Thursday, April 30, 2020

April 30, 2020: New York City To Begin Daily Cleaning Of Subways To Combat Covid-19

From ABC7, New York:
NYC subway service to halt overnight so trains can be cleaned
A new subway cleaning plan was unveiled Thursday that involves a complete suspension of overnight service after Governor Andrew Cuomo ordered officials to figure out how to "disinfect every train every night."

"When people get into the train in the morning, they have to know that train was disinfected the night before," Cuomo said. "So that I can say to essential workers that are killing themselves for our state, we are keeping the subways open for you, and when you get on the subway in the morning or the afternoon, know that car was disinfected the night before."

Starting next Wednesday, May 6, the MTA will stop ridership from 1 a.m. to 5 a.m. daily to complete the cleaning. To fill the gaps, the MTA will provide buses, for-hire-vehicles, and dollar vans at no cost to essential workers.....MORE
Possibly related, from Gizmodo:
Half the DNA on the NYC Subway Matches No Known Organism

Also at WABC:
April 30, 2020
Mayor: Unrefrigerated bodies outside funeral home 'unacceptable'

Worldometers Covid-19 tracker:
                                                 Deaths                        Deaths per Million

"Florida man might just stick it to HP for injecting sneaky DRM update into his printers that rejected non-HP ink"

The question as always is: Do you own what you buy or don't you?

From The Register:
World crosses fingers
One man’s effort to sue HP Inc for preventing his printers from working and forcing him to use its own branded, and more expensive, ink cartridges can move forward in California.
Florida man John Parziale was furious when he discovered in April last year that HP had automatically updated his two printers so they would no longer accept ink cartridges from third-party vendors – cartridges he had already bought and installed.

That month, HP emitted a remote firmware update, without alerting users, that changed the communication protocol between a printer’s chipset and the electronics in its inkjet cartridges so that only HP-branded kit was accepted. The result was that Parziale's printer would no longer work with his third-party ink. He saw a series of error messages that said he needed to replace empty cartridges and that there was a “cartridge problem.”

Parziale sued the IT titan in its home state of California, arguing he would never have bought the HP printers if he knew they would only work with HP-branded ink cartridges. At the time, the cartridges he bought to go with the machine did in fact work and were printing merrily right up to the point the DRM-style update was sent.

HP asks customers to “please use genuine HP ink cartridges for best results,” though Parziale decided he would forego the “best results” to save money. He bought nine cartridges, none of which work any longer.

It’s a situation that millions of people worldwide can sympathize with: a full set of inkjet cartridges often cost over $100, making the ink more expensive per drop than vintage champagne, whereas refilled or third-party cartridges often cost a third of that – and that's a significant saving.

But feeling ripped off and beating a tech giant in court are two different things, as Parziale found out this month [PDF] when federal district judge Edward Davila threw out most of his claims against HP. Four of five allegations he had made were under America's Computer Fraud and Abuse Act (CFAA), accusing HP of abusing its “authorized access” to his devices. These were rejected because, the judge noted, he had granted HP remote access to his printer....MUCH MORE
 For some reason bringing to mind the Bill Gates' coronavirus vaccine joke making the rounds earlier in the month:
"Sure, they say it will be a one-shot deal but then come the updates".

Weekly Natural Gas Storage Report April 30, 2020

Following on the Chesapeake news yesterday the chances of the market seeing our $3.50 target later this year improves a bit as pressure for CHK's "production at any costs" approach for making interest payments subsides a bit.

Front futures up 2.5 cents (1.34%) at $1.894.

First up, the estimates ahead of the report, via FX Empire:
Today’s EIA storage report is expected to come in near the five-year average of 74 Bcf.
NGI reports that a Bloomberg survey of six analysts produced a range of 64 Bcf to 76 Bcf, with a median of 71 Bcf. A Reuters poll of 17 market participants had injections ranging from 59 Bcf to 80 Bcf. NGI also modeled an 80 Bcf build. Last year, the EIA recorded a 114 Bcf injection.
And the report from the Energy Information Administration: for week ending April 24, 2020   |   Released: April 30, 2020 at 10:30 a.m.
Working gas in storage was 2,210 Bcf as of Friday, April 24, 2020, according to EIA estimates. This represents a net increase of 70 Bcf from the previous week. Stocks were 783 Bcf higher than last year at this time and 360 Bcf above the five-year average of 1,850 Bcf. At 2,210 Bcf, total working gas is within the five-year historical range....MORE 
And the price action via the CME:

https://www.tradingview.com/x/1VDdR3PO/

Is This The End Of The Insight-Industrial Complex?

Yesterday's trip down to the link-vault for the sunspot post immediately below resulted in a bit of happy serendipity as on the same (metaphorical) shelf was a tweet with the annotation:

This is Why Izabella Is the Best
Which reminded me of this 2018 post and got me wondering about the future of panels, TED talks, and the conference biz in the post coronavirus world.

The insight-industrial complex
Not the thing Eisenhower warned against.*
Horrifyingly worse.
If you're trapped in one of these two-hour talks.

From TechCrunch:
https://tctechcrunch2011.files.wordpress.com/2018/01/insight-industrial.jpg?w=738
I don’t like tech conferences. I mean, of course I don’t, they’re not meant for people like me. I’m an introvert, so I find them exhausting, and am (presumably) less likely than an extrovert to meet interesting or contributory people. I read much faster than people talk, so they’re not a good way for me to learn things. But there’s more to my dislike than that.
I find that the actual goal of conferences often seems to be quite distinct from the notional goal. The notional goal is for people to come together to learn about the field in question: some detailed specifics, some new announcements, and an overall general view of the state of the art, all under one roof. Maybe, if all goes well, to even find people to collaborate with in the future.

To the extent that conferences do those things, they’re great. But at too many conferences, those intentions often seem to be incidental to the actual goal, which is to reify the importance and social status of the conference organizers and speakers, while in practice all else is secondary.
Obviously this wouldn’t be true, or at least wouldn’t matter, if people were actually getting their money’s worth from the pearls of wisdom their “VIP” speakers drop on stage. But are they really? Speaking as an occasional alleged pearl-of-wisdom dropper myself, let me assure you: I have serious doubts.

There seems to be a widespread mindset that all you really need to succeed is insight. That you just need to learn a little more, to integrate one more dose of perspicacity from some billionaire or guru, and then you too will have assembled enough of an arsenal of wisdom to overcome any of life’s or business’s obstacles. That what separates success from failure is a sufficiency of sage advice.
This seems to be especially common among those who revere academia, or their idea of academia. The problem is this: it’s not true. Very few pearls or even paragraphs of wisdom ever actually translate into any kind of actionable plan. What’s more, if you look hard you can probably find unimpeachable wisdom arguing all sides of any given situation.

Meanwhile, if you’re doing something genuinely interesting, then nobody really knows what the hell is going to work or not yet; and if you aren’t, then a dozen others are doing it too, and execution, rather than a little extra abstruse understanding is going to make the difference. Either way, pearls of wisdom seem pretty extraneous....MORE
*One of the most farsighted speeches ever delivered in the USA, President Eisenhower's Farewell Address to the American People, January 17, 1961.

