Tag: finance

Authored by Charles Hugh Smith via OfTwoMinds blog,

This complete capture of all avenues of regulation and governance can only end one way, a kind of hyper-stagflation.

Zeus Y. and I go way back, and he has always had a knack for summarizing just how insane, disconnected from reality, manipulative and exploitive the status quo narrative has become. I’ve occasionally published his commentaries and essays here since 2008 Imaginary Worth, Empire of Debt: How Modern Finance Created Its Own Downfall (October 15, 2008), not coincidentally, in the midst of the previous debt-fueled speculative bubble popping.

Here is Zeus’s recent commentary on my opting out essay:

“Regarding your excellent recent article: Now That the American Dream Is Reserved for the Wealthy, The Smart Crowd Is Opting Out:

1) The sock puppet theater assumption among the technocrats that economies ebb and flow, go bull and bear, and have moments of advancement and retraction is now irretrievably disproven. We have gone past “too big to fail, too big to jail” and escalated to “so big as to fail upward always and to get away with everything no matter how venal”.

When the Fed decided to buy up non-investment grade junk bonds for the first time in its 107-year history, we now have no semblance of the (always iffy and now absurdly irrelevant) “self-regulating” economy. More and more extreme intervention on behalf of the super-rich (even as the real economy is tanking) will mirror the vaccine mandates on behalf of Big Pharma, even as their vaccines are tanking. “Draining trillions of dollars and stashing them in offshore accounts? You deserve a tax break!”

We have gone far past “moral hazard” and a “rigged game,” where the super-rich will make out like bandits, even if they cause a crash. We are in the next phase where it becomes profitable to cause hyperinflation and crashes (which you control by your monopoly powers), and then simply “siphon” (the apt term from this article) whatever is left of the savings and sweat of Jose and Maria American. Inflate and crash. Inflate and crash. Quick money. Guaranteed government bailouts. Manipulated markets (including cybercurrency by the way– can you say JPMCoin?).

There is only one way out. Refuse the sordid mess, which has gotten so absurd, and the myths so hollow (educating yourself into massive debt, and working hard, only to be “rewarded” with some downsized employee’s work being loaded on you) that there can be no other ultimate option but non-violent civil market disobedience.

2) What is the future of the developing juggernaut called predatory global capital, and their preferred cocaine called “zero interest rate, infinite money printing (ZIRIMP?)?

a. The super-rich will continue to borrow unlimited sums of money at near zero interest rates, so they can claim this new “debt” as a deduction and pay no income tax whatsoever (while vacuuming up every tangible good with this funny money)

b. The super-rich will use the same value-free money to buy stocks (of their own companies and others) sending those valuations and options soaring on nothing other than an artificial and infinite “demand”, while being assured of special treatment and no prosecutions.

c. The super-rich will circle wagons around one-another– Big Legacy Media, Big Social Media, Big Pharma, etc. This can be seen in Big Social Media’s promotion to disinformation by the Biden administration and censoring of real and critical scientific pushback because the billions of taxpayer-funded government contracts Big Everything knows they can get if they play along. Again, we will see acceleration toward rebellion, as people are finding ways to move away from these monopolies like YouTube and Facebook into Telegram, Rokfin, and Rumble.

d. Not only have the “little people” had $50 trillion of their productivity stolen, but many trillions more for having an effective savings interest rate of 0% for the past 12 years. What are we “saving up for” when our money in savings has literally no growing power at all? Who needs workers anyway when you can ship every productive asset and manufacturing to China, and have them holding both the strings and the bag of the global economy?

e. This complete capture of all avenues of regulation and governance can only end one way, I can see, a kind of hyper-stagflation, i.e. plummeting (real) growth and hyperinflation as both Fed and government “stimuluses” only supply trillions of dollars more to the richest while the little guys gets screwed over and over under the guise of helping them (where “paycheck protection programs” fund hedge funds on Wall Street and somehow manage to miss mom-and-pop businesses on an increasingly shuttered Main Street).

