mullin (R-OK), who are all reasonably active investors. Each made more than one purchase during the year. 

The list of Congressional investors buying Microsoft is equally distinguished. including the same members. Again, the bulk of purchases are by Democrats, but buyers exist from both houses and on both sides of the aisle. For Microsoft, the largest buyer is Representative Josh Gottheimer (D-NJ), who purchased several millions worth of the stock. The second largest purchaser is Representative Pelosi, who bought at least $500,000 worth of shares. Republicans on the list include Representative Sessions, Representative Michael Guest (R-MS) and Senator Mullin....

....MUCH MORE

"AI companies eye fossil fuels to meet booming energy demand"

From Popular Science, March 25: 

Recent reports suggest renewable energy sources alone won’t be enough to meet data centers' increasingly intensive power needs. 

It takes massive amounts of energy to power the data center brains of popular artificial intelligence models. That demand is only growing. In 2024, many of Silicon Valley’s largest tech giants and hoards of budding, well-funded startups have (very publically) aligned themselves with climate action–awash with PR about their sustainability goals, their carbon neutral pledges, and their promises to prioritize recycled materials. But as AI’s intensive energy demands become more apparent, it seems like many of those supposed green priorities could be jeopardized. 

A March International Energy Agency forecast estimates input-hungry AI models and cryptocurrency mining combined could cause data centers worldwide to double their energy use in just two years. Recent reports suggest tech leaders interested in staying relevant in the booming AI race may consider turning to old-fashioned, carbon-emitting energy sources to help meet that demand.

AI models need more energy to power data centers
Though precise figures measuring AI’s energy consumption remain a matter of debate, it’s increasingly clear complex data centers required to train and power those systems are energy-intensive. A recently released peer reviewed data analysis, energy demands from AI servers in 2027 could be on par with those of Argentina, the Netherlands, or Sweden combined. Production of new data centers isn’t slowing down either. Just last week, Washington Square Journal reports, Amazon Web Service Vice President of Engineering Bill Vass told an audience at an energy industry event in Texas he believes a new data center is being built every three days. Other energy industry leaders speaking at the event, like Former U.S. Energy Secretary Ernest Moniz, argued renewable energy production may fall short of what is needed to power this projected data center growth. 

“We’re not going to build 100 gigawatts of new renewables in a few years,” Moniz said. The Obama-era energy secretary went on to say unmet energy demands brought on by AI, primarily via electricity, would require tapping into more natural gas and coal power plants. When it comes to meeting energy demands with renewables, he said, “you’re kind of stuck.” 

Others, like Dominion Energy CEO Robert Blue say the increased energy demand has led them to build out a new gas power plant while also trying to meet a 2050 net-zero goal. Other natural gas company executives speaking with the Journal, meanwhile claim tech firms building out data setters have expressed interest in using a natural gas energy source. 

Tech companies already have a checkered record on sustainability promises....

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If the utilities can't supply the electricity the AI data centers will find other ways.  

"China’s Wind Turbine Makers Extend Dominance as Vestas, GE Slip"

From Bloomberg, March 27:

China’s wind turbine manufacturers dominated global supply last year, riding the nation’s renewables installation boom as a contraction in the US and meager growth in Europe dented overseas competitors.

Four of the five biggest producers in 2023 were China-based companies, up from just two in the prior year, according to a BloombergNEF report released Wednesday. Goldwind Science & Technology Co. retained the top spot, while Envision Energy Co. took second place from Vestas Wind Systems A/S. General Electric Co. and Siemens Gamesa were pushed out of the top five. 
*****
China accounted for about two-thirds of global additions of onshore and offshore wind last year, and while the nation’s manufacturers lifted sales overseas they continued to rely on their home market for about 98% of deployments, according to the report. Wind installations in the US fell to the lowest since 2017....

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For folks keeping score, China now dominates batteries, the solar supply chain from polysilicon ingots to solar panels, electric vehicles and wind generation.

"France's deficit targets unlikely to be met, Moody's says"

And Germany is projected to have another year of flat GDP. Europe has some problems that, though much smaller in magnitude than the American hamster-wheel of only-getting-a-dollar-of-growth-by-borrowing-$2.50, are real and are going to get worse.

From DevDiscourse, March 27:

France's wider-than-expected public sector budget deficit last year makes it unlikely the country would be able to stick to its fiscal targets in the coming years, credit rating agency Moody's said on Wednesday.