Most folks know his warning on the military-industrial complex:
...In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together...
But they don't remember what followed immediately after:
...Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.
Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.
The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present--and is gravely to be regarded.
Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite....
Something to think about.
But for now, I am going to think about the time I spent absorbing and learning the tips and tricks of being a thought leader:

Sunspots and Agricultural Production (William Herschel does a driveby)

As promised in yesterday's "Risk: "Here Are the U.S. Regions Most Vulnerable to Solar Storms":
The author of this study, Jeffrey Love, did some work on sun - agriculture interactions that we were going to post last year. While I descend into the link-vault to see if we still have it, here's some stuff that is potentially scarier than covid-19.....
We have quite a few posts on the observations posted by Herschel in the Royal Society's blog Philosophical Transactions (just kidding Professor Ramakrishnan, please don't cut-off access).
Some links below, TL;dr : I couldn't figure out how to make money off what Herschel and other sharp cookies have thought about.

With that longer than usual introduction here's Dr. Love via the American Geophysical Union's Geophysical Research Letters volume 40:
Received 23 June 2013; revised 8 August 2013; accepted 9 August 2013; published 27 August 2013

On the insignificance of Herschel's sunspot correlation
Abstract

[1] We examine William Herschel's hypothesis that solar‐cycle variation of the Sun's irradiance has a modulating effect on the Earth's climate and that this is, specifically, manifested as an anticorrelation between sunspot number and the market price of wheat. Since Herschel first proposed his hypothesis in 1801, it has been regarded with both interest and skepticism. Recently, reports have been published that either support Herschel's hypothesis or rely on its validity. As a test of Herschel's hypothesis, we seek to reject a null hypothesis of a statistically random correlation between historical sunspot numbers, wheat prices in London and the United States, and wheat farm yields in the United States. We employ binary‐correlation, Pearson‐correlation, and frequency‐domain methods. We test our methods using a historical geomagnetic activity index, well known to be causally correlated with sunspot number. As expected, the measured correlation between sunspot number and geomagnetic activity would be an unlikely realization of random data; the correlation is “statistically significant.” On the other hand, measured correlations between sunspot number and wheat price and wheat yield data would be very likely realizations of random data; these correlations are “insignificant.” Therefore, Herschel's hypothesis must be regarded with skepticism. We compare and contrast our results with those of other researchers. We discuss procedures for evaluating hypotheses that are formulated from historical data.

1 Introduction
[2] William Herschel [1801] interpreted telescopic observations of the Sun in terms of solar meteorology. The photosphere, he believed, was the top of luminous clouds and sunspots were openings in the clouds. Therefore, variations in sunspots would correspond to variations in solar irradiance which might affect the heating of the Earth's atmosphere and the Earth's weather. Riccioli (Almagestum Novum, 1651) and others had proposed similar hypotheses, but Herschel took the idea one important step further: he sought quantitative evidence, even if scarce and indirect, that might support the hypothesis. The problem was that Herschel was contemplating all of this decades before Schwabe [1844] discovered the ∼11‐year solar‐cycle waxing and waning of sunspots and before Wolf took up his ambitious compilation of historical sunspot numbers. Still, Herschel [1801] knew that sometimes the Sun had relatively few or no spots and that this condition could persist for several years: Flamsteed saw “no spot in the Sun” from 1677 to 1684; Cassini saw “no spot” from 1686 to 1688; etc., while at other times, sunspots were clearly seen. As for terrestrial meteorological data, Herschel lacked reliable measurements, and so he considered a proxy. Reasoning that farm crop yields would be correlated with temperature and that market prices for crop products would be anticorrelated with yields, he chose to analyze the London wheat price data compiled in Adam Smith's Wealth of Nations. Herschel found that wheat prices during five durations of time with few sunspots were high (inflated), while prices during five other durations were low (deflated). From this, he suggested that diminished sunspot number might correspond to a “deficiency of the solar beams.” In publishing his ideas, Herschel hoped to motivate a broader discussion on the role played by the Sun in affecting phenomena on the Earth.[3]

Subsequent analyses by reputable nineteenth century scientists did not convincingly confirm the existence of a correlation (or anticorrelation) between sunspots and wheat prices [e.g., Carrington, 1863; Poynting, 1884]. Still, the idea persisted, partly because of Herschel's enormous reputation, partly because a rigorous philosophy for statistical hypothesis testing had yet to be developed, and partly because it was simply so enticing. A correlation, if demonstrated, would enable the prediction of crop yields and product prices, possibly for financial gain. It is, therefore, not surprising that the next influential proponent of a hypothesis similar to Herschel's was an economist: William Stanley Jevons [1879] reported a correlation between sunspots and wheat prices in India, to which he assigned elaborate interpretations. But Jevons's evident lack of objectivity was soon ridiculed [e.g., Proctor, 1880], and today, while economists sometimes discuss a “sunspot effect,” it is usually as an abstraction of the extrinsic variables that contribute to a “market psychology” of uncertainty [e.g., Cass and Shell, 1983].[4]

The first clear evidence that specific terrestrial phenomena can be affected by sunspots was obtained by Edward Sabine [1856], who found a correlation between the solar cycle and the occurrence of magnetic storms recorded at ground‐based observatories. Magnetic storms result from the dynamic interaction of the solar wind with the coupled magnetospheric‐ionospheric system. Many storms are caused by coronal mass ejections from active regions defined by sunspots, but they can also be driven by high‐speed streams of plasma flowing from coronal holes that develop during the declining phase of each solar cycle. While the physics of the solar cycle and magnetic storms remains the subject of active research, there is no doubt about the reality of the causal relationship. Indeed, Sabine's statistical correlation has held up over the 14 solar cycles since he discovered it [e.g., Chapman and Bartels, 1962, chapter 11], and it is one of the foundational principles of modern operational “space weather” forecasting.[5] 

 In contrast, a relationship between the sunspot solar cycle and terrestrial weather has been much more difficult to detect [e.g., Meadows, 1975]. Herschel's analysis on this subject, if not exactly meeting modern standards, is certainly important in the historical evolution of ideas [e.g., Hoyt and Schatten, 1997; Bard and Frank, 2006; Benestad, 2006; Eddy, 2009]. Still, we know of only one recent critical analysis of Herschel's hypothesis [Krut, 2008], while numerous publications report what are seemingly statistically significant correlations (or, sometimes, anticorrelations) between sunspots and agricultural prices and crop yields [e.g., King et al., 1974; Harrison, 1976; Vines, 1977; Legrand, 1977, 1978; Currie et al., 1993; Stanhill and Cohen, 2001; Pustil'nik and Yom Din, 2004a, 2004b; Garnett et al., 2006; Pustil'nik and Yom Din, 2009, 2013]. Herschel's hypothesis is also often depicted as being essentially factual in the popular literature [e.g., Clark, 2007; Cohen, 2011]. Given the present situation, we are motivated to conduct our own significance tests of Herschel's hypothesis. Results inform the wider and controversial subject of the role played by the Sun and solar‐terrestrial interaction in affecting global climate change [e.g., Moore et al., 2006; Gray et al., 2010; Love et al., 2011; Lockwood, 2012].
 