This growing gap will reach a critical point when we have supply line collapses and unpredictable events around credit. Perish forbid if we have an interruption of the internet. We are headed to that station, GBOAT, the Greatest Bubble Of All Time alright, and it is just a matter of how long it’s going to take for this runaway train to get there.”

by Zeus Yiamouyiannis, Ph.D.
Consultant, Learning transformation, leadership, and design
Citizen Zeus (http://citizenzeus.com) “Learn to Transform”
Transforming Economy: From Corrupted Capitalism to Connected Communities

Thank you, Zeus. Well said: inequality is well and truly baked in.

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

My recent books:

A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

Facebook Chief Technology Officer Mike Schroepfer, the man who oversees the the social giant’s work in artificial intelligence, virtual reality and the blockchain, will step down next year after 13 years with the company; he will be replaced by longtime Facebook executive, Andrew Bosworth, will take over as CTO, Bloomberg reported citing an internal message on Wednesday from Chief Executive Officer Mark Zuckerberg

Schroepfer’s move – which comes on a day Facebook shares tumbled after the company warned Apple’s privacy changes will have a bigger Q3 impact than it previously disclosed – marks the most significant departure from the company in years and follows the recent exits of several other top executives.

Schroepfer joined Facebook in 2008 and has been CTO since 2013, reporting directly to Zuckerberg. He sits atop many of Facebook’s most ambitious organizations — including groups that the social network is depending on for future growth – such as engineering, infrastructure, augmented reality and VR, and the blockchain and finance unit. His desk sits next to Zuckerberg’s and operating chief Sheryl Sandberg’s at Facebook headquarters.

Schroepfer’s most central role has been his oversight of Facebook’s AI organization, which he helped build. That group develops the technology Facebook uses to automatically find and remove content that violates its policies, like nudity, hate speech and graphic violence.

According to Bloomberg, Schroepfer, 46, will continue to advise the company in a new part-time “senior fellow” role, helping with recruiting technical talent and developing the company’s artificial intelligence initiatives.  “This new position will also create more space for me to dedicate time to my family and my personal philanthropic efforts while staying deeply connected to the company,” Schroepfer wrote in an internal post.

“Boz will continue leading Facebook Reality Labs and overseeing our work in augmented reality, virtual reality and more, and as part of this transition a few other groups will join Facebook Reality Labs over the next year as well,” Zuckerberg wrote to employees.

Before joining Facebook, Schroepfer worked for web browser maker Mozilla. A Stanford University graduate, he has become one of the most visible Facebook executives, often speaking at events and at Facebook’s own annual developer conference. He represented the social network at a hearing before the U.K. Parliament to discuss the company’s Cambridge Analytica data-sharing scandal in 2018.

He cuts a high profile internally as well, frequently appearing at companywide meetings, and is the executive sponsor for the internal “Women@ Facebook” employee group.

Schroepger’s departure is the latest in a series of veteran executives leaving the company in recent months. Fidji Simo, the head of the company’s flagship social networking app, left in July to become CEO at Instacart Inc., and was joined there shortly after by Carolyn Everson, who was a Facebook vice president running its global business relationships with advertisers. Both women were at Facebook for more than 10 years.

In a shocking revelation that raises serious challenges for the official narrative about COVID’s origins inside China, new claims from an exiled CCP whistleblower allege that Chinese agents released COVID at an international sporting event in Wuhan in October 2019.

In effect, it was the first super-spreader event, and it – didn’t happen at a biker rally in South Dakota.

CCP insider Wei Jingsheng claims that Chinese agents deliberately spread COVID during the World Military Games in October 2019. The whistleblower also claimed he tried to warn the Trump Administration about COVID five months before the pandemic began.

The international tournament for military athletes was held in Wuhan, where sick patients would start overwhelming hospitals and dropping dead in the streets not even three months later after Beijing notified the WHO on New Years about the outbreak. After the games, Wei claims, some of the 9,000 athletes who attended were sickened with a mysterious illness, including French, American and German athletes.

