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Spot Markets Live, 30/11/23 (Rapid Liquid Printing, Recession warnings, Essequibo heats up)

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TLDR: ChatGPT summary:

  • Greeting: Mentioned UN approval for the Jewish state, birthdays of Jonathan Swift and Churchill, and the passing of Henry Kissinger.
  • 3-D Printing Breakthrough: DGG introduces Rapid Liquid Printing (RLP), a groundbreaking 3-D printing technique, highlighting its advantages over conventional methods. The discussion touches on its potential applications and challenges.
  • Electric Vehicle (EV) Developments: The chat shifts to the UK’s significant investment in EVs, contrasting with resistance in US EV dealerships. General Motors’ buyback, dividends, and challenges in the autonomous car division are explored.
  • Market Trends and Financial Insights: Elon Musk’s controversial statements, market trends, and the best month for global equities in three years are discussed. The conversation includes insights on ETFs, market volatility, and economic indicators like the Fed Beige Book.
  • Geopolitical Tensions: The focus turns to geopolitical events, with tensions rising between Guyana and Venezuela, potential Russian involvement, and a Serbian military buildup near the Kosovo border. The implications for oil markets and European stability are considered.
  • Banking News and Economic Outlook: The chat touches on a UK bank spying clause, Bank of England Governor Andrew Bailey’s economic outlook, and Jamie Dimon’s warnings about inflation and a possible recession.
  • Despair and Farewell: The chat concludes on a note of despair, acknowledging the unpredictable nature of the world and bidding farewell until the next installment. Warning: No show on Friday as Izzy is having a break.

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.)

10:30 JR: Good morning, Aloha and greetings fellow market wizards.

Welcome to the latest installment of the Boomer and the Zoomer

Good moaning, Dario

10:31 DGG: Aloha!

10:31 JR: Welcome to St. Andrew’s Day.

76 yrs ago today the UN approved the establishment of the Jewish state.

The literary among us celebrate the birthdays of Jonathan Swift and Samuel Clement / Mark Twain.

It was the birthday of Churchill.

And speaking of statesmen, the sun finally set on Henry Kissinger at the grand old age of 100.

10:33 DGG:

10:33 JR: I
 can riposte that with a Gore Vidal quote

Although I’m sure it’s apocryphal

10:34 DGG: I’m betraying my ignorance but his name sounds like a porn star.

10:34 JR: In the Sistine Chapel, Gore Vidal once came upon Henry Kissinger “gazing thoughtfully” at the Hell section of Michelangelo’s Last Judgment. “Look,” said Vidal to a friend, “he’s apartment hunting.”

Nunc tempus loquendi

10:35 DGG: Starting off with some quick insider sales updates

Atlassian ($TEAM) insiders have sold over $600m in shares this year – with a few million’s worth being sold every few days

But let’s move onto cooler market developments

What do you make of 3-d printing julian?

Have you ever seen one?

10:35 JR: Have a guess, Dario.

10:35 DGG: You don’t?

10:35 JR: I never think about 3-D printers.

10:36 DGG: I love 3-d printing. I’ve been following its manufacturing trends closely, especially in the gun manufacturing world.

But there’s bigger news this week

Apparently Rapid Liquid Printing, some very very smart guys form top universities in the US, have started coming out with their new RLP printer

HUGE milestone

RLP is a breakthrough technique to print 3d objects inside gel

This is critical for 2 reasons

Conventional 3-d printing is hampered by 2 obstacles – printing on a surface and post-processing time

If you’re printing on a surface, the structure needs to support itself while being built, leading to material wastage for these struts that need to be carefully cleaned (read: broken) off

Not so with RLP

RLP prints in a gel – meaning it’s essentially printing in a zero-G environment, meaning no post-processing or material wastage

\


Ok so while at the show I think we met a witch and this particular witch used their magic powers to create a company that uses silicone in a suspension fluid…

10:38 JR: Is that a useful structure?

10:38 DGG: This one was to demonstrate that RLP can print very flexible items with high strength, much more so than conventional 3-d printers.

10:38 JR: Ah, so useful

10:38 DGG: Does this remind anyone else of Westworld?

10:38 JR: It doesn’t remind me of Westworld. I’ve never heard of it.


10:39 DGG: Somehow I’m not surprised.

10:39 JR: Before we move on to EVs

Is there a way to play the rapid gel 3d printing?

10:40 DGG: So, from what I know, rapid liquid printing is still far too early to be investable

But I’d caution people to stay far away.

One thing is developing the tech – the guys will prolly get rich.

But getting the tech to a place where it’s profitable and competitive with conventional manufacturing is still a long way to go

Just look at how poorly 3-d printer companies stock has been performing since the hype around them in 2020

10:41 JR: It wouldn’t need Russian gas, though so it’s a laudable enterprise at this stage.