France's wider-than-expected public sector budget deficit last year makes it unlikely the country would be able to stick to its fiscal targets in the coming years, credit rating agency Moody's said on Wednesday. The country had a fiscal shortfall in 2023 of 5.5% of economic output, France's statistics agency INSEE said on Tuesday, up from 4.8% in 2022 and significantly more than the government's target of 4.9%.....

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Tuesday, March 26, 2024

"How to measure China’s true economic growth: In search of a successor to the Li Keqiang Index"

Last week, in a post on the conflicting messages about China's economy being sent by iron ore, copper and the smaller "teapot" oil refineries, I mentioned "We need a new Li Keqiang index."

It turns out The Economist was at least a year ahead of me. March 9th 2023:

When Li Keqiang, China’s prime minister, gave his final speech at the National People’s Congress on March 5th, it was already clear who would succeed him. But a successor has yet to be found for the “Li Keqiang index”. This unofficial proxy for China’s economic growth was inspired by a leaked conversation between Mr Li, when he was party secretary for the province of Liaoning, and an American diplomat. Mr Li confessed that the province’s gdp figures were “unreliable”. Instead, he focused on electricity consumption, rail cargo and bank lending. Taking our cue from Mr Li, this newspaper thought it would be fun to see what the three indicators, bundled into a single index, revealed about China’s economy at a national level.

The index has had a good run since its introduction in 2010. A version has its own “ticker” on Bloomberg. It inspired a similar index for India. Teams of researchers at the Federal Reserve Bank of San Francisco and separately at the New York Fed have tested the usefulness of Mr Li’s preferred indicators. A paper published in 2017 by Hunter Clark and Maxim Pinkovskiy of the New York Fed, together with Xavier Sala-i-Martin of Columbia University, calculated that the best combination of the three indicators gave roughly 60% weight to loans, 30% to electricity and 10% to rail cargo. In a subsequent paper, Mr Clark, Mr Pinkovskiy and Jeff Dawson of the New York Fed suggested replacing lending with m2, a measure of the money supply, because bank-credit figures failed to capture a government crackdown on shadow lending.

Critics argue that the declining energy intensity of China’s economy undermines the index. But that is not quite true. As long as electricity follows an identifiable trend, deviations from the trend are revealing about economic upturns and downturns. What really broke the Li Keqiang index was the covid-19 pandemic. The decline in retail sales, air travel and the property market was far more dramatic than the slowdown in industry, electricity use or rail freight. Meanwhile, m2 grew quickly at the end of last year as people hoarded cash.

What are the alternatives? Those sceptical of China’s data yearn to escape its statistical system altogether. Perhaps the brightness of lights at night, recorded by satellites, could offer a truly independent guide to growth? But this measure has its own problems. The newer satellites do not have a long track record and the older ones struggled to distinguish between the bright and very bright lights of cities. Coverage is also patchy from month to month....

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Premier Li was very sharp and we grew rather fond of the old boy:

January 2019

June 2019
...In the Government Work Report presented to the National People's Congress in March, Chinese Premier Li Keqiang underlined the importance Beijing places on adopting clean-energy vehicles. The premier has repeatedly stressed this point....

July 2022
Chinese Premier Li Keqiang Seems To Take Grains Very Seriously
Two from the State Council of the Peoples Republic of China:

October 2022
"China's Premier Li Keqiang dropped in leadership shuffle"
Although the public shaming of China's former president Hu Jintao is the story that went viral, the ouster of Li Keqiang is probably more important....

"SWIFT planning launch of new central bank digital currency platform in 12-24 months"

From Reuters, March 25:

Global bank messaging network SWIFT is planning a new platform in the next one to two years to connect the wave of central bank digital currencies now in development to the existing finance system, it has told Reuters.

The move, which would be one of the most significant yet for the nascent CBDC ecosystem given SWIFT's key role in global banking, is likely to be fine-tuned to when the first major ones are launched.
 
Around 90% of the world's central banks are now exploring digital versions of their currencies. Most don't want to be left behind by bitcoin and other cryptocurrencies, but are grappling with technological complexities.
 
