Month: October 2021

We now live in a world, where bizarro headlines such as the ones below, have become a daily if not hourly occurrence:

• *TREASURY TO STUDY IMPACT OF CLIMATE ON HOUSEHOLDS, COMMUNITIES

• *TREASURY LAUNCHES EFFORT ON CLIMATE-RELATED FINANCIAL RISKS

• *BRAINARD: CLIMATE-SCENARIO ANALYSIS WILL HELP IDENTIFY RISKS

• *BRAINARD: CLIMATE CHANGE COULD HAVE PROFOUND ECONOMIC EFFECTS

• *MESTER: FED LOOKS AT CLIMATE CHANGE FROM VIEW OF RISKS TO BANKS

• *FED IS TAKING THE RIGHT COURSE ON MONITORING CLIMATE CHANGE

• *FED SHOULD CONSIDER CLIMATE-CHANGE RISK TO FINANCIAL SYSTEM

Now, in case someone is still confused, none of these institutions, and not a single of the erudite officials running them, give a rat’s ass about the climate, about climate change risks, or about the fate of future generations of Americans (and certainly not about the rising water level sweeping away their massive waterfront mansions): if they did, total US debt and underfunded liabilities wouldn’t be just shy of $160 trillion.

So what is going on, and why is it that virtually every topic these days has to do with climate change, “net zero”, green energy and ESG?

The reason – as one would correctly suspect – is money. Some $150 trillion of it.

Earlier today, Bank of America published one of its massive “Thematic Research” tomes, this time covering the “Transwarming” World, and serves as a massive primer to today’s Net Zero reality. The report (which is available to all ZH pro subs) is actually a must read, interesting, chock-full of data and charts such as these…

… and handy cheat sheets…

… none of which happen to mention China’s role in the “global climate change” crisis of course (after all, can’t offend Beijing and lose the biggest revenue stream now can we) and comes at a very precarious time for the green cause, just when soaring energy prices around the globe as a result of the escalating global energy crisis, threatens to crush any grass roots support to fight “global warming.” As report author Haim Israel writes:

This is the decade of climate action and COP26 will be the tipping point of the race to reach net zero emissions – the balance of reducing and removing carbon emissions from the atmosphere. To achieve it, a transition to clean technologies in all sectors at an unprecedented pace would be required, with the steering of governments and willingness of society. This is the last decade to act. Absolute water scarcity is likely for 1.8bn people, 100mn face poverty, and 800mn are at risk from rising sea levels by 2025. Climate migration could reach 143mn from emerging markets, driven by extreme weather.

None of that is new, of course – and while it is handy to have a centralized compendium of the data, a 5 minute google search can provide all the answers that are “accepted” dogma by the green lobby.

But while we don’t care about the charts, that cheat sheets, or the propaganda, what we were interested in was the bottom line – how much would this green utopia cost, because if the “net zero”, “ESG”, “green” narrative is pushed so hard 24/7, you know it will cost a lot.

Turns out it does. A lot, lot.

Responding rhetorically to the key question, “how much will it cost?”, BofA cuts to the case and writes $150 trillion over 30 years – some $5 trillion in annual investments – amounting to twice current global GDP! 

At this point the report gets good because since it has to be taken seriously, it has to also be at least superficially objective. And here, the details behind the numbers, do we finally learn why the net zero lobby is so intent on pushing this green utopia – simple answer: because it provides an endless stream of taxpayer and debt-funded “investments” which in turn need a just as constant degree of debt monetization by central banks.

Consider this: the covid pandemic has so far led to roughly $30 trillion in fiscal and monetary stimulus across the developed world. And yet, not even two years later, the effect of this $30 trillion is wearing off, yet despite the Biden’s admin to keep the Covid Crisis at bay, threatening to lock down society at a moment’s notice with the help of the complicit press, the population has made it clear that it will no longer comply with what is clear tyranny of the minority.

And so, the establishment needs a new perpetual source (and use) of funding, a crisis of sorts, but one wrapped in a virtuous, noble facade. This is where the crusade against climate change comes in.

