Tag: news

86% Of Model 3s Produced to Meet Tesla’s 5,000/Week Goal Needed Rework

Internal documents revealed by Business insider, disclose that Tesla had to re-work over 4,300 of the much discussed 5,000 Model 3 vehicles it built in June, and later touted as a production target milestone. The milestone was closely watched and of keen interest to Wall Street to see whether Tesla can scale its business model.

The same report also gives those closely following the Tesla saga additional color what the term “factory gated” means. One would guess is that Musk can’t put most of these 5,000 vehicles – about 20% of which were built in Tesla’s GA4 assembly tent – on the road, when more than 86% of them need to be reworked. Internal documents revealed that these reworks came during the week of June 23 and that each one took about 37 minutes to complete.

As we noted previously when we discussed Tesla’s 5,000 Model 3 accomplishment, today’s report would confirm that the company sacrificed quality in order to boost quantity. As a result, instead of 5,000 new vehicles out on the streets, most were likely “factory gated”. In other words, they needed to be fixed.

This comes after the company claimed in its most recent shareholder letter that “The layout and processes of GA4 [the tent] are similar to those of the Model S and X assembly line, while quality and cost of production are roughly equal to those of GA3.”

Perhaps, in addition to explaining the “factory gated” term, this can also possibly explain why thousands of Model 3 vehicles were sitting out in fields across various parts of California – a question that we raised back in July when we wrote this report.

Tesla’s extended PR machine over at electrek tried to explain these stockpiled vehicles as follows:

There’s literally zero news here. We already knew that the number of Tesla vehicles in transit would increase significantly with the production rate. That will be reflected by much higher inventory at the end of the quarter.

It’s no surprise considering Tesla roughly doubled its overall production rate over a quarter.

When it was making 2,000 cars per week, Tesla was able to use parking lots around the factory as loading areas to ship out the cars.

It had to expand to other lots as the production rate increased and it recently spiked to 7,000 vehicles per week with the recent 5,000 Model 3’s in a week milestone.

Therefore, it’s normal that Tesla has new parking lots for vehicles in transit.

What is also troubling is that the company’s “first pass yield”, or the number of vehicles that made their way through the manufacturing process without needing rework, was anemic. 

The normal range for the auto industry is between 65% and 80%, according to experts cited in the BI article. Using the numbers provided, Tesla’s first pass yield was less than 14%. Obviously, the extra use of resources and cost of labor at the time of production were likely not only well above the industry average, but could have been pushed to extremes relative to the company’s previous figures and estimates.

Tesla, of course, went on record by noting that reworks can also include minor issues.

“Our goal is to produce a perfect car for every customer. In order to ensure the highest quality, we review every vehicle for even the smallest refinement before it leaves the factory. Dedicated inspection teams track every car throughout every shop in the assembly line and every vehicle is then subjected to an additional quality control process towards the end of line. And all of this happens before a vehicle leaves the factory and is delivered to a customer,” the spokesperson said.

The report continued, noting that most reworks were because of failed manual tasks and cosmetic issues.

In any case, these surprisingly inefficient numbers provide yet another glimpse into the “production hell” for a company that was supposed to have top-of-the-line autonomous manufacturing that was going to challenge best practices in the industry and possibly create a new standard.  That notion now seems laughable. 

However, most grandiose expectations of the “alien dreadnaught” performing with any type of efficiency had already been slammed back to reality over the last 18 months where numerous production issues were reported and a meaningful rework of Tesla’s production facility and procedure needed to be put into place.

If the company can only produce vehicles up to their quality standards at a rate of just 14%, maybe it’s time to think about reworking the production facility again – or putting up another tent.

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Trump Admin Proposes Replacement For Obama-Era Climate Policy

The Trump administration on Tuesday proposed replacing the Obama administration’s Clean Power Plan – the centerpiece of former President Obama’s climate policy aimed at combatting climate change, with the “Affordable Clean Energy” (ACE) Rule, reports Reuters. 

The Obama-era legislation was halted by the Supreme Court in February, 2016 after several energy-producing states sued, relegating the decision to the US Court of Appeals in DC where it currently sits in limbo. 

The Trump Environmental Protection Agency (EPA) proposal would grant states the ability to write their own regulatory policies governing power plant emissions, including the ability to request an opt-out of current federal regulations. 

