Month: December 2021

Lumber prices surged to June highs as Canada’s largest forestry company curbed shipments due to supply chain disruptions after severe flooding in British Columbia.

West Fraser Timber Co. Ltd. said weekly lumber shipments from Canada’s westernmost province fell approximately 25%-30% in the second half of November following floods. Pulp shipments to the port of Vancouver were down 20%. 

“While West Fraser is utilizing alternative transportation routes and methods to the extent they are available to continue servicing customers, the magnitude and duration of the impact from current weather events remains uncertain.

Therefore, West Fraser has reduced operating schedules at multiple western Canadian locations and will continue to make such adjustments as necessary in order to manage inventory levels, raw material supplies and our integrated fibre supply chain.

At the current time, it is not possible to estimate when full transportation services will resume or when the backlogs resulting from the interruptions will be cleared,” the company said in a statement. 

Uncertainty about lumber supply spooked lumber futures trading in Chicago on Tuesday, up nearly 4% to $824.50 per 1,000 board feet, the highest price since late June. Prices have jumped 30% in the last two weeks. 

Around Nov. 14, an atmospheric river dumped torrential rains across southern parts of British Columbia. A series of floods severely damaged infrastructure, including roads, bridges, and train tracks. Moving lumber from sawmills to ports generally occurs on trucks and or trains. With infrastructure damaged, as shown below, it appears West Fraser has been partially choked off in accessing ports. 

Greg Kuta, the founder of Westline Capital Strategies Inc., which specializes in lumber trading, told Bloomberg that “there’s no point in producing more than you can ship right now, especially knowing lumber is at the bottom of the pecking order with rail car allocation.”

There’s no timetable on when West Fraser’s supply chain will go back to normal. Fixing bridges and roads is not an overnight process. It could take weeks, if not months, to resolve the logistical nightmare that some blame on climate change, and others point to La Nina. As for now, a bullish thesis could be developing for lumber as supply woes mount. 

Authored by Charles Hugh Smith via DailyReckoning.com,

One of the most famous examples of smart people being sucked into a bubble and losing a packet as a result is Isaac Newton’s forays in and out of the 1720 South Sea Bubble that is estimated to have sucked in 80–90% of the entire pool of investors in England.

Some have claimed that Newton did not buy early in 1711, sell in April 1720 for a nice profit and then sink the majority of his substantial fortune in the bubble as it peaked in summer, then suffering heavy losses as the bubble popped in September, but evidence supports this chain of events.

Newton “bought the dip” on the way up and then added to his position as the mania rolled over, making his final fatal purchase as a “buy the dip” just before the “last chance to exit” spike — which is precisely the point the current bubble has finally reached, when everyone is all in and “buying the dip” to increase the profits that everyone agrees are essentially guaranteed because the Fed.

Not Even a Genius Can See a Bubble

Isaac Newton was a very smart man. Newton was not just smart and wealthy, but he was financially sophisticated and a very successful investor who favored financial instruments such as bonds over land.

He was the ultimate experienced, savvy investor who would not be bamboozled by specious math.

The problem is, alas, smart people are still humans, and humans run with the herd when the herd is minting money.

The Herd Is in for a Rude Awakening

Absurdly farfetched claims are gussied up with “mathiness” and narratives that are powerfully simplistic, with just enough common-sense credibility to enliven the excessive greed that lies dormant but ready in every human heart.

Despite Newton’s tremendous intelligence and experience, he fell victim to the bubble along with the vast herd of credulous greedy punters.

Newton died a wealthy man in 1727, so his bubble misadventure did not ruin him, though it did lop a huge chunk off his net worth.

Many in the herd, then and now, won’t be as fortunate. In fact, right now they’re being set up for a massive fall. And the financially intelligent could make fortunes as a result.

Let me explain…

An Opportunity to Scoop up Mega-Millions

An extraordinary opportunity to scoop up mega-millions in profits has arisen, and grabbing all this free money makes perfect financial sense. Now the question is: Will those who have the means to grab the dough have the guts to do so?

