Spot Markets Live, 23/11/23 (Lillium EVTOL, Dutch elections cont’d, India)

Happy Thanksgiving Day to everyone, especially my geopolitical zoomer down there in the south of Spain, dario…

On Thanksgiving we note ‘In 1986, the average turkey weighed 20 pounds. By 2006, that had risen to 28.2 pounds per bird’.

i think the average american has also seen a similar weight increase

Joe Biden confused  Britney Spear and Taylor Swift when he made a joke pardoning two birds (turkeys) in a thanksgiving ceremony. It’s easily done.

No irony, I mean it’s easily done.

Turkey facts: a male is called a tom, a female is a hen, both sexes gobble apparently, they sleep in trees and they have 270 degree vision

Turkeys are so called because they resembled guinea fowl which originally came from east Africa but crucially through the Ottoman empire so when settlers to the US saw wild birds in America resembling the guinea fowl they called them turkey cocks or turkey hens.

Incidentally in Turkey the birds is called Hindi, relating to India and the French call them dinde which is a contraction of ‘poulet d’inde’ or Indian chicken.

(what I had for dinner last night at Tangawizi in St Margarets

so we are 60 yrs on from the death of JFK now

grassy knoll, the book depository, lee harvey oswald, magic bullet, jack Ruby etc

And a decade on from the Revolution of dignity in Ukraine in 2013

From the latin Pavus

International diplomacy live on X

Yes Izzy – we’re getting into that 😉

and twitter

Today we have more – Salesforce insiders have sold around $700mn of stock recently since June

Which tends to be very accurately timed for stock price decreases

Speaking of good timing – a Japanese carmaker has released the cutest ever mini-van just as Tesla’s Cybertruck starts making deliveries two years after schedule

Look at it! So cute!

“That focus on disaster resilience is front and center in the PUZZLE electric van as well, which features onboard AC outlets, USB ports, wi-fi internet connectivity, and emergency tools. Roof-mounted solar panels are included to ensure functionality even during prolonged power outages. There’s even a first-aid kit and a crowbar, just in case whatever disaster you’ve encountered can be helped by extra leverage.”

(the EVs biggest attraction is still the incredible $/mile rate in congested environments.)

Whatever the answer is – EV makers clearly need more of them

Ford just announce dthey’re scaling back plans for a huge $3.5bn battery plant in Michigan owing to slower than expected demand

Izzy is spoiling her own show

lmao

spoiler alert!!

The company announced this Tuesday it would cut planned production capacity at the plant by roughly 43%, and would reduce its expected employment from 2,500 jobs to 1,700 jobs – though the lessening in investment $ figure was left undisclosed.

But not every EV maker is struggling

big news in the EVTol landscape

Lillium has just announced they will begin production of the Lillium jet for next year, with a large factory capable of churning out around 100 products a year.

The Lillium jet is one of the few EVTol models I’m not totally dead-set against.

lol Izzy

I’ve been following the drone space closely for a decade, and the manned drone space for the last half decade, and I’m dead-set on the idea that a double-canard configuration is the only way forward – like Lillium’s jet:

Why the double canard? Because you get solid lift surface areas for forward flight, and a much more capable stall profile

Now – plenty of skepticism online about Lillium’s use of 40something ducted microturbines – an industry first

But I wish them all the best

I actually sat in the Lillium myself – I wasn’t unimpressed

 (a codeword for ‘daddy government please give my unviable business tax money from the working and lower middle classes so I can fly around mediocre consultants’)

“Our jet is meant to replace short-haul private jet travel” Lillium’s Alberto Caruso chief designer told me with refreshing honesty –  “and it won’t be for everyone”.

At least, that’s what I vaguely remember him telling me.