2 The Data and Their Preparation[6] 
As Herschel understood it, sunspot number might be used as a proxy measure of solar irradiance; for review of this and other proxies, see Gray et al. [2010]. We use annual mean international (Zurich or Wolf) relative sunspot number RZ, covering years 1700–2012, or more than 28 solar cycles up to the present rise phase of cycle 24. We obtained RZ from the Royal Observatory of Belgium [e.g., Clette et al., 2007]. Prior to 1700 and during the Maunder Minimum in sunspot number when systematic counts were not always made, we use a list of year dates of solar‐cycle minima and maxima estimated from monthly sunspot numbers and records of days with and without sunspots [Eddy, 1976], obtained from NOAA's National Geophysical Data Center.[7]

We compare sunspot numbers with the terrestrial data summarized in Table 1. Of these, the most straightforward comparison is between sunspots and geomagnetic activity. The aa index [e.g., Mayaud, 1980], 1868–2012, measures magnetic storm intensity and lower levels of global magnetic field disturbance. Although geomagnetic activity is not the type of solar‐terrestrial effect that Herschel was contemplating in 1801, there is, today, a reasonably well‐established understanding of the relationship between sunspots and geomagnetic activity and, as such, a correlational analysis of RZ and aa serves as a qualitative check of our analysis methods. The aa index is derived from British and Australian magnetic observatory data; it can be obtained from the British Geological Survey. We average the 3‐h aa index values into annual means....
....MUCH MORE.

Here's Herschel:
Philosophical Transactions of the Royal Society of London, Volume 91, pp. 265-318
January 1, 1801
Observations tending to investigate the nature of the sun, in order to find the causes or symptoms of its variable emission of light and heat; with remarks on the use that may possibly be drawn from solar observations

The wheat bit starts on page 313 (page 49 of the 56 page PDF)

Here's me:
"Wheat Market Gone Wild and "Do We All Die in 2027?":
During a misspent youth one of my follies was following in William Herschel's footsteps....
...And Herschel? In 1801 he announced** he had spotted a correlation between sunspots and wheat prices. Here's a mention in the Edinburgh Philosophical Journal, 1823.
The question has been argued for 200 years and Herschel has, off and on, been the subject of ridicule***. Here's a headline from the New York Times in 1903:
SUN SPOTS NO PROPHETS; Science Destroys Theories That Disasters Follow Their Appearance. Interesting as Solar Curiosities with Possible Relation to Electrical Conditions of Earth....Source
Here's the cached version
A while later I came on the scene, couldn't figure out how to make money out of Herschel's idea and having the attention span of a gnat, moved on. So why bring it up? Since I first looked at the matter there's been a lot of research and it appears the correlation may not be as spurious as I thought. The wheat price series is one of the longest we have, it extends back to 1250, I've got a paper chart that starts in 1300 (although some of the prices are dubious).

The CBOT has a wheat chart that starts in 1477.
Google Scholar has 285 ref's to Herschel and wheat prices. Gregory Yom Din of the Israel Cosmic Ray Center, Tel Aviv University and Israel Space Agency, seems particularly interested, here, here, here, and note below.
Or:
"Herschel and Me (Sunspots and Wheat)"

You can also peruse the work of William Stanley Jevons (he of the paradox):
 "The Solar Period and the Price of Corn" (1875)
"The Periodicity of Commercial Crises and Its Physical Explanation" (1878)
“Commercial crises and sun-spots”, Nature xix

You may want to dip into the big daddy of price series:
"A History Of Agriculture And Prices In England, From The Year After The Oxford Parliament (1259) To The Commencement Of The Continental War (1793)"
by J. E. Thorold‐Rogers, 7 volumes, 1866-1887 which probably influenced Jevons.

Here's another bit o'price series scholarship:
The paper constructs an annual price series for English net agricultural output in
the years 1200-1914 using 26 component series: wheat, barley, oats, rye, peas,
beans, potatoes, hops, straw, mustard seed, saffron, hay, beef, mutton, pork,
bacon, tallow, eggs, milk, cheese, butter, wool, firewood, timber, cider, and
honey. I also construct sub-series for arable, pasture and wood products. The
main innovation is in using a consistent method to form series from existing
published sources. But fresh archival data is also incorporated. The implications
of the movements of these series for agrarian history are explored.
Here's Mudvayne covering The Police:

Wednesday, April 29, 2020

Reuters "Exclusive: Chesapeake Energy preparing bankruptcy filing" (CHK)

Well it's about time.
From Reuters April 29, 2020:
Chesapeake Energy Corp, the oil and gas exploration and production company that was at the forefront of the past decade’s U.S. shale boom, is preparing a potential bankruptcy filing as it grapples with an unprecedented rout in energy prices, people familiar with the matter said on Wednesday. 

The Oklahoma City-based company, cofounded by late wildcatter and outspoken natural gas proponent Aubrey McClendon, has held discussions with creditors about a possible loan that would aid operations while it navigates bankruptcy proceedings, the sources said. The loan could total roughly $1 billion, though its size remains in flux, one of the sources added.

Such loans, referred to as debtor-in-possession financing, are key to companies seeking Chapter 11 bankruptcy protection because they help them sustain as much of their business as possible during court proceedings.

Chesapeake’s discussions about possibly obtaining bankruptcy financing are in early stages, and the company has made no final decisions about how it plans to address its debts, the sources cautioned. It could attempt to persuade creditors to restructure its debt outside of bankruptcy proceedings, said the sources, who asked not to be identified because the matter is confidential....
....MUCH MORE

As noted back on February 26:
U.S. #3 Natural Gas Producer, Chesapeake Crushed, Down 32% (CHK)
I think CHK is still #3 after OXY bought Anadarko but it's possible Chesapeake has slipped to #4.
This is one of the three or four most likely bankruptcies among the gas Exploration & Production companies
....MORE 

March 17 
Natural Gas: "Exclusive: Shale gas pioneer Chesapeake Energy taps restructuring advisers - sources" (CHK)

If interested see also some of the links in March 26's "Goldman: "Why Natural Gas Prices Could Double by Next Winter".

And dozens more over the years, use the 'search blog' box if interested.
Over the years:

CHK Chesapeake Energy Corporation monthly Stock Chart

That 1 for 200 reverse split is how you get a $7000 stock.

"Saudi Oil Flotilla Faces Congested U.S. Ports"

The Saudi's Motiva refinery in Port Arthur Texas was set up to process Saudi sour crude.
The  Port Arthur refinery at 630K barrels/day is the largest in the U.S. and fifth (now) eighth largest such plant in the world.
So we know where some of the goo is headed.
But even with cancellations from non-Saudi customers there is an immense amount of oil on its way.