Here’s the opportunity:

Retail punters (those who attempt to make fast profits from an investment regardless of its underlying fundamentals) have gone wild for call options, churning $2.6 trillion in mostly short-term calls — bets on gains now, not later.

This expansion of retail options exposure is unprecedented not just in its volume but in its concentration in short-term bets (options that expire in a few days) and in mega-cap tech companies that are commanding rich premiums for options.

The options market is like every other market only more so.

The price of an option — a bet that a stock, ETF or index will go up or down before the option expires — is sensitive to the volatility of the underlying equity, the demand of other punters for options and the premium being demanded for time:

The further out the expiration date, the higher the cost of the option.

Anyone with 100 shares of the underlying equity can write/originate an option. Each option controls 100 shares, so a call option that is listed at $1 costs the buyer of the call $100.

This is very sweet leverage if the market goes your way. You get all the gains of the 100 shares for a cost considerably less than buying the 100 shares outright. No wonder retail punters are going crazy for this cheap leverage to maximize gains in “can’t lose” trades.

There’s a Catch

But options have one funny trait: They can expire worthless and the punter loses the entire bet.

Each option has an expiration date and a strike price — the price of the underlying equity that’s the pivot point for the bet.

Calls gain value if the equity’s price moves above the strike price and puts gain value if the equity’s price falls below the strike price.

The entity that sold the option gets to keep the money if it expires without any value. Here’s an example:

Let’s say you have 100 shares of Engulf & Devour and you sell me a call for $500 at a strike price of $100. If Engulf & Devour closes below $100 at expiration, you keep the $500 as pure profit and I lose the entire bet.

Now, it would be extraordinarily profitable to sell a huge number of calls — bets on a move higher — and then pull the rug out by crashing the market just as all those options expire. It would be criminally foolish not to crash the market and scoop up all that free money.

Here’s what makes the opportunity so extraordinary…

All Bulls, No Bears

The options universe is extremely lopsided. Bearish bets have dried up as the market has melted higher month after month; short bets are at record lows and the put-call ratio reflects the same capitulation of bears and bulls’ supreme confidence in near-term gains.

This means a crash will cost very little in terms of puts gaining value because there are so few puts out there to reap enormous gains as the vast majority of call options will expire worthless, leaving those who wrote the calls immensely wealthier.

In previous eras with lower retail option volume and a less lopsided options market, it wouldn’t be worth the trouble to flash-crash the market to scoop up retail calls. But a trillion here and a trillion there and pretty soon you’re talking real money.

Buyers of “can’t lose” calls may be unaware that the tail can wag the dog. Mega-cap tech companies appear invulnerable to declines, but they are now the 800-pound gorillas in all the indexes (Dow 30, S&P 500, Nasdaq) and a boatload of ETFs.

So triggering a mass sell-off in an index play such as SPY will trigger a sell-off in all the components of that index, including the invulnerable mega-cap tech names.

Mass Exodus

The opportunity here is amplified by the dominance of computer trading algorithms. Once a crash begins, the algos will trend-follow and liquidate exposure to lower risk. This sets up a self-reinforcing chain of selling as every drop triggers more sell programs.

Volumes are so low that it won’t take that big of a leveraged sell order to start the rug-pull.

Add up the extraordinary size of retail options bets, the lopsided bullish bias in calls and the short duration of the calls and you have an unprecedented opportunity to scoop mega-millions of dollars by doing a rug-pull of the market via selling leveraged index instruments.

Retail call buyers are basically begging the big players to take their money via a flash crash, and the players would be insanely incompetent not to take the money lying on the table.

The Perfect Con

It has all the moving parts of a perfect con:

Convince the retail punters that they can’t lose by buying calls, jack up the premium they’re paying to own that beautiful leverage for a few days or weeks, lead them on with little rallies, “proving” they can’t lose and encouraging them to buy more high-priced calls, crush volatility to show the futility of buying puts and persuade the punters they have no need for any hedge, as the market can only loft higher because the Fed, etc.