I was too busy invisibly congratulating the man internally for not lying through his teeth about how EVTols are the general future of air travel

how they will save the world

yada yada

like every other EVTOL salesman – read grifter – was doing – to really listen to him

I still remember sitting in the World Economic Forum chalet at the Paris Air Show this summer as makers of some of the most world-renown air mobility vendors spoke at length about how their debut to shuttle tourists around in next year’s Paris Olympics would be the start of an illustrious industry.

That is until the Paris delegate mentioned a cursed word – “we just need to get more understanding on the costs of EVTols” – something which made everyone on stage gulp, look around slightly disoriented, and receive the saving shout of “to the canapés!” which followed with evident relief.

Just for that honesty from Caruso (and their immaculately beautiful design), Lillium got my Kudos. Though I guess my ex was right and I never really listen.

anything going on in the Open Ai saga? Given Izzy’s breathless input below I assume rather a lot

Some more intelligence crumbs to the OpenAI disaster pie have come to light.

Two unnamed sources “close to the matter” revealed to Reuters that Altman’s ouster was precipitated by a letter on an “Ai Breakthrough” regarding a program called Q*

The maker of ChatGPT had made progress on Q*, which some internally believe could be a breakthrough in the startup’s search for superintelligence, also known as artificial general intelligence (AGI), one of the people told Reuters. OpenAI defines AGI as AI systems that are smarter than humans.

Given vast computing resources, the new model was able to solve certain mathematical problems, the person said on condition of anonymity because they were not authorized to speak on behalf of the company. Though only performing math on the level of grade-school students, acing such tests made researchers very optimistic about Q*’s future success, the source said.

But

Reuters journalists were unable to review the letter’s contents – or even see a copy of it. They were left without comment by the researchers who supposedly wrote the letter, and OpenAI declined to comment on the allegations

More smoke and mirrors?

But the rabbit hole is truly getting murky now

Chief among these concerns was his apparently hasty and murky exit from YCombinator last year

Tied to this are a series of anonymous online accounts that seem fixated on convincing people to file an SEC whistleblower complaint for improper behaviour against Altman

They claim Altman modified the openAI’s board to circumvent his fiduciary duty to OpenAI to return the favour to Satya Nadella for getting him hired as OpenAI CEO after his hasty exit from YCombinator

One of the weird accounts in question:

And these accounts consistently tie the completely unclarified allegations of Altman’s behaviour at YCombinator with allegations from his younger sister of having suffered emotional and sexual abuse by her older brother when they were younger

did he hit her with his keyboard? is that technological abuse?

terra cognita for me, at least

not two

but three jobs for writing things that were not considered befitting of an investment bank

The risk at this point is not that rates stay higher for longer but that central banks simply don’t cut quick enough because clearly a slowdown is coming across most developed mkts.

Exhibit 1

JPM  global fixed income mkts 2024 outlook

The reversal of the fastest and most synchronized DM central banks tightening cycle of 2022-23 will start in 2H24 amidst subpar growth and an ongoing decline in headline inflation to 2% target by 2025. Risks of earlier cuts comes from lingering recession risks whereas additional hikes are a risk scenario only for selective central banks in 1Q24. We expect a steady and gradual easing cycle towards neutral level of rates across DMs if our macro baseline of soft landing unfolds, with differentiation across jurisdictions in terms of start date, pace and terminal. However, risks are tilted towards faster cuts in a recession scenario where the macro outlook warrants easy monetary policy. OIS curves pricing policy rates still above neutral warrant a strategic bullish duration stance in the intermediate sector and eventually steeper curves. We project positive bond returns across DMs in 2024 favouring long in Bunds, OATs and Bonos vs. JGBs in 1h24

exhibit 2

Barclays 2024 outlook

‘the global economy is in better shape than most forecasts (including ours) called for at the start of this year. This is despite two wars on two continents, a bond sell-of for the ages, US banking stresses, and very aggressive hiking cycles. Jobless rates in Western economies are near record lows, inflation has more than halved from its peak in late 2022, equity markets are up healthily for the year, and consumers are still spending. The world economy has stared down a series of challenges in 2023 – and there have been many – and is still on its feet. Moreover, much of the hard work is done.

