Tag: finance

By Bill Wilson of RT&S

A shrinking workforce and legislation that is being pushed through Washington is weighing heavily on the minds of saw millers.

A few in the industry made up the Today’s Sawmill Challenges at the Railway Tie Association’s annual meeting in St. Louis last week.

With the housing market boom and COVID-19 pandemic, railroad wood crossties have taken a back seat to other products in the nation’s sawmills. Supply chain issues are constant, and with the older workers opting out the problem does not seem to have a solution in the near future.

“There are not enough people on the ground in the lumber industry,” Frank Wilson of Wilson Brothers Lumber said.

Paul Gaines from Madison County Wood Products echoed Wilson’s concern, and said wages in the sawmill industry are up 20%.

Production is starting to pick up and it is improving, and what saw millers need to do at the plant is use technology like automation to attract younger workers so the increase in production can be handled.

Perhaps the greatest success (but failure) recruitment story comes from the Missouri Forest Products Association, which attempted to create a school for loggers in Missouri. After being turned down by just about every technical school because enrollment numbers could not be guaranteed, the association created its own education platform. A 10-week program was put together, but after a year and a half it failed.

“We just could not recruit,” said Brian Brookshire. “I think we need to give it another shot where it’s more inclusive and it needs to be set in a technical school for recruitment. The entire industry needs to come together to make this happen.”

President Biden’s Build Back Better economic package also is looming over the sawmill industry. According to Wilson, the legislation could cripple coal-fired plants as the administration tries to encourage the use of more green energy like wind and solar.

“Solar and wind are unreliable and will cause brownouts in the future,” remarked Wilson.

Private industries also are buying up forests and using them to offset carbon footprints, making them off limits to loggers. Build Back Better has money that would assist land owners to participate in more of these programs. Darwin Murray from McClain Forest Products said there is no better way to store carbon than in a railroad tie. Dana Cole, who moderated the session, from the Hardwood Federation, added once a tree is mature it does not store as much carbon.

Congress has been unable to pass Build Back Better, but President Biden said the focus is now on that piece of legislation now that the $1.2 trillion infrastructure bill has been passed.

With 10Y yields sliding all day, and painfully squeezing near-record duration shorts, as the market aggressively prices in the Fed’s upcoming policy error, today’s 10Y auction provided a brief respite for duration bears as the sale of $39BN in ten year paper was plain and simple ugly.

One day after a solid 3Y auction, the high yield on today’s benchmark auction stopped at 1.444%, well below October’s 1.584%, however it also tailed the When Issued by 1.2bps, which was the first tail since April.

The bid to cover was also ugly, dropping from 2.58 in October to 2.35, the worst print of 2021 (the lowest since Dec 2020), and well below th six-auction average of 2.54.

The internals, like yesterday, were a bit better with Indirects taking 71.0%, virtually unchanged from yesterday’s 71.1%, and with Directs taking down 13.8%, the lowest since August, Dealers were left holding 15.2%, or the most since July.

Overall, a mediocre auction, and one which helped yields bounce some 3bps from session lows of 1.41% hit just before the auction.

As it turns out, even some of the experts at the NIH oppose Dr. Anthony Fauci’s push for mass forced vaccination that President Biden recently codified by expanding his vaccine mandate to affect some 80MM working Americans –  including health-care workers, who must choose to either accept the jab, or leave their jobs, despite a shortage of medical workers.

WSJ reported Tuesday that vaccine mandates are sparking debates and controversy within the NIH, which has scheduled a Dec. 1 live-streamed roundtable session over “the ethics of mandates”. The seminar is one of four ethics debates to be held this year. These debates will be accessible to all of the NIH’s 20K staff, along with patients and the public.

The Dec. 1 ethics debate was set up after a senior infectious-disease researcher pushed back against the growing drive for mandates. Dr. Matthew Memoli, who runs the clinical studies unit within the Dr. Fauci-controlled NIAID, both opposes vaccine mandates and has declined the vaccine himself, arguing that jabs should be reserved for the vulnerable, the elderly and obese Americans.

Memoli, who has served at the agency for 16 years and recently received an NIH director’s award, even pushed back against the mandates in an email to Dr. Fauci.

“I think the way we are using the vaccines is wrong,” he said to Dr. Fauci in an email on July 30.

Memoli argues that “blanket vaccination of people at low risk of severe illness could hamper the development of more-robust immunity gained across a population from infection,” per the WSJ.

It’s not like he’s just making this stuff up. At least one major study conducted by Israel showed that immunity produced by natural infection is more effective, and longer lasting, than vaccine-induced immunity.