Much digital ink has been spilled on the philosophy and debate behind the green movement, and we won’t bore you with the details, but we will instead focus on the very clear, and very tangible financial consequences of a world where the establishment agrees, whether with democratic support or not, to allocate $5 trillion in new capital toward some nebulous cause of “fighting global warming.” Here are the highlights from Bank of America:

• Will it be inflationary? Yes, expect 1-3% pa shock. This is for the next 30 years… over and on top of any already present inflation!
• What are the bottlenecks? Geopolitics, climate wars and EM.
• Do we have the resources? Nickel and Lithium are just two that could be in deficit as soon as 2024.
• Is green technology really green? Not really (see below).

Drilling down on the absolutely staggering costs, at an estimated $150 trillion over 30 years, boosting funding sources to $5tn a year is equivalent to the entire US tax base, or 3x the COVID-19 stimulus this decade. Here are the details:

The energy transition to a net zero greenhouse gas (GHG) economy by 2050 will be a very expensive exercise, estimated by the IEA at $150tn of total investment, over a period of 30 year. At $5tn p.a, the IEA see it costing as much as the entire US tax base every year for 30 years.

Not high enough for you? Hang on then because…

BNEF has a higher estimate that the total investment needed for energy supply and infrastructure could be as high as $173tn through 2050, or up to $5.8tn annually, which is nearly three times the amount invested on an annual basis today.

Next follows the obligatory pitch from BofA which is reminiscent of a stalinist kolhoz pep talk from the 1950s, to wit:

… But it can be done, with technology, economy, markets and ESG joining forces. Exponential cost reductions in wind, solar and batteries technologies have made renewables the cheapest form of energy in areas producing >90% of global electricity. Market appetite is chipping in too. Labelled bonds and loans jumped to > $3tn this year, with $3 in every $10 of flows into global equities going into ESG, which will support climate-friendly investments, as well as funding new ones needed to further decarbonize our planet like green mining, green hydrogen or carbon capture.

We leave the best for last because at the end of the day, this was always about more debt, and more monetization, a process which by now even the shoeshine boy knows makes the rich richer and the poor poorer. Only this time the world’s wealthiest plan on robbing what little is left of the middle class under the guise of a noble crusade to defeat global warming… a crusade which will require over $500 billion in annual debt monetization by central banks each and every year, leading to hyperinflation in either risk assets or the broader economy, or both.

So if it sounds like “the crusade against climate change” is one giant con game meant to enrich a handful of kleptocrats here and now, while the nebulous benefits – and the all too certain debt and hyperinflation – of this revolutionary overhaul of the global economy are inherited by future generations, it’s because that’s precisely what it is.

Here is BofA’s startling admission of the above, as excerpted from the report’s Q&A on the Climate Change Conference (COP 26):

Q: What is the economic impact of net zero?  

A: The inflation impact of elevated net zero funding will not be insignificant but the impact looks manageable at 1% to 3% per annum depending on central bank monetization rates, particularly if government spending is targeted and contributes to accelerate the rate of global GDP growth. The IEA also has a productive outlook for their net zero scenario, where the change in the annual growth rate of GDP accelerates by somewhere between 0.3% and 0.5% on a sustained basis over the next 10 years as a result of a shift to a green economy.

So much more QE for the next 30 years, check. What about inflation? Oh, there will be plenty of that too. As BofA admits, “green bond purchases  could result in a 1% to 3% inflation p.a. shock”

To answer this question, we look at three separate cases. In our first case, the Fed, ECB and other central banks would subsidize all of the required infrastructure spending to decarbonize (translation: print the money). In a second scenario, we assume that they would absorb only half of the new bond issuance. And in a third case, we assume central banks take up only a fifth of all decarbonization spending onto their balance sheet. What is our key finding? If central banks only have to foot 20% of the bill or less, the impact of decarbonization looks fairly manageable with respect to inflation (Exhibit 108).

And just so readers know what to BofA looks “manageable” here it is: this is inflation on top of whatever inflation is already in the economy. Of course, if central banks have to “foot” 50%, 80%, or more, well… it gets much worse.

