JR = Julian Rimmer (Resident Boomer and former EM markets pro turned writer.)
DGG = Dario Garcia Giner (Resident Zoomer and former corporate investigations pro turned meme stock watcher and in-house drone expert.)
Good morning, Dario and welcome to Thursday 7th December
Here’s news
Apparently I live in the happiest borough in the kingdom
Although I consider myself neither happy nor affluent
To those of you living under a rock: Grand Theft Auto has just released its new iteration – GTA 6
Quickly became the most viewed and liked trailer of all time
I had seen this exchange between one of my villains and that hapless lickspittle, Cheong
And someone snuck into Bohemian grove on a kiddie kayak
With a large owl
In California
Though I prefer Richard Nixon’s take on it
Which sounds more realistic
Venezuela has a new official map that is being distributed to all public institutions as of yesterday
CYBERHACK
So in all likelihood, Queen Mary’s was hacked
Something still not out in the press
As a reminder – our source informed us that QM IT personnel are working overtime to restore a loss in their IT systems after experiencing unidentified issues related to a cyberhack
We also heard that personnel in St. Barts are suffering from an almost total outage in their capacity to process laboratory data
While their testing hardware functions, it remained impossible for researchers to transfer the testing data into workable models on the university’s computer systems
St Barts is a top notch institution, they’re working on the real deal
Our source was given an estimate that these QM systems aren’t expected to be fully functional until the New Year at least
The extent to which any patient, student, or personnel data has been lost or exposed, if at all, is unclear
While QM didn’t specifically tell us a cyberhack had occurred – they basically did in so many words
They confirmed an outage in Barts Cancer Institute due to an “issue involving an isolated network”, and specified it was not a widespread issue across QM
“We have experienced an issue involving an isolated network that supports the Barts Cancer Institute and related activities, including some research activities.
We took all related systems offline as a precaution while we investigated the issue. Contingency plans are in place to enable research to continue.
“We have a team of network specialists working on understanding and resolving the issue as quickly as possible. None of the other University systems are affected.”
I have my doubts
In computer systems very little is ‘isolated’ – particularly if the ‘related systems’ that went offline led to the widespread research woes described to us by our source
We remind our watchers that customer data from the British Library recently went on sale on the dark web for around £600,000 – which included the personal data of J.K. Rowling.
But, to be honest, things going on in cyberspace neither capture my imagination, nor my understanding
The secretive National Reconnaissance Office just announced it signed agreements with five commercial providers of electro-optical satellite imagery
Airbus U.S. Space and Defense, Albedo Space, Hydrosat, Muon Space and Turion Space were selected for the NRO’s Strategic Commercial Enhancements program, which seeks new and emerging types of electro-optical imagery beyond what the agency already procures from Maxar, BlackSky and Planet Labs under a 2022 contract known as the Electro-Optical Commercial Layer.
The NRO has access to significant commercial sources of imagery under the EOCL contracts but it’s now looking to capture the next wave of technologies that have emerged in the industry in recent years, such as commercial non-Earth imagery, or the imaging of objects in space.
I found a nifty little website, Julian
It lets you see the active trajectory of Starlink and OneWeb satellites in orbit
11:43 DGG:
Something else caught my attention – a dubious online story about the number of burned or destroyed Starlink satellites
What’s going on?
10:45 DGG:
“Starlink, a satellite constellation operated by aerospace company SpaceX, lost 212 satellites in the period spanning July 18th and September 18th, data compiled by satellitemap.space shows.
Data shows the number of burned-up satellites steadily increasing over the past three years, but a significant spike can be observed starting the month of July.
It’s unclear whether these satellites were scheduled to de-orbit or whether the burn-ups were a result of a failure. Cybernews has reached out to SpaceX for comment but has not received a response.”
Now – half of the redditor’s comments online actively try to debunk the original source – but none precisely say why or who debunked it
All these debunkers claim is the numbers of the website aren’t reliable, particularly as they don’t gel with a known astrophysicists’, Jonathan McDowell’s
While he IS an amazing source on Starlink, he also has no way of knowing whether a satellite is in service – just if its in orbit
And SpaceX has NOT replied to requests by media to confirm or deny the allegations
The story is important regardless because if you think constellations like Stasrlink are the future, mind that satellite losses and space junk will become valid arguments to limit atmospheric real estate
But if that hidden cost doesn’t put you off space companies, here’s six to invest in courtesy of Motley Fool
Back here in the real world, down on the ground, where things are tangible….
We had a ding-dong, thrill-a-minute, rollercoaster session in the US last night
UST10YR hit 4.1% @ one stage
It would be a courageous move to short UST here on the eve of payroll data but it’s very clear at some point in 1Q23 there’s going to be some kind of inflation scare, however short-lived, and treasuries will see some kind of retracement. Irrespective of what the number is tomorrow, one would be tempted to short on the release itself. There’s a lot of travel-and-arrive in that 4.11% yield.
Andrew Bailey’s comments yesterday confirmed there’s a short squeeze in place with CFTC data registering an $800bn short, up from $650bn in July, presumably much of this, though, a function of the basis trade.