Pursuant to President Trump’s Executive Order 13873, which directed Federal agencies to review burdensome regulations, the EPA undertook a review of the CPP. Many believed the CPP exceeded EPA’s authority under the Clean Air Act, which is why 27 states, 24 trade associations, 37 rural electric co-ops, and three labor unions challenged the rule. Additionally, the Supreme Court issued an unprecedented stay of the rule. –EPA

The EPA has opened the proposal up for a public comment period, while a final EPA rule is expected later this year. 

The move comes amid Trump’s “war on coal” – a bid to boost domestic fossil fuels production. Meanwhile, the President is scheduled to hold a rally Tuesday night in West Virginia, a top coal-producing state. 

Obama’s 2015 power plan sought to reduce power plant emissions by 32% below 2005 levels by 2030 but never took effect after the Supreme Court halted the measure in response to 2016 legal action brought by several energy-producing states which claimed the EPA had exceeded its legal reach.

“The ACE Rule would restore the rule of law and empower states to reduce greenhouse gas emissions and provide modern, reliable, and affordable energy for all Americans,” said EPA Acting Administrator Andrew Wheeler. “Today’s proposal provides the states and regulated community the certainty they need to continue environmental progress while fulfilling President Trump’s goal of energy dominance.”

“EPA has an important role when it comes to addressing the CO2 from our nation’s power plants,” said Assistant Administrator for the Office of Air and Radiation Bill Wehrum. “The ACE rule would fulfill this role in a manner consistent with the structure of the Clean Air Act while being equally respectful of its bounds.”

Per the EPA: 

The proposal will work to reduce GHG emissions through four main actions:

1. ACE defines the “best system of emission reduction” (BSER) for existing power plants as on-site, heat-rate efficiency improvements;

2. ACE provides states with a list of “candidate technologies” that can be used to establish standards of performance and be incorporated into their state plans;

3. ACE updates the New Source Review (NSR) permitting program to further encourage efficiency improvements at existing power plants; and

4. ACE aligns regulations under CAA section 111(d) to give states adequate time and flexibility to develop their state plans.

The proposed ACE Rule is informed by more than 270,000 public comments that EPA received as part of its December 2017 Advance Notice of Proposed Rulemaking (ANPRM).  

EPA’s regulatory impact analysis (RIA) for this proposal includes a variety of scenarios. These scenarios are illustrative because the statute gives states the flexibility needed to consider unit-specific factors – including a particular unit’s remaining useful life – when it comes to standards of performance. Key findings include the following:
 
• EPA projects that replacing the CPP with the proposal could provide $400 million in annual net benefits.
• The ACE Rule would reduce the compliance burden by up to $400 million per year when compared to CPP.
• All four scenarios find that the proposal will reduce CO2 emissions from their current level.
• EPA estimates that the ACE Rule could reduce 2030 CO2 emissions by up to 1.5% from projected levels without the CPP –  the equivalent of taking 5.3 million cars off the road. Further, these illustrative scenarios suggest that when states have fully implemented the proposal, U.S. power sector CO2 emissions could be 33% to 34% below 2005 levels, higher than the projected CO2 emissions reductions from the CPP. 

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UNC’s Century-Old Confederate Monument Takes a Tumble

A controversial Confederate monument was torn down last night by protesters at the University of North Carolina’s Chapel Hill campus.

The Silent Sam statue went up in 1913 to memorialize UNC students who fought and died for the south in the Civil War. In recent months, many activists called for its removal, arguing it was nothing more than a symbol of white supremacy.

Last night, on the eve of the first day of classes, roughly 250 protesters gathered in support of Maya Little, a UNC grad student who covered the statue with red ink and her own blood earlier this year. Little is facing criminal charges and potential expulsion.

Before the statue came down, protesters covered it with gray banners that read, “For a world without white supremacy,” the Charlotte News & Observer reports. Behind the banners, demonstrators attached ropes to the monument, which were used to bring the statue down.

The scene on campus was at times chaotic, as some protesters tossed smoke bombs. Police arrested one person for “concealing one’s face during a public rally and resisting arrest,” UNC spokesperson Kate Luck tells CNN.

UNC Chancellor Carol Folt criticized the protesters’ “unlawful and dangerous” actions, though she recognized the “divisive” nature of the statue. “The police are investigating the vandalism and assessing the full extent of the damage,” Folt said in a statement posted on the school’s website.