And this is where we get to the punchline: as BofA admits, it’s all about greenlighting the biggest QE episode in history!

We just see a peak of <1% additional inflation a year over a three decade horizon. Under more aggressive scenarios where central banks opt to absorb either half or the full decarbonization bills through quantitative easing, the risks of an inflation shock grow. Still, we think our third case is the most likely scenario, as it would be politically difficult to justify a much more expansive monetary impulse. True, while central bankers have expressed a desire to help green the economy, their corporate bond purchases have historically been restricted to crisis time policies through quantitative easing and remain well below purchases of sovereign debt. As such, any purchases of corporate green bonds would likely be limited both by the size of future purchase programs and their proportion relative to the overall corporate bond market, with slightly higher allocations under more progressive purchase policies that highlight environmental concerns

And there you have it: just as covid was one giant smokescreen to “allow” central banks and Treasuries to merge and lead us to Helicopter Money and MMT, creating some $30 trillion in liquidity in the process, the “Net Zero” myth is what will perpetuate this endless printing for the next 30 years, a period during which the only benefits will be bestowed upon those who benefit from QE and money printing. That would be the richest. As for everyone else, well you great grandchildren or their grandchildren may (or may not) live in a cleaner world. We really don’t know, but if we don’t start printing money now it will be too late.

If that sounds scarier than any religion in human history, it’s because it is.

The full 114 page report, which we recommend to anyone who wants to know what is coming, is available to pro subs in the usual place.

Authored by Katabella Roberts via The Epoch Times,

A Marine Officer who faces trial by court-martial on Oct. 14 for criticizing senior military officials over the U.S. withdrawal from Afghanistan is set to plead guilty to several charges, his lawyers said.

Lt. Col. Stuart Scheller has been charged with contempt toward officials, disrespect toward superior commissioned officers, willfully disobeying a superior commissioned officer, dereliction in the performance of duties, failure to obey an order or regulation, and conduct unbecoming an officer and a gentleman.

Scheller will allegedly plead guilty to some charges in the hopes of avoiding a prison sentence and secure instead either an honorable discharge or a general discharge under honorable conditions.

The possibility of such a plea deal was first reported by Coffee or Die Magazine.

“Our hope is for him to get a letter of reprimand, and no more,” Tim Parlatore, one of Scheller’s attorneys, told The Washington Post.

Scheller was placed in confinement at the Regional Brig for Marine Corps Installations East at Marine Corps Base Camp Lejeune, on Sept. 27.

Two days later, a number of Republican lawmakers wrote a letter to Marine Corps Commandant Gen. David Berger, requesting an expedited review and removal of Scheller from pretrial confinement.

“Given his excellent record and more than 15 years of dedicated service, we do not believe and have seen no evidence that LTC Sheller poses a grave risk of criminal misconduct,” lawmakers wrote in their letter.

The Marine was released from confinement on Oct. 5, as part of a mutual agreement between Lt. Col. Scheller, his Defense counsel, and the Commanding General, Training Command, Captain Sam Stephenson, Training and Education Command, spokesperson confirmed.

Scheller gained viral fame back in August when he posted a video on social media alleging that top military leaders were not taking responsibility for how the military withdrawal from Afghanistan was handled, including the ISIS terrorist attack that left 13 service members dead in Kabul.

Lt. Col. Stuart Scheller—the U.S. Marine jailed for criticizing senior military officials—has been released from detention but could still face charges, The Epoch Times understands. (screenshot)

“The reason people are so upset on social media right now is not because the Marine on the battlefield let someone down,” Scheller said in the video.

“People are upset because their senior leaders let them down. And none of them are raising their hands and accepting accountability or saying, ‘We messed up.’”

A U.S. Marine passes out water during the evacuation at Hamid Karzai International Airport in Kabul, Afghanistan, on Aug. 21, 2021. (U.S. Marine Corps/Isaiah Campbell/Getty Images)

He then continued to release further videos on LinkedIn and Facebook as well as written statements criticizing military officials, and was reportedly told by his superiors to stop posting on social media entirely.

