Friday, May 31, 2019

"Sea Changes – The Longer View of Shipping"

From Winton:
The tracking of shipping routes is an oft-cited achievement of modern data science. But comparable data has been collected for centuries—as our video shows.

While modern transponder data can indeed provide a near real-time picture of supply and demand, it has long been possible to monitor changes in the maritime economy through a number of sources.

The shipping journal Lloyd's List has long offered a comprehensive overview of commercial maritime traffic between ports, with data stretching back as far as 1692.

Another source of information is historical ship logs - records that reveal further details about the exact routes that vessels traversed, as well as prevailing winds and other weather patterns.
In order to complement these and many other datasets, Winton researchers have harvested Panama and Suez Canal reports to round out a full representation of international maritime commerce from the 19th century and beyond.
Yet although this results in a much richer account, it remains far from easy to read the seas.
Crests and troughsSuch are the vagaries of shipping that even the best entrepreneurs can make profound errors of judgment. Consider Malcolm McLean, the inventor of container shipping, a technology that reshaped the maritime economy and with it the world.
Growth Of World Trade
Real value of world exports (1900=100). Source: Our World in Data.
Despite McLean’s far-reaching innovation, he would go on to fail spectacularly – not once, but twice - in his attempts to profit from industry shifts.

McLean’s first misadventure came in the wake of the 1967 closure of the Suez Canal. The disruption forced ships to instead travel around Africa, putting a premium on speed.

But by the time the canal reopened, oil prices had risen, making the new rapid vessels uneconomic. McLean’s line, Sea-Land, had overinvested, delivering its parent company a $150 million loss.
In response to these higher oil prices, carriers switched to slower, less fuel-intensive ships. Expecting the oil price to surge to $50 per barrel, McLean bought into this new trend, purchasing United States Lines in 1977. For that company, he developed a line of vast, plodding container ships that could circumnavigate the globe.

Once again, however, the oil market turned on McLean. The price of crude slumped, wiping out his $500 million investment in the new line of ships. Not long after, in 1986, McLean’s company was driven into insolvency, resulting in one of the largest bankruptcies in American history at the time. 
Bankruptcies
Engineering the seas...
...MUCH MORE

"'Kipper und wipper': rogue traders, rogue princes, rogue nuns and the German financial meltdown of 1621-23"

From A Blast From The Past:

The great German hyperinflation of 1923 is passing out of living memory now, but that doesn’t mean that it has been forgotten. Indeed, you don’t have to go too far to hear it cited as a terrible example of what can happen when a government lets the economy spin out of control, and the episode still remains a minor feature of the British history curriculum, studied – briefly – by 15 and 16 year olds taking their GCSE. In consequence, a surprisingly large number of Brits can recall at least some of the details of that period. They may remember, for instance, that at its peak German inflation hit 325,000,000 percent, while the exchange rate plummeted from 9 marks to 4.2 billion marks to the dollar. They may recall that it became cheaper to decorate a room with high-denomination banknotes than with wallpaper; or that when thieves robbed a worker who had used a wheelbarrow to cart off the billions of reichsmarks that were his week’s wages, it was reported that they stole the wheelbarrow but left the useless wads of cash piled on the kerb. Others have had one or other of the famous photos taken in this period burned into their memories, such as one that shows a German housewife firing her boiler with an imposing pile of worthless notes [below left].

It’s easy, in these circumstances, to suppose that 1923 was a uniquely strange and terrible episode, but the truth is that it was not. Indeed, the German hyperinflation was not even the worst of the twentieth century; its Hungarian equivalent, dating to 1945-46, was so much more severe that prices in Budapest began to double every 15 hours. (At the peak of this crisis, the Hungarian government was forced to announce the latest inflation rate via radio each morning, so workers could negotiate a new pay scale with their bosses, and issue the largest denomination banknote ever to be legal tender: the 100 quintillion (1020) pengo note. When the debased currency was finally withdrawn, the total value of all the cash then in circulation in the country was reckoned at 1/10th of a cent. [Bomberger & Makinen pp.801-24; Judt p.87])   Nor was 1923 even the first time that Germany had experienced an uncontrollable rise in prices. It had also happened long before, back in the early years of the 17th century. And that hyperinflation (which is generally known by its evocative German name, the kipper- und wipperzeit) was a whole lot stranger and more colourful than what happened in 1923.

In fact the kipper- und wipperzeit was – at least in my opinion – quite possibly the most bizarre episode in the whole of economic history– and that’s a judgement, incidentally, that I reached having written an entire book on the unquestionably strange Dutch tulip mania of 1636-37.

What made the kipper- und wipperzeit so incredible, and so unlike other instances of hyperinflation, was that it was the product not only of slipshod handling of the economy, but also of quite deliberate attempts made by a large number of German states to systematically defraud their neighbours. This international monetary terrorism – as it may be helpful to think of it – had its roots in the economic problems of the late sixteenth century, and lasted long enough to merge into the general crisis of the 1620s caused by the outbreak of the hideously bloody Thirty Years’ War, which killed roughly 20 percent of the population of Germany. While it lasted, the madness infected large swathes of German-speaking Europe, from the Swiss Alps to the Baltic coast, and resulted in some surreal scenes: bishops took over nunneries and turned them into makeshift mints, the better to pump out debased coinage; princes indulged in the tit-for-tat unleashing of hordes of crooked money-changers, who crossed into neighbouring territories equipped with mobile bureaux de change, bags full of dodgy money and a roving commission to seek out any gullible peasants who could be persuaded to swap their good money for for the changers’ bad. By the time it stuttered to a halt, sometime partway through the 1620s, the kipper- und wipperzeit had undermined economies as far apart as Britain and Muscovy, and – just as was the case in 1923 – it was possible to tell how badly things were going wrong from the sight of children playing in the streets with piles of worthless currency....
...MUCH MORE

"Amazon as a wireless carrier? Company reportedly wants to buy Boost Mobile from T-Mobile and Sprint"

From GeekWire, May 30:

Amazon wants to buy a mobile wireless service.
Reuters reported Thursday that the tech giant is interested in acquiring prepaid wireless service Boost Mobile from T-Mobile and Sprint.

Part of Amazon’s interest in buying Boost is a wholesale deal that would give it access to T-Mobile’s wireless network for at least six years, as well as access to wireless spectrum, Reuters reported.
Amazon declined to comment on the Reuters report, which noted that “it was not immediately clear why the U.S. online retail giant and cloud services provider would want the wireless network and spectrum.”

T-Mobile and Sprint have a pending $26.5 billion merger that is still under consideration by U.S. regulatory bodies. Selling off Boost has been floated as one potential concession to gain approval.
Last month, reports surfaced that Justice Department officials warned the companies that their merger wasn’t likely to receive approval under the current proposal. DOJ officials are reportedly not buying the companies’ arguments that a combined T-Mobile and Sprint will increase competition with larger rivals AT&T and Verizon and up U.S. competitiveness in the next generation of wireless technology known as 5G.

Bloomberg reported this week that officials want T-Mobile and Sprint to set the table for a new wireless carrier, complete with its own network, as a concession for approval of the merger....
....MORE

Also at GeekWire:
Amazon to boost advertising business with acquisition of assets from ad tech company Sizmek

Meanwhile In Texas: Governor Signs Law Lifting Ban On Brass Knuckles, Clubs, Kitty (Claw) Keychains

From The Dallas Morning News:

Texas Gov. Abbott signs law lifting ban on brass knuckles, kitty keychains and clubs

https://dallasnews.imgix.net/1532555326-Screen-Shot-2018-07-25-at-4.40.33-PM.png?w=724&h=500&auto=format&q=60&fit=clip
Updated May 29, 2019 with details about Gov. Greg Abbott signing the bill into law.

AUSTIN — Texas Gov. Greg Abbott has signed a bill into law lifting the state's ban on brass knuckles, kitty keychains and other self defense items.
Abbott signed House Bill 446 on Saturday; the new law will go into effect on Sept. 1, 2019. Bill author Rep. Joe Moody, D-El Paso, said lifting the ban was "another step" toward getting rid of "antiquated laws regarding weapons."