North Carolina Gov. Roy Cooper, a Democrat who has said Confederate monuments should be removed from public places, expressed similar sentiments. “The Governor understands that many people are frustrated by the pace of change and he shares their frustration, but violent destruction of public property has no place in our communities,” Cooper’s office said in a tweeted statement.

Silent Sam was first erected using donations from the United Daughters of the Confederacy. But as more people started calling for it to be taken down, the school was forced to spend at least $390,000 in security for the monument in the past year alone, according to the News & Observer.

School officials said that state law precluded them from removing the statue. As The New York Times reports:

Under that law, similar in its language and structure to other statutes shielding Confederate-themed displays in the South, a “monument, memorial or work of art owned by the state” may not be “removed, relocated or altered in any way” without the consent of a state historical commission.

University officials resisted calls, including one from the governor, that they invoke a loophole in the law, which allows for “an object of remembrance” to be removed without the commission’s approval if it is deemed “a threat to public safety because of an unsafe or dangerous condition.”

Had school officials moved quicker, it’s possible they could have avoided what transpired last night.

Bonus link: Reason‘s Ronald Bailey argues that most Confederate monuments belong at historical sites or museums, not on public land.

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An excellent way to protect your US Dollar holdings

Last week we saw how quickly a currency crisis can destroy someone’s savings.

In just one week, the value of the Turkish Lira plummeted over 30% after the US imposed sanctions against Turkey.

So anyone holding all of their savings in Turkish Lira got hammered.

This was an unfortunate reminder of the importance of a Plan B – an insurance plan to make sure your wealth and your family are safe no matter what happens around the world.

So often, people concentrate their risk in a single country or jurisdiction… their job is there, their home, their savings and investments…

And if something goes wrong in that one country, you’re completely exposed.

That’s why I routinely write about the steps you can take to implement a solid Plan B – things like a second residency or citizenship, an offshore bank account and various, offshore tax structures.

Today I want to discuss another, simple step you can take to fortify your Plan B: diversifying currencies.

Last week, we saw the Turkish Lira lose one-third of its value in a matter of days.

Turkey is considered a ‘developing market’, so its currency is a lot more volatile than larger, wealthier nations of like the US, China, and the eurozone.

But even the largest economies in the world can see major swings in their currencies.

In the summer and early fall of 2016, for example, the British pound lost nearly 20% of its value after the Brexit vote.

And back in 1992, the British pound lost 10% of its value in a week when speculators bet that the Bank of England couldn’t maintain its exchange rate target.

So, wild fluctuations are possible with -any- currency. Even the major ones.

The lesson from Turkey is clear: if you’re concentrated in a single currency, it’s possible for your savings to lose a LOT of value if there’s a sudden catastrophe.

One long-standing alternative to paper currencies is to own gold and silver– which have continued to have value for thousands of years.

(For more on how you should hold gold, you can read on here…)

But you can also choose to hold a portion of your savings in different currencies.

Consider the Hong Kong Dollar, for example.

The Hong Kong dollar has been pegged to the US dollar since 1983, and remains within a very tight range of between 7.75 and 7.85 Hong Kong dollars per US dollar.

So as the US dollar moves up and down against other currencies, so does the Hong Kong dollar.

Essentially the two currencies are completely interchangeable.

But here’s the bonus: the Hong Kong Monetary Authority is incredibly well capitalized.

In other words, Hong Kong’s central bank has vast cash reserves that it’s able to deploy in case of crisis.

In fact it’s one of the ONLY central banks in the world to have such a substantial reserve fund.

And if that weren’t enough, the Hong Kong government (which is separate from the central bank) also has its own substantial cash reserves. It too consistently runs a budget surplus.

So think about it like this– because of the pegged exchange rate, holding Hong Kong dollars is VERY similar to holding US dollars.

Hong Kong dollars have all of the upside and stability of owning US dollars. But none of the downside.

With US dollars, the government is broke with a $21+ trillion debt and trillion dollar budget deficits. Social Security is totally underfunded. The highway infrastructure fund is insolvent. The central bank is barely solvent.

So if you hold US dollars, you are assuming all of those long-term risks.

Holding Hong Kong dollars eliminates those risks; your ‘counterparty’ is now the Hong Kong Monetary Authority and HK government, both of which are in fantastic financial condition.