SWIFT's head of innovation, Nick Kerigan, said its latest trial, which took 6 months and involved a 38-member group of central banks, commercial banks and settlement platforms, had been one of the largest global collaborations on CBDCs and "tokenised" assets to date....
....MUCH MORE

Francis Scott Key Bridge Collapse: Insurance and Reinsurance

As the search for the six missing workers who were doing repairs on the bridge deck continues, the financial ramifications are beginning to come into focus.

First up, from S&P Global Market Intelligence, March 26:

Reinsurers, marine market to bear brunt of Baltimore bridge collapse 

The collapse of a bridge near the Port of Baltimore will have major implications for reinsurers and the wider marine insurance market as one of the busiest ports in the mid-Atlantic grinds to a halt.

The Francis Scott Key Bridge fell into the water early in the morning of March 26 after being struck by a cargo ship departing the port for Colombo, Sri Lanka. Maryland Gov. Wes Moore declared a state of emergency, and emergency personnel undertook rescue efforts.

Crew onboard the Singapore-registered container ship Dali notified the Maryland Department of Transportation just before the accident that they had lost control of the vessel and that a collision with the bridge was possible, according to media reports.

While the accident will generate a complex web of claims and liability that may take years to untangle, the financial fallout is expected to fall heavily on the reinsurance industry.

"No doubt both marine insurers and reinsurers will be involved with this loss," said Loretta Worters, a spokesperson for the Insurance Information Institute.

Liability lessons

The Dali is owned by Grace Ocean Pte. Ltd., managed by Synergy Marine Pte. Ltd. and covered by The Britannia Steam Ship Insurance Association Ltd., or Britannia P&I Club. Protection and indemnity (P&I) clubs are mutual insurance organizations that insure and pool liability for the global shipping industry.

All crew members and the two pilots operating the Dali have been accounted for, according to a statement from a Britannia P&I Club spokesperson. The statement noted that the "exact cause of the incident is yet to be determined."

The value of the bridge itself could be about $1.2 billion; it is not yet known if the insured limit on the property placement will fully cover replacement, Worters said. Insurance Insider reported that Chubb Ltd. is the lead insurer of the bridge itself, but any claims are likely to be subrogated to the shipowner's insurance.

The incident will impact the International Group of P&I Associations the hardest, according to Worters, who said the group has significant reinsurance coverage, led by AXA XL. Worters also said it was her understanding that Aon PLC covers the bridges and tunnels property placement for the State of Maryland....

....MUCH MORE

And from Insurance Business Magazine, March 26:

Major (re)insurers and P&I club on hook for Baltimore bridge disaster
Collapse expected to drive "one of the largest claims" ever for marine market  

A search-and rescue operation is underway in Baltimore after the Francis Scott Key Bridge collapsed, sending at least seven cars into the Patapsco River. The event is likely to lead to legal wrangling and major claims activity, with reinsurers set to take a heavy hit.

The collapse is expected to drive “one of the largest claims ever to hit the marine (re)insurance market,” John Miklus, American Institute of Marine Underwriters (AIMU) told IBA.

“You've got various components to the loss,” Miklus said. “A big one is going to be rebuilding the bridge and all the loss of revenue and loss of tolls while that's taking place.”

It’s expected to be a huge and costly salvage operation, Miklus said. Liability claims are also anticipated from loss of life. Six people remain unaccounted for, with rescue operations underway. There are also supply chain implications.

Could Baltimore bridge disaster top Costa Concordia cost?

Commentators have likened the scale of the incident to the sinking of the Costa Concordia. The cruise ship ran aground off the coast of Italy in 2012. The event, in which 32 people died, drove a marine insurance loss of $1.5 billion.

“I wouldn’t be surprised if this were similar,” Miklus said of the Baltimore bridge incident loss figure.

The Costa Concordia disaster (2012) 
  • Location: Off the coast of Isola del Giglio, Italy 
  • Cost: The salvage operation alone cost over $2 billion, making it one of the most expensive shipwrecks in history. Additional costs included compensation to passengers and crew, legal liabilities, and loss of the ship. 
  • The insured loss cost of the disaster exceeded $1 billion, making it to the most expensive marine loss of all time.
“We are horrified by what has happened in Baltimore”

The bridge collapsed Tuesday at about 1:30 a.m. local time after a container ship crashed into a support column, according to a report by The Baltimore Sun. Local authorities are calling the collapse a “mass-casualty event.”