Then bang, pull the rug out and crash the market limit down for a few days.

It’s a gorgeous setup, literally picture-perfect. It makes perfect financial sense to crash the market and no sense to reward the retail options marks by pushing it higher.

Let’s see who gets to be the Road Runner and who ends up as Wile E. Coyote.

A man in New York City was arrested for allegedly robbing a woman at knifepoint in a Nov. 22 subway attack. Hours later he was released on  bail by Judge James Clynes, a Democrat.

After a good night’s sleep in his own bed, 63-year-old Augustin Garcia stole an iPhone from another woman on the subway the next morning, according to Fox News.

He now faces charges of petty larceny, grand larceny, robbery, menacing, criminal possession of a weapon and criminal trespassing.

He allegedly stole a woman’s purse on the afternoon of Nov. 22 and ran onto a train, then “displayed a knife and told her to stay back” when she pursued him, according to a criminal complaint. 

After he was arrested, prosecutors requested a $15,000 cash bail or a $45,000 bond, but Judge James Clynes let him go on supervised release just after midnight on Nov. 23, the Manhattan District Attorney’s Office told Fox News. 

Garcia was arrested again about seven hours later for allegedly stealing from the second victim and prosecutors upped the request to a $20,000 cash bail or a $60,000 bond, but Judge Valentina Morales ordered him to undergo a mental health evaluation. 

“My brother is a sick person,” said Jose Garcia, Augustin’s brother, in a comment to the NY Post, adding that Augustin used to be “sharp as a weasel” when he was working as a supervisor at at welding company. He was diagnosed with schizophrenia around 35 years ago.

“When he goes to the hospital and is committed there, sometimes for a month or two, he sometimes doesn’t get the treatment completely, and they release him. And once they release him, the problem comes back again,” Garcia continued.

Augustin was arrested the day before the first robbery for allegedly stealing a 12-pack of beer from a Bronx bodega – and reportedly bragged to the cops that he knew he’d be released.

“I know I’m getting out, he said, adding “I have no record.”

Authored by Dave DeCamp via AntiWar.com,

Citing unnamed US military officials, The New York Times reported Saturday that Israel was responsible for a recent cyberattack against civilian infrastructure in Iran that targeted gas stations.

The report said Israel was behind an October 26th hack of Iran’s fuel distribution system that caused gas pumps to stop working across the country. Gas pumps displayed a digital message telling customers to blame the problem on Supreme Leader Ayatollah Ali Khamenei.

Iran provides a certain amount of subsidized fuel to each citizen for a discounted price, and the report said it took the Oil Ministry two weeks to get the system back up and running. The idea was to get Iranians angry at the government and to create unrest, but it never materialized.

It’s unclear if the cyberattack was as disruptive as the Times report said, as Israel is known for using leaks to the media to exaggerate the power it has inside Iran. The report also cited unnamed Israeli officials who claimed Iranians hacked an Israeli dating site and a medical facility in response. The officials said the hackers posted the personal details of millions of Israelis to social media.

Israel is often suspected of carrying out cyberattacks against Iran on top of its frequent attacks against Iran’s civilian nuclear program. But the US usually keeps quiet on these operations.

The acknowledgment by US officials came just before the US and Iran resumed negotiations to revive the nuclear deal, known as the JCPOA, and could have been an attempt to increase the pressure ahead of the talks.

Israel & Iran up cyberattacks against each other. A recent cyberattack on Iran’s fuel distribution system paralyzed 4,300 gas stations & took 12 days restored. Days later a cyberattacks in Israel hit a medical facility & popular LGBTQ dating site. https://t.co/u6APXgOfRH

— Kylie Atwood (@kylieatwood) November 28, 2021

When the Biden administration started its first round of talks with Iran back in April, Israel carried out a covert attack against Iran’s Natanz nuclear facility. By not condemning the attack, the US gave it a tacit endorsement. Quietly backing Israel’s operations against Iran appears to be a negotiations tactic for the Biden administration.