10:41 DGG: There’s actually a lot of security risks associated.

Very easy to build a gun with a conventional 3-d printer

I’ve always wondered what kind of supply restrictions the insane capabilities of 3-d printers will lead to

I’m bullish on the tech, bearish on the sector

(precisely because of how bullish I am on the tech)

Introducing the Orca - YouTube

I mean, look at this sexy beast

10:42 JR: It will be enshrined within the 2nd amendment for sure, the right to print firearms.

10:42 DGG: Almost fully 3-d printed except for the barrel and firing assembly

So – EVs

UK announced a 2bn investment across the automotive industry

Precisely geared to facilitate certain developments in EV technology

I always get a little annoyed at EV news – I prefer dead dinosaurs and internal combustion – but that’s my bias

“This funding will also be used for developing lightweight electric vehicle powertrains for heavy goods vehicles and hydrogen fuel cells for buses. Also, it will be used for the development of motorsport technology built into highly efficient motors for cars and vans.”

Unfortunately timed, as EV dealerships in the United States are rebelling against Biden’s EV adoption plan between now and 2032

“EVs are selling three times as slow as [internal combustion engine] cars. And so dealers that were forced to make investments on the electrification space, forced to have floorplan financing against these cars, are suddenly running against 90–93 days of inventory turn vis-a-vis 31–32 days for the internal combustion cars. And that obviously is a real issue for them,” said Jantoon Reigersman, COO at TrueCar.”

10:44 JR: Isn’t it just a function of cost, though? At some point there will be a generation of drivers who will have no recollection of petrol cars

10:45 DGG: Cost is certainly a factor

Alongside others – poorly trained salespeople (and very high staff turnover in EV sales) – poor charging infrastructure, high battery recharge times

EVs are certainly a part of our future vehicular industry – I just don’t see them replacing ICE anytime soon unless subsidised to the gills

Speaking of vehicle manufacturing

General Motors has initiated a $10bn buyback, boosting dividends and restating 2023 guidance, causing GM shares to jump almost 10% yesterday

We note that GM heavily curtailed expectations for its Cruise division of autonomous cars – which seems like a dead-end for the manufacturer

10:47 JR: Before we look at financial markets, did you see the bizarre performance yesterday from your guru, Napoleon?

10:47 DGG: Yes lol.


10:47 JR: With X CEO Linda Yaccarino sitting in the room, Elon Musk just told advertisers who have pulled out of X — including Disney CEO Bob Iger — to go f*** themselves.

10:48 DGG: John – Hydrogen is an interesting one. One thing that goes unmentioned is that the fires are much easier to put out than battery fires as it all goes ‘puff’ in one go. And hydrogen cars are already functioning. Like David says high cost of production – and difficulty in storage – will be problems going forward

10:48 JR:

Linda, ashen-faced in the front row tweeted later…TodayElon Musk gave a wide ranging and candid interview at

@dealbook2023. He also offered an apology, an explanation and an explicit point of view about our position. X is enabling an information independence that’s uncomfortable for some people. We’re a platform that allows people to make their own decisions.’

I wonder, Dario, what ads show up in your Twitter feed and what that says about you?

Mine shows a great preponderance of storage solutions

Onto markets

The best month for global equities in 3 yrs comes to an end

Interesting chart from BAML showing how a buy-the-dip mentality has been enshrined in financial mkts by the Greenspan/ Bernanke/ Yellen/ Powell Put / repeated willingness of central banks – read governments –  to do whatever it takes to support financial assets, sustain liquidity and prevent economic collapse.

The Covid-19 rubric should, of course, read ‘waver’ not ‘waiver’ (the pedant adds)

Again, one can see how a whole generation of retail traders, the HODL bunch, have grown up knowing the govt/ the central banks will ultimately bail them out

Another fascinating story I came across…

Goethe University study on ETF demonstrated that the proliferation of ETFs has exacerbated mkt volatility.

10:53 DGG: I’m so offended. We both know it’s only big banks that get daddy govt funds rather than retail traders.

10:53 JR: An increased number of passive investors tends to crowd out trade specific factors and cause mkts and stocks to list dramatically, first in one direction, and then in another

Rather like passengers on a ship running from port to starboard screaming ‘sell’ and ‘buy’.

The higher the passive ownership of a stock the greater the sensitivity to broader mkt liquidity and non-fundamental ‘noise’.

I suppose this study simply puts numbers and stats on something equity strategists have instinctively sensed for many years.

Shorter-term investors have a greater propensity for ETFs and for trading on non-fundamental information/ charts/ online trading fora/ sentiment/ Twitter/ Reddit and so on

Do you, I address you as a spokesman for the Zoomer generation, use ETFs in preference to single stocks, Dario?