At least one senior bioethicist at the NIH acknowledged that there’s “a lot of debate” about vaccines.

“There’s a lot of debate within the NIH about whether [a vaccine mandate] is appropriate,” said David Wendler, the senior NIH bioethicist who is in charge of planning the Dec. 1 session. “It’s an important, hot topic.”

Current data shows that nearly 90% of the NIH’s federal employees “were fully vaccinated at the end of October.”

Memoli’s detractors assert that pushing natural immunity over vaccination is a “terrible idea.”

“That’s a terrible idea if we have a vaccine that prevents serious disease,” said Timothy Schacker, vice dean for research and an infectious-disease physician at the University of Minnesota Medical School.

The president’s mandate has already faced enough resistance from conservative-leaning states as the US Court of Appeals for the Fifth Circuit Court issued a temporary stay blocking the mandate as it weighs a permanent injunction. The ruling from a three-judge panel on Saturday resulted from a stay sought by the states of Texas, Utah, Mississippi, and South Carolina, along with businesses that oppose the Biden plan. Both the states and businesses filed a petition of review of the agency action, which goes directly to a federal appeals court instead of a one-judge federal district court.

During the December roundtable, Memoli will make his case for a different approach to vaccinations to anybody who wants to listen.

Memoli

NIH bioethics head Christine Grady signed off on the Dec. 1 seminar, which they’re calling “Grand Rounds,” saying via email that she believes there is interest in the topic across the agency.

“Our hope is that the December Grand Rounds will be relevant to the debates that are going on around the country regarding vaccine mandates,” an agency spokeswoman said on her behalf.

It’s just another reminder: when it comes to “the science”, there isn’t a consensus – more like a handful of opposing views, all of which should be carefully considered and discussed.

Authored by Dave DeCamp via AntiWar.com,

The Biden administration is threatening to take action against Nicaragua over the election held on Sunday which resulted in Nicaraguan President Daniel Ortega securing a fourth term.

President Biden and Secretary of State Antony Blinken both released statements declaring the election a “sham” and threatening new sanctions. “What Nicaraguan President Daniel Ortega and his wife, Vice President Rosario Murillo, orchestrated today was a pantomime election that was neither free nor fair, and most certainly not democratic,” the White House statement said.

“We will continue to use diplomacy, coordinated actions with regional allies and partners, sanctions, and visa restrictions, as appropriate, to promote accountability for those complicit in supporting the Ortega-Murillo government’s undemocratic acts,” Blinken said on Monday.

On Friday, US officials told Reuters that the Biden administration was already preparing fresh sanctions on Nicaragua over the election. The US decided the election was a “sham” before it even happened, the accusation being that Ortega jailed most of his political opponents.

Sanctions against Nicaragua have strong bipartisan backing in Washington. Last week, the House passed a bill that would implement sanctions on Nicaragua in a vote of 387 to 35. The week before, the legislation passed easily through the Senate and is expected to be signed once it reaches President Biden’s desk.

Russia is standing behind Ortega and condemned Washington’s calls not to recognize the election results.

Nicaragua’s President Daniel Ortega secured a fourth term in office in an election that critics say the former Marxist rebel rigged by suppressing his political rivals https://t.co/khyoHxD0zL pic.twitter.com/YT9nmqb8Iq

— Reuters (@Reuters) November 9, 2021

“As far as I understand, just yesterday in the evening, when the voting was over, the White House declared its refusal to recognize the election and called on other countries to do the same. We consider it inadmissible and strongly condemn such a policy,” Russian Foreign Minister Sergey Lavrov said Monday, according to Tass.

Well that didn’t go as planned…

Despite Tom Brady (newly recruited pitchman for the company) proclaiming via Twitter that the newly re-public Hertz shares would go “to the mooooon…”…

To the moooooon…@Hertz #IPO #LETSGO pic.twitter.com/eNHDP4acrK

— Tom Brady (@TomBrady) November 9, 2021

…the car rental company’s stock opened 9.5% below where its share-offering just priced.

The company said late Monday that an upsized offering by selling stockholders of 44.52 million shares priced at $29 a share, compared with previous expectations that the 37.10 million-share offering would price between $25 and $29 a share.

The stock’s first trade on the Nasdaq was at $26.25 at 12:14 p.m. Eastern for 2.82 million shares

In the run-up to the IPO, Hertz ‘reportedly’ placed an order for 100,000 Teslas as part of an ambitious plan to to electrify its rental-car fleet (although everyone involved seemed very wary of discussing the details).