In investing terms, holding Hong Kong dollars is like having a free ‘put option’ on the US dollar, because if the US dollar ever ran into problems, Hong Kong would likely de-peg its currency and let it appreciate freely against the USD.

Now, every few years there always seems to be a bunch of fear and worry about the Hong Kong dollar.

Back in the 1990s people panicked that the Chinese takeover would put an end to Hong Kong’s financial stability.

Then the flue pandemic in 2009 caused a big decline in the Hong Kong dollar as well.

Today there are a lot of investors worried about the Hong Kong dollar once again, primarily due to problems in China.

Those concerns are always overblown.

With a cash reserve of $440 billion, the Hong Kong Monetary Authority has so much ammunition to defend its currency they could literally purchase every single Hong Kong dollar in circulation, and still have billions left over.

This is one of the healthiest central banks and governments in the world.

And that makes it a very sensible option to consider in your own Plan B.

Source

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Higher Minimum Wages Blamed for Closure of Iconic NYC Coffee Shop Where Alexandria Ocasio-Cortez Worked

Before she was the rising star of the progressive left, Alexandria Ocasio-Cortez worked shifts at the iconic Coffee Shop in Union Square, Manhattan.

That espresso-sized biographical nugget tells you a lot about Ocasio-Cortez. It grounds her as a real woman of the people, for one. She’s held a low-paying service sector job. She had to commute from the working class, minority community of the Bronx to fill the coffee cups of well-off New Yorkers living in Manhattan. Union Square might not be the Upper East Side, but the contrast with Ocasio-Cortez’ neighborhood is still pretty stark.

But it also tells you something about the trajectory of progressivism. On Monday, Ocasio-Cortez paid what is probably her final visit to her former employer—because the Coffee Shop is closing later this year—and posted a sweet, nostalgic note about it on Twitter:

What Ocasio-Cortez failed to note is that the Coffee Shop is shutting its doors for the last time, at least in part, because of New York City’s rising minimum wage.

“The times have changed in our industry,” Coffee Shop owner Charles Milite told the New York Post last month. “The rents are very high and now the minimum wage is going up and we have a huge number of employees.”

In other words, one of the very progressive policies that Ocasio-Cortez is riding towards a seat in Congress—she has called for a $15 federal minimum wage, up from $7.25 currently—has had very real consequences for people she probably knows fairly well. Unlike Ocasio-Cortez, it’s a safe bet that most of the roughly 150 people who work at the Coffee Shop won’t land a job in public office when they lose their current jobs in October.

Will that make the progressive darling rethink her stance on the minimum wage? There’s no indication of that from Monday’s tweet.

This is not the first time Ocasio-Cortez has missed an opportunity to acknowledge that expensive government mandates can have real world consequences. The Daily Show‘s Trevor Noah, for example, pressed Ocasio-Cortez (lightly) about whether her $15 federal minimum wage proposal would stagnate economic growth.

No, she said, claiming that Seattle had seen no such stagnation after implementing the same minimum wage. She also bizarrely claimed that 200 million Americans get by on less than $20,000 per year—a “fact” that’s pretty difficult to swallow given that the entire American labor force is 162 million.

But the Seattle argument is more interesting, because there’s a fair bit of evidence that the minimum wage has caused job losses in that city. Consider what researchers at the University of Washington’s School of Public Policy and Governance found: Namely, that the number of hours worked in low-wage jobs in Seattle has declined by around 9 percent since the start of 2016, “while hourly wages in such jobs increased by around 3 percent.” The net outcome? In 2016, the “higher” minimum wage actually lowered low-wage workers’ earnings by an average of $125 a month.

This sort of trade-off should be expected. Higher minimum wages will force some businesses to cut staff, while others might close entirely. If you still have a job after that, sure, you’ll make more money. If you don’t, well, finding a job just got more difficult.

But the point isn’t to argue with Ocasio-Cortez about the consequences of Seattle’s minimum wage hike (her defenders will point to other studies, like one commissioned by city officials and conducted by researchers at Berkeley, which show no ill-effects whatsoever). The point is that even if businesses in Seattle or New York City could absorb the economic hit of a $15 minimum wage, what would happen to businesses in places that aren’t modern metropolises with high costs of living and relatively higher wages? Does a $15 federal minimum wage make sense in western Pennsylvania, in eastern Kentucky, or in central California?