New video has emerged, possibly the result of a military leak, of a British fighter jet crash that occurred less than two weeks ago off the HMS Queen Elizabeth aircraft carrier in the Mediterranean. 

A Nov.17 press release put out by the UK Defence Ministry had stated, “A British F35 pilot from HMS Queen Elizabeth ejected during routine flying operations in the Mediterranean this morning.” The pilot was described as in safe condition and is back on the ship after the major incident, but further details were scant. But new video has been featured by Business Insider after apparently leaked footage from aboard the carrier was posted to social media. A UK military analyst posted the new footage:

Well thank God he is still with us! That’s all I can say. pic.twitter.com/YtL6f0BFAm

— Seb H (@sebh1981) November 29, 2021

The Royal Navy video looks to be security footage from the crash. It was initially unknown whether the advanced fighter jet had crashed while in flight, or if it had rolled off the carrier, with the footage now confirming the latter scenario. 

The private analyst who posted the footage online said it was sourced to a Royal Navy WhatsApp group, with Business Insider describing the scene as follows: 

The video shows the plane losing speed as it climbs the runway, so much so that it immediately drops instead of taking off. The pilot’s parachute is visible as he ejects, and smoke billows around the ramp and sea.

The BBC’s report added that the MoD confirmed that the pilot survived and was rescued. The MoD also told the BBC that an investigation was still underway as crews are still trying to recover parts of the high-technology, sensitive parts of the plane.

The UK military has since said it was “aware” of the now public video but didn’t give comment. It simply stated that “It is too soon to comment on the potential causes of this incident.”

One former Royal Navy officer was cited in British media as explaining, “Given how close the aircraft ditched to the bow, and the speed of the ship on launch, the likelihood of it hitting the bow of the ship (under the waterline) would be quite high.” 

The short clip shows the jet taking off at a dangerously slow speed, and then appearing to power down just as it reached the end of the runway, which caused it to plunge into the sea below. The pilot ejected at the moment the F-35’s nose began going overboard. The military hasn’t confirmed if there was damage to the carrier due to the accident.

The crashed jet was part of a contingent of nearly a dozen F-35s aboard. The F-35 that went down was an estimated 135 million dollars, and had cutting-edge stealth technology and radar. Depending on what the investigation returns, the mishap could prove hugely embarrassing, especially if it wasn’t pilot error but something wrong with the plane’s advanced systems.

By Eric Kulisch of American Shipper,

Overflow lots set up by large retailers this month as temporary staging areas for imported containers have helped bring down congestion levels at the Port of Savannah, and Georgia officials expect further efficiency gains with this week’s opening of two more port-sponsored pop-up sites.

The Georgia Ports Authority, in partnership with the Norfolk Southern, will start accepting loaded containers on Monday at the freight railroad’s nearby Dillon Yard and later this week will begin routing shipping units to a general aviation airport in Statesboro, located about 60 miles west of Savannah, Chief Operating Officer Ed McCarthy told FreightWaves.

Moving containers to off-port properties is part of the recently announced South Atlantic Supply Chain Relief Program designed to reclaim space at the Garden City Terminal, where container crowding is making it difficult for vessels to unload and for stacking equipment and trucks to maneuver. In October, Savannah handled an all-time record of 504,350 twenty-foot equivalent units for a single month, an increase of 8.7% over October 2020. The volume surpassed the GPA’s previous record of 498,000 TEUs set in March.

Port officials began testing the Dillon Yard and Statesboro locations last week after renting top loaders for stacking and truck transfers, installing computer lines in order to track containers entering the gate with radio frequency identification, and laying extra pavement at the rail facility, McCarthy said. 

Four or five more pop-up container facilities are scheduled to open around Georgia by mid-December and the port authority is talking with freight railroad CSX about an auxiliary storage site in Rocky Mount, North Carolina, the COO said in an interview. 

The sites are mini-versions of inland ports where containers are brought to strategically located sites by intermodal rail, shortening the distance trucks have to travel to collect imports or drop off exports and reducing traffic in and around busy seaports. The concept essentially brings the seaport closer to manufacturing, agriculture and population centers. 