The deal with Tesla is about meeting customer demands and preparing for the future, according to Mark Fields, interim chief executive officer.

“This is not only a turnaround, this is a transformation of Hertz,” he said in an interview Tuesday with Bloomberg TV.

“In business you have to start looking around the corner.”

For the car-rental business, he said that includes electrification, shared mobility and connected cars. Hertz wants to be out front of those trends.

The company was forced to file for bankruptcy in early 2020, after the Covid-19 pandemic sapped demand for rentals. It emerged from Chapter 11 about five months ago under the ownership of a group that includes Knighthead Capital Management, Certares Management and Apollo Global Management Inc.

Yet another corporate executive has come out and thrown cold water on the idea that the ongoing chip shortage would be solved anytime soon.

The latest dose of reality was offered up by Infineon’s CEO, who said this week that the chip shortage would last “well into next year,” according to Bloomberg.

Infineon a German semiconductor manufacturer founded in 1999 that is one of the 10 largest semiconductor manufacturers in the world. Sales to the automotive industry make up about 40% of the company’s revenue. 

CEO Reinhard Ploss made the comments at an auto conference this week, stating that the company wouldn’t be able to work off its order backlog until 2022. 

Obviously, he noted that it would be a “positive” if chip and car production returned back to “balance” by Q3 of next year. 

He also made the comment that he is confident higher demand for car chips would continue and that any bubble after capacity additions would be “small”. 

Ploss’ comments follow that of Ford’s CFO John Lawler, who offered a similar underwhelming take on when the chip shortage would start to right itself. 

As we noted in a recent write-up, despite the chip shortage, Ford plans on launching its F-150 Lightning, the all-electric version of Ford’s F-150 pickup truck, in coming months. Executives said the company was in “final preparations” for the launch. 

“Semiconductor availability remains a challenge, but markedly improved from the second quarter,” the company said in a release last week.

Ford’s CEO commented that the company’s challenge is “to brave production constraints and increase availability to meet this incredible demand, both in North America and in Europe and also in China.”

CFO Lawler said of the semi shortage that “the constraints on the chips will remain fluid through 2022, and they could extend into 2023”.

GM CEO Mary Barra had echoed these sentiments weeks ago during GM’s earnings call, stating: “We think [the shortage] will get better toward the end of the year, but I have to tell you, it still continues to be somewhat volatile.”

Authored by Paul Joseph Watson via Summit News,

The Biden White House has refused to rule out extending its vaccine mandate to cover domestic air travel.

On the day that U.S. airports re-opened to fully vaccinated international travelers for the first time in 20 months, the possibility that Americans using them would also have to be fully jabbed remains open.

After she was asked about vaccine mandates for domestic travel, White House Deputy Press Secretary Karine Jean-Pierre responded, “We say this all the time – everything is on the table.”

“We just don’t have an announcement to preview right now on this,” she added.

“So I don’t have anything more to share on the domestic travel.”

The option is being kept on the table despite a vaccine mandate imposed on businesses with over 100 employees being temporarily suspended by the 5th Circuit Court of Appeals over the weekend.

The administration has also previously suggested that it could try to extend the mandate to businesses with under 100 employees, impacting millions more companies.

Any attempt to ban unvaccinated Americans from domestic travel will further exacerbate a $300billion hit on the economy caused by the suspension of international travel.

Around 20 per cent of Americans remain unvaccinated while 70 per cent have received both doses of the jab.

*  *  *

Brand new merch now available! Get it at https://www.pjwshop.com/

In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Get early access, exclusive content and behinds the scenes stuff by following me on Locals.

Until this morning’s little interruption, markets over the past week are evidencing a scramble for upside (created by single-name “Growth” stocks i.e. TSLA), as the persistent “wall of worry” of the past 1.5 yrs is again being hurdled and leading us to fresh Index all-time-highs.

As many freshly-minted stock trading gurus look on speechless as TSLA craters (finally) – which , rhymes a bit with last August’s broad Retail “gamma squeeze / Nasdaq Whale” phenomenon into the September “Delta unwind” crash thereafter (as “Gamma cuts both ways”) – Nomura’s Charlie McElligott has some thoughts on the current risk environment…

The story of 2021 from the Eq Vol perspective:

1) the incessant bid in crash / downside put-wing (massively exacerbated by lack of supply from Dealers who cant be short it, per VaR lookbacks / rolling “vol shocks” of the past multi-year period), but all against…

2) absolutely NO demand for “crash-UP” – is finally showing signs of an inflection in the latter observation, as the market over the past 1w has now come for the right-tail (SPX 2w Call Skew at 100%ile on 6m lookback—it’s been single-digits / teens almost entirety of year)

But now, it seems that “peak FOMO” is permeating speculative assets.