"We did it with switchblades. We did it with knives and now with knuckles," Moody said on May 15, when the Texas Senate gave the bill final passage. "Hopefully, now, with this on the way to the governor, we can ensure these types of laws aren't being used inappropriately to go after folks who have legitimate tools of self defense."

It's legal to openly carry handguns (with a license) and rifles in Texas, and in 2017, lawmakers eliminated a 145-year-old ban on carrying knives in public. But brass knuckles remain illegal. Simply possessing something that fits this description — including plastic "kitty keychains" and other self defense items — is a Class A misdemeanor punishable by up to $4,000 in fines and a year in jail....MORE
Previously, July 15, 2017:
 
Meanwhile, In Texas: Governor Signs Bill to Allow Open Carry of Stilettos, Swords and Spears
Dirks and daggers too. No word on battle-axes....
***
...Prisons, hospitals, amusement parks, and sporting events will also remain sword/spear-free by law.
Violations will be a Class C misdemeanor, which carry a fine of as much as $500.
Cocktail swords, being under 5.5 inches are exempt from the bar prohibition. 

"America Begins To See The Consequences Of The Past Policy Errors That Helped China's Rise"

The last twenty years of U.S.- China relations prove up the the line in Anne Stuart's historical romance (got a problem with that? huh, got a problem with that?) Lord of Danger:
She was a spoiled brat and he knew it. She had spent her short young life getting her own way by dint of her beautiful face and her wheedling charm. Someone should have spanked her lovely little arse when she was a child but he suspected no one had had the heart to.

It was too late for that now....
From Forbes:
From the South China Sea to the Indian Ocean and the African Continent, China is rising fast, challenging America’s long dominance.
That’s something investors should watch closely, as rising tensions between the world’s two largest economies raise geopolitical risks that begin to spread beyond trade.

China’s rise didn’t happen by accident. It occurred systematically, helped by the kindness of the previous US administrations that allowed China to launch and execute its grand strategy.

That’s according to a recently published Council of Foreign Affairs special report, which argues that US administrations, from President Clinton to President Obama, misread China’s strategic intentions on several fronts; and made optimistic statements about US-China relations.

While these presidents were making such optimistic statements over a nearly twenty-year period, China implemented a grand strategy under Xi Jinping; used geoeconomic tools to coerce its neighbors and others, including most recently though the Belt and Road Initiative (BRI); violated international commercial practices, including by committing massive theft of U.S. intellectual property; manipulated its currency for trade benefits; threatened Taiwan; build up its military forces to push the United States beyond Japan and the Philippines; constructed and militarized artificial islands in the South China Sea, in violation of the international law. . . and patiently and incrementally built its power and influence with the strategic goal of challenging the United States as the primary power in Asia.

One of the errors of previous administrations in South Asia was the failure to assure Asian allies that America would come to their side in case they were attacked by China, as has been argued by foreign policy experts for quite some-time. Ely Ratner of the Center for American Security, for instance, has been calling for America to abandon its neutrality in the South China Sea region by supplementing diplomacy with military assurances.

In ‘The Stealth Superpower: How China Hid Its Global Ambitions,’ published in the January/February issue of Foreign Affairs, he says the US “should supplement diplomacy with deterrence by warning China that if it continues, the United States will abandon its neutrality and help countries in the region defend their claims. Washington should make it clear that it can live with an uneasy stalemate in Asia—but not with Chinese hegemony.”....
.....MORE  

Following Uber Earnings: Notes to Self if Arguing With The FT's Izabella Kaminska

Last IK fanboi post (this week).

So Uber has filed their first financials as a public company:
"Uber stock rises as net losses match expectations" (UBER)
  • Uber reported a net loss of $1.01 billion for the quarter, in line with analysts’ expectations....
And I thought "They grow up so fast. Or they don't grow up at all. 10 years old and still losing a freaking billion dollars a quarter!?!?

Going back to 2014 we, and more importantly for the serious-minded investor, the Financial Times' Izabella Kaminska have posted hundreds of bits, bytes, factoids and analyses on Uber. At times it seemed as though we were doing a Vaudeville bit, bouncing off of each other, with me getting to play the role of the clown (I fell those giant shoes quite well) while she played it straight (for the most part). While I could post:
Travis Kalanick: The Musical
I'm sorry, I lied. That headline is "fāke " or, in the words of Sheldon Cooper "A big fat whopper".
However, 'Brilliant Jerks' is a play! 
She was more reserved:
A Serious Look At Some Potentially Large Risk Factors In Uber's Finances (with a small bit of jocularity)

And out of all those hundreds and hundreds of posts one that really sticks out is a conversation about Uber's loss-making ability after getting run out of China by Didi.
Her interlocutor was a Bloomberg correspondent who has since redeemed himself by a) removing the tweets in question and b) taking a much more skeptical view of the Ubester.
We'll use a 2018 post as the introduction and work backward:

"Uber Spent $10.7 Billion in Nine Years. Does It Have Enough to Show for It?"
Ha!
Back in December 2016 one of the authors of this piece, Eric Newcomer, came dangerously close to mansplaining Uber, Uber's losses and Uber in China to the FT's Izabella Kaminska.*
His central fallacy (besides arguing in public) was that Uber, having ditched the money-sucking black hole that was their China operation was now heading for the broad sunlit uplands of  taxi service (thanks Winston). He was wrong.
Ahem.

Here's the latest from Bloomberg:....

*Besides the fact Izabella was one of the first journos, along with Pando founder Sarah Lacey who had the advantage of being the target of an Uber smear campaign funded to the tune of a mil. to tip her off that something was not right over on Market St., San Francisco, CA, USA; besides the fact Ms Kaminska was on the story back in 2014 she has additionally posted more on the Ubester than most folks alive.
Here is part of the to-ing and fro-ing:
There's more, here's one of the threads.

A couple months later we recapped the story in:
Notes to Self If Arguing With The FT's Izabella Kaminska: Uber and the Multi-Billion Dollar Losses Edition
The denouement in that piece was epic.

To his credit Mr. Newcomer has taken a more gimlet-eyed view of Uber over the last year, so we continue to read and from time-to-time, link.

Notes to Self If Arguing With The FT's Izabella Kaminska: Uber and the Multi-Billion Dollar Losses Edition

The first note would be "Attempt to be correct in your assertions"

The second note: "Don't be an insecure little jerk".

The third note: Remember the ironic warning that may go as far back as Lactantius (but definitely La Ménagerie, 1868):

Cet animal est tres méchant; 
Quand on l'attaque il se défend.

And what, wary yet intrigued reader may be asking, what the hell am I talking about?

First some background.
Back on December 1, 2016 Ms K. wrote a post, "The taxi unicorn’s new clothes" that began:
Finally! Word is getting out. It’s not just Uber’s “innovation” claims which are questionable, it’s potentially the entire business model.

Kudos to Naked Capitalism’s Yves Smith for giving transportation industry expert Hubert Horan a platform to highlight the following analysis of the scant figures Uber has shared (reluctantly) with the public thus far – none of which had a requirement to be audited in accordance with GAAP or SEC reporting standards....
This apparently angered Bloomberg's Eric Newcomer who started a long back-and-forth on Twitter.
I don't reproduce it here because a) It is 14 tweets and b) for some reason his (linked above) thread omits the key tweet. Here it is via Izabella's thread:
That's just being a dink.
A few weeks later (Dec. 21) Kaminska authored a post we linked to in "A Serious Look At Some Potentially Large Risk Factors In Uber's Finances (with a small bit of jocularity)":
...A few weeks ago public transport expert Hubert Hogan, wrote an impressive four-part series on Naked Capitalism questioning the Uber model both on profitability grounds and public transport logic grounds. The conclusions were stark. Uber’s primary objective seems to be achieving monopoly at any cost (mostly by way of undercutting) and holding on to that position irrespective of whether it is actually making transport more efficient or not.