Denmark-headquartered Maersk, the world’s second-largest shipping company, confirmed that it had chartered the vessel that hit the bridge, the container ship Dali. The Singapore-flagged vessel was operated by charter company Synergy Marine Group, according to a Financial Times report. Synergy said the owners of the Dali, Grace Ocean Pty Ltd, were cooperating with federal and state authorities.

“We are horrified by what has happened in Baltimore, and our thoughts are with all of those affected,” Maersk said in a statement. The shipping giant said no Maersk crew or personnel were onboard the Dali at the time of the incident.

The Dali had liability insurance through Britannia, part of the International Group of P&I Clubs. Together, the group has upwards of $3 billion of reinsurance cover, sources said. AXA XL is said to lead the first layer of cover for IGP&I’s reinsurance program, with other global reinsurers also in the frame....

....Chubb is the lead market for property placement on the Francis Scott Key Bridge, according to a report by Insurance Insider....

Only The Dead Have Seen The End Of Inflation

The headline is our repurposing of Santayana's "Only the dead have seen the end of war."*

Back in the bad old days of the U.S. economy making stuff** and energy intensity be damned, the rule of thumb was "a 10% rise in oil prices flowed through to a 1% rise in CPI." 

Now it is around half that but still important as it touches on just about every facet of economic life. And if we look at the action in oil (WTI) and gasoline we can see where goods inflation is likely to get a boost over the coming months. Three month charts, daily prints via FinViz (also on blogroll at right):

Crude Oil Chart DailyGasoline RBOB Chart Daily

*"Only the dead have seen the end of war".

attributed to Plato from the 1930s on, especially following a speech by General Douglas MacArthur at West Point, 12 May 1962 crediting him, but not found in Plato's works; Santayana is the earliest known source
Soliloquies in England and Later Soliloquies (1922) ‘Tipperary’
**The U.S. manufacturing sector has pretty much flatlined since the 1980's but because the rest of the economy has grown so much, the relative contribution of manufacturing to GDP and employment has fallen dramatically.

"Hints of a yuan versus yen currency war"

Following up on the observation Marc Chandler made in this morning's Marc to Market:

Asia Pacific
The currencies are the three largest Asia Pacific economies remain weak....

From Asia Times, March 25:

China has growing economic incentive to let the yuan fall in beggar thy neighbor response to the chronically weak yen 

The costs of a chronically weak yen just grew by US$18 trillion as China’s economy, Asia’s biggest, may be joining the race to the bottom.

It’s still unclear if the drop in the Chinese exchange rate that began Friday is the start of a trend that would surely rock global markets or just a fluke. But the correlation with the Japanese yen’s decline is hard to ignore.

To be sure, President Xi Jinping’s team threw markets a lifeline on Monday. The People’s Bank of China signaled that the yuan might not be about to plunge with a slightly higher-than-expected daily reference rate of 7.0996 per dollar. That’s the biggest strengthening bias since November.

Even so, many analysts think the PBOC may be finally losing tolerance with Japan allowing the yen exchange rate to drop so far with little blowback in Washington – particularly as China struggles to keep economic growth as close to its 5% target as possible.

Chinese authorities don’t announce weaker-than-expected daily fixing levels in a vacuum. The decision on Friday to fix the yuan rate lower as the yen was sliding anew hardly seems a coincidence.

“After Friday’s fireworks with the PBOC nudging the yuan weaker, markets have run with it,” says Sean Callow, senior currency strategist at Westpac.

Are the beggar-thy-neighbor currency strategies of the past returning to China’s $18 trillion economy? 

Economist Brad Setser, senior fellow at the Council on Foreign Relations, speaks for many when he observes that Friday’s hint still “leaves the ‘why now’ question unanswered.”....

....MUCH MORE

Javier Blas: "Chocoholics Won’t Be the Only Victims of Cocoa’s Surge"

 From Bloomberg Opinion, March 26:

When a market becomes disorderly, trading firms are at risk. 

In every sustained commodity price rally, there’s a moment when fundamentals — supply, demand, inventories — no longer matter. The cost of the molecules, whether in the form of energy or foodstuffs or metals, stops being a price and becomes just a number. The market ceases to be orderly and becomes unruly.

It’s clear that moment has arrived for cocoa. On Tuesday, cocoa futures in New York surged above the previously unthinkable $10,000 a metric ton. In dollar terms, they surged more than $1,000 over two days — equal to the trading range that in the past would have taken a year to witness.