The basis trade is a manoeuvre whereby HFs go long treasuries and then short the futures contract on those treasuries if they are trading at a premium. These positions are characterised by high leverage, though, to exploit tiny arbitrages.
The first sign of a reversal in the trend came last night with talk that the Japanese about to abandon YCC
Having worked so hard to stimulate some inflation in their system and weaken the yen, I’d be surprised if the BoJ does anything quickly but mkts as always frontload policy shifts very rapidly, even before they’ve started.
@marks – i dont think related
One consequence of the move in UST is mortgage applications have suddenly surged w a 14% monthly jump in the US as 30yr mortgages fell from 8-7%
14%!
Another factor, of course, with declining yields is oil
WTI <$70
Putin arrived in UAE (one of the few places in the world he can visit without being arrested by the ICC) trying to talk up oil.
@marks – 14% jump in mortgage applications in US
He did his little, short-stepping, short-arse, man-trying-to-get-to-the toilet-before-it’s-too-late walk down a lavender (not a red) carpet (I looked into this: ‘The lavender carpets are identical to the colour of the kingdom’s deserts and plateaus in the spring,” said the Saudi Press Agency, referring to the blooms on the country’s lavender, desert germander and basil plants and jacaranda trees’) was greeted by MbS and claimed…
10:55 JR:
‘We have stable and very good relations in terms of political interaction, economics, and in the humanitarian sector’
Which is an interesting use of the word ‘humanitarian’ coming from the Kremlin Ripper discussing his relations with that well-known dismemberer and dissolver of journalists and decapitator of juvenile dissidents, MbS.
10:56 JR: As an aside, how many Muslims did The Kremlin Ripper take out during his presidential election campaign / Chechen war? The answer is tens of thousands, perhaps two hundred thousand.
All my mates
10:57 JR: There’s a deal of differentiation within that of course with the outlook for gold, silver, copper and uranium very different to that for iron ore and other bulks.
Is XBT a commodity?
Jamie Dimon added his tuppence ha’penny,
“If I was the government I’d close it down” “The only true use case for it is criminals, drug traffickers, money laundering, tax avoidance.
The best approach to XBT is teleological: Don’t try and understand what it is but rather what it does.
I agree – I’m extremely bullish on bitcoin because I see its value as ideological
Which gives it a sheen much like gold
Umm… sure, Julian
????
But, as Panmure Gordon point out, already all conditioning assumptions used in the Nov forecast (that saw no GDP growth in 2024) are, mark-to-market, too pessimistic.
Because:
1. Bank Rate was seen averaging 5.1% in 2024 – but financial markets are calling bluff (for all major central banks) & now see 4.8% for the year. That loosens financial conditions in real time & we are seeing this in how forward swaps are pricing UK debt products
2. Secondly, the Sterling Exchange rate is now more than 2% higher at 82 (largely a function of recent USD/EUR weakness) & this will mute the imported inflation impact into next year as less favourable currency hedges from Q4 2022 roll off.
4. Fourth, UK gas prices are now (for the 2024 curve) at their lowest in 22 months at 106p/therm. This is down from 142p/therm in late October. This will have a big downward impact on Energy Price Cap estimates from Q2 24 onwards.
5. Fifth, there was a stimulative Autumn Statement in mid-Nov with payroll & business investment incentives both constructive for disposable incomes & bringing forward investment activity. No blame accorded to the Bank (they can’t front run HMT) but also now an upside risk to GDP.
In summary: But overall this is encouraging and suggests if you were to run a real time update to the Bank’s economic model (on today’s assumptions) you would get materially more growth in 2024 than output in the November 2023 forecast.
The upshot: There is upside risk to UK gdp growth forecasts next year
Could we say the same about China?
For the first time in six months, China’s exports have grown in a relief for factories
The new trade balance stands at $68.4bn vs. expected $54.9bn.
In november, exports grew 0.5% vs. an expected flatline, even though imports declined -0.6% yoy
“While the level of export volumes hit a fresh high, (they were) supported by exporters reducing prices,” noted Zichun Huang, China economist at Capital Economics. “We doubt this robustness will persist,” Huang cautioned, “as exporters won’t be able to continue cutting prices for much longer.”
However, they also left analysts wondering whether negative sentiment-based surveys have masked an improvement in conditions, they point to hard data to sustain dis: quicker than expected growth in Q3 and a run of mostly upbeat data from October
It may also show that policy support from Beijing is having some effect
Interestingly, China’s trade with its major peers, the United States, Japan, South Korea, and Taiwan are all up on October.
I did something I never thought I’d do yesterday Julian
…
Like, plugged in with the cable thingy!
How analogue
Now, however, the crisis is clearly worldwide
On mother’s day, our Great and Supreme Leader Kim Jong Un apparently burst into tears begging NK women to have more babies
Commanding?
This sounds like the one thing a dictator can’t command more of
“In the Sahel, for example, the region with the highest fertility rates, the number of children per woman has dropped from 7 to 5.7 since 1980. The most spectacular drop has been in North Africa, where the rate was cut in half in 37 years, from 6 children per woman to 3.”