“I thought the Chinese government would take this opportunity to spread the virus during the Military Games, as many foreigners would show up there,” Wei said in a new Sky News documentary entitled ‘What Really Happened in Wuhan?’.

“[I knew] of the possibility of the Chinese government using some strange weapons, including biological weapons, because I knew they were doing experiments of that sort,” he said.

The World Military Games, like the Olympic Games for military athletes, were held in Wuhan from October 19-27, 2019.

Wei claims he went to senior figures in the Trump Administration all the way back in November 2019, but was ignored. We now know cases of COVID may have been spreading in the US at that time – and certainly before Christmas 2019. While he wouldn’t say which official he spoke to, he claims they were a “senior official” in Trump’s Administration.

Per News.au, David Asher, a former COVID investigator for the State Department, says in the documentary that the Games were “suspicious.”

“We do see some indications in our own data…that there was Covid circulating in the United States as early as early December, possibly earlier than that,” he said.

“I mean, some of the people who came back from these Games were sick with something.”

Having been exiled to the US years earlier, Wei said he was made aware of what was happening through CCP insiders who shared their fears about the situation and described the central government cover-up.

But the late fall, complaints about COVID had already begun popping up on social media in China, where they were immediately censored by the CCP, Wei adds. Finally, as the virus spread and the early efforts to cover it up and contain it failed, Beijing was left with no choice but to go to the WHO. Even at that point, Beijing continued to deny evidence of human-to-human spread – until it became obvious days later.

While there’s no hard evidence that China used COVID as a bioweapon, there’s plenty to suggest that the lab in Wuhan was working on viruses that looked an awful lot like COVID-19.

Just last night, we shared leaked grant documents showing a US agency – DARPA – rejecting a proposal from Peter Daszak – yes, that Peter Daszak – asking for money to fund research to infect bats with manipulated bat coronaviruses.

As we noted, the bid was submitted by Daszak, working on behalf of US-based EcoHealth Alliance (which has been wrapped up in the controversy of Dr. Fauci and his allies circumventing a US ban on “gain-of-function” research that may or may not have contributed to the global COVID pandemic), and Daszak was hoping to use genetic engineering to cobble “human-specific cleavage sites” onto bat COVID ‘which would make it easier for the virus to enter human cells’ – a method which would coincidentally answer a longstanding question among the scientific community as to how SARS-CoV-2 evolved to become so infectious to humans.

Were these researchers inadvertently helping the Chinese develop the most potent bioweapon of the modern age?

Stocks did what stocks do ahead of The Fed – drifted higher – and then markets all roared higher after The Fed statement (which was undoubtedly hawkish on both the taper and rate liftoff) but it was not until Powell said the taper would be over by mid-2022 that everything reversed (dollar higher; gold, bonds, and stocks lower). But by the close, gold was lower (well why not) and so were stocks while the dollar and bonds held post-FOMC gains…

On a volatility-basis, today was mini-taper-tantrummy, but stocks only cared that Evergrande was ‘saved’ (it wasn’t) and The Fed won’t stop the flow of free money until at least December…Small Caps liftathon all day as short-squeezers were in play

Stocks remain down on the week still however (although Small Caps managed to get green briefly)…

All sectors ended the day green with Energy leading but it was the Evergrande pump open that dominated…

Source: Bloomberg

Treasuries were mixed on the day with the short-end higher in yields (+2bps) and long-end lower (-1.5bps)…

Source: Bloomberg

Th 30Y Yield fell to its lowest since early August…

Source: Bloomberg

10Y Yields ended marginally lower but chopped around in the last few days range…

Source: Bloomberg

The yield curve flattened dramatically, with 5s30s back at its flattest since June 2020…

Source: Bloomberg

Rate-hike expectations rose modestly on the day – almost entirely pricing in a full rate-hike by the end of 2022 (9 of the 18 members now agree)…