10:56 DGG: I prefer to gamble rather than invest Julian. So no.

But I’ve heard it’s not unwise

10:56 JR: Fed Beige Book…

Chart posted by ZH last evening

(I pause for a moment to remind readers I despise Zerohedge)

According to bberg, “taken at face value, that’s two-thirds of districts citing conditions that are ostensibly consistent with a mild recession.”

And, as a consequence, mkts are now pricing in 125bp of easing in 2024

(Difficult to reconcile this with the latest revision to Q3 GDP from 4.9% to 5.2%)

10:58 DGG: I don’t know if its a function of my age and inexperience but I’m so befuddled by the mixed signals being given by the economy

It’s a bit like my dating life

10:58 JR: You are right to be befuddled

The survey said:
  • Retail sales, including autos, remained mixed; sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity.
  • Travel and tourism activity was generally healthy. Demand for transportation services was sluggish.
  • Manufacturing activity was mixed, and manufacturers’ outlooks weakened.
  • Julian Rimmer struggled to sell much high-end wine (or any at all, really)
  • Demand for business loans decreased slightly, particularly real estate loans.
  • Consumer credit remained fairly healthy, but some banks noted a slight uptick in consumer delinquencies.
  • Agriculture conditions were steady to slightly up as farmers reported higher selling prices; yields were mixed.
  • Commercial real estate activity continued to slow; the office segment remained weak and multifamily activity softened.
  • Several Districts noted a slight decrease in residential sales and higher inventories of available homes.

Prizes for anyone who spots the odd one out.

11:00 DGG: Jamie Dimon has also come online to issue a sstark warning to wall Street, claiming inflation could rise further and that a recession is still not off the table.

11:00 JR: He‘s right, of course, but then again you may be abducted by twin smurfs but it’s unlikely to happen.

11:01 DGG:

“Stimulus money handed out during Covid shutdowns and quantitative easing by the Federal Reserve had injected “drugs directly into our system” and caused an economic “sugar high,” said Dimon. But that’s fading. “I think quantitative easing and tightening and these geopolitical issues can bite,” he said.

In previous interviews, Dimon has said that the Fed may be far from finished with its aggressive regimen of interest rate hikes in the fight against elevated inflation, and that it’s possible the central bank will continue hiking rates by another 1.5 percentage points, to 7%.”

11:01 JR: Now make sense of this:


11:02 DGG: John – I think the 2% target’s been dead for a while no?


11:02 JR: (a challenge with which I should preface everything I write or say)


As US recession seems to be featuring more prominently in forecasts, investors are chucking money at the most highly-leveraged sector in the mkt.

Look at this

11:03 DGG: Why is that?


11:03 JR: Because high-yield bonds, by their very definition, are those belonging to companies who are indebted, have weaker balance sheets and are mor vulnerable to economic slowdowns

And then the beige book seems to diverge from what Wall St analysts are forecasting…

@johnk – i don’t think the central banks ever get back to 2% and settle for a higher number

These S&P forecasts for 2024 don’t make much sense if you believe in the recessionary scenario. According to Multipolar Mkt JPM is the most bearish of the major houses with an 8% decline predicted for next year, despite eps growth.

11:06 DGG: In other banking news, the British government has added a bank spying clause in a late amendment to the Data Protection & Digital Information Bill on Tuesday for a vote which passed yesterday.

The clause will force banks to monitor all bank accounts – as well as those receiving benefits from the government

Silkie Carlo from Big Brother Watch wrote an excellent thread on the matter on Twitter

“It would be dangerous for everyone if the government reverses this presumption of innocence.

Information processing in the welfare system is notoriously bad – the state rifling through millions of people’s bank statements is highly likely to result in serious mistakes…”

11:07 JR: I don’t like monitoring my own bank account ad seeing what I waste my money on, nor my wife, nor my bank

UK banks… delightful segue onto BoE governor, Andrew Bailey

Or as he is better know

The beleaguered BOE governor Andrew Bailey

His grim vision of the economy.

“If you look at what I call the potential growth rates of the economy, there’s no doubt it’s lower than it has been in much of my working life,” he said.

It be true but I dont know we’d state this so brazenly

The excellent Simon French of Panmure Gordon on the BoE governor’s comments

‘I think the Governor is factually correct in this, and many of his recent statements. But I think it also shows a misunderstanding of the (unofficial) communications responsibility of a Governor in framing economic decisions. Growth, productivity & profit requires optimism – and CB leaders have an outsized role in setting that mood.’