In the wake of those posts, Bloomberg’s Eric Newcomer (who had broken the original bottom line figures which Hogan had based his story on) entered into a heated exchange on Twitter with me regarding whether or not Hubert had correctly assumed Uber had failed to consolidate the full extent of its Chinese losses into those figures. Newcomer argued it had and that Hubert was thus exaggerating the scale of the investor subsidy propping up Uber’s global operations. Hubert on the other hand insisted — based on his experience working with Chinese transport JVs or partnerships — that it was unlikely Uber could have owned a majority stake in its Chinese business, and thus would not have been obliged to consolidate all the numbers into its bottom line. Without actually being able to see the accounts directly, or get a better understanding of the corporate ownership structure, it was difficult to verify either way.

Since then, however, Eric Newcomer has reported a fresh set of Uber numbers based on reporting by the Information noting:...
Heated exchange huh?
He was a rude little boy and apparently wrong in his whole "I know more about Uber's numbers than you"  schtick in the tweetstream.
Here's the denouement, Izabella's April 15th post "Snap AV: About that $2.8bn loss for Uber in 2016….":
Those who have followed Hubert Horan’s excellent series on the non-viability of Uber’s business model at Naked Capitalism may be aware of questions posed over whether his analysis understood the exceptionality of the $1.2bn loss figure he cited for the first half of 2016 on grounds it included costs associated with Uber’s unfortunate foray into China. A one off.
Horan’s analysis — drawing on extensive experience in international transportation — had assumed the China losses were not consolidated because of the way generally accepted accounting principles work.
If Horan’s presumptions were wrong, however, it could may have exaggerated the cash burn associated with the core business model.
Late Friday, however, Uber released its full year results for 2016 to selected press. This showed a total $2.8bn loss for the year. Critically, as Bloomberg’s Eric Newcomer notes:
Net revenue was $6.5 billion, while adjusted net losses were $2.8 billion, excluding the China business, which it sold last summer....
Got that? The huge, never-before-seen-in-a-VC-funded-company-losses continued irrespective of the whole China question and Ms Kaminska uses Newcomer's own reporting to stick the knife in.

The quote at the top depends on the translation of méchant for the degree of animosity implied. I'm going with naughty but it can also translate as bad or wicked:

This animal is very naughty
When one attacks it, it defends itself 
And in other Uber news, via Clickhole: 

Climateer Line of the Day: Financial Architecture Edition

Today's winner has to be Alphaville's Bryce Elder's description of Softbank's ownership implications for Wirecard's Vision 2025, just a throwaway line before he gets into the wider markets and the meaning of life:
"We don’t know how the deal ramps over the years either. 
Though, from a purely architectural perspective, ramps can go both up and down."

Come to think of it that could be commentary on the meaning of life.

I shall ponder, while having a strawberry, the fact "ramp" has more than one meaning in relation to equities e.g. "Ramp the stock".
Ah the simple machines, "Here at Wedge, Lever, and Screw we believe..."

Capital Markets: "US Struggles to Build Physical Wall, Tries Tariff Wall on Mexico"

Equity futures are down pretty much anywhere one cares to look on the tariff news and probably more importantly China PMI and weak European reports.
From Marc to Market:
Overview: The US announcement to lay a 5% tariff on all goods coming from Mexico (starting June 10) until it stops the flow of "illegal migrants" spurred sharp losses in the Mexican peso and general risk-off move that strengthened the yen. The tariffs are set to rise every month until reaching 25%. This is a significant surprise and especially given that the Trump Administration is preparing to formally submit the USMCA to Congress. The legislative ratification process has begun in both Canada and Mexico. The peso is off about 2.8%, the weakest in the world today, while the Canadian dollar has weakened in sympathy. It is off about 0.25%, the most of the majors. The yen strengthened, and this coupled with the exposure of Japanese automakers, (Nissan, Mazda, Honda) which produce autos in Mexico and export to the US, weighed on Japanese shares. China's shares edged lower, while South Korea and Taiwan advanced more than 1%. European markets are lower, and the Dow Jones Stoxx 600 is off nearly 1% to three-month lows. The S&P 500 failed to close the gap left from Wednesday's sharply lower opening, leaving it vulnerable technical position before the action that seems to be a textbook example of cutting one's nose to spite one's face. It is trading nearly 1% lower. Our technical target is 2700-2720. The trade action spurred an extension in the bond market rallies. The US 10-year is near 2.15%, while the 2-year yield is threatening to go below 2%. The German 10-year Bund is at minus 20 bp. Australian and New Zealand benchmark yields are 5-7 bp lower to new record lower. European bond yields are off 2-3 bp mostly. Italy's looming confrontation with the EU and political uncertainty sees the Italian bonds continue to trade as risk assets, and the yield is five basis points higher to push above 2.70%.

Asia Pacific
Japanese data reported today captures the challenge facing the economy. Unemployment unexpectedly eased last month to 2.4% from 2.5%. Industrial output was up more than expected. The 0.6% rise compares with a median forecast of 0.2% in the Bloomberg survey and a 0.6% fall in March. However, it does not appear to help boost consumption. Retail sales were flat in April. Economists surveyed by Bloomberg forecast a 0.6% increase. Separately, the slowdown in housing starts and construction spending (-5.7% and -19.9% year-over-year, respectively) follows a surge in March (10% and 66.7% respectively). The BOJ did not reduce the amount of bonds it intends to buy in June, but it did reduce the frequency (three days instead of four) for long bonds and widened the range for the 10-year-25-year purchases to JPY100-JPY300 bln up from JPY100-JPY250 bln last month. The net impact was marginal.

Many, if not most, observers are suspicious of Chinese data unless they are weak. The May PMI showed the manufacturing sector slipping back into contraction, with a decline to 49.4 from 50.1 in April. It had recovered from the sub-50 reading in the December-February period. The non-manufacturing PMI was unchanged at 54.3. The composite slipped to 53.3 from 53.4. New orders for manufacturing slumped to 49.8 from 51.4, and new export orders fell to 46.5 from 49.2. In the non-manufacturing sector, new orders and new export orders also fell (50.3 from 50.8 and 47.9 from 49.2, respectively). The disappointing data, even before the full impact of the increase in US tariffs is felt, suggests officials will have a policy response.

In emerging Asia, note that South Korea's central bank kept rates steady. Earlier in reported a stronger than expected 1.6% rise in April industrial output and an upward revision in the March series to 2.1% from 1.4%. However, next week's data will likely to confirm that exports fell for the sixth consecutive month on a year-over-year basis in May and that the economy contracted 0.3% in Q1. May's CPI will also be reported, and as it stays below 1%, there is scope for a BOK rate cut in Q3. Separately, S&P upgraded Indonesia's credit rating to BBB citing better growth prospects and stable policy environment with the re-election of Widodo as President. The rupiah is the strongest currency today, rising nearly 1% against the dollar. The local equity market advanced 1.7% for an almost 3% gain om the week.

The dollar has been sold through JPY109 for the first time since the end of January. In the next few hours, a battle will be waged between two expiring options. There is $1.4 bln at JPY108.50 and $1.5 bln at JPY109. The Australian dollar has been confined to a $0.6900-$0.6940 range this week. There is an option for nearly A$560 mln at $0.6900 that will be cut. The market appears to have discounted nearly a 95% chance of an RBA rate cut next week.

Europe
Germany reported disappointing April retail sales and Italy cut its estimate for Q1 growth, while the softer inflation readings are consistent with what was already reported by Spain and France....

....MUCH MORE

Note to Mr. Chandler: with GDP per capita (PPP; IMF) over $40,000, does South Korea still get to call itself 'emerging'?

Thursday, May 30, 2019

"Novatek announces THIRD LNG project in Arctic Russia"

From Eye on the Arctic, May 25:

The Ob LNG will be developed exclusively with Russian technology.
As if in a great rush to develop its Arctic resources, Russian natural gas company Novatek this week made clear that it is starting the development of a third LNG project in the Yamal region.
The Ob LNG will be based on the resources of the Verkhnetiuteyskoye and Zapadno-Seyakhinskoye fields, two structures located in the central part of the Yamal Peninsula. The fields hold a total of 157 billion cubic meters of natural gas and the projected new plant will produce up to 4.8 million tons of LNG per year.