If Ocasio-Cortez can’t look at the loss of an iconic New York City business—a place where she used to work, no less—and see a potential problem with her worldview, there is little hope she that will ever come to understand the potential problems created by one-size-fits-all employment policies.

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Dear Democrats and Republicans, Please Keep Tearing Down Your Government: New at Reason

Anybody expecting respect for the overall government to survive current leadership unscathed is dreaming, suggests J.D. Tuccille. And as somebody who considers government little more than “a dangerous weapon in the hands of competing tribes of control freaks,” Tuccille’s response is: More, please.

Those wary of big, intrusive government have warned for years that the mainstream political tribes, left and right, Democrat and Republican, were creating a monster, writes Tuccille. Team Red and Team Blue seem to have taken these warnings as “how-to” advice. Now they’re gleefully proving every one of our warnings correct as they turn the monster they built against one another.

For those of us who cautioned that this day would come, all we can do now is sit back and enjoy the show as those who created the problem now slash away at the legitimacy of their own government, argues Tuccille.

View this article.

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Buchanan: In Spies Battle, Trump Holds The High Ground

Authored by Patrick Buchanan via Buchanan.org,

In backing John Brennan’s right to keep his top-secret security clearance, despite his having charged the president with treason, the U.S. intel community has chosen to fight on indefensible terrain.

Former Director of National Intelligence James Clapper seemed to recognize that Sunday when he conceded that ex-CIA Director Brennan had the subtlety of “a freight train” and his rhetoric had become “an issue in and of itself.”

After Donald Trump’s Helsinki summit with Vladimir Putin, Brennan had called the president’s actions “nothing short of treasonous.”

The battle is now engaged. Trump cannot back down. He must defy and defeat the old bulls of the intel community. And he can.

For a security clearance is not a right. It is not an entitlement.

It is a privilege, an honor and a necessity for those serving in the security agencies of the U.S. government — while they serve.

Brennan is not being deprived of his First Amendment rights. He can still make any accusation and call the president any name he wishes.

But to argue that a charge of treason against a president is not a justification for pulling a clearance is a claim both arrogant and absurd.

Again, a security clearance is not a constitutional right.

Said Defense Secretary James Mattis:

“I have taken security clearances away from people in my previous time in uniform… a security clearance is something that is granted on an as-needed basis.”

Brennan is now threatening to sue the president. Bring it on, says national security adviser John Bolton.

With 4 million Americans holding top-secret clearances, and this city awash in leaks to the media from present and past intel and security officials, it is time to strip the swamp creatures of their special privileges.

The White House should press upon Congress a policy of automatic cancellation of security clearances, for intelligence and military officers, upon resignation, retirement or severance.

Clearances should be retained only for departing officers who can demonstrate that their “need to know” national secrets remains crucial to our security, not merely advantageous to their pursuit of lucrative jobs in the military-industrial complex.

Officials in the security realm who take clearances with them on leaving office are like House members who retain all the access, perks and privileges of Congress after they step down to earn seven-figure salaries lobbying their former congressional colleagues.

The White House statement of Sarah Huckabee Sanders on John Brennan’s loss of his clearances was spot on:

“Any access granted to our nation’s secrets should be in furtherance of national, not personal, interests.

“Mr. Brennan has recently leveraged his status as a former high-ranking official with access to highly sensitive information to make a series of unfounded and outrageous allegations — wild outbursts on the Internet and television — about this administration. Mr. Brennan’s lying and recent conduct, characterized by increasingly frenzied commentary, is wholly inconsistent with access to the nation’s most closely held secrets, and facilitates the very aim of our adversaries, which is to sow division and chaos.”

Trump is said to be evaluating pulling the security clearances of Clapper, ex-FBI Director James Comey, former CIA Director Michael Hayden, former Deputy FBI Director Andrew McCabe, former FBI counterintelligence official Peter Strzok and former FBI lawyer Lisa Page.

This is a good start. Some of these individuals have been fired. Some are under investigation. Some were involved in the FBI’s “get-Trump” cabal to prevent his election and then to abort his presidency.

Some have become talking heads on cable TV, exploiting the credibility of their former titles and offices to undermine an elected president.

Again, they have a First Amendment right to do this. But they should be stripped of their clearances to show the nation that the president is dealing with insiders who have joined the Resistance.