How rabid is the behavior, how large are the flows, how extreme are the metrics?   A few notables today:

• Crypto at ATHs across board, where through Nov 6th, the value of $1k invested 1 year ago in Shiba Inu = $740,259,740 last Friday; $1k a year ago in Axie Infinity = $1,082,920; $1k a year ago in Telcoin = $130,144; $1k a year ago in Polygon = $127,867; $1k a year ago in Solana = $119,828; $1k a year ago in Dogecoin = $95,882 (h/t @JonErlichman)

• Nomura-Wolfe Retail Red Alert equities basket (“meme” proxies) at ATH and now +152% YTD

• SPX 1m Realized Vol at 7.5 vols, 1.7%ile (1Y lookback)

• SPX / SPY options $Delta 100%ile; QQQ options $Delta 100%ile; IWM options $Delta 100%ile (all since 2013)

• Russell 2000 (IWM) options 1m Call Skew at 95%ile (since 2000); Energy Select ETF (XLE) 3m Call Skew at 95.7%ile (since 1998); Semiconductors ETF (SMH) 3m Call Skew at 99.4%ile (since 2011)

• US Equities Total Call Option Volume 20d average now back to highs again, testing ATH made in January ’21 (data since ’92)

• US Put / Call Ratio on total monthly volumes at lows since June 2000 (data since ’92)

• US Equities fund flows 1m total +$51.4B, 99.3%ile since 2000

• Global Equities fund flows 1m total +$90.5B, 98.7%ile since 2000

• US Equities Vol Control estimated re-allocation of +$47.3B over the past 2w window, 93.4%ile; 1m buying of +$59.3B, 91.6%ile

As we have discussed in recent notes when speaking to the “broken markets” behavior in mega-cap “Hyper-Growth” names via their options flow (e.g. TSLA, NVDA options volumes, Call prem vs Put), the overall spot market move higher has actually been led by single-name Call-Wing going bid, as the “weaponized Gamma” options phenomenon then further creates demand for upside crash tails from Dealers and MMs who are short those deep OTM Calls in a virtuous “delta grab” spiral.

However, as SpotGamma highlights this morning, there is an impressive gap between current SPX prices (blue line) and the Put Wall (green) & Vol Trigger (orange).

Qualitatively we read this as concerning – it shows a lack of hedges.

Although SKEW is bid, which suggests traders are starting to add a bit of tail risk protection:

However, to Nomura’s strategist, it still feels like between now and year-end, the “buyback / fund flow / performance chase / seasonality into lower volume” dynamic referenced-above “wins out” (caveat being “in the absence of an inflation shock print”—which is certainly a ‘non-zero’ probability)…

But without a doubt, McElligott warns that the closest analog with how the “now” is beginning to feel is a soft-parallel with that of Dec 17 à Jan 18 period.

Looking specifically in that Jan ’18 period, we went “Spot up, Vol up” off back of the Trump Tax Cut / Dereg push into an already hot economy… where very un-ironically and over the course of that month, we saw a number of “upside surprise” inflation / prices beats, which then suddenly meant that the formerly perceived “never gonna move” Fed now was at risk of being forced to kick-off tightening and balance sheet unwind (and it did ultimately…both policy- and balance-sheet normalization…aka the QT “rolling vol event” disaster in late 2018).

Hence, I always state with vigor that it was the big macro upside inflationary surprise print in Average Hourly Earnings on Friday Feb 2nd 2018 which actually kicked-off the spiral, and saw SPX trade -2.1%…which PRECIPITATED the following Monday Feb 5th 2018’s “Volmageddon” leveraged VIX ETN “extinction event” where SPX closed -4.1% and VIX printed up 20 points (+115%).

And after today’s big PPI print, tomorrow brings CPI and the potential for a big surprise (as the Nomura MD warns, nontheless, the statement here is that “Spot up, Vol up” and a (very) nascent increase again in the “vol of vol” are a spidey-sense “tell” for good-reason which will be monitored in coming days /weeks).

Via SchiffGold.com,

American consumers aren’t buying the transitory inflation narrative.

Even after five straight months of annual CPI increases over 5%, Jerome Powell continues to insist inflation is “transitory” and the result of a “supply chain problem.” But according to the New York Federal Reserve Survey of Consumer Expectations, people aren’t buying this story. They expect inflation to be running at 5.7% a year from now. And in three years, they still expect the inflation rate to be at 4.2%.