The plant and adjacent infrastructure will cost $5 billion and is to come in operation in 2023, newspaper Kommersant reports with reference to a high-ranking representative of Novatek.
The development of the Ob LNG will run parallel to the Arctic LNG 2, the company’s far bigger project currently under development on the nearby Gydan Peninsula. The Arctic LNG 2 will produce up to 19.8 million tons, and the first of the projected three trains is to be ready by 2023.

The announcement of the Ob LNG comes a the same time as Novatek signs a major contract with UK-based TechnipFMC on engineering and construction of the Arctic LNG 2....
...MORE

It's an international party that Novatek's hosting, see also:
April 29
"China Buying Stake in Novatek’s Arctic LNG 2"
March 28 
"Saudi Arabia Looks to Enter Arctic LNG With Large Investment"*
March 11
French Oil Major Total Ups Presense In Russian Arctic LNG 

*May 29, SteelGuru: "Saudi Aramco ends talks to join Novatek's Arctic LNG-2 project"

Shipping: "CMA CGM sees southeast Asia taking up shipping slack in trade war"

From Hellenic Shipping News:
Shipping giant CMA CGM expects volumes to continue growing this year as increasing activity from southeast Asia toward the United States helps make up for the slowing China-U.S. trade that dragged on its first quarter.

French-based CMA CGM, the world’s fourth-largest container shipping firm, reported on Wednesday a first-quarter net loss of $43 million, compared with a $77 million loss in the same period last year.
Group sales surged 36.9% to $7.41 billion, supported by a 4.4% increase in shipped volumes and the inclusion of CEVA Logistics, but core earnings were stable when removing the effect of CEVA and an accounting change relating to leases.

“We are very confident about seeing our volumes grow in 2019, regardless of the geopolitical climate,” Chief Financial Officer Michel Sirat said.
“We had a slightly mixed performance in the first quarter,” he told Reuters by telephone. “There was something of a ricochet from what happened in the previous quarter.”

Brisk China-U.S. traffic, partly due to U.S. importers anticipating further tariffs in a trade dispute between Washington and Beijing, buoyed CMA CGM’s activity in the second half of last year.
But the resulting easing of China-U.S. flows at the start of this year then weighed on CMA CGM’s performance, Sirat said. He added that profitability generally tended to be weaker in the first half before strengthening during a traditional second-half peak in U.S. demand.

CMA CGM was, however, seeing higher volumes from southeast Asia toward the United States, reflecting a shift in sourcing of goods from China to countries like Vietnam in response to U.S. tariffs, while increased traffic from Asia to Europe was also offsetting the reduced China-U.S. trade.
The company expected to achieve full-year growth of 5-7% in shipped volumes, outperforming the industry and helped by intra-regional services, he added....
....MORE

If interested see also:
Shipping: "CMA CGM Delivers Loss, Takes New Step in Transformation" 

Shipping: "CMA CGM Delivers Loss, Takes New Step in Transformation"

From World Maritime News, May 30:

French shipping major CMA CGM ended the first quarter of 2019 in loss as it took a new step in the transformation to adapt to the changing market.
The company’s net loss for the period reached USD 43 million, compared to a net loss of USD 77 million reported in the same quarter a year earlier.

However, first quarter revenue was up by nearly 37% year-on-year, to USD 7.41 billion from USD 5.41 billion reported in the previous year. Coming on top of the group’s 5.5% organic growth, the impact of integrating CEVA amounted to USD 1.7 billion.

Volumes transported by CMA CGM rose by 4.4% compared to the first quarter of 2018 as the beginning of 2019 was marked by strong development in intra-regional routes. Revenue per container increased slightly, particularly on the routes serving the United States and Africa.
The CMA CGM Group has undertaken a number of strategic moves in recent months, including the acquisition of CEVA Logistics and regional short-sea players such as Mercosul and Containerships and the modernization of its fleet.

To adapt to the changing market, the group is now taking a new step in its transformation by consolidating its development and implementing an ambitious cost reduction program.
In continuation of the “Agility” plan to improve overall operational performance, which was implemented in July 2016, CMA CGM revealed in March 2019 a strengthened plan with a savings target of USD 1.2 billion....
....MORE

Also at World Maritime News:

EU Funds Autonomous Shipping Initiative for European Waters 

"From sky farms to lab-grown shrimp, Singapore eyes food future"

From Reuters:
Singapore, the tiny Southeast Asian city-state, is an unlikely place for a farming revolution.
[no, no it's not. combine the world's highest average IQ with limited land area and things get real creative, real fast]
With tiered fish farms, vegetable plots atop office buildings and lab-grown shrimp, the island aims to beef up its own food production and rely less on imports to feed its 5.6 million people.

Singapore produces about 10% of its food but as climate change and population growth threatens global food supplies, it aims to raise that to 30% by 2030 under a plan known as ‘30-by-30’.
The challenge is space.

With only 1% of Singapore’s 724 sq km (280 sq miles) land area devoted to agriculture and production costs higher than the rest of Southeast Asia, the pressure is on new urban farmers to answer the government’s call to “grow more with less”.

“Whenever I talk about food security in Singapore, I tell folks don’t think land - think space. Because you can go upwards and sideways,” said Paul Teng, a professor specializing in agriculture at Nanyang Technological University.

Sustenir Agriculture is one of more than 30 vertical farms in Singapore, which has seen a doubling in so-called sky farms in three years....MUCH MORE
And Gurkhas. Singapore's Gurkha Contingent have the best Police haberdashery in the world.

"Newly Released Amazon Patent Shows Just How Much Creepier Alexa Can Get"

From ScienceAlert, May 28:
A newly revealed patent application filed by Amazon is raising privacy concerns over an envisaged upgrade to the company's smart speaker systems. This change would mean that, by default, the devices end up listening to and recording everything you say in their presence.

Alexa, Amazon's virtual assistant system that runs on the company's Echo series of smart speakers, works by listening out for a 'wakeword' that tells the device to turn on its extended speech recognition systems in order to respond to spoken commands.

On Amazon's devices, the wakeword is 'Alexa', but similar systems control how Apple devices work ('Hey Siri') and also Google's ('Hey Google'), not to mention products from other tech companies.
In theory, Alexa-enabled devices will only record what you say directly after the wakeword, which is then uploaded to Amazon, where remote servers use speech recognition to deduce your meaning, then relay commands back to your local speaker.

But one issue in this flow of events, as Amazon's recently revealed patent application argues, is it means that anything you say before the wakeword isn't actually heard....MORE
Kill them.
With fire.
(the companies, not the devices. We do not advocate or condone violence against inanimate objects, that would be silly)

"Uber stock rises as net losses match expectations" (UBER)

Some cynic (Wilde) once said second marriages are the triumph of hope over experience.
Ditto for buying Uber.
After an initial jump the stock is now down 8 cents.
AH high $ 41.25
AH low  $ 39.33
$39.72 last.

From CNBC:
  • Uber reported earnings for the first time as a public company on Thursday after the bell.
  • Uber reported a net loss of $1.01 billion for the quarter, in line with analysts’ expectations.
  • The company reported total revenue of $3.10 billion, at the top end of its preliminary estimates for the quarter.
Uber reported earnings for its first time since its public market debut earlier this month, reporting revenue at the top end of its preliminary estimates and roughly matching analyst estimates for net losses. The stock was up about 1% during after hours trading.
Here are the numbers Uber reported for the first quarter of 2019:
  • Net loss: $1.01 billion, vs. $1.01 billion estimated, according to Refinitv
  • Revenue: $3.10 billion, vs. $3.04 billion estimated, according to Refinitiv
Uber’s revenue came in at the high end of its expected range provided in an unaudited filing ahead of its IPO. It marks a 20% increase from the same period last year when Uber reported $2.58 billion in revenue. Uber’s net income fell into the negative compared to its net income of $3.75 billion in the first quarter of last year.
Uber reported gross bookings for the quarter of $14.65 billion, up 34% from the same period in 2018. Gross bookings measures the total dollar value paid for its services including taxes, tolls and fees, but not tips. Uber grew its monthly active platform consumers 33% from last year’s quarter to 93 million....
....MORE

Here's the press release at the company:
Uber Reports First Quarter 2019 Results

More to come.