Although I’m not sure about the latter
We’ve seen the destruction of the western family with all the attendant consequences as a result of this crisis and it’s only just begun
I’m often told by fellow conspirators that the promotion of modern values like LGBTQ+ are part of some dodgy conspiracy to lower birthrates
No need for a dodgy conspiracy – there’s simply a process of nature by which humanity’s birthrates automatically adapt to our circumstances
The problem is the way we MAKE EVERYTHING A CRISIS
It reminds me of my History module at university where we read letters by Enlightened philosophers to Kings and Queens of the period.
Throughout the early 18th century, everyone went on about the need to grow population as some perennial, national objective
Especially, Frederick II The Great of Prussia and Catherine the Great of Prussia
(my two fave monarchs btw)
What happened at the end of the 18th century? After the revolution?
I could read it in the letters!
Overpopulation was now a perennial issue of state! Moves should be made to reduce the birth rate! Crisis! Alarm!
We’re always at war with Eastasia, and Eurasia has always been our ally
I was going to summarise DB’s auto outlook for 2024 but three lines in I lost the very impetus to continue breathing
After lots of ups and downs for the sector in 2023, including some positive momentum on volume recovery, high hopes for EV adoption, resilient vehicle pricing, but also UAW labor negotiation and strikes, and EV/AV slowdown, we do not expect the 2024 environment to become materially easier. The European and US economies still remain uncertain, and global autos volumes seem to trend in the flat to down direction, essentially offering limited growth opportunities for OEMs and suppliers alike. Layered on top are inflationary labor costs that will persist into 2024 and EV liabilities that come from previous higher adoption expectations.
So why should investors look at the sector? Within the space there have been plenty of opportunities to make money in 2023 with STLA up ~50% YTD, Tesla at ~90% or ALV with a ~35% gain or also BMW up 35% at peak during the year. Overall, we argue for a selective exposure to the sector in 2024, and expect another tough year ahead for the Auto space. In this note, we offer a detailed perspective on volume, pricing, EV adoption curve, AV winners, as well as our early view of the playbook into 2024. Our top picks in Europe are BMW, Mercedes, FRVIA, ML and PIRC; in the US they are ALV, GT, MBLY; and Xpeng in China.
Best ideas into another challenging 2024 environment In Europe we prefer premium over mass. Our rankings still reflect a preference for OEMs over suppliers, rather expressing a lack of structural growth stories among suppliers in Europe than a strong OEM bias. In our base case pricing is tough for both while a shortfall in volumes that we see typically hits the suppliers more. We once again assume 2% negative net pricing for premium and 4% for mass market OEMs. In our top picks we look for price setting power through branding and strong models as well as 1offs and buy backs making it easier to show stable EPS despite the assumed pricing headwind. This leaves BMW and Mercedes, to a lesser degree P911 given the major model renewal and likely volatility this creates
I’m not gonna lie – it looks so cool
If I had more cojones (and any money at all) I’d buy one
Bible quotes in the comments! Love it!!!
Speaking of autos, Michigan has just installed a wireless charging public roadway for electric vehicles
I could lie on it and charge myself
Just park in, starts charging, boom
What is dogging?!
Top Wines 2023 No.3
Castelgiocondo, Brunello di Montalcino, 2010 by Marchese de Frescobaldi
Has any wine ever tripped so mellifluously off the tongue?
It means ‘playful castle’ in Italian I think,
Which certainly stimulastes a fertile imagination like mine. I’ve been drinking this wine since its release in 2015 and have a very strong emotional attachment to it
Which means I will probably die with at least one bottle of it in my cellar (or my coffin.) 100% sangiovese, ripe, dark cherry fruit and chocolate, a hint of tobacco and now, 13 yrs in, developing tertiary notes of liquorice.
Bottled poetry
So, Dario, your latest hero?
How’s that for your nominative determinism, Julian?
He’s joined Peter Thiel in the launching of heavy criticism of the United States Department of Defense’s policy for sales, which effectively have been crowding out any bidder for their upcoming projects that aren’t already a part of the pre existing massive, lethargic military industrial complex
His defence company, Anduril, has made significant headway and cinched several contract wins with the Defense Department, notably on border security
He’s gonna have the rare distinction of launching 2 unicorns in his life
Opening it up to innovation from smaller, private funded players, and as such, helping us guarantee we aren’t under some Chinese boot in the decades to come
Ok, my latest villain…
is Charles Saxe-Coburg-Gotha
And there it was, the mediaeval scene, intact for several millennia, the peasantry in thrall to the divinely-appointed
It’s not as though he represents continuity, tradition oer the model family the self-styled Windsors claim to be. They are so dysfunctional they make my family look conventional.
And we are not the Waltons I can assure you
Charles claimed he wanted a scaled-down, pared-back ceremony but, of course, there’s no point being crowned if you don’t make a bloody great fuss of it
He makes no real secret of his disdain for the general public and thinks his opinions are generally more important than others hence his private lobbying of ministers and his interference in public affairs.
Let’s not forget the weird grim reaper!
And on that chippy, resentful, misanthropic note
Nunc tempus taciendi
Goodbye all!