First, a look at how it started. Initially, cocoa’s troubles were firmly rooted in fundamentals, triggered largely by a series of crop failures in West Africa, the region that typically produces about 75% of the world’s supply. There, a combination of aging trees, diseases and bad weather combined to create the largest shortfall seen in the cocoa market in more than six decades.

The upshot was a brutal price rally that took cocoa to $6,000 a metric ton by February from $2,500 a year ago, surging above the 1977 record. Facing a massive deficit, the market was doing its work by sending prices high enough to curb consumption and restore the supply-and-demand equilibrium. Although in nominal terms cocoa prices are at a record level, in real terms — adjusted by inflation — prices remain below the peaks of the 1970s. The record high set back then equals to about $27,000 a ton in today’s money.....

....MUCH MORE

Mr. Blas also wrote an eXtwitter thread, here via Threadreader: 

Retail chocolate prices are rising (and will increase much further, while shrinkflation will reduce sizes) after wholesale cocoa prices surged to an unthinkable all-time high of ***$10,000 a ton*** on Tuesday.

1/15 @Opinion Image

First, the magnitude of the rally:

In nominal terms, cocoa prices have surged to >$10,000 – up from ~$2,500 a year ago, and ~$650 a decade ago.

To put things into perspective: the previous record, which only fell in February after 46 years unbroken, was ~$5,500.

2/15 @Opinion
Of course, that’s in nominal terms.

In real terms, adjusted by the cumulative impact of inflation, cocoa is still trading well below the peak set in the 1970s.

The record high established 46 years ago equals to ~$27,000 a ton in today’s money.

3/15 @Opinion

To understand the crisis, one has look at its genesis: years of underinvestment in cocoa farming in West Africa, home to ~75% of the world’s supply. Bad weather and diseases added to the problem....

....MUCH MORE

Although President Biden falsely accused the maker of the SNICKERS® bar, Mars, Inc. of shrinkflation in his State of the Union speech, it may be he was just being psychic and foretelling the future of SNICKERS®

AI In The Cloud: "CoreWeave Is in Talks for Funding at $16 Billion Valuation"

We've mentioned CoreWeave a few times, some links after the jump.

From Bloomberg, March 22:

CoreWeave, a cloud computing provider that’s among the hottest startups in the artificial intelligence race, is in talks to raise equity capital in a transaction that would more than double its valuation to $16 billion, according to people with knowledge of the matter.

The Roseland, New Jersey-based company, led by CEO Michael Intrator, is discussing selling both new and existing shares, and employees may tender some of their holdings, said the people, who asked not to be identified discussing confidential information. Terms haven’t been finalized and could still change, one of the people cautioned.

A CoreWeave representative declined to comment.

A $16 billion post-money valuation would eclipse CoreWeave’s $7 billion mark in a transaction last year. The company said in December that it had closed a $642 million minority stake sale to an investor group comprising Fidelity Management & Research Co., Investment Management Corporation of Ontario, Jane Street and JPMorgan Asset Management, among others....

....MORE

Previously:
June 2023
Chips: "Nvidia Leads, Habana Challenges on MLPerf GPT-3 Benchmark" (NVDA; INTC)

From EE Times, June 26:

The latest round of MLPerf training benchmarks includes GPT-3, the model ChatGPT is based on, for the first time. The GPT-3 training crown was claimed by cloud provider CoreWeave using more than 3,000 Nvidia H100 GPUs. What’s more surprising is that there were no entries from previous training submitters Google, Graphcore and others, or other competitors like AMD. It was left to Intel’s Habana Labs to be the only challenger to Nvidia on GPT-3 with its Gaudi2 accelerator.

CoreWeave used 3,584 Nvidia HGX-H100s to train a representative portion of GPT-3 in 10.94 minutes (this is the biggest number of GPUs the cloud provider could make available at one time, and is not the full size of its cluster). A portion of GPT-3 is used for the benchmark since it would be impractical to insist submitters train the entirety of GPT-3, which could take months and cost millions of dollars. Submitters instead train an already partially-trained GPT-3 from a particular checkpoint until it converges to a certain accuracy. The portion used is about 0.4% of the total training workload for GPT-3; based on CoreWeave’s 10.94 minutes score, 3,584 GPUs would take almost two days to train the whole thing.....