The GPA currently operates a large inland intermodal rail terminal in Murray County, Georgia, as well as an inland dry bulk facility. Construction on a second inland rail link for containerized cargo in northeast Georgia is scheduled to begin in April and be completed by mid- to late 2024, spokesman Robert Morris said. South Carolina also operates two inland ports, Virginia has one in the northwestern part of the state and the Port of Long Beach in California recently launched an effort to quickly flow cargo to Utah for distribution by converting truck traffic to rail.

Several users of the Port of Savannah this month have opened pop-up yards of their own where they can directly flow import containers to avoid waiting for longshoremen to sort through shipping units for their cargo and then retrieve them when space opens at one of their distribution centers. Each of the private spillover yards can accommodate 2,000 to 3,000 containers. 

“We’re starting to see some of our customer base do their own pop-ups. They’re contracting with some folks who have capabilities in the Savannah region and … taking their long-term destiny in their own hands,” McCarthy said in an interview.

The Rocky Mount intermodal facility being discussed with CSX will probably be used as an alternative storage location for empty containers. It could be running by early December, the COO said. Whether containers are diverted from other locations or whether empties are loaded up in Savannah and sent there remains to be determined. 

The Biden administration, which is focused on alleviating a nationwide supply chain crisis that is creating product shortages and contributing to inflation, helped fund the GPA’s emergency storage yards by reallocating $8 million in federal funds. Additional flexibility recently granted by the Department of Transportation allows port authorities to redirect cost savings from previous projects funded by port infrastructure grants toward mitigating truck, rail and terminal delays that are preventing the swift evacuation of containers from ports.

White House port envoy John Porcari, the liaison between industry and the White House Supply Chain Disruptions Task Force, said the government is looking to create more inland ports. 

“We’re encouraging other ports to do the same [thing as Savannah.] I think you’ll see a generation of projects in the short term around the country that will help maximize the existing on-dock capacity through interior pop-up sites,” Porcari said on Bloomberg’s “Odd Lots” podcast last week. 

“The fundamental issue is that the docks themselves are such valuable pieces of real estate that you don’t want the containers dwelling there a second longer than you have to. You want to get them to the interior or back on ships to their target markets overseas,” he said.

Better Fluidity

Improvements in rail handling, a dip in import volumes in line with seasonal patterns and the customer pop-up yards have combined to improve cargo flow and reduce the number of ships waiting for a berth at the Port of Savannah, McCarthy said. 

The port authority released an operations update last week showing the average dwell time for a container moving by rail after vessel unloading is two days, and that the average resting time within the terminal for import and export containers is about eight days, down from 11 and 10 days, respectively. The backlog of empty containers remains a problem, with boxes lingering an average of 17.8 days.

The improved performance is helping personnel work vessels faster and reduce Savannah’s cargo backlog. The number of ships at anchor in the Atlantic Ocean declined to 15 as of Monday morning from 22 two weeks ago, Morris said. There were 24 container vessels at anchor in mid-October. Total containers on the terminal also declined 13% and are down 16% from the peak of 85,000, according to the update.

McCarthy said there are about 225,000 TEUs currently on the water, a 10% to 12% reduction from early November that indicates “we are over the hump of the peak season.”

Last week, ocean carrier CMA CGM said its Liberty Bridge service from northern Europe to the U.S. East Coast would temporarily skip Savannah due to the congestion. According to the revised schedule, seven stops between late December and early February will be omitted. Shippers can send Savannah cargo to the Port of Charleston, South Carolina, until then, it said.

The GPA also noted that providers have increased the supply of chassis, the wheeled frames on which containers rest when pulled by truck, and are increasingly able to repair more chassis to help meet demand for cargo deliveries.

The Port of Savannah increased its near-dock rail capacity by 30% with the commissioning two weeks ago of a second set of nine tracks at the Mason Mega Rail Terminal. The port moved 550,000 containers by rail last year and now has more than 2 million TEUs of capacity with an eye toward future growth. The ability to discharge cargo from a vessel and ship it out by train in less than two days is best in class for the U.S., McCarthy noted.