Source: Bloomberg

Before we leave rates-land, it’s worth a look at the anxiety being priced into the short-dated T-Bill market – the market just ain’t buying what the Democrats are selling on any deal getting done…

Source: Bloomberg

The dollar roller-coastered notably today – lunging down on the FOMC statement then spiking higher on Powell’s taper comments…

Source: Bloomberg

Bitcoin bounced today after two days of bloodbathery. The FOMC prompted and quick pump’n’dump up to $44k…

Source: Bloomberg

Evergrande dominated commodity-land overnight and then The fed dominated this afternoon…

Source: Bloomberg

Gold mirrored the dollar with an initial spike followed by a tumble…

Finally, why does everyone care so much about the Fed’s taper? Simple, stupid! It’s all that matters… it’s the only thing!!!

Source: Bloomberg

How long before the market demands ‘more’?

The saga of Snopes co-founder David Mikkelson just keeps getting worse. 

Mikkelson, who made headlines in 2016 for cheating on his co-founder wife and marrying an escort – only to be suspended by Snopes last month for mass plagiarism – has been accused of raping his now-ex escort wife ‘every morning’ and playing mind games with her, according to Newspunch.

In a September 9 Facebook post, Elyssa Young – who split with Mikkelson at some point in 2020, wrote:

“The worst thing about covid-19 for me personally is how complete my comprehension is that if i were to contract it I would die utterly alone.“

(Fact check: False. Elyssa has just a 1% chance of dying, assuming she’s under 50 years-old.)

My parents are completely self absorbed narcissistic pieces of work only concerned with their emotional blackmailing and thier narcissistic supply (My own mother who was once the director of peirce county rape relief, and now is “lay leader of the world for the methodist church doesn’t want to disrupt her happiness with my “rich husband” who quite honestly, raped me every morning. (By engaging with me ONLY while i was asleep and clothed for tearful years.

And yes i regularly sobbed to him to stop and his therapist what was going on. I went to multiple therapists and told them what was happening but they decide upon speaking with david mikkelson that i was”on drugs” and that I was the problem. Not the raping… I went to multiple lawyers all of which were happy to take my savings and then tell me how wonderful david was and that i should not persue domestic violence charges.

He refuses all communication because of course he knows i will not keep quiet so villifying me is of course the logical answer. And villifying is his specialty… i would worry about posting this but really why? David always said facebook wasn’t a good medium to distribute info on.”

In 2016, the Daily Mail reported that Alyssa – a former Snopes.com administrator, was a part-time porn actress and sex worker.

David, meanwhile, was suspended by Snopes after BuzzFeed uncovered massive plagiarism – including instructing other Snopes writers to ‘cut-and-paste’ mainstream breaking news stories without attribution, and then alter them after the fact.

In total, Mikkelson ‘wrote and published 54 articles with plagiarized material,’ under his own name as well as a pseudonym, and the Snopes byline. In addition, an internal review by the ‘fact-checking’ company identified 140 articles with possible problems. Meanwhile, Snopes raised $1.7 million in July to fight a series of lawsuits from a former tech vendor.

Fact check: what an absolute mess.

Oil’s recent gains may accelerate and the price per barrel could surge to $90 if the approaching winter proves colder than normal, Jeff Currie, Goldman’s global commodities head of told Bloomberg TV. Such a rise – the result of gas for oil substitution due to exploding nat gas prices around the globe – would be $10 higher than the bank’s current forecast and would be accompanied by a prolonged period of high natural gas prices that already have had disastrous consequences for U.K. power providers.

According to Curie, who recapped a recent note from Goldman’s Damien Couravlin, the tightening gas supplies in Europe which have led to a shattering of all price records, will elevate demand for oil as an alternative at a time when global crude output is constrained, Currie said adding that post-hurricane disruptions in the Gulf of Mexico would adversely impact supply.