Hiking cycles are likely close to finished. Oil has stayed below $90 a barrel almost all year, despite wars in Russia and now the Middle East. Home prices across the West have weathered elevated mortgage rates surprisingly well. Two of the three largest banking failures in US history occurred in the first half of the year, and the economy shrugged them of. Financial markets have endured a punishing bond sell-of without a hint of a systemic crisis, despite dire warnings to the contrary.’

exhibit 3

ubs 2024 outlook

we expect central banks to start cutting rates in 2024. In our view, government bond markets are overpricing the risk that high interest rates will represent the new normal, and we also expect yields to fall in 2024. This speaks in favor of limiting cash allocations and locking in yields in quality bonds.

‘slower growth for the US economy in 2024 as consumers face mounting headwinds. We expect European growth to remain subdued, and China to enter a “new normal” of lower, but potentially higher-quality, growth. We think this environment speaks in favor of tilt- 10 A new world ing equity allocations toward quality stocks, including in the technology sector, that can deliver earnings growth even against a backdrop of slowing global growth.’

i think at this juncture what mkts underestimate is geopolitical volatility

the grande spectacle de merde whih the US presidential election promises to be

wars in europe and the m/e

JPM forecast UST10YR at 3.75% YE24 and a decline in UK bond yields of a similar magnitude

regarding Japan

The BoJ has two levers to pull—the short-term policy rate and its balance sheet policy—and we expect the BoJ to prioritize the latter. Market pricing indicates a 80% probability of a NIRP exit by the April MPM and expectations for an additional 15bp of hikes by the November 2024 MPM. We expect the BoJ to under-deliver relative to market expectations, especially what is being priced in beyond a NIRP exit. On duration, we have a stronger conviction to receive front-end swaps; we keep receiving 1Yx1Y swap and hold 5Y swap spread narrowers. On curve, we think there is value in entering 2s/10s JGB steepeners. Given the recent curve moves, it may be tempting to (re)enter bearish expressions on 20Y, but we recommend to remain on the sidelines for now. 

For now, according to this chart from Bloomberg, inflation is back in Japan – for the first time in 40 years.

JPM’s recommendations for 2024 seem very consensual

A large and synchronized monetary tightening drag has been blunted by a resilient private sector and positive fiscal and commodity price shocks • Inflation is elevated but divergent. Growth is poised to slow as positive shocks fade, while rising yields and tighter credit bite • We expect subpar 2.1%ar global GDP growth in 1H24 • Vulnerability likely to build gradually: We see a 25% chance of recession by 1H24, 45% by 2H24, and 60% by 1H25 • Our bottom-up country forecasts do not incorporate a 2024-25 recession: US and Western Europe growth slips below 1%, EM anticipated to grow at trend-like 3.8% • We do not believe inflation can be controlled on a sustained expansion path, but recent developments soften our scepticism •Domestic demand shortfalls in China and Europe point to a potential ongoing disinflationary impulse • Soft-landing outcome dependent on inflation decline that allows monetary easing to begin by about midyear • A mild recession is not a mild event and would generate a meaningfully more adverse outcome than a sluggish growth soft landing

Speaking of recessions or lack thereof

Hedge fund shorties continue to suffer calamitous losses due to the latest rally – up to $43bn

“Short sellers, many of whom had built up bets against companies exposed to higher borrowing costs over the past year or so, have been caught out by a “painful” rebound in “low quality” stocks this month, said Barclays’ head of European equity strategy Emmanuel Cau. That has come as the market has grown more confident that the US Federal Reserve’s cycle of rate rises is finally over.”

Wrote the FT

But the much vaunted rally isn’t universal

Bloomberg combined the average stock price growth of several brands which catered to the ameircan middle class which showed otehrwise

Several articles have been recently penned outlining the views of anxious doctors and lawyers, where 31% of those with $1mn or more of investable assets surveyed considered themselves “middle class” rather than “upper middle class”.