December 2023
Cloud: GPU's as a Service Gets Big Backers (GaaS)
March 2024
"Nvidia CEO Becomes Kingmaker by Name-Dropping Stocks" (NVDA+++++++)
March 2024
Google Cloud Is Losing Top Executives

Capital Markets: "Dollar's Recent Gains Pared but Firm Undertone Remains Intact"

From Marc to Market:

Overview: After surging at the last week, the dollar consolidated yesterday and is continuing to do so today as slightly lower levels. The Swiss franc is the only G10 currency unable to gain traction against the greenback today. Still, the dollar's pullback has barely met the minimum retracement targets of the jump last Thursday and Friday. The PBOC lower the dollar's fix slightly, but the proverbial toothpaste is out of the tube and officials are struggling to reestablish order. Against the offshore yuan, the dollar remains outside of its 2% onshore band. The Hungarian forint is the strongest of the emerging market currencies ahead of the central bank's rate decision, where a 75 bp cut is expected after the base rate was slashed by 100 bp last month.

Asia Pacific equities rallied, led by the Hang Seng and mainland shares that trade in Hong Kong. Most of the other large bourses rose with the notable exception of Taiwan, Australia, and India. Europe's Stoxx 600 is treading water after eking out a minor gain yesterday. US index futures are enjoying modest gains. European 10-year yields are mostly 3-4 bp lower. The 10-year US Treasury yield is off one basis point to about 4.23%. Yesterday's $66 bln US two-year note sale generated a small tail, but underlying demand seems reasonably strong. Today, the Treasury comes back with $67 bln five-year notes and a $70 bln cash management bill. Gold is trading firmly above $2190. The highest close last week was around $2186.40. A new record high close is possible today. May WTI is trading quietly in around a 30-cent range around $82.

Asia Pacific
The currencies are the three largest Asia Pacific economies remain weak....

....MUCH MORE

Monday, March 25, 2024

How Russia Will Deal With The People Behind The Crocus City Hall Slaughter

A repost of a repost.

Sunday, November 15, 2015

I've posted the story of Arkady Katkov a couple times. It seems once again appropriate.
The Russians can be nasty. After the Moscow theater hostage crisis in 2002 and the Beslan school massacre in 2004 you didn't hear much from the Chechens, despite the fact that sporadic hostilities continued until at least 2009. That is a gruesome story for another post. For today, here is an indication of what happened and what's to come.
This is a repost from May 2010:

Dealing with Pirates (and terrorists) Russian Style

While the BBC was reporting last week: "UN backs tougher stance against Somali piracy" yesterday's headline at the Moscow Times said "Somali Pirates Seize State-Owned Tanker".
Uh oh.

If the Somali pirates were up to speed on their history they may have remembered the name Arkady Katkov.

Starting in 1982, and continuing for the remainder of the decade, approximately 100 people were kidnapped in Beirut by various factions of Hezbollah ('the Party of God').
William Buckley, for example. He was the CIA station chief, kidnapped on March 16, 1984.
He was tortured to death. They did it slow, he died in captivity 15 months later, in June 1985.

After his kidnapping the U.S. did the same thing they did after the Marine Corps barracks at Beirut International Airport were bombed in October 1983, killing 241 Marines and Sailors.
Nothing.

On September 30, 1985 four Soviet diplomats were kidnapped and Arkady Katkov was shot in the head by Hezbollah's head of security, Imad Mughniyeh.

The Soviets gave the kidnappers 48 hours to return the hostages and dispatched some guys they call Spetsgruppa A (Alfa Group).

The kidnappers and their relatives were identified by KGB operatives working with the Druze militia, and some of the relatives were taken hostage.

Following the standard policy of 'no negotiation', Alfa proceeded to sever some of their hostages' body parts and sent them to the perpetrators with a warning that more would follow if the Russian hostages were not released immediately. The tactic worked and no other Russian national was taken hostage in the Middle East for the next 20 years, until the 2006 abduction of Russian diplomats in Iraq.

Among the body parts was a decapitated head and some testicles.
You can do your own digging if you wish more detail.
The Russians did not kill Mughniyeh, some say he ended up working for them, but in February 2008 a joint US/Israeli operation blew him to hell on the streets of Damascus.
Mughniyeh was the man responsible for the drawn out torture and finally, murder, of Buckley.
He got better than he deserved.