At bottom, the issue is: Who speaks for America?

Is it the mainstream media, the deep state, the permanent government, the city that gave Trump 4 percent of its votes? Or is it that vast slice of Middle America that sent Trump to drain the swamp?

Trump’s enemies, and they are legion, want to see Robert Mueller charge him with collusion with Russia and obstructing the investigation of that collusion. They want to see the Democratic Party take over the House in November, and the Senate, and move on to impeach and remove Trump from office. Then they want to put him where Paul Manafort sits today.

For Trump, a truce or a negotiated peace with these people is never going to happen. But this issue of security clearances is a battlefield where the president cannot lose, if he fights wisely.

Americans sense that these are privileges that should be extended to those who protect us, not perks for former officials to exploit and monetize while they attempt to bring down the commander in chief.

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Facebook “Reputation Score” Exposed, Echoes China ‘Social Credit’ System

In a hideous reflection of China’s already-prevalent ‘Social Credit’ system – which is a rating assigned to each citizen based on government data regarding their economic and social status – The Washington Post reports that Facebook has begun to assign its users a reputation score, predicting their trustworthiness on a scale from zero to one.

Under the guise of its effort to combat ‘fake news’, WaPo notes (citing an interview with Tessa Lyons, the product manager who is in charge of fighting misinformation) that the previously unreported ratings system, which Facebook has developed over the last year, has evolved to include measuring the credibility of users to help identify malicious actors.

Users’ trustworthiness score between zero and one isn’t meant to be an absolute indicator of a person’s credibility, Lyons told the publication, nor is there is a single unified reputation score that users are assigned.

“One of the signals we use is how people interact with articles,” Lyons said in a follow-up email.

“For example, if someone previously gave us feedback that an article was false and the article was confirmed false by a fact-checker, then we might weight that person’s future false news feedback more than someone who indiscriminately provides false news feedback on lots of articles, including ones that end up being rated as true.”

The score is one measurement among thousands of behavioral clues that Facebook now takes into account as it seeks to understand risk.

“I like to make the joke that, if people only reported things that were [actually] false, this job would be so easy!” said Lyons in the interview. “People often report things that they just disagree with.”

But how these new credibility systems work is highly opaque.

“Not knowing how [Facebook is] judging us is what makes us uncomfortable,” said Claire Wardle, director of First Draft, research lab within Harvard Kennedy School that focuses on the impact of misinformation and is a fact-checking partner of Facebook, of the efforts to assess people’s credibility.

“But the irony is that they can’t tell us how they are judging us – because if they do the algorithms that they built will be gamed.”

This all sounds ominously like the Orwellian China ‘social credit’ system, which in addition to blocking the flights and trains, the Global Times noted that the names of those with low social credit scores had been shamed on a public list, said Meng Wei, spokeswoman for the National Development and Reform Commission, via news website chinanews.com.

Those on the list could be denied loans, grants, and other forms of government assistance, Wei added.

“Hou’s phrase that the ‘discredited people become bankrupt’ makes the point, but is an oversimplification,” Zhi Zhenfeng, a legal expert at the Chinese Academy of Social Sciences in Beijing, told the Global Times.

“How the person is restricted in terms of public services or business opportunities should be in accordance with how and to what extent he or she lost his credibility.”

“The punishment should match the deed.”

“Discredited people deserve legal consequences.”

“This is definitely a step in the right direction to building a society with credibility.”

Many observers have likened China’s ‘social credit’ system to that shown in Netflix’s Black Mirror episode ‘Nosedive’ in which a world where people can rate each other from one to five stars for every interaction they have.

It seems Silicon Valley’s leaders saw the same episode…

Coming to America soon…

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Treasury Unloads On Russia: Warns Of “Economic Pain”, Sanctions If Conduct Does Not Change

Just hours after Microsoft said it had thwarted Russian intelligence attempts to hack two conservative think tanks and government sites used by Congressional staff, on Tuesday, the United States imposed new sanctions on two Russians and one Russian and one Slovakian firm under a U.S. program targeting malicious cyber-related activities.

In a statement on its website, the U.S. Treasury said the sanctioned firms – Saint Petersburg-based Vela-Marine Ltd and Slovakia-based Lacno S.R.O. – and the two individuals were linked to Divetechnoservices, a previously sanctioned entity.