I don’t see how people can scoff at the concept. Maybe if you live in rural Milwaukee. But in megalopolies like London that would seem an adequate statement

A brilliant article I can no longer find on the FT reported on families with median incomes surpassing 200/300k a year that struggled to make ends meet. How? Well, add a variable interest mortgage rate on a swanky house and two kids in private school, and you’re basically already cutting it thin.

And that’s not a UK or US-only phenomenon. And as they say, when money leaves home, love is the first thing out the door.

And speaking of love thy neighbour (or failing to):

but that didnt stop him coming out on top in the Dutch election

before we discuss them

his success had me wondering who has the worst barnet in global politics?

(although I have never heard tell of a fair in Barnet)

Starting with of course, our very own MP who claims his hair has been ‘enhanced’ Michael Fabricant

geert

Fat Donny

Bojo

chainsaw Milei

Lukashitshow

answers on a postcard please

but there’s clearly something about populists sporting a leonine mane which attracts voters and gives off a whiff of masculinity

There needs to be some kind of commission established in every country to monitor the ridiculous hairpieces before these people are allowed on the ballot because it appears democracy will be the better for it if we can just eliminate all these nutjobs before they even get there

serious point about Wilders, is whether anyone is prepared to work with him so he may not yet be able to form a govt although in Holland this process can take months.

To make up for my total lack of knowledge

VVD properly f*cked it because they opened the door towards working together with the PVV for the first time and focused heavily on immigration during the elections. They even let our previous cabinet collapse over immigration (while there were many other issues) basically to line up their position into this election. They horribly underestimated the PVV in this context as they are basically issue-owner on the subject. Also, the PVV chose for a more mild political campaign, solely focusing on migration (issue-owner) and ‘solving’ the needs of all dutch citizens using unrealistic and populistic standpoints (make all healthcare free, stop with climate action completely, amongst others). This in combination with VVD (largest political party) not openly excluding them from a cabinet for the first time in a while made them an attractive vote for a lot of unhappy / unheared citizens. Imo the VVD should have called them out for all their bullshit more often and highlight their true political opinions instead of trying to stand with them against the left and underestimating them. Also a big reason is that it is sort of an anti-vote, as in anti current government, who are blamed for covid policy, inflation, energy bills etc.

• Preventively lock up jihad sympathizers through administrative detention

• Stop arts and culture subsidies

• The financing of the public broadcasting will be completely terminated

• The Netherlands is not an Islamic country: no Islamic schools, Qurans and mosques

• Residence status holders who go on holiday to their country of origin immediately lose their residence permit

• Ban on wearing Islamic headscarves in government buildings, including the States General

• Ban on dual nationality

 

These are the most outrageous ones I could find amongst them

Number 1 being the most insanely dangerous proposal of them all

Just like a ban on Islamic headscarves. Leave the women be – why shouldn’t they wear what they feel comfortable in. Jesus

Article on Bloomberg yesterday highlighting the very same

it only takes a sudden shift in sentiment to trigger outflows here and as we mentioned yesterday some charts on China are starting to bottom out and look interesting on technicals

This informs the contrarian trade I have been suggesting for a little while

Interesting point made by Zerohedge (although I generally find this media outlet repellent and pro-Russia)

and to underline this point, the Swedes this morning, confounded expectations by not hiking rates

instead leaving them at 4%

on India, you had something else which might potentially trigger a change in sentiment for intl investors perhaps?

I wonder what hotels state-backed assasins get to stay in

The suite at a Hilton?

you need a bath at least to wash all the blood off

“The target of the plot was Gurpatwant Singh Pannun, an American and Canadian citizen who is general counsel for Sikhs for Justice, a US-based group that is part of a movement pushing for an independent Sikh state called “Khalistan”.”