As if to undermine him, yesterday data released

The UK unemployment rate fell to 3.5 per cent in the spring, according to early findings from a new survey from the Office for National Statistics that suggests the jobs market is stronger than previously thought. The figures — which match a low seen only once since the 1970s — were quietly released in an ONS spreadsheet last month and contrast with the official estimate of 4.2 per cent for the second and third quarters.

DXY weakness which we have discussed ad nauseam in this parish

Has been a boon to EMFX but not all EMFX

Izzy will be chuffed at the strength of the zloty but rand, lira, peso and rupee all failed to chalk up a gain in Nov for well-rehearsed reasons.

11:13 DGG: In other news – geopolitics

Guyana is heating up!

Guyana has conducted several flag raising ceremonies over their Essequibo lands, and outlined intentions to construct their military bases in the region to dissuade additional attempts by venezuela to muscle in on their newly found oil wealth

11:14 JR: Does Guyana have a military?

11:14 DGG: Barely.

And Venezuela’s is one of the region’s strongest – at least on paper

11:14 JR: That I didn’t know.

11:14 DGG: Venezuelan military runs the state essentially

Bit like Egypt.

And now Venezuela is announcing the construction of their own military bases near the contact line with Guyana

Yesteday, news reports attested to the Brazilian army being placed on high alert near the Guyanese border due to Venezuelan military buildup

Published Brazilian military intelligence suggests Venezuelan military plans an imminent move against the Guyanese republic

11:16 JR: Do you think the Russians are putting them up to th?

This?

11:16 DGG: We can’t see Russians around every corner Julian.


11:16 JR: I see Russians everywhere.


11:16 DGG: lmao

All of this happened as Guyana’s third offshore project by ExxonMobil – first and largest in Guyana – began flowing oil – the Prosperity FPSO

(Well, a week and a half ago to be precise)

We remind our viewers that over 20 oil majors and minors, including Saudi Aramco, BP, and Shell are competing for Guyanese oil contracts

And that this oil rush has made Guyana the second fastest growing nation in the world

11:18 JR: A wild stab in the dark here but is the govt of Guyana a reputable and reliable partner?


11:18 DGG: I’m gonna take a spitball guess by looking at the region and suggest no.


11:18 JR: So disappointing.


11:18 DGG: FWIK John – yes

US defence officials have also visited Guyana on Tuesday

With the caveat that i’m an amateur

Seems unlikely Maduro’s regime would risk international isolation so soon after regaining it due to America’s oil supply woes

On the other hand, nobody can let such a potentially profitable historical claim go to waste

11:19 JR: Guyana gdp growth for 2023 forecast at 34% in 2023

By IMF

11:20 DGG: I would be unsurprised if the referendum results provided a clear victory to Madruo’s intention to annex Essequibo, which could be used by Maduro to extract concessions either from American companies in Venezuela, or in drilling rights for their PDVSA in the Essequibo region

Beyond the medium and long term national concerns are naturally short termist electoral attempts by Maduro to place himself as sovereign defender

Something he defintiely has to do this time as conditional to its reentry into international finance, Maduro’s government has to allow for free and fair elections with the opposition

11:21 JR: Shell, MOL, Repsol and others have all visited Venezuela in recent days to see if a thawing of US/ Maduro relations and the easing of curbs on Venez oil production can be exploited, trying either to secure access to oil and gas fields, rewrite contracts or recover old debts.

Washington gave Maduro till the end of November (clue: not long left for that eventuality) to make progress towards fair elections, including establishing a process for disqualified candidates to participate in next year’s vote. Maduro hasn’t yet, creating a risk of “snapback sanctions” that would reimpose tight restrictions on his oil sector, making it impossible for intls to drill there.

The government targets production of 1mill BPD from about 750,000-800,000 currently. The nation has about 300 bill barrels of reserves, the world’s largest.

Do you know why it’s called Venezuela?

11:22 DGG: No?


11:23 JR: Apparently the first explorers were Italian and thought the delta and network of rivers resembled Venezia

So little Venice effectively

11:23 DGG: How cute!

In less cute news

The US has just issued a warning about a Serbian military buildup along the Kosovo border

11:24 JR: Do you think the Russians are behind this?


11:24 DGG: We can’t see Russians around every corner Julian.


11:24 JR: I see Russians everywhere.

11:24 DGG: Well on this occasion, you’re probably right.

11:24 JR: (stopped clock).


11:25 DGG: So NATO sent over 1k more troops

But people should watch for the December 1 deadline for 10,000 serbian motorists in Kosovo to register their cards with Kosovan license plates

This is the date that violence is most likely to break out

11:25 JR: Why did the Kosovans try to impose this? Because it seems inflammatory and no real benefit derived?


11:26 DGG: The intensity and cruelty of Balkan politics is beyond me, tbh

The significance of Kosovo to European markets often goes underrated.

But Kosovo is an intrinsic part of the Silk