Separately, speaking before the Senate Banking Committee, Sigal Mandelker, the Treasury’s top terror and financial intelligence official said that “the breadth and brazenness of Russia’s malign conduct demands a firm and vigorous response.”

Mandelker touted that the net worth of Oleg Deripaska had dropped by about 50%, and the share price of EN+ fell to $5.40 from $12.20 since the latest round of sanctions against Russia were imposed; she also noted that the net worth of Viktor Vekselberg fell by an estimated $3BN due to American penalties.

Mandelker said that sanctions blocked hundreds of millions of dollars in Russian assets in the U.S., and told lawmakers that the US will not hesitate to bring economic pain to Russia if its conducts does not change.

Finally, in Trump’s determination to show how “tough” he is on Russia, the U.S. also sanctioned owners of six Russian ships over claims they are helping transfer refined petroleum products to North Korean vessels, as tensions with both Moscow and Pyongyang intensify, Bloomberg reported.

The ships – and two Vladivostok-based shipping companies – violated U.S. and United Nations sanctions on North Korea, the Treasury Department said Tuesday in announcing the sanctions on its website. The U.S. is aiming to keep pressure on North Korean leader Kim Jong Un to denuclearize.

“Consequences for violating these sanctions will remain in place until we have achieved the final, fully verified denuclearization of North Korea,” Treasury Secretary Steven Mnuchin said in a statement.

In a separate announcement on Tuesday, Treasury also sanctioned two Russian individuals and two entities it said were making attempts to get around existing U.S. sanctions.

“The Treasury Department is disrupting Russian efforts to circumvent our sanctions,” said Mnuchin. “Today’s action against these deceptive actors is critical to ensure that the public is aware of the tactics undertaken by designated parties and that these actors remain blocked from the U.S. financial system.”

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Used Car Prices Hit All Time High

Submitted by Nicholas Colas of DataTrek Research

Regular readers know that we consider used car prices an important, if overlooked, indicator of the true state of the US economy. More Americans buy used vehicles than new ones, making them a deeper measure of consumer sentiment. And since the supply of used cars and trucks is essentially fixed – you can’t “make” one – prices are exceptionally twitchy and move noticeably on both dealer (and therefore small business) sentiment and underlying retail demand.

The Manheim Used Vehicle Index is one widely watched measure, and it just made a new all time high for data from July 2018 auction results.

The numbers and some historical perspective:

  • Wholesale (the index tracks dealer-only auction results) prices for used cars/trucks were +1.5% from June to July 2018 and +5.1% versus July 2017.
  • More affordable vehicles saw the largest price increases, with compact and midsized cars outperforming the overall market. This is unusual; for the last several years it has been hotter-selling SUVs and pickup trucks that have led used vehicle prices higher.
  • Cox Automotive (which owns the Manheim auction business) notes that the overall used vehicle market (both dealer and private sales) is currently robust, with a July 2018 selling rate of 39.2 million vehicles, +3% over last year and at +5 year highs. For comparison, July 2018 new vehicle sales were flat versus last year.

As for what is causing recent strength in used vehicle demand and therefore prices, Manheim notes three factors:

  • Continued strength in the US economy.
  • Growing affordability issues in the new car market. A quick Internet search on our part shows that a new Honda Civic is $19,000, but a 3-year-old used version will run you about $11,000. With US wage growth still slow, the latter is obviously a more compelling option for many consumers, even if it rises another 10% in price over the next 12-18 months.
  • Worries about import tariffs, which pushes dealers to stock up on used vehicles in anticipation of rising new vehicle prices.

While it would be tempting to pin the surge in used vehicle prices on tariff worries, a look at the data since 2010 shows a different story entirely. Used car prices were remarkably stable from the start of the decade through 2016. The breakout to new historical highs was in mid-2017 (i.e. long before recent tariff announcements) and current year prices look similar to those levels. So yes, tariff fear-related buying clearly plays a role but the overall picture has been good for longer than that factor can explain.

The upshot here: strength in used car prices is more a function of good consumer demand than temporary factors like tariffs concerns. On the plus side, that’s a promising sign about the state of the US economy. On the downside, it says much about the lack of affordability of new cars and trucks; automakers face a real challenge there. On balance, we take it as positive news with only a small asterisk beside it.

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