This followed a similar event in Canada, where Justin Trudeau – aka mister nepobaby – stated there were ‘credible allegations’ that linked New Delhi to the fatal shooting of a similar Sikh separatist in Vancouver

The affair is a particularly thorny one for the Western alliance due to a number of reasons

First among them is that India holds a key position as the sole local state actor that can counter China’s muscle somewhat

Meaning Washington has been very reticent abou using its ammunition in decrying Delhi’s attempted (and alleged) breach of American sovereignty

Second is singificant Sikh and Indian voting populations, which are more relevant, tbh, in Canada

BUT

As you can imagine

its far more complicated than Modi Bad, Sikh Activist Good

You mean trade deals and such?

The Indian press, together with Indian public figures, have decried Canada, and the West more broadly, for harbouring an alleged terrorist, and claimed that the Trudeau government’s actions reflect “the interference of Canadian diplomats in India’s internal matters and their involvement in anti-India activities”, and that Canada has given space to “a range of illegal activities including murders, human trafficking and organised crime” linked to the Khalistani movement.

What? Western countries supporting terrorism abroad and acting shocked when similar methods are used in the West?

I’m so surprised

Here’s some quick background:

​​The Khalistan movement is a separatist Sikh movement in the Indian region of Punjab. While calls for a separate Sikh state have existed since the 30s, the movement as it is known today only began flourishing during and after the Indian-Pakistan war of 1971. While the movements’ zenith passed in the 1980s, after which its continuous use of violence drained its support among moderate Sikhs in India, Khalistani groups continue to obtain some sympathy among Western activists, Western-based Indian citizens, and capitals to this day owing to continued repressive actions by the Indian army and police against Sikh groups.

As can be expected, the nature of the violence in the Punjab region is truly complicated. It’s not merely a matter that pits Hindus against Sikhs. For instance, a sizeable chunk of the Indian soldiers who participated in the brutal Operation Blue Star crackdown — when the Indian army assaulted the Sikh’s most venerated temple as it was hosting an armed Khalistani liberation group — were Sikh.

And India is right to be sceptical of Western claims that espouse their protection of these violent activists with the typical ‘crying wolf’ concepts of asylum and freedom of speech

Many of the initial actions that began the modern Khalistani movement were started by a Sikh activist called Jagjit Singh Chohan in the United Kingdom and the United States during the 70s. Operating from a London building termed “Khalistan House”, Chohan started issuing Khalistani passports and dollars. And we needn’t remind our readers that the Pakistani ISI, forever closely linked to the United States, had a key and unsurprising role in arming and aiding Khalistani separatists.

Jaspal Atwal is a member of the International Sikh Youth Federation, a pro-Khalistani independence group, and resides in Canada. Atwal viciously beat up a Sikh lawyer named Ujjal Dosanjh in Canada, 1985, was freed on a technicality, and then shot a Punjab Cabinet Minister in Vancouver Island in 1986. So what the heck was he doing with the official Canadian delegation when Trudeau visited India in 2018? The Former Chief Minister of Punjab, Captain Amarinder Singh, also recently claimed that Khalistani extremists are getting aid from Canada, the UK, and curiously, Italy – as well as the Pakistani ISI.

There is so much to these ethnonationalist conflicts that’s hidden under the rug of conflicting histories

the govt is drawing up a list of fifty companies (including Country Garden) which will qualify for govt support

the developers require some $450bn of funding to plug shortfalls

and state/ regional banks are reluctant to provide this without explicit govt backing

this is coming

CCP is mostly concerned with stability and control and the property mkt’s problems are the gravest threat to this at present

Allowing banks to offer unsecured loans is one measure being considered. Measures taken by govt so far have been mostly piecemeal and verbal interventions but serious subsidies are obviously in the pipeline.

a big bazooka is in the offing, i suspect

(heretics)

Bon appetit

nunc tempus taciendi

adios