First up, Bloomberg via gCaptain, April 29:
A fleet of supertankers carrying Saudi oil will add to the growing congestion at U.S. ports in coming weeks at the same time producers are shutting in output as they run out of space to store unwanted supplies.

A total of 43 million barrels of Saudi oil is set to arrive on the U.S. Gulf and West coasts by May 24, according to Rystad Energy. The flotilla — comprising 28 tankers, including 14 very large crude carriers, or VLCCs — will join a queue of 76 tankers waiting to unload in U.S. ports as the greatest oil glut in history plays out.

Dozens of tankers are lined up off the two coasts with demand for motor and jet fuel destroyed by the Covid-19 pandemic. There are 34 tankers already waiting in line to offload about 25 million barrels on the West Coast, and 31 tankers lined up off the U.S. Gulf Coast.
“The congestion at U.S. ports has reached new highs,” Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst, said in a statement. “We find it unlikely that all tankers will be able to unload upon arrival.”...
....MORE

 And from Reuters via gCaptain, April 29:

Saudi Crude Buyers Cancel at Least 7 Supertankers After Freight Hike – Sources
U.S. buyers of Saudi Arabian crude oil cancelled at least seven April-loading tankers after a jump in freight costs, two industry sources said, likely to result in lower-than-expected shipments from the world’s top exporter.

The move shows how some buyers are not rushing to take extra oil despite a slide in prices this month to below $16 a barrel, the lowest this century, as demand has collapsed following government measures to contain the spread of the coronavirus.

In March, Saudi Arabia had cut its official selling prices for April crude and vowed to boost exports after a supply cut deal by the Organization of the Petroleum Exporting Countries and rivals like Russia collapsed.
But tanker rates soared and Saudi Arabia told buyers it would cut compensation payments for freight costs because of extraordinary conditions in the freight market.

Freight costs jumped globally because more ships were needed to deliver oil after Saudi Arabia and other Middle East producers ramped up output after the talks to extend the OPEC-led production cut deal broke down at the start of March.

This killed the economics of importing the extra barrels, one source said.....
....MORE

June WTI futures up $1.93 (12.82%) at $16.99.
It was a lifetime ago (okay, eight years) when we first started babbling about Motiva:
Saudis Sending Seven Tankers to Begin Stockpiling Feedstock for Soon to Be Largest Refinery in the U.S., Motiva (RDS)

Back then it was a 50/50 j.v. with Shell.

Pivot: "Investing in the Future of Food: WeWork Food Labs helps level the playing field"

There is a story told about young (17 years old) first lieutenant Arthur MacArthur, father of the future five-star, Douglas.

During one of the Civil War battles he participated in he was holding some higher ground against the attacks of the Rebels  when his General rode by shouting "Wheel Arthur, wheel" which the young officer did by turning his men to face a fresh onslaught. This happened again. And again, so that by the end of the day Arthur had wheeled a complete 360°and ended up facing the original direction.

I'm not sure WeWork can pull that off but they have to do something.

From Food Navigator:
According to Food Labs Program Manager Tessa Price, the vertically integrated Food Labs also aims to bridge the communication gap between entrepreneurs and venture capitalists entering the food and beverage space so that they share the same expectations and ultimately have a better chance for long-term success.

In this episode of FoodNavigator-USA’s Investing in the Future of Food​, Price explains how WeWork developed Food Labs, the benefits and resources it offers and how it is improving connections between startups and investors. Since FoodNavigator-USA met with Price in New York before the pandemic was declared, WeWork Food Labs has watched its food and beverage community work together to overcome many of the unique challenges posed by the novel coronavirus as well offer a helping hand to first responders by coordinating much-needed donations. 

Remaking the food industry for ‘small independent entrepreneurs’
As someone who worked at several food and beverage companies that failed despite raising sufficient funds, Price said she is intimately familiar with challenges entrepreneurs in the space face and is hopeful that by bringing companies together they can learn from each other and avoid common mistakes.

“The food industry was really built for scale. It wasn’t necessarily built for small independent entrepreneurs to find success,”​ Price said....
....MUCH MORE

Another possibility, raised I think by one of the Tyler Durden's at ZeroHedge: the office spaces be turned into crude oil storage facilities. Or maybe it was at Alphaville.
Could have been about Airbnb's instead of WeWork.

Actually, who really cares, "Wheel Arthur, wheel!"

Risk: "Here Are the U.S. Regions Most Vulnerable to Solar Storms"

The author of this study, Jeffrey Love, did some work on sun - agriculture interactions that we were going to post last year. While I descend into the link-vault to see if we still have it, here's some stuff that is potentially scarier than covid-19.
A Carrington Event-level disruption could actually kill people through its second order effects.

From IEEE Spectrum:

Grid operators in Minnesota, North Dakota, and Wisconsin should take extra precautions against solar "weather"

https://spectrum.ieee.org/image/MzYxODgzNQ.jpeg
This map shows 100-year storm-induced voltages on the national electric power grid.
A new study about solar-induced power outages in the U.S. electric grid finds that a few key regions—a portion of the American midwest and Eastern U.S. seaboard—appear to be more vulnerable than others.

The good news is that a few preventative measures could drastically reduce the damage done when a solar storm hits Earth. Those include stockpiling electrical transformers in national strategic reserves.
Jeffrey Love is a research geophysicist at the U.S. Geological Survey (USGS) in Golden, Colorado and co-author of the new USGS solar geoelectric hazard study. He’s one of many voices in the worldwide geophysical community warning that geoelectric “perfect storms” will happen—it’s not a question of if, but when. Such storms can last between one and three days. 

Love explains that solar flares and other solar mass ejections that travel through space can slam into Earth’s atmosphere and generate powerful electric and magnetic fields. These magnetic storms can occasionally be intense enough to interfere with the operation of high-voltage electricity lines.
Depending on the geology of a given region, the currents a geomagnetic storm induces in the power lines can destabilize the power grid’s operation and cause damage to (or even destroy) transformers. 
Fortunately some kinds of rock, such as sedimentary formations, are relatively electrically conductive. Which means they’re more effective at dissipating storm-induced electric fields. And so the regions of the country with more of these conducting-type rocks will be more resilient to a magnetic storm. As it happens, that’s most of the United States.

Some regions with bad geological luck, however, happen to have more electrically resistive rock (including igneous and metamorphic formations) in the ground. And that means high-voltage electrical wires in those parts of the country will be more subject to geomagnetic disturbances from solar flares. Utilities in those regions need to know that power disturbances and outages—and possibly blown transformers—are more likely in the case of a big solar storm hitting Earth.

In a worst-case scenario, Love said, portions of the electric grid without enough backup transformers and other equipment could find themselves unable to operate until they can swap in backup systems. Of course, if there are not enough transformers and other devices, many in the hardest-hit regions could be without power for days or weeks until equipment could be delivered or built from scratch.
In March 1989, for instance, a so-called coronal mass ejection from the sun slammed into Earth. Because of how the planet was oriented when it hit, it blew out power grids and transformers primarily in the Canadian province of Quebec. For the next 12 hours, millions of people were thrown back to a world without any electricity, lights, heating, or other necessary services.