A huge new container yard will come online in phases starting in December and culminate with about 820,000 TEUs of additional capacity by March. The project includes rubber-tired gantry cranes for sorting, stacking and transferring containers.

Construction of another berth is underway and scheduled to be complete in 2023.

Meanwhile, the federal dredging project to deepen the Savannah River to 47 feet (54 feet at high tide) is expected to be completed in the first quarter of 2022. It has already allowed vessels with deeper drafts to enter the port, McCarthy said. The deepening translates to about 200 extra loaded containers per foot and a total of 1,000 per vessel when the project is finished.

Former Trump National Security Adviser Michael Flynn reportedly believes that ‘QAnon’ is actually a ‘disinformation campaign created by the CIA,’ despite having heavily endorsed the movement.

In a private telephone conversation with pro-Trump attorney Lin Wood which has not been independently verified, Flynn – according to Wood, dismissed QAnon as ‘total nonsense,’ the Daily Mail reports.

Wood posted the conversation to his Telegram channel on Saturday. Exactly when the call took place is unclear, however it referenced a Hal Turner article published Nov. 2.

“I think it’s a disinformation campaign. I think it’s a disinformation campaign that the CIA created. That’s what I believe,” the man said to be Flynn said on the recording. “Now, I don’t know that for a fact, but that’s what I think it is.”

Later in the call, the same man can be heard stating how the conspiracy movement was ‘total nonsense’ calling it a ‘disinformation campaign created by the left’. 

‘I think it’s a disinformation campaign. There’s actually a very interesting article today out that was sent to me — I’ll send it to you — about how the QAnon movement has failed and all that. But I find it total nonsense, and I think it’s a disinformation campaign created by the left,’ he said. –Daily Mail

Listen:

vIdEo pRoDuCtIoN iS mY pAsSiOn pic.twitter.com/7ErBpus3kn

— Jan Bobrowicz (@janbobrowicz) November 28, 2021

While it’s possible the man heard in the recording is not Flynn, the retired Army General hasn’t denied it when reached for comment by other outlets.

Authored by ‘NAMCIOS’ via BitcoinMagazine.com,

Crypto Giving Tuesday returns this year to connect bitcoin donors with over 1,000 nonprofits from various sectors.

Philanthropy platform The Giving Block is launching the Crypto Giving Tuesday initiative on Tuesday, November 30, according to a statement sent to Bitcoin Magazine. The campaign will take place on the same day as the world’s most prominent day of global generosity, Giving Tuesday, to connect bitcoin donors with nonprofits across various sectors.

The Giving Block facilitates nonprofit organizations’ experience in receiving donations in bitcoin and other cryptocurrencies. Philanthropic investors can browse and contribute to the cause they identify more with by sending direct bitcoin donations rather than converting the desired amount to fiat currency and donating that instead. Donors can avoid capital gains taxes from the sale of cryptocurrency and enable a bigger donation to reach the nonprofit, a win-win for both parties.

“People can avoid giving proceeds to the IRS by donating that money directly…to charity,” the statement said.

“For example, if an investor chooses to donate based on assets they have recouped, takes $10,000 in Bitcoin and cashes out to donate, they will get the write-off, but pay capital gains tax on the $10K (as much as 20%). If the same investor donates the $10K in Bitcoin directly to a nonprofit, they still get the write-off, but there’s zero tax to be paid.”

There are currently over 700 nonprofit organizations on The Giving Block’s platform, and the company expects over 1,000 organizations to participate in the campaign this year, almost ten times more than in 2020.

Crypto Giving Tuesday can also serve as an inexpensive pilot program for nonprofits interested in accepting bitcoin donations. If they have a successful campaign, they can present their results to their leadership to push the Bitcoin agenda more easily. And for those worried about their precious bitcoin stack, they can enforce a virtuous cycle while purchasing back the same amount of BTC instantly after donating, which is also tax efficient.