"There's a scarily good 'deepfakes' YouTube channel that's quietly growing – and it's freaking everyone out"

From The Register, May 28:
Watch for yourself
Videos “Do not believe what you see on the internet, OK?” a techie, who doctors video clips apparently using AI algorithms and puts them on YouTube, has warned.

The resulting digitally altered material ranges from a comedian doing impersonations of celebrities, with the performer's face changed to match those of the stars being lampooned, to the face of Heath Ledger's Joker superimposed over the actor's characters in other movies. The alterations are made using, it is claimed, deepfake neural network algorithms.

Russian researchers hit the headlines last week by reanimating oil-painted portraits and photos into talking heads using AI. Now, here’s another reminder that the tools to craft deepfakes are widely available for just about anyone with the right skills to use: the manipulated videos posted on YouTuber Ctrl Shift Face are particularly creepy.

At first, the faces of the characters in specific movie clips are normal and recognizable, but they slowly morph into someone else. And before you know it, the actor Edward Norton suddenly turns into Brad Pitt during a scene in Fight Club. See it for yourself in the video below, the change occurs at about 42 seconds into the clip.
Blink and you’ll miss the transition....MUCH MORE

The American Plan For Rebuilding Notre-Dame Will Not Be Implemented

From The Local.fr, 28May:
French Senate says Notre-Dame must be restored exactly how it was
French Senators have stipulated that Notre-Dame cathedral must be restored exactly how it was before the devastating fire that tore through the Paris landmark.
On Monday evening, the French Senate approved the government's Notre-Dame restoration bill - but added a clause that it must be restored to the state it was before the blaze, striking a blow to the government which had launched an international architecture competition to debate ideas on the restoration.
The subject of the rebuilding of the cathedral - which was left badly damaged after fire tore through the roof and destroyed the spire on April 15 - has become a fraught battleground between traditionalists who want an exact restoration and others who favour a more imaginative take.
Some of the suggestions have included a rooftop garden, an 'endless spire' of light and a swimming pool on top of the building.
The Senate has now approved the restoration bill already passed by the French parliament to allow work on the structure to be completed in time for the Paris Olympics in 2024 - but requires that the restoration be faithful to the “last known visual state” of the cathedral, in an attempt to check the government, which has launched an international architectural competition soliciting designs for renovation....
....MUCH MORE
 
https://i1.wp.com/www.powerlineblog.com/ed-assets/2019/05/Screen-Shot-2019-05-12-at-8.13.58-PM.png?resize=768%2C908&ssl=1

Somehow related:

October, 2017
...And how did the Russkies retaliate for the closing of their San Francisco consulate with the beautiful view?

Russia reduces parking spaces at US consulates 
MOSCOW (AP) — Russia has withdrawn parking privileges for U.S. diplomats, an apparent continuation of a diplomatic tit-for-tat between Washington and Moscow.

State-owned television channel Rossiya 24 reported on Wednesday that parking spaces outside the U.S. consulate in St. Petersburg had been painted over with a pedestrian crossing, and special parking signs had been removed outside the U.S. consulate in Yekaterinburg, near the Ural Mountains.

Diplomatic tensions between the U.S. and Russia are at their lowest level since the Cold War...MORE
Yeah, they understand Americans.

Ag Commodities: "The Party Over Already?"

Nah, although yesterday's reversal, following Tuesday's gap-up, was dramatic. I don't know if there's even a name for this candlestick formation with the gigantic range, to life-of-contract highs and huge body of the candle closing down followed by today's even-larger-body trading up (over there on the right):

https://finviz.com/fut_chart.ashx?t=ZC&cot=002602&p=d1&rev=636948073810144404

And the headline story from AgWeb:

The Hueber Report
The Party I Over Already?
May 30, 2019

Corn
Is the party over already?  It seems that it really just got started. Both the corn and wheat markets posted reversals lower yesterday after gapping into higher highs for this advance, which would tend to be viewed as a classic sign of exhaustion. Even though nothing has changed in the underlying issues that have sparked this advance, considering that July corn has advanced $.95 over the last 11 sessions and July wheat $1.03, taking a little breather would seem quite understandable.  Add to this the fact that we have daily indicators back into a very overbought position and teetering on the edge of a precipice and you could make even the most ardent bulls begin the question their faith just a bit.   Do recognize, at this point these are just warning flags and we would need to witness additional follow-though for confirmation but even if that happened, I do not believe it would signal a return to an overall bearish pattern as the problems we have faced this spring cannot be undone. 
Wheat
I am on the first leg of my trip through Illinois, Missouri and Iowa and coming down from Northern Illinois to Springfield last night, I do not believe I witnessed a single field of corn that was over 5 inches tall.  Of course, that was only those that happened to have been planted at all. While I fully expected this to be the case, it was still a bit shocking to see and in the forty plus years that I have been in this business, is nothing that I can recall, at least on this scale, witnessing before....MORE

"U.S. banking regulator says strains growing in farm sector"

From Reuters:
A U.S. banking regulator on Wednesday said more farmers fell behind on their loans early this year, a sign that international trade tensions could be weighing on a farm sector already beset by years of low commodity prices.

In a quarterly report on the health of U.S. banks, the Federal Deposit Insurance Corporation did not directly refer to the Trump administration’s trade war with China which began in 2018. But officials at the regulator noted some farm banks were reporting a deterioration in asset quality.

“We are seeing some emerging strain,” Diane Ellis, director of the insurance and research division at the Federal Deposit Insurance Corporation, said at a news briefing. “Mostly it affects our community banks in the middle of the country.”

Ellis said the strain had been building for years in the farm sector as commodity prices have fallen, and noted farm incomes were at half the levels they were six years ago.....MORE
Do note that last sentence. We've been pitching this idea for a couple years; the rain/cold and trade wars are adding misery on top of preexisting misery.

Blockchain Clearing: So There I Was, Perusing the Latest From Securities Lending Times

And saw their top story was:

"IHS Markit appoints new head of Asia Pacific"
IHS Markit has appointed Stewart Cowan as head of Asia Pacific (APAC) securities finance product, effective from 3 June. 
 Based in Sydney, Cowen will report to Paul Wilson, managing director and global head of securities finance at IHS Markit.

Cowen will oversee all regional activities with a focus on business development and strategy execution, identifying growth markets and synergistic data sources, and introducing new services and solutions for beneficial owners.

With 30 years of experience in financial services and 15 years of applied expertise in securities finance, Cowen joins IHS Markit from fintech firm Digital Asset Holdings, where he served as a senior product manager for distributed ledger technology and smart contract solutions.
Prior to this, Cowen served at J.P. Morgan as the APAC head of trading services, responsible for regional business growth and client management in the agent lending segment. Cowen has also held senior roles at State Street and Perpetual Trustees.....MORE
Well that's odd, wasn't Digital Asset Holdings supposed to be rolling out a settlement program for the Australian Securities Exchange?

Why yes, yes they were: "ASX opens testing center for blockchain-based post-trade system"
(TokenPost, May 7)
And yet one of the honchos at DAH has resigned? And this follows on the resignation of THE honcho, Blythe Masters, in December:
Blythe Masters Quits As CEO of Blockchain Co., Digital Asset

As the man said: huh.

Earlier:
Germany's Central Bank Smashes Arguments For Currency, Securities Settlement Via Blockchain

Germany's Central Bank Smashes Arguments For Currency, Securities Settlement Via Blockchain

A Quick Victory Lap For the FT's Izabella Kaminska.

On Tuesday I mentioned: "Meanwhile, Mr. Elder's boss, editor Izabella Kaminska has been seeing naked emperors for the last few years or so."