“The geomagnetic disturbance was global, but the effect was prominent for Quebec because Quebec has old and geologically resistive rock,” Love said. “Also, power grid systems in Quebec have very long lines, meaning that the integration of electric field along the lines (produced) very high voltage.”....
....MUCH MORE

"If Moscow and Riyadh think they can put the U.S. shale industry out of business, they’d better think again"

'Man 'High On Meth, Fights Off 15 Police Officers While Masturbating'
Huffington Post,  January 3, 2020

Them Rooskies an Saudis don't know who they're messin' with!
'Murica, F*ck yeah!

Ahem. Sorry.

From MarketWatch:

If Moscow and Riyadh think they can put the U.S. shale industry out of business, they’d better think again
U.S. companies may go bankrupt, but Putin and MBS need petrodollars to keep their citizens from rioting 
Picture a line of dominoes falling, one right after the other. That’s what we’re beginning to see in the U.S. oil industry, as companies go bust, thanks to the historic collapse in crude prices CLM20, 16.45%.
 
Another one fell Monday: Diamond Offshore DO, +13.06% filed for bankruptcy — the fifth oil company to file for protection in the last 30 days, according to BankruptcyData.com. 

More are expected to follow. A recent report by the consulting firm Rystad Energy said “more than 70” firms had trouble servicing their debt with crude at $30. $30? Prices today are south of $12 on the Nymex, and a potential rebound is anybody’s guess.
One thing’s for certain: A lot of people in the once red-hot industry have already lost — or are about to lose — their jobs.

“I would expect we’ll see a 30% to 40% reduction in labor in the Permian,” the huge oil production region of western Texas and New Mexico, says Dr.Gregory Brew of Southern Methodist University, an oil historian who focuses on petroleum and its role in geopolitics and the global economy. He notes that activity in North Dakota’s Bakken formation had already been slowing down.

The history of the oil industry is one of busts and booms, of course, but the current bust is harder to analyze, given two extraordinary factors....
....MUCH MORE

Also, GDP down 4.8%, DJIA up 335 F* yeah!

Matthew Klein, Formerly of FT Alphalfaville Is Now Covering Food, Feed, and Livestock At Barron's

From Barron's, April 28:

Meat Shortages Are Coming as Coronavirus Shuts Down Packing Plants
The novel coronavirus has upended the U.S. meat-supply chain, with American consumers likely to face shortages of beef and pork before the end of May even as farmers are forced to slaughter millions of unwanted cattle and hogs.

Since the beginning of April, meatpacking plants across the country have been forced to shut in response to viral outbreaks that have infected thousands of workers. Meatpackers work in tight spaces and breathe recirculated air during long shifts, which makes it easy for the virus to transmit across the thousands of workers in a single plant. The United Food & Commercial Workers union estimates that 20 workers in meatpacking and food processing have already died from Covid-19, the disease caused by the new coronavirus.

The union also estimates plant closures have directly reduced beef packing capacity by about 10% and pork packing by 25%. Meatpacking is a skilled profession, so plants can’t simply replace lost workers with unemployed waiters.

“The food supply chain is breaking,” Tyson Foods Chairman John Tyson wrote on Sunday. “Millions of pounds of meat will disappear,” and American consumers will soon feel the pinch as supplies in cold storage are run down.

The system is vulnerable to bottlenecks because meatpacking is concentrated in a small number of facilities—many of which are near each other. About 70% of America’s pork-packing capacity, for example, comes from just 20 plants across the country, with about two-thirds of that output coming from plants either in Iowa or near the border with Iowa. (This is because most hog farmers want to be near the corn and soy they use as animal feed.) Iowa now has one of the fastest growth rates of new Covid-19 infections in the entire country.....
....MUCH MORE

HT: FTAV's Further Reading post

(also to FTAV's Bryce Elder for implanting a version of Alfalfaville a couple years ago)

Capital Markets: "Heavy Dollar amid Month-End Pressure"

From Marc to Market:
Overview: The dollar is lower across the board as dealers attribute the selling to month-end pressures ahead of the FOMC today and ECB tomorrow and long-holiday weekend for many. Japan's Golden Week holiday has already begun. Despite the loss in US equities yesterday, despite the higher opening, it has not spilled over, as Alphabet earnings helped lift sentiment. The MSCI Asia Pacific Index rose for a third session as is approaching the halfway mark of this year's range. Europe's Dow Jones Stoxx 600 little changed near the month's high. US shares are firm, and the S&P 500 is poised to recover most of yesterday's loss.

Caterpillar earnings before the US are awaited for global economic insight as it operates in nearly all countries. Peripheral European bond yields begin off higher, with Italy under the most pressure after Fitch downgraded it late yesterday. Core bond yields are a little lower, and the US 10-year is near 60 bp. The Antipodean currencies are leading the move against the US dollar by the major currencies, with sterling the laggard, having been turned back from the $1.25 area yesterday. JP Morgan's Emerging Market Currency Index rose a little more than 1% yesterday, its best showing in April, and is extending those gains today. Gold is little changed, hovering around $1700, while oil is firmer.

Asia Pacific
Australia's Q1 CPI was reported a bit higher than expected at 2.2% year-over-year. This was above the Bloomberg survey median forecast of 1.9% after 1.8% in Q4 19.This represents a five-year high. The trimmed mean was also higher at 1.8% (vs. 1.6% in the previous quarter). Food (vegetable prices) and pharmaceuticals lifted the CPI. The rise in price pressures is understood to be temporary with deflationary forces from the compression of demand, and falling oil prices likely be evident in Q2.

South Korea saw March industrial output jump 4.6% or more than three times more than economists expected. In February, industrial production fell by 3.8%. The number of working days may have helped inflate the series. Tomorrow South Korea reports April trade figures as is seen as a barometer of regional and electronic trade. Foreign investors had been large sellers of South Korean equities this month, but it has slowed in recent days.

The dollar is extending its fall against the Japanese yen for the sixth consecutive session. It has not closed above JPY108 since April 10 and is now near JPY106.35, which is the lowest level since March 17. The next important technical target is closer to JPY105.20. Immediate resistance is seen around JPY106.60 and then JPY107.00. The Australian dollar reached almost $0.6550, its best level since March 10. The next target is around $0.6600, and the 200-day moving average is closer to $0.6700. Here is April, the Aussie has led the majors with around a 6.3% rally. The New Zealand dollar is in second place with about a 2.2% gain. The yen is the third-best with roughly a 1% gain. The Chinese yuan is little changed as the dollar is "trapped" in a CNY7.06-CNY7.0950 range. It is virtually unchanged this month.

Europe
Although S&P did not downgrade Italy ahead of last weekend, Fitch moved late yesterday, cutting the sovereign rating to BBB-, but it changed the outlook to stable from negative. Remember how the ECB works. It takes the best rating of the four main agencies (includes DBRS). Also, the ECB has indicated since Italy had an investment-grade rating in early April, that it would continue to accept its bonds as collateral through September 2021, if it lost it. The ECB's backstop may be the critical consideration allowing Italy to keep the investment-grade status.