“Supply chains are so severely depleted that the system can not accommodate any type of disruption,” Currie said. Benchmark international oil futures rose 1.4% to $75.39 at 4:09 p.m. in London, extending the year-to-date advance to 46%.

Meanwhile, the gas rally shows no signs of abating, “particularly outside the U.S.” as tight supplies run headlong into surging demand, Currie said.

As noted above, Currie is referencing a recent note from Goldman’s Damien Courvalin, who in a note over the weekend said that global gas prices have surged as inventories remain at exceptionally low levels ahead of peak winter demand. This risk premium reflects prices testing for the marginal solutions of gas-to-oil power and industrial substitution, ahead of power blackouts. According to Goldman, the oil market can indeed help, with, for example, a one-standard colder deviation 2.5 Bcf/d boost to gas burn offset by a 0.6 mb/d increase in oil power burn (in Europe and Asia) and industrial use (in refining and petrochemical). Higher heating and residential oil usage at colder temperatures would bring the total uplift to oil demand to 0.9 mb/d through March.

And while manageable from an oil market perspective, such a one-standard deviation weather shock would nonetheless represent $5/bbl upside to the bank’s $80/bbl Brent forecast. Clearing that price threshold would in turn require TTF and JKM prices to rally above $23.5 and $25.5/mmBtu (vs. $22.5 and $25/mmBtu spot).

We estimate that the potential capacity for gas-to-oil substitution could be larger should gas rally further, of up to 1.35 mb/d in power and 0.6 mb/d in industry (in Asia and Europe), although such a large demand boost would prove too large for the oil market to absorb, leading to a spike in prices to in turn achieve oil demand destruction, the ultimate solution to widespread energy scarcity.

In fact, the challenges to gas-to-oil demand substitution may become apparent even at low volumes given already below average petroleum product inventories, infrastructure constraints at sourcing and diverting feedstocks as well as the only intermittent gas relief provided by peaking liquids plant with only days of storage. This suggests that risks to our estimated oil and gas price thresholds to absorb colder weather are skewed to the upside, as illustrated by the rally in JKM prices to $32/mmBtu this January.

On net, Goldman warns that “the tightness in global gas supplies creates a clear and potentially meaningful bullish catalyst for the oil market this winter, larger than the downside risk to global oil demand from another Delta-like COVID wave. The bullish impact of even moderate gas-to-oil substitution in power would be greater for the fuel oil and LPG markets relative to distillates given their smaller market size.”

Treasury Secretary Steven Mnuchin has found an investor for his new 10-figure private equity fund in an old friend of the Trump Administration: SoftBank.

The latest iteration of SoftBank’s infamous Vision Fund has decided to invest in Mnuchin’s new firm, which has a fundraising target of $2.5 billion, and will feature a private equity model.

Mnuchin’s new Liberty Strategic Capital, which was launched earlier this year, has also raised money from sovereign wealth funds in the Middle East, including Saudi Arabia’s Public Investment Fund. Ironically, the Saudis were a major backer of SoftBank’s first vision fund, but declined to invest in VFII after VFI single-handedly hiked valuations across the Silicon Valley startup world with massive investments in Uber, WeWork, and other less-well-known firms. WeWork’s implosion, defeat at Wag, and even more ridiculous ventures like Zume Pizza – the VF’s $4 billion burnt pizza fiasco – left SoftBank and its Middle Eastern backers with massive losses.

Although it mostly slipped below the radar, Mnuchin’s fund also received an investment from Abu Dhabi’s Mubadala, the giant sovereign wealth fund that saw its reputation tainted by the 1MDB scandal (which briefly led Mubadala to suspend its relationship with Mnuchin’s former employer, Goldman Sachs).

According to the FT, one anonymous source said VFII’s decision to invest with Mnuchin was influenced by Saudi Arabia’s PIF, the state fund administered by Crown Prince Mohammed bin Salman, with whom Mnuchin was said to have a friendly relationship.

Liberty Strategic said: “The firm is not permitted to comment on any ongoing fundraising, but it has a diverse investor base including US insurance companies, family offices, sovereign wealth funds, and other institutional investors.”