One of the 'The Emperor has no clothes' manifestations she was pointing out, in the face of unhinged resistance from the blockchain bros., was that settlement and other financial functions had developed  as they had for identifiable reasons and that the attempt to 'disrupt' these functions was actually just overlaying a shiny layer of 'tech' on existing solutions, a disruption that would actually slow and complicate settlements rather than increasing efficiencies.

Here's Bundesbank President (and possibly more importantly  BIS chairman) Jens Weidmann on the results of a test the bank performed, along with commentary by Ms Kaminska.
From FT Alphaville, May 29:

Blockchain officially confirmed as slower and more expensive
Hat tip to Joe Weisenthal at Bloomberg for flagging the following shocker from the Bundesbank on Wednesday (our emphasis):
A trial project using blockchain to transfer and settle securities and cash proved more costly and less speedy than the traditional way, Germany’s central bank president said.
The experiment, launched by the Bundesbank together with Deutsche Boerse in 2016, concluded late last year that the prototype “in principle fulfilled all basic regulatory features for financial transactions.” Yet while advocates of distributed ledger technology say it has the potential to be cheaper and faster than current settlement mechanisms, Jens Weidmann said the Bundesbank project did not bear those out.
For context, here's FT Alphaville, March 19, 2015:
For one, we’re not convinced blockchain can ever be successfully delinked from a coupon or token pay-off component without compromising the security of the system. Second, we’re not convinced the economics of blockchain work out for anything but a few high-intensity use cases. Third, blockchain is always going to be more expensive than a central clearer because a multiple of agents have to do the processing job rather than just one, which makes it a premium clearing service — especially if delinked from an equity coupon — not a cheaper one....
...MORE

Another of the 'Emperor has no clothes' issues she's mentioned over the years is the tech bro. fantasy of seasteading. Here she rather dryly refers to exit risk:
One of our links from a couple years ago:
A topic of abiding interest. Here's a post from November 2017:

The Financial Times' Izabella Kaminska Examines Seasteading and Is Bemused

More accurately, she comes down on the concept somewhere between bemused and dubious.
We've looked at the idea of islands or ships full of geeks, nerds and billionaire geek/nerds a few times over the years:


http://geographical.co.uk/images/articles/nature/geophoto/2017/LPOTY/web8.jpg

Oops that's Brighton Pier by Landscape Photographer of the Year, 2017 finalist Matt Cooper via Geographical.
How embarrassing, the roller coaster should have been a tip-off. 
Here's Izabella. I'll go look for the intended picture.

From FT Alphaville:
On the (non) viability of start-up islands

...MORE

Economy/Shipping: "Maersk Warns Trade Tensions are Hurting Shipping’s Growth"

Two via gCaptain. First up, Reuters May 24:
A.P. Moller-Maersk , the world’s largest container shipping company, warned on Friday that trade tensions and an economic slowdown are slowing growth in global freight.

Maersk, which is seen as an indicator of global trade patterns, cut its forecast for global growth in container traffic this year due to the trade dispute between the United States and China.
“The recent escalation of the trade war induced by an increase in tariff rates and threats of implementing additional tariffs could take global container trade growth to the lower end of the 1-3% interval (range),” CEO Chief Executive Soren Skou said, referring to a forecast range it had given three months ago.

During his three years as CEO, Skou has sold off the Danish group’s oil and gas business to focus on the container business, a strategy some analysts say has left Maersk exposed during economic downturns.
The strategy was initially welcomed by investors, but Maersk’s share price has fallen 42% since a peak in July 2017 and is now virtually trading where it was when Skou took on the job in June 2016.
On Friday the group reported first-quarter results in line with expectations as a decline in container volumes was balanced by higher freight rates.
The trade war depressed trade volumes between Asia and North America in the first three months of the year, it said.

New tariffs could reduce the expected growth in global container volumes by up to 1 percentage point, Skou told a press conference in Copenhagen after returning from a trip to China.
“We hosted 50 Chinese customers for dinner in Shanghai yesterday and I can assure you that they all wanted the trade war to end soon,” Skou said....
....MORE

And The Loadstar, May 24:

Carriers Blank More Sailings as Transpacific Box Rates Continue to Slide
A blanked sailing from the 2M+HMM grouping on the transpacific this week failed to halt the further erosion of freight rates to both the Asia-US west coast and Asia-US east coast destinations.
The departure of the 8,500 teu Hyundai Faith, scheduled for this week, was cancelled “to rationalise capacity supply from Asia to the US west coast”, according to vessel-sharing agreement partner MSC.
The blanking was on the MSC Yulan service connecting Shanghai, Gwangyang and Busan with Los Angeles.

However, the capacity cut failed to push up rates, which this week saw further declines on the transpacific, according to multiple indices.
The Shanghai Containerised Freight Index (SCFI) recorded a 3.4% on the Shanghai-US west coast leg to $1,294 per 40ft, while the Shanghai-US east coast leg saw rates drop 2.2% to $2,450 per 40ft.
The Freightos Baltic Index broadly concurred with the SCFI assessment. Yesterday, it put the China-US west coast rate at $1,315 per 40ft, and noted that rates had jumped 24% at the beginning of April following a general rate increase (GRI) to $1,555 per 40ft, but “they’ve been dropping ever since”, it reported.....
....MORE

Wednesday, May 29, 2019

The Magic of Commodity Prices

Rising prices, especially rapidly rising prices have two effects.
First, as this article points out, they are a signal to producers to get producing.
Second, if the first effect is insufficient to balance supply and demand, higher prices will ration what goes where.
In the case of corn the two biggest users are animal feeds and ethanol production.
It's going to be interesting to see who is willing to pay more to secure current and future supplies.

From AgWeb, May 28:

Corn Market Begs Farmers To Get Crops Planted  
When USDA released the Crop Progress Report for the week ending May 26, on Tuesday, May 28, there was a collective feeling of disbelief. Not only did the trade underestimate Mother Nature’s ability to keep planters parked, but at just 58% planted this is the slowest corn planting in history.
Markets responded with limit up movement, with some contracts even setting new contract highs.

The market is begging farmers to take their time and get their crops planted, according to Chip Flory, host of AgriTalk and Farm Journal economist,

“The market is trying to convince farmers that prevent plant is a bad idea,” says Flory, who called Tuesday’s report “shocking.” “I’ll admit, I saw that 58% number and I was sick to my stomach. Good God.”

Farmers in Illinois are just 35% planted, in Indiana and Ohio just 22% of the crop is planted and in South Dakota and Michigan, 25% and 30% of the corn is planted, respectively. With soil moisture conditions at or above 50% surplus for much of the Corn Belt and more rain on the way, it will be tough for farmers to make much progress this week.

“The weather pattern has shifted where the heavier amounts [of rain] are further to the West now than what they were,” Flory says. “But the soils in the east are so saturated that even if they get an inch of rain a week, it will keep them out of the field.”

While prevent plant insurance final planting dates have arrived for some farmers, others are nearing. Farmers in Illinois have until June 5 to keep full crop insurance coverage. But, Illinois farmers are just 35% planted compared to the five-year average of 95%. And if the market continues to move higher, some farmers may lose the itch to file a prevent plant claim and give their ground time to dry out.

“You add another 25-35 cents to this corn price this week it just widens the window of an acceptable planting date,” Flory says....MORE

Capital Markets: "Equity Slump Deepens while Yields Plunge"

From Marc to Market:
Overview: The slump in equities continues after the poor showing in the US yesterday. Nearly all bourses in Asia Pacific and Europe are lower. Indonesia is the notable exception as domestic operators re-position after the election. Foreign investors have been notable sellers of Korean and Taiwanese shares this month (in excess of $6.2 bln). Europe's Dow Jones Stoxx 600 is testing its lowest levels since March, and the S&P 500 is poised to gap lower through the 2800-level that has offered support in recent weeks. The technical target we suggested is in the 2700-2720 area. Meanwhile, bond yields continue to plunge. The US 10-year yield is near 2.22%, while 10-year German Bunds yield minus 16 bp and the 10-year JGB offers minus 10 bp. Spain and Portugal's benchmark yields are off 4-5 bp. Italian yields are slightly lower. Australia's 10-year yield is trading through the 1.50% cash rate. The dollar is firmer against most currencies, though the Swiss franc and Japanese yen are resisting also benefitting from the risk-over environment. The South African rand is leading the emerging market currencies lower. Concerns President Ramaphosa's reform agenda will be compromised as the new cabinet appointments are awaited. The dollar's move above ZAR14.75 is an inflection point. The high from last October near ZAR15.05 is the next important area.