Italy, Spain, and France will report Q1 GDP estimates ahead of the aggregate figure tomorrow. The median forecast in the Bloomberg survey sees a 3.7% quarter-over-quarter contraction. Separately, the preliminary April CPI will be reported. The headline pace is expected to slow to 0.1% from 0.7%, and the core rate may fall to 0.7% from 1.0%. The ECB meets tomorrow. There is some expectation that it will increase is Pandemic Emergency Purchase Program from 750 bln euros announced six weeks ago. While an increase is likely at some point, we see it as too soon now. In terms of the signaling effect, it could achieve the same by suggesting that its operations are scalable. Separately, alongside a surge in M3 money supply growth (7.5% vs. 5.5%), lending to non-bank financial companies surged in March to about 118 bln euros, which is near twice the previous record from December 2007....
....MORE

Tuesday, April 28, 2020

"Washington State Warns of Asian Giant Hornet Sightings"

Great. Just 'effin' great.

From U.S. News & World Report:

The Washington state Department of Agriculture has started hunting for Asian giant hornets after two confirmed sightings of the predator.
The Washington state Department of Agriculture started hunting for Asian giant hornets after two confirmed sightings of the predator.
The confirmed sightings in December were accompanied by two unconfirmed but probable sightings, The Skagit Valley Herald reported Sunday.

The sightings were in Whatcom County along the state's northern border.
The Asian giant hornets can attack and kill a honey bee colony within hours and scientists expect the hornet to emerge again this spring.
Tim Lawrence, director of the Washington State University Island County Extension and a honey bee expert, said the queen hornets come out of hibernation in April to feed on plant sap and fruit.
The goal is to eradicate the queens before they establish populations and pose threats to honey bees, which farmers rely on for crop pollination, Lawrence said....MORE
The fear is for the honeybees but they mess with people as well.
From CNN:
Deadly hornets kill 42 people in China, injure over 1,500 ...
https://i.ytimg.com/vi/RCr4u13HRoQ/hqdefault.jpg

"Norwegian billionaire [NOK] held over wife's disappearance"

There's a headline you don't see all that often.
From AFP via Yahoo News:
Norwegian police said Tuesday they had arrested a wealthy businessman over the disappearance of his wife 18 months ago, the latest twist in a case that has kept the Nordic countries on tenterhooks.

Tom Hagen, 70, was arrested as he was leaving his home for work on Tuesday, on suspicion of "murder or accessory to murder," commissioner Ida Melbo Oystese told a press conference.
Hagen's wife Anne-Elisabeth Hagen disappeared without a trace from their home in Lorenskog, east of Oslo, on October 31, 2018.

A poorly written ransom note, containing threats and a demand for nine million euros in crypto currency, was found at the scene.

Sporadic contact with the alleged kidnappers on digital platforms initially supported the theory that she had been the victim of a rogue abduction.

However, by June 2019, police were re-evaluating their leads and started examining whether it was a murder that had been disguised as a kidnapping.

Tom Hagen is the 164th richest man in Norway with an estimated net worth of 1.9 billion Norwegian kroner ($183 million, 168 million euros) in 2019, according to business magazine Kapital....
.... MORE

Attentive reader will note that we have fixed the problem that arose in December's "2019 Norwegian Seafood Exports Will Exceed NOK 100 Billion Sometime This Week"
Run that through our handy currency converter et voilà: 3.959 Trillion.
Hmmm, that doesn't look right. I may have translated NOK into Zimbabwe dollars....
*****
....Let's try converting our Zimbabwe  dollars into USD:

Waddya mean no one wants 3.96 Trillion ZWD?
How about just theoretically?
There's a 22% fee?
What the hell am I going to do with ~four trillion ZimBucks?

Ah ha! reversing the arrow of time we unwind the earlier transaction and now, jamming the transmission into 1st, we come up with 100 Billion NOK = a bit under $11 Billion.
That's a lot of fish.
In any currency.  


The krone has recovered a bit from the all-time (?) low reached against the dollar on March 23, almost 12:1, coincidentally the bottom for the U.S. stock markets which raises the question: is the krone now being valued off the sovereign wealth fund rather than the price of oil?

"23 Lessons From Jeff Bezos’ Annual Letters To Shareholders" (AMZN)

It's good to be king.

From CB Insights, April 27:
Each year, Jeff Bezos writes an open letter to Amazon’s shareholders. Over the last 2 decades, these letters have become an unparalleled source of insight into how the world’s richest man thinks about efficiency, online customer experience, retention, managing through crises, and more.

Amazon is a hugely successful, precedent-breaking company. The online bookseller didn’t turn a profit for 6 years — today, it’s the second publicly traded company ever to hit a $1T market cap.
Since founding Amazon in 1994, Jeff Bezos has run his company according to an unconventional set of core principles: don’t worry about competitors, don’t worry about making money for shareholders, and don’t worry about the short-term. Focus on the customers, and everything else will fall into place.
Bezos broke all the rules when he built Amazon. In doing so, he carved out a unique way of looking at the world, at companies, and at tech in general. And nowhere is Bezos’ philosophy of business, technology, and leadership better articulated than in his annual shareholder letters, which he has written every year since the company’s IPO in 1997.
Since 1997, Amazon’s stock price has risen from $5 per share to around $2,400 per share.
To read Bezos’ shareholder letters is to get a crash course in running a high-growth internet business from someone who mastered it before any of the playbooks were written.

Below, we analyze the letters and unpack the most important wisdom in each. We also include an appendix linking to each letter at the bottom of the post.

Together, these letters form a library of Jeff Bezos’ most distilled thinking on running a successful, high-growth company.
2019: In times of crisis, be aggressive and agile
“Reflect on this from Theodor Seuss Geisel: ‘When something bad happens you have three choices. You can either let it define you, let it destroy you, or you can let it strengthen you.’ I am very optimistic about which of these civilization is going to choose.”

Takeaway
Bezos’ 2019 letter has a different tenor than letters of years past. Most of it is focused on the threat posed by Covid-19, both to Amazon and to the world.
But there are also some echoes of previous Amazon missives, especially the 2000 letter, which was designed to ease the concerns of Amazon shareholders after the huge sell-off that followed the dot-com boom.

This one is similarly designed to demonstrate resilience in the middle of a crisis, though in a dramatically different context — both in terms of Amazon’s scale and the scale of the unfolding situation around the company.
The key message of the letter is simple: Bezos wants the world to know that Amazon is acting aggressively to simultaneously create value and keep people safe.

Challenge
The Covid-19 pandemic has generated waves of first- and second-order effects on the global economy, with millions laid off, furloughed, or ordered to stay home.

Meanwhile, the majority of Amazon’s nearly 800,000 employees cannot work from home. From warehouse stockers to delivery drivers, Amazon’s workforce is made up of mostly “essential employees” responsible for the company’s vital shipping and logistics infrastructure.
While Amazon has seen sharp increases in sales since the beginning of the pandemic, the company has also come under a corresponding amount of criticism for labor practices, poor handling of warehouse safety, and its climate record.