Mnuchin had close ties with the US’s Middle Eastern partners during his time as Treasury Secretary, though there were also times of tensionL he declined to attend MbS’s “Davos in the Desert” in the wake of the murder of journalist Jamal Khashoggi inside a Saudi consulate in Turkey.

Mnuchin of course joins a long line of Treasury Secretaries (from both parties) who have transitioned to private equity after their time in office. The list includes Timothy Geithner, Hank Paulson, John Snow and Jack Lew

Mnuchin’s fund is supposed to focus on financial services and technology. No word yet on whether or not it owns any crypto.

By Greg Miller of FreightWaves,

The number of container ships at anchor or drifting in San Pedro Bay off the ports of Los Angeles and Long Beach has blown through all previous records.

The latest peak: There were an all-time-high 73 container ships in the queue in San Pedro Bay on Sunday, according to the Marine Exchange of Southern California (the tally inched back to 69 on Tuesday). Of the ships offshore Sunday, 36 were forced to drift because anchorages were full.

Theoretically, the numbers — already surreally high — could go even higher than this. While designated anchorages are limited, the space for ships to safely drift offshore is not.

“There’s lots of ocean for drifting — there’s no limit,” Capt. Kip Loutit, executive director of the Marine Exchange of Southern California, told American Shipper.

“Our usual VTS [Vessel Traffic Service] area is a 25-mile radius from Point Fermin by the entrance to Los Angeles, which gives a 50-mile diameter to drift ships. We could easily expand to a 40-mile radius, because we track them within that radius for air-quality reasons. That would give us an 80-mile diameter to drift ships,” said Loutit.

Limits on land

The Southern California gateway is acting like the narrow tube on a funnel: Ocean volumes pour in from Asia and can only flow out at a certain velocity due to terminal limitations as well as limitations of warehouses, trucking and rail beyond the terminal. When the flow into the top of the funnel is too great, as it is now, it creates an overflow in the form of ships at anchor or adrift. This offshore ship queue is equivalent to a massive floating warehouse for containerized imports whose size is only limited by liner shipping capacity and U.S. consumer demand.

How constrained is the flow? Port of Los Angeles Executive Director Gene Seroka said during a press conference on Wednesday that container dwell time in the terminal “has reached its peak since the surge began” and is now six days, worsening from 5.3 days last month. On-dock rail dwell time is 11.7 days, not far below the peak of 13.4. Street dwell time (outside the terminal) “is 8.5 days, nearing the all-time high” of 8.8 days, said Seroka. It has worsened from 8.3 days a month ago.

Marine Exchange data reveals the constraints of the Los Angeles/Long Beach port complex. Since congestion began, the total number of container ships either at anchor or at berth has risen and fallen — it was an all-time-high 100 on Sunday, more than five times pre-COVID levels. But one stat has remained remarkably consistent: The number of container ships at Los Angeles/Long Beach berths has remained in a tight band of around 27-31 per day — that is what the land side can handle, the tube of the metaphorical funnel. Throughout 2021, all ship arrivals over that threshold have overflowed into the anchorages and drift areas.

More ships deployed in trans-Pacific

Meanwhile, at the wider open end at the top of the funnel — the drift area radius outside the port — a much higher number of ships is flooding into Southern California than ever before. Seroka noted that of the 84 ships his port handled in August, 11 were “extra loaders” — ships that are not part of a scheduled service. “And in addition to the extra loaders we’ve seen from incumbent carriers, there are no less than 10 newcomers [new services] to the trade,” he added. According to Alphaliner, deployed trans-Pacific capacity is up 30% year on year.

Asked by American Shipper whether ports or terminals could proactively stem inbound flows to provide more breathing room, Seroka replied: “Slowing down these ships is something we thought about in the early days of the surge, to try to give us a little bit more time in between to get ready for the next ships. But if you start looking at slowing down these ships, it’s going to back up the vessel supply chain even further and make schedules an even deeper concern for liner companies.” In other words, no.