In its most recent FOMC statement, the Fed claimed: “the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer‑term inflation expectations remain well-anchored at 2%.”

As WolfStreet put it, inflation isn’t anchored at all. It’s totally unanchored and spiking to high heaven.

In March 2022, consumers expected inflation to be at 3.2%. It’s clear that expectations for higher and higher prices are rising. As WolfStreet explained, as actual prices have surged, consumers can see where this is going.

They can see that even the Fed is starting to back off its mantra that this red-hot inflation is just ‘temporary,’ and they’re not fooled by some Fed officials’ efforts to redefine ‘temporary’ to mean the opposite of temporary. It’s at the point when consumers think inflation will remain high that they change their behavior and contribute to even higher inflation.”

Inflation expectations play into the inflationary spiral. In theory, when consumers expect prices to rapidly rise, it impacts their behavior. They begin to push purchases forward to avoid higher prices later. They also become willing to accept higher prices rather than walking away. This altered behavior can theoretically increase inflationary pressure in the future.

Consumer inflation expectations a year from now for many important categories are even higher than 5.7%.

• Rent: +10.0% (new record)

• Food prices: +9.1% (new record)

• Gasoline prices: +9.4%

• Health care: +9.4%

• College education: +7.4%.

Meanwhile, the Fed refuses to take any responsibility for inflationary pressure. There is no acknowledgment that trillions in money printing might be contributing to rising prices.

In the 20 months since March 2020, the Fed has increased the assets on its balance sheet by $4.2 trillion. It’s nearly doubled its total assets to $8.6 trillion. Meanwhile, the US government unleashed over $5 trillion in deficit spending. That totals nearly $10 trillion in stimulus.

It was, by definition, trillions in inflation.

In one sense, the Fed and the mainstream pundits are right. Consumer demand is up and Americans are spending a lot of money. But they are right for the wrong reason, as Mises Institute managing editor Ryan McMaken pointed out.

If we look at the immense amount of new money created over the past eighteen months, we should absolutely expect people to have more money sloshing around. But this also means a lot more pressure on the logistical infrastructure as people buy up more consumer goods. The idea that supply chain problems are ‘driving inflation’ gets the causation backward. It’s money supply inflation that’s causing much of the supply chain’s problems. Not the other way around.”

Regardless, Americans aren’t buying the Fed’s transitory narrative. They can see the writing on the price tags. Inflation expectations are unanchored. This is just one more brick in the inflationary wall.

Famous short seller Michael Burry of The Big Short game briefly emerged from a his latest self-imposed twitter exile to offer his thoughts on why Elon Musk might now all of a sudden be in the mood to start selling stock. Shortly thereafter, on Tuesday, Tesla shares plunged 10% in just minutes, leading many to speculate as to whether or not Elon Musk had started selling his personal stock. 

Burry jabbed at Musk this week, suggesting that the Tesla CEO may need to sell his shares because he had 88 million of them pledged as loan collateral. 

“Regarding what @elonmusk NEEDS to sell because of the proposed unrealized gains tax, or to #solveworldhunger, or … well, there is the matter of the tax-free cash he took out in the form of personal loans backed by 88.3 million of his shares at June 30th,” Burry wrote in a now deleted Tweet that was captured by the Business Insider tabloid. 

Burry also suggested that Musk’s narratives about “solving world hunger” or “unrealized tax gains” are diversions from the real reason the Tesla CEO is selling stock. Instead, the iconic investor insinuated that Musk needs to service the loans he took out against his shares.

Musk had 41% of his shares pledged as collateral as of December 2020 and 48% as of June 2020, Insider reported.

As he usually does, Burry also drew comparisons between today’s market and the Dutch Tulip bubble. He has made his Twitter header a Brueghel painting called “Satire of the Tulip Mania,” which shows tulip “investors” as monkeys, speculating, taking on debt, and fighting – all over the “mania” in tulips that took place. 

Burry has been vocal about warning about our current stock market bubble.

“People say I didn’t warn last time. I did, but no one listened. So I warn this time. And still, no one listens. But I will have proof I warned,” he Tweeted about markets about a year ago. 

He also commented on Tesla golden child Cathie Wood, earlier in the year, Tweeting: “It is too early, she is too hot, and, today, short sellers are timid, but Wall Street will be ruthless in the end.”

Burry, recall, revealed a huge Tesla short earlier in 2021 but as of one month ago he was no longer betting against Tesla and said that his position was just a trade.

Burry has also been vocal warning against a bitcoin bubble. Of course, if he was also short the crypto space in addition to TSLA, his losses in 2021 could be Jess Livermore-sized….