Asia Pacific
There continues to be much discussion about Chinese using its rare earths dominance to retaliate against the US. The National Development and Reform Commission (NDRC) suggested China was not on the verge of weaponizing these strategic minerals, indicating it would continue to meet world demand. Ominously, it noted that the Chinese people would not be happy if the rare earths are used to curb its development. The US has been careful not to put a new levy on the imported earths from China, which amount to about 4k tonnes last year at the cost of around $175 mln. China has put a 25% tariff on the one producer of rare earths that are exported to China for processing. Far and away, the most rare earths the US imports are embedded in a wide range of products. Owing to this, we have argued that it will be difficult for China to weaponize the rare earths without causing wider collateral damage. Meanwhile, China's rhetoric is escalated. News wires are reporting the using an important Chinese phrase to the effect of "don't say you weren't warned."

We had suggested that his public support, the stronger than expected Q1 GDP, and the fact that opposition in disarray, the Japanese Prime Minister Abe may be tempted to dissolve the lower chamber of the Diet and hold elections alongside the upper house elections slated for July. The election for the lower house is not required until October 2021. There is more discussion of this possibility in the press and among LDP officials. Time is not on Abe's side. Whenever the retail sales tax increases, it has hit the economy. Although the government has taken some counter-measures, the risk is that tax hike in October weighs on weakens the economy again. In recent years, the lack of clear rivals in the LDP made Abe more secure. However, gradually Koizumi, the son of the former prime minister is beginning to draw attention as a potential candidate.

The dollar slipped to new two-and-a-half-week lows against the Japanese yen near JPY109.15. There is a $425 mln option at JPY109 and a $370 mln option at JPY108.75 that will be cut today. The JPY108.65 area is a (50%) retracement of the dollar's recovery from the January 3 flash crash that saw the greenback drop below JPY105, while the low from late January was near JPY108.50. Looking ahead, there is a $1.3 bln option at JPY109 that expires tomorrow and a $1.4 bln at JPY108.50 on Friday. While the Australian dollar appears to have carved out a shelf near $0.6865, it now has failed for the fourth session to push above $0.6940. The Chinese yuan was virtually unchanged, though the off-shore yuan (CNH) weakened slightly for the second consecutive session.

Europe
The jockeying for position after the European Parliament election is nothing new, and the rhetoric around it and the differences should not be exaggerated. The European leaders agreed to have a six-person committee, two from each of the top three party groupings (center-right, center-left, and the Liberals) to begin the negotiating process with hopes of some preliminary agreements over the next month.

The strength of the German labor market has been a major prop for sentiment and hope of a recovery in H2. Today's surprising jump in unemployment, the first in nearly two years raises new questions....
...MORE

Agricultural Futures: Wow

We'll start with a random act of prophecy from April 2018:
"Is $8 Corn A Possibility?"
Maybe.
Though the odds for it happening are probably better in 2019 or 2020 but it could happen this year. We saw such prints in both 2011 and 2012;  2008 got close.....
Yesterday's USDA report threw a bit of gasoline on already  hot markets:
Crop Progress Report, May 28, 2019: Soybeans Not Getting Planted, Corn 32 Points Behind Averag

And the action:

Corn up 16.50 (+3.83%) at 436.75

https://finviz.com/fut_chart.ashx?t=ZC&cot=002602&p=d1&rev=636947082728670204

Wheat up 15.00 (2.97%) at 519.75

https://finviz.com/fut_chart.ashx?t=ZW&cot=001602&p=d1&rev=636947084585923145

Soybeans up 33.00 (3.86%) at 889.00

https://finviz.com/fut_chart.ashx?t=ZS&cot=005602&p=d1&rev=636947085978268305


One more random act of prophesy, from May 7:

One of the Scariest Sentences In the English Language: Crop Progress Report Edition
The weekly crop progress report was released yesterday but first a quick diversion:
In the spring of 1315, unusually heavy rain began in much of Europe. 
The story continues:
Throughout the spring and summer, it continued to rain and the temperature remained cool. These conditions caused widespread crop failures. The straw and hay for the animals could not be cured and there was no fodder for the livestock. The price of food began to rise. Food prices in England doubled between spring and midsummer. Salt, the only way to cure and preserve meat, was difficult to obtain because it could not be evaporated in the wet weather; it went from 30 shillings to 40 shillings. 
...MORE

They don't teach enough history these days.

Cold and wet is very bad. Keep an eye peeled for folks tripping on ergot in the rye for that full-on medieval experience.
If interested see also yesterday's "Grains and Soybeans Jumping Higher".

Tuesday, May 28, 2019

"Satellite Images Reveal Russian Navy's Secret Arctic Marine Mammal Facility"

I think Norway is planning to deport back to Russia the harness-wearing Beluga mentioned in this story and which we noted in April's WTH: "Whale with harness could be Russian weapon, say Norwegian experts".

Here's the headliner from The Barents Observer:
These pens near the naval town of Polyarny on the Kola Peninsula might very well be the home from where runaway ‘Whaledimir’ beluga escaped from. Or was he brought to Norwegian waters on purpose? 
https://thebarentsobserver.com/sites/default/files/styles/full_width/public/beluga-pens-polyarny_0.jpg?itok=AAauRKOZ
 Six beluga whales in pens are visible on this satellite image from Garyachie Ruchy in the Kola Bay, some 3,5 km 
south of the closed naval town of Polyarny on the Kola Peninsula. Image: Google Earth 3D / The Barents Observer
The beluga whale wearing a harness with mounts for a GoPro camera that first was spotted by local fishermen on Norway’s Barents Sea coast in late April is still swimming around in the harbor of Hammerfest.

Making big headlines in Norway and around the globe, the locals name him ‘Whaledimir’ (Hvaldimir in Norwegian) after national broadcaster NRK made a poll asking their audience to name the animal. Today the beluga is stripped free from the harness, but is refusing to leave his new life of freedom in Norway. Experts say the whale will likely not survive without being fed by humans....
...MUCH MORE

Hvaldimir? What kind of name is Hvaldimir?
Whaley McWhaleface should have been a lock.

There is some question whether this Beluga returning a woman's dropped phone is Hvaldimar or just some rando phone retrieving cetacean:

https://i.iheart.com/v3/re/new_assets/5cd4305a6599f2143134a7ac?ops=contain(740,0)

Here's the story and video of the retrieval.
Incredible Footage Shows Whale Retrieve Phone Woman Dropped In The Ocean

Superyacht MY SONG Falls Off The Cargo Ship Transporting It

What. The. Hell?
From gCaptain:

https://3kbo302xo3lg2i1rj8450xje-wpengine.netdna-ssl.com/wp-content/uploads/2019/05/mysong-nautayacht16cb018777-1400x928-800x530.jpg
 MY Song. Photo: Baltic Yachts
The big story from over the weekend was without question the loss of the 40-meter sailing yacht MY Song in the Mediterranean Sea after the superyacht fell from the deck of the cargo ship that was transporting it.
The award-winning yacht, owned by Italian billionaire Pier Luigi Loro Piana, was being transported aboard the general cargo ship MV Brattinsborg when the incident occurred early Saturday morning.
Yacht transport company Peters & May confirmed some of the details of the incident in a statement from its CEO, David Holley, on Tuesday. Holley said the company was informed of the incident early on Saturday, 26 May.