However, he appeared to defy that directive in a further post, in which he announced he had been relieved from his position as the battalion commander for the Advanced Infantry Training Battalion at School of Infantry East at Camp Lejeune, North Carolina, based on a “lack of trust and confidence.”

At the time, Scheller’s mother, Cathy Scheller, said she believed the military was treating her son unfairly, and confirmed he has been taken to a lockup pending a hearing.

“He is an American war hero. He has fought for his men and women that follow him. He’s fought on the battlefield for them. I believe he has risked his life for his fellow service people and Americans. He is now risking his livelihood for them. He saw a misjustice happening at the top and he felt that they should be held accountable for it,” Cathy Scheller said on NTD’s “The Nation Speaks.”

Parlatore told The Post that details about the plea deal are “still up in the air” but that he is willing to take accountability for his actions, in light of the fact that he is demanding military officials also take accountability for their own actions regarding the withdrawal from Afghanistan.

The lawyer also noted that Scheller went through an “emotional roller coaster” after posting his first video, noting that this is something many other veterans experience in a more private manner.

“There is no question that there is some severe emotional distress throughout, and he definitely went to some very dark places,” Parlatore said.

“This is unfortunately not uncommon for a lot of the veteran community.”

On Oct. 9, Task and Purpose published a story based on leaked documents that purported to show Scheller’s support for the Jan. 6 U.S. Capitol breach.

Scheller’s defense team has criticized military officials for leaking the case documents ahead of his trial, saying that the leak is designed to harm Scheller’s reputation and distract people from his calls for accountability for senior leadership’s disastrous Afghanistan withdrawal.

Parlatore told The Epoch Times that the alleged conversation was taken out of context and that Scheller was only commenting on how the Jan. 6 situation could have been worse.

Scheller’s hearing is set to take place at the Marine Corps Base Camp Lejeune in North Carolina.

Ten days have passed since Merck dropped its bombshell announcement about Molnupiravir, its “revolutionary” anti-viral that purports to lessen severe COVID and death by half in vulnerable unvaccinated patients.

But as scientists warn about potential unexamined safety issues with molnupirvavir, analysts at Goldman Sachs are reminding clients that Merck is hardly alone in the race to produce an effective antiviral that could function like the Tamiflu of COVID.

Looking ahead to Q42021 and on to Q12022, Goldman is looking forward to drug readouts from Roche, Pfizer, Shionogi and others developing oral antivirals. Goldman’s discussions with clients about the potential influence of antiviralls “…indicate that key questions about oral antivirals largely center on: 1) clinical differentiation among the various programs; 2) data and approval timelines, supply, and pricing; and 3) the potential for pediatric and prophylactic use. Within, we size up the market potential and TAM with our market model and frame key upcoming readouts for the late stage programs. We also provide a list of upcoming catalysts in the category.”

For investors seeking “exposure to the antiviral theme”, Goldman recommends 1) Roche, as preclinical data for its AT-5227 suggest “differentiation” vs. molnupiravir, 2) Shionogi, whose S-217622 represents an alternative to RNA polymerase therapies, and 3) Divi’s Labs, which will ride molnupiravir’s coattails.

As for the losers, Goldman sees Eli Lilly and Regeneron, who produced antibody treatments that never really caught on.

Using the 10MM molnupiravir courses expected to be on the market for $700/course (40x what it costs to produce), Goldman estimates that the “commercial opportunity” for COVID antivirals is between “$15 billion and $20 billion.” That figure represents near-term sales; over time, Goldman estimates the market for COVID antivirals to be around $5 billion/$6 billion. Although the analysts look for prices to decline as more competitors are approved and enter the market.

Although Goldman’s team focuses on the “commercial” aspects of antivirals, its analysts note that their success could lead to significant “cultural” changes. If people were confident that COVID could easily be treated without a trip to the hospital, they would be less incentivized to wear masks and observe social distancing and other new features of the COVID era.

Goldman’s analysts put together a table showing their expectations for the timing of each drug’s approval.