The challenge of this shareholder letter, for Bezos, was how to provide an update that would project strength and preparedness, despite the chaos.

Solution
In what is unconventional style for an Amazon shareholder letter, Bezos spends much of the beginning of the document running through a list of initiatives that the company has undertaken to support the efforts of healthcare workers around the world and protect employees.
Among these measures are the prioritization of delivery on essential goods, closure of non-essential Amazon retail stores, various social distancing measures, and internal work on building out greater Covid-19 testing capacity.

The clear message of the letter is that Amazon is responding to Covid-19 by acting aggressively to keep its workers healthy, hiring additional workers to meet demand, and helping governments, healthcare organizations, and others collect valuable data on how the virus works and spreads....
....MUCH, MUCH MORE 

Questions America Wants Answered: "What if the Secret to Preventing Several Common Diseases Is Hiding in Our Babies’ Poop?"

That's Mother Jones with the query du jour:

There’s one big problem, though: The bacteria has largely disappeared in American babies.
The labs of Evolve BioSystems are full of baby poop. Tucked into a shopping mall in Davis, California, alongside a Jazzercise and a marijuana dispensary, this biotech company has gathered infants’ feces from all over the country. “Millions of people every day are throwing away poopy diapers, and they don’t realize how much information is actually contained in each poop,” says Robin Flannery, Evolve’s director of clinical development and operations. “It tells us a lot about what’s going on inside the baby.”

Specifically, Evolve is interested in one potentially very powerful type of bacteria found in babies’ intestines: B. infantis. Its researchers, including several scientists at University of California, Davis, think the bacterium flourished in babies’ bellies for thousands of years. But today, the company’s research shows, in about 9 out of 10 American babies, B. infantis has disappeared. Without it, they say, kids are missing out on a host of health benefits....
“Let’s take a look at your baby’s
 poop and then we’ll decide how 
healthy they are on the inside.”
...MUCH MORE

Previously in munchkin doo:
MIT: "An Economist’s Guide to Potty Training"

Oil: "Picking the Bones Of Last Week’s Plunge into Negative Prices for WTI"

The FT's Energy Editor, David Sheppard, has some interesting observations on last week's mayhem:

THREAD

Reuters is headlining their take on the story:
China asks banks to halt new sales of products that may lead to unlimited losses
Sounds reasonable, at least for retail.

Market Commentary From the Ukulele Orchestra of Great Britain (while in self-isolation)

Harking back to the Happy Time, in this case June 20, 2019:
Capital Markets: Your Love Is Lifting Me Higher
I'm thinking that may be our theme song for the blow-off phase, see "Just a Reminder: Riding the Bubble Can Be Very Profitable".
It's probably a sad reflection on me that, despite Jackie Wilson's amazing talent I preferred our theme song for the 2008 - 2009 unpleasantness, The Ramones' I Wanna Be Sedated....
Here's a cover to dance to with equity futures green, green, green:


We'll be heading back down as we approach the election but for now we dance

note: we drag Mr. Wilson out to reflect market optimism not as a predictive tool.
Here's a February 2009 instance, fully a month before the ultimate bottom:

Markets: Your Love is Lifting Me Higher  
Sometimes markets just make up their collective minds to go in one direction or the other and it pays to set Graham and Dodd down and start dancing*. Here's Jackie Wilson:...

DJIA futs 24,404.00 +405.00(+1.69%)

"Oil Tumbles As Traders Frontrun USO Liquidation Of Entire June Exposure"

The June WTI futures are trading with a $10-handle, down $2.02 (15.81%) at $10.76.
These are not the futures that went negative, those were the rolled-off May's but what's going on is the reason we titled yesterday's post "Oil End Game: B.O.H.I.C.A., B.O.H.I.C.A.":
For folks too young to remember, B.O.H.I.C.A. was the acronym much in use during the worst of the market meltdown during October 2008—the market kept falling until March 2009 but October '08 was really bad for the longs.

The acronym stands for Bend Over Here It Comes Again.

CME WTI June futures are down $4.18 (24.75%) at $12.76.
 
Here's ZeroHedge with the headline story later on Monday morning:
While the culprits behind last week's historic oil plunge to a negative $40/barrel have yet to be conclusively identified, with some pointing fingers at US retail traders, while others blaming tremendous losses in Chinese structured products, one clear usual suspect is the USO, the largest oil ETF and the preferred crude oil investment derivative for thousands of retail investors everywhere. As Bloomberg's Laura Cooper writes, oil trading negative last week brought to light the risks inherent in ETF’s easy liquidity: "while the market appears to be viewing the USO episode as an outlier, proof that funds can become unhinged from their benchmark leaves risk assets exposed."

Of particular interest remains the composition of USO's WTI futures holdings, with some speculating that the nearly 100,000 barrels held for May delivery may have precipitated the liquidation wave observed last Monday. Well, as it turns out, the CFTC data was actually stale, because as Bloomberg writes this morning, the USO wasn’t holding May WTI futures last Monday as it began rolling its underlying assets to June futures contracts in early to mid April – by construction to avoid trading complications near the date of contract expiry. 

Even so, the tumble in both May WTI and USO quickly became a mutually reinforcing - and self-fulfilling - prophecy, and as the June price tumbled towards zero as May collapsed, the risk of liquidation from a negative NAV prompted the fund to take the unprecedented step to change its structure to lessen sensitivity to the moves and shift its mandate for future flexibility.
The chart below courtesy of Bloomberg summarizes how the USO - which historically only held the forward month leading to much pain during times of contango when the USO suffered major losses as it rolled its contract into a more expensive one - changed its composition in the past three weeks, through late Friday.

These color-coded changes in the USO's exposure to carious WTI contracts reflect the ETF's ongoing near-death experience as the fund's managers scrambled to prevent it from going negative - and liquidating - by dumping the fund's traditionally extensive exposure to the front, June contract month which - if last Monday's is any indication - would go negative next.
Then, in the latest update published this morning, the USO announced it was getting out of the June WTI contract altogether, rolling out of the June contract on April 27, 2020 through April 30, 2020, well ahead of the scheduled roll out which was supposed to take place on May 5-8th, while adding to other, longer-dated contracts. And as it sells June, this is what the USO is buying as per the latest 8K:
  • 30% of its portfolio in the July contract,
  • 15% of its portfolio in the August contract,
  • 15% of its portfolio in the September contract,
  • 15% of its portfolio in the October contract,
  • 15% of its portfolio in the December contract,
  • 10% of its portfolio in the June 2021 contract.
With USO manager, USCF, saying it will roll the current portfolio positions into the positions described above over a three-day period with approximately 33.3% of the investment changes taking place each day on each of April 27, 2020, April 28, 2020, and April 29, 2020, that explains why the June WTI contract is tumbling this morning as traders frontrun the USO selling....
...MUCH MORE

B.O.H.I.C.A. indeed, front (June) futures down another $2.02 (15.81%) at $10.76.