“Upon receipt of the news Peters & May instructed the captain of the MV Brattinsborg to attempt salvage whilst 3rd party salvors were appointed,” Holley said in the statement.
“The vessel maintained visual contact with My Song until the air and sea search was initiated. As of 0900hr BST on 28th May 2019 the salvage attempts are still ongoing,” Holley said.
Photos leaked to the media show the yacht partially sunk:...
***
... The MV Brattinsborg has since been instructed to continue its voyage to Genoa, Italy with remaining yachts still on board.....
....MUCH MORE

"China considers limiting rare-earth exports to US: report"

With 10 minutes to the ASX pre-market open... ,

From The Hill:

China's government is considering plans to use the country's dominance in the rare-earth metals market against the U.S. as a trade war between the two nations progresses.

China's government is "seriously considering" restricting the export of rare metals used in electronics manufacturing to the U.S., the editor in chief of Global Times, China's party-run English-language newspaper, tweeted Tuesday, Reuters reported.

"Based on what I know, China is seriously considering restricting rare earth exports to the U.S. China may also take other countermeasures in the future," he reportedly wrote.
The Global Times, while not officially run by the federal government, is published and distributed by the Communist Party’s People’s Party, the dominant party in China.

Chinese shipments accounted for 80 percent of all U.S. imports of rare-earth minerals between 2014 and 2017, according to Reuters, suggesting that U.S. markets could be in for a major blow if the government carries out plans to restrict business to the U.S....MORE
If interested see also May 20ths "Xi Jinping visits China rare earth plant amid talk of use as trade war weapon ".

Related:
I'm Beginning To Doubt the Efficient Market Hypothesis: Rare Earths Edition

Crop Progress Report, May 28, 2019: Soybeans Not Getting Planted, Corn 32 Points Behind Average

From the U.S. Department of Agriculture:
Crop Progress

ISSN: 1948-3007

Released May 28, 2019, by the National Agricultural Statistics Service 
(NASS), Agricultural Statistics Board, United States Department of 
Agriculture (USDA).

NASS Survey Update!

In the first two weeks of June, NASS will gather information 
about this season's crop production, supplies of grain in 
storage, and livestock inventory. The information will help 
producers, suppliers, traders, buyers and others make informed 
business decisions. The results will be available on June 27 in 
the Hogs and Pigs report and on June 28 in the Acreage and Grain 
Stocks reports. Farmers should watch for their surveys and be 
sure to respond. Your information matters!

Corn Planted - Selected States
[These 18 States planted 92% of the 2018 corn acreage]
-----------------------------------------------------------------
                 :            Week ending            :           
                 :-----------------------------------:           
      State      :  May 26,  :  May 19,  :  May 26,  : 2014-2018 
                 :   2018    :   2019    :   2019    :  Average  
-----------------------------------------------------------------
                 :                    percent                    
                 :                                               
Colorado ........:    82          63          71          83     
Illinois ........:    99          24          35          95     
Indiana .........:    94          14          22          85     
Iowa ............:    95          70          76          96     
Kansas ..........:    91          61          70          88     
Kentucky ........:    89          71          82          89     
Michigan ........:    62          19          33          73     
Minnesota .......:    91          56          66          93     
Missouri ........:    99          62          65          95     
Nebraska ........:    95          70          81          94     
North Carolina ..:    98          93          95          97     
North Dakota ....:    83          42          63          85     
Ohio ............:    80           9          22          78     
Pennsylvania ....:    56          42          66          70     
South Dakota ....:    87          19          25          90     
Tennessee .......:    97          85          93          97     
Texas ...........:    90          92          93          89     
Wisconsin .......:    77          35          46          82     
                 :                                               
18 States .......:    90          49          58          90     
-----------------------------------------------------------------

Corn Emerged - Selected States
[These 18 States planted 92% of the 2018 corn acreage]
-----------------------------------------------------------------
                 :            Week ending            :           
                 :-----------------------------------:           
      State      :  May 26,  :  May 19,  :  May 26,  : 2014-2018 
                 :   2018    :   2019    :   2019    :  Average  
-----------------------------------------------------------------
                 :                    percent                    
                 :                                               
Colorado ........:    54          12          25          54     
Illinois ........:    88          11          20          84     
Indiana .........:    78           4          10          65     
Iowa ............:    74          20          42          77     
Kansas ..........:    77          37          49          69     
Kentucky ........:    66          50          65          70     
Michigan ........:    37           1           7          41     
Minnesota .......:    60           6          21          70     
Missouri ........:    90          44          51          88     
Nebraska ........:    77          27          50          73     
North Carolina ..:    93          80          89          92     
North Dakota ....:    30           1           8          43     
Ohio ............:    63           3           8          54     
Pennsylvania ....:    29          18          42          46     
South Dakota ....:    45           -           2          57     
Tennessee .......:    88          72          81          88     
Texas ...........:    83          75          81          81     
Wisconsin .......:    44           3          11          49     
                 :                                               
18 States .......:    69          19          32          69     
-----------------------------------------------------------------
-  Represents zero.                                              

Soybeans Planted - Selected States
[These 18 States planted 95% of the 2018 soybean acreage]
-----------------------------------------------------------------
                 :            Week ending            :           
                 :-----------------------------------:           
      State      :  May 26,  :  May 19,  :  May 26,  : 2014-2018 
                 :   2018    :   2019    :   2019    :  Average  
-----------------------------------------------------------------
                 :                    percent                    
                 :                                               
Arkansas ........:    86          31          42          73     
Illinois ........:    89           9          14          70     
Indiana .........:    85           6          11          63     
Iowa ............:    78          27          32          77     
Kansas ..........:    63          17          22          41     
Kentucky ........:    53          22          38          40     
Louisiana .......:    96          67          82          90     
Michigan ........:    43          10          23          52     
Minnesota .......:    75          22          35          77     
Mississippi .....:    88          45          65          86     
Missouri ........:    75           9          12          53     
Nebraska ........:    84          40          56          74     
North Carolina ..:    48          36          52          45     
North Dakota ....:    66          24          46          65     
Ohio ............:    65           4          11          55     
South Dakota ....:    56           4           6          64     
Tennessee .......:    61          31          49          50     
Wisconsin .......:    59          12          20          59     
                 :                                               
18 States .......:    74          19          29          66     
-----------------------------------------------------------------

Soybeans Emerged - Selected States
[These 18 States planted 95% of the 2018 soybean acreage]
-----------------------------------------------------------------
                 :            Week ending            :           
                 :-----------------------------------:           
      State      :  May 26,  :  May 19,  :  May 26,  : 2014-2018 
                 :   2018    :   2019    :   2019    :  Average  
-----------------------------------------------------------------
                 :                    percent                    
                 :                                               
Arkansas ........:    75          20          30          62     
Illinois ........:    72           2           8          44     
Indiana .........:    59           1           3          35     
Iowa ............:    40           3           8          36     
Kansas ..........:    39           6          12          22     
Kentucky ........:    30           8          17          21     
Louisiana .......:    91          46          64          83     
Michigan ........:    24           1           5          24     
Minnesota .......:    25           -           3          35     
Mississippi .....:    77          32          44          75     
Missouri ........:    49           3           7          32     
Nebraska ........:    49           7          23          36     
North Carolina ..:    33          18          34          27     
North Dakota ....:    17           -           4          21     
Ohio ............:    43           -           4          29     
South Dakota ....:    14           -           -          24     
Tennessee .......:    37          14          28          28     
Wisconsin .......:    22           -           1          23     
                 :                                               
18 States .......:    44           5          11          35     
-----------------------------------------------------------------
-  Represents zero.                      
....MUCH MORE

Earlier today Reuters was reporting trade estimates:
The U.S. Department of Agriculture’s (USDA) weekly crop progress report should show that farmers were able to plant 63% of their intended corn acres as of Sunday, according to the average estimate in a survey of 14 analysts on Tuesday.

Trade estimates for the week ended May 26 ranged from 59% to 68%. The government was scheduled to publish its report at 3 p.m. CDT (2000 GMT), a day later than normal due to Monday’s federal holiday....MORE
Also earlier:

Grains and Soybeans Jumping Higher
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