Goldman’s assessment about the TAM for COVID antivirals is based on the following assumptions:

1. COVID-19 becomes endemic in perpetuity, thereby requiring the maintenance of a vaccinated population as well as the use of effective therapies to treat those who are unvaccinated, immunocompromised, and breakthrough cases.
2. That following a relative peak of infections in the acute phase of the pandemic (starting late 2019 and still continuing) that the rate of infections will settle at a relatively consistent endemic level.
3. A relatively consistent vaccination rate in perpetuity that assumes maintained protection, boosters, and/or updated vaccines that experience the same relative uptake.
4. A lower rate of high-risk patients in the EU and ROW vs. the US. Generally, average BMI and hypertension rates are lower in the EU and Asia.
5. An average of 2 potential post-exposure prophylactic patients per infection, and that all major oral antiviral candidates will be approved in this indication.
6. That the post-exposure prophylactic population will be given an extended course of treatment compared to the primary treatment population as observed on both the Tamiflu and Relenza labels (e.g., 10 days vs. 5 days).
7. That the oral antivirals will significantly erode the antibody therapeutic market in the near term, particularly in the post-exposure prophylaxis setting due to their relative convenience and cost savings.
8. An initial price of ~$700/course in the US based on the previously announced government tender offer for 1.2mn courses of molnupiravir, and that prices will be relatively lower in the EU ($500) and ROW ($150).

As far as sales, Goldman outlines its bull, bear and base cases in a chart.

As far as what we know about molnupiravir so far is from a Phase 2/3 analysis with unvaccinated high risk patients.

Looking at opportunities for distribution abroad, Goldman notes that Divi’s Labs should benefit from molnupiravir due to its ability to manufacture generic anti-retroviral API and finished doses. Citing data from – of all places – the Clinton health access initiative – Goldman says the overall market size in Low and Middle Income Countries is roughly $1.7 billion.

Bottom line: in the coming weeks, the outlook for COVID anti-virals will become increasingly important to the market.

* * *
Source: Goldman Sachs

Authored by Michael Snyder via The Economic Collapse blog,

The truth is starting to come out, and a lot of people aren’t going to like it.  When the supply chain problems and the shortages began, government officials repeatedly assured us that they would just be temporary, and most of us believed them.  But now it has become clear that they aren’t going to be temporary at all.  In fact, during a recent interview with Bloomberg, U.S. Transportation Secretary Pete Buttigieg admitted that some of the supply chain problems that we are currently facing could last for “years and years”.  I don’t know about you, but to me “years and years” sounds like a really long time.

Of course that is not the only time that Buttigieg has made such a claim.  During another recent interview, he used the words “long term” to describe what we are facing…

Buttigieg has said in recent interviews that “it’s an incredibly complicated situation,” but the government is holding virtual “roundtables” with port operators, labor unions and private companies. Nevertheless, he told MSNBC last Thursday, the “challenges” will continue, not only “going into the next year or two, but going into the long term.”

Isn’t it remarkable how the outlook for our economic future has changed so dramatically in just a matter of a few months?

Earlier this year, we were told that we would soon be entering a new golden era of prosperity.

But now inflation and shortages are causing chaos everywhere we look.

Earlier today, I came across a Daily Mail article that boldly declared that “stores across America have empty shelves” right now…

Stores across America have empty shelves thanks to a series in supply chain problems that are prolonging inflation and could stretch into the new year, with some retailers like Costco and Walmart limiting the amount of toilet paper in some stores.

More than 60 cargo ships are waiting to dock in California, carrying hundreds of thousands of containers, and may be stuck for months in a traffic jam after arriving from China and Asia. Millions of dollars of American goods are still sitting in warehouses in China, awaiting shipment.

In addition to the unprecedented backlogs that we are witnessing at our major ports, it has also become far, far more expensive to send products across the Pacific Ocean.

Just check out these numbers…

The Washington Post reported the median cost of shipping a standard container from China to the U.S. West Coast hit a record $20,586. That’s nearly twice what it cost in July, which was twice what it cost in January, according to the Freightos index.

“Consumers are confronting higher prices and shortages of cars, children’s shoes and exercise gear, as the holiday shopping season looms,” the Post said.

That is crazy.