Also at ZH, late last night: 
Mon, 04/27/2020 - 23:00
Crude Carnage Continues Across Asia As Another Futures Contract Roll Looms

"Inflation figures are about to get fuzzier"

A solid piece from Claire Jones at FT Alphaville on some of the factors to keep in mind as the inflation reports come out over the weeks ahead. We'll dive deeper into the cross-currents next month but this is the survey you want to read to provide the framework to navigate a very interesting landscape.

Inflation figures are about to get fuzzier
In the wake of the most serious pandemic for a century, growth will plunge and unemployment will rise. But what will happen to inflation?

Economists are split. Some, such as Charles Goodhart, believe supply constraints and rampant government spending will push up prices. Others — such as Gavyn Davies — think otherwise, arguing that demand will be so weak that inflation will remain subdued.

We’re not going to make a judgment on what’s going to happen longer term. What we want to spell out here is two things about the readings over the next few months. The first is inflation will drop dramatically. The second is the official readings will be misleadingly low. Here’s why.
 
Oil alone is enough to drive inflation down
Statisticians calculate inflation using a “basket” of goods and services that represents the nation’s spending habits. Prices for energy and other goods affected by the oil price take up a big proportion of people’s spending wherever you look — they account for more than 10 per cent of the inflation basket in the eurozone, for instance.

Sub-zero crude will, in Davies’ view, help push inflation in the eurozone into negative territory almost immediately.
But people may not feel any wealthier.

Take the impact of the oil price shock on one of the most important crude-related goods: diesel. It’s already been profoundly hit. According to German website clever-tanken.de, the price of diesel at the pump has plunged from around €1.30 per litre in late January to €1.04. Few of us are driving much at the moment, though.
Which brings us to our second point.

The basket case
The pandemic has had a drastic impact on consumption patterns....
....MUCH MORE 

Monday, April 27, 2020

"‘The French Are Very Bad at Picking Asparagus.’ Virus Imperils European Farming"

From the Wall Street Journal, April 19:
Covid-19 raises questions about the viability of an economic system built on borderless migration and a single marketplace—especially in the bloc’s agricultural industry

Caroline Goursat had recently finished training as a flight attendant when France went into a strict coronavirus lockdown, sealing its borders and grounding planes. Days later, the 19-year-old was waking up at dawn to pick white asparagus at a farm in southern France.
“It’s quite taxing,” said Ms. Goursat, who spends half her day bending over to carefully pick the asparagus without snapping off their slender shoots.

Ms. Goursat is a soldier in France’s “great agricultural army,” thousands of locally recruited workers who are deploying to the country’s fields after the coronavirus pandemic disrupted the flow of seasonal laborers.
Covid-19 is tearing at the European Union’s binding principles, raising questions about the viability of an economic system built on borderless migration and a single marketplace that matches labor supply with demand. Nowhere is that more apparent than in the sudden reordering of its agricultural industry.

Normally, workers from poorer parts of the European Union, particularly Central and Eastern Europe, would take many of these jobs. Each spring they hopscotch the continent on buses, moving from farm to farm to plant and pick crops.

Now, with many borders closed because of the coronavirus pandemic, many in Western Europe are rethinking the dependence on distant pools of labor—and are trying to spur an interest in farm work among people closer to home.

The crisis is putting other practices of European agriculture under scrutiny, including the use of long-haul trucks to move livestock and produce, and farms’ growing specialization on niche, luxury products such as white asparagus.

When borders and businesses closed in mid-March, farmers were stuck with rotting crops that restaurants, hotels and other venues affected by the lockdowns were no longer buying.
The continent is beginning to relax national borders and reopen its economy, and farmers now need manpower to plant and harvest.
Travel is still restricted in many areas for nonessential workers. In response to the labor squeeze, the EU deemed seasonal workers essential, but countries have the final say on whether the laborers can cross their borders and under what conditions.

And many workers in Central and Eastern Europe, where the pandemic is less severe, are hesitant to travel to more heavily afflicted countries in the West, because of the health risk, particularly if it means crowding into buses.
Ewa Adam, a 45-year-old in Poland, had been planning to travel by bus, passing through Germany, to the south of France for a three-month farming stint that pays €8,000, or about $8,700.

“I can live comfortably in Poland for a year” with the money, Ms. Adam says.

But she’s putting it off, waiting for the spread of the virus to slow. She’s also spooked about the potential for sudden border closures, which would cut her off from elderly family members she looks after in Poland. “Both the German and French borders were a problem,” she says.

Farmers in the U.S. might face a similar shortage of labor as they sponsor visas for migrant workers from Mexico and other poorer countries. While the Trump administration has recently taken steps to make it easier for farms to hire migrant workers, on Monday night President Trump said all immigration would be temporarily halted. The executive order is expected to include exceptions for farmworkers, but details weren’t available.

Labor contractors who recruit, transport and house seasonal workers say they are checking workers’ temperatures before they cross the U.S.-Mexico border. They are also boosting sanitation at the motels, apartments and labor camps where workers live, setting aside rooms to isolate any ill workers.

The demand for seasonal farmworkers is less acute in the U.S., because farms are concentrated in the hands of fewer owners, who have embraced automation to a greater degree than Europeans. The U.S. grows a higher proportion of bulk crops, which are easier to plant and harvest with machinery.
In Europe, low-wage labor and hefty subsidies feed a patchwork of more than 10 million farms. Most are a fraction of the size of the average American farm. Instead of commodity grains and produce, many have focused on higher-value crops that require more hand labor. That caters to European palates accustomed to pearl-size Champagne grapes and mozzarella from buffalo’s milk.

In many cases, rich countries have a hard time filling jobs with local people, who can choose work with fewer physical demands and higher pay. But workers from Central and Eastern Europe are attracted by minimum wages in countries like France and Germany that are more than double what similar work pays at home.

People in some countries have raised concerns that foreign workers could help spread the virus. Antiforeigner sentiment in general has increased in some countries in recent years amid a rise of nationalist groups.

The Dutch government has rolled out an information campaign in several languages to reassure Eastern European workers that they are welcome in the Netherlands during the pandemic.

Germany has chartered planes to carry 80,000 laborers from Central and Eastern Europe, with the aim of reducing the exposure of bus travel through multiple countries. The workers are screened for any symptoms of the virus upon their arrival, including temperature checks, and bused to farms, where they are expected to live in dormitories, under quarantine conditions, until the end of May.
News of the German airlifts led to crowding at airports in Romania, where prosecutors are now investigating the recruitment firms for violating the country’s strict lockdown regulations. One Romanian worker died of coronavirus after arriving in Germany for the harvest.....
...MUCH MORE

A similar situation in Britain. From PoAndPo Agrifish, April 27:
Furloughed UK workers will be encouraged to work as fruit pickers
Furloughed workers will be encouraged to take on a second job as fruit pickers during the summer harvest due to a lack of migrant workers, a Cabinet minister says.
counter