Imports down year on year

The higher the number of ships waiting offshore, the bigger the queue and the longer it takes for a vessel to get a berth. On Tuesday, the average wait time to reach a berth in Los Angeles (30-day rolling average) rose to an all-time high of nine days.

That, in turn, delays imports. Back in August 2020, when import demand surged post-lockdowns, there were almost no ships at anchor off Southern California. This August, there was an average of 36 ships at anchor per day, according to Marine Exchange data. The port of Los Angeles handled 485,672 twenty-foot equivalent units of imports in August — down 5.9% year on year.

As Seroka pointed out, on the last day of August, 26 ships were at anchor waiting for berths in Los Angeles. These ships had 205,000 TEUs of cargo on board, which was pushed into this month (just as delayed cargo from this month will be pushed into October).

Total throughput for the port was 954,377 TEUs in August, down 0.8% year on year due to the decline in imports and a 23% plunge in loaded exports, offset by a 17% surge in outbound empty containers.

The port expects volumes to pull back from August’s level over the next two months, to 930,000 TEUs in September and 950,000 TEUs in October. It expects full-year throughput of 10.8 million TEUs.

More blank sailings ahead

What could stem the tide of cargo arriving in Southern California and cap the size of the floating warehouse?

When congestion peaked earlier this year, in the first quarter, it led to a large number of “blanked” (canceled) sailings in the second quarter. Ships stuck at anchor in San Pedro Bay could not get back to Asia in time, forcing carriers to cancel voyages. Those cancellations helped pare California anchorage totals in May and early June.

Carriers are yet again blanking sailings as a result of escalating congestion in Southern California. But this time, the number of ships at anchor and drifting has much more room to run before the network reaches its limit.

Not only are there more services and extra loaders, but carriers also have an incentive to blank sailings in other markets instead and redeploy ships into the trans-Pacific, where they can earn more money by topping off rates with premium charges.

According to Lars Jensen, CEO of consultancy Vespucci Maritime, “If we continue to see extremely strong demand specifically on the trans-Pacific, carriers may elect to blank a few Asia-Europe sailings and instead temporarily let a few of those vessels make a trip across the Pacific before coming back to Asia and re-phasing into the Asia-Europe network.”

According to Alphaliner, ships are already being pulled from the Asia-Middle East and Asia-Red Sea lanes to make more money elsewhere. Alphaliner reported that up to 50% of Asia-Middle East services are now being blanked because vessels have been redeployed to trades like the trans-Pacific “where spot freight rates are at historic highs.”

Is this the beginning of the end? Or the end of the beginning of the real big end? While the FOMC statement did not explicitly “talk taper”, the dots suggest a Fed that is more hawkish than before… but whatever you do, don’t interpret that as ‘tightening’.

Fed Chair Jay Powell has some dancing between the raindrops to do today: avoid being cornered on firing Rosengren and Kaplan; avoid suggesting the economy is doing ‘too well’, avoid saying the economy is not ‘doing well’; avoid being forced to express his views on when and how long any tapering of The Fed’s purchases will be…

In other words, Powell has to go full ‘Greenspan’ today, mumble a lot, use big words, and escape to fight another day.

“…instead of just stopping, I would continue on resolving the sentence in some obscure way which made it incomprehensible. But nobody was quite sure I wasn’t saying something profound when I wasn’t. And that became the so-called Fed-speak which I became an expert on over the years. It’s a self-protection mechanism … when you’re in an environment where people are shooting questions at you, and you’ve got to be very careful about the nuances of what you’re going to say and what you don’t say.”

Watch Powell walk the tightrope here (due to start at 1430ET):

The kneejerk reaction to the most hawkish Fed statement since 2018 is ‘interesting’.

The dollar is dumped…

While stocks, bonds, bitcoin, and gold are all rallying…

 

Are markets pricing in the next QE already?