And now the emerging global energy crisis is going to make it even more expensive to move stuff around the planet.  On Monday, the price of gasoline in the United States hit a new seven-year high…

The national average price for gasoline hit a fresh seven-year high of $3.27 a gallon on Monday, up by 7 cents in the past week alone, according to AAA. Gas has nearly doubled since bottoming at $1.77 in April 2020.

High gas prices will only exacerbate elevated inflation, squeeze the budgets of American families and hurt President Joe Biden’s political fortunes.

In addition, we just learned that U.S. stockpiles of heating oil have hit a 20 year low…

The U.S. may be heading into winter with the lowest stockpiles of heating oil to meet surging demand in more than two decades.

Inventories of distillates — used as diesel for both transportation and heating oil — are enough to meet 31.2 days of demand, according to the Energy Information Administration. That’s the tightest it has been for this time of the year since 2000.

Unfortunately, global energy supplies are going to get even tighter and prices are going to go even higher in the months ahead.

Needless to say, the big corporations are going to feel forced to pass on rising costs to consumers.  In fact, the head of Kraft Heinz says that his company is already doing this…

Miguel Patricio said the international food giant, which makes tomato sauce and baked beans, was putting up prices in several countries.

Unlike in previous years, he said, inflation was “across the board”.

The cost of ingredients such as cereals and oils has pushed global food prices to a 10-year high, according to the UN Food and Agriculture Organisation.

If you are reading this article and you are thinking that this is perfectly setting the stage for many of the scenarios that I have described in my books, you would be 100 percent correct.

We are entering a period of inflation that is going to absolutely shock most people.

In fact, the UN says that the global price of food has already risen more than 32 percent over the past year…

The United Nation’s Food and Agriculture Organization (FAO)’s September food price index – a measure of monthly changes in global food prices – reached 130 points, a level not seen since 2011.

It represents a 32.8 percent increase from September 2020.

I realize that I have thrown a lot of information at you very quickly in this article.

Things are starting to move quite rapidly now, and we are being warned that conditions are going to continue to deteriorate in the months ahead.

And as conditions deteriorate, the American people are going to becoming increasingly restless.  Already, polls are showing that Americans are quite dissatisfied with the current state of affairs.  Here is one example…

Just 37% of Americans rate the economy as very or fairly good – the lowest percentage since March, and for the second straight month, more than half feel the economy is in bad shape. And most Americans are not convinced that the Biden administration’s domestic agenda would improve the economy.

As I discussed yesterday, our economy is starting to break down on a very basic level.

We have become so dependent on an efficient flow of goods and services, but these days there are breakdowns all over the system.

I would like to tell you that things will get better soon, but I can’t do that.

More supply chain problems are ahead, and some of them are going to be exceptionally painful.

*  *  *

It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon.

Oil prices were flat today after accelerating up to multi-year highs late last week and early this week as OPEC sounded a cautious note on the strength of oil demand (trimming its forecast for 2021 demand growth to 5.8mm b/d, down from its previous projection of 5.96mm b/d), while EIA raised its price forecasts for 2022.

“Despite positive assumptions on oil demand going into the final quarter of the year, supported by seasonal petrochemical and heating fuel demand as well as the potential of switching from natural gas to oil,” actual data on consumption earlier in the year was weaker than expected, OPEC’s Vienna-based secretariat said in the report.

It advised producers “to maintain a vigilant watch over market fundamentals.”

However, the next leg one way or the other will likely be triggered by the latest inventory data as analysts expected a 3rd weekly build in a row for crude, throwing some cold water on the recovery/demand hype.

API

• Crude +5.213mm (+900k exp)

• Cushing -2.275mm

• Gasoline -4.575mm (+600k exp)

• Distillates -2.707mm (-1.1mm exp)

A big build in crude stocks was offset from a market perspective by the big gasoline draw in the prior week…

Source: Bloomberg

WTI hovered around $80.50 ahead of the print and went basically nowhere after the mixed data…

Finally, in Russia, President Vladimir Putin said oil prices could reach $100 a barrel, as The White House has been speaking with U.S. oil and gas producers about helping to bring down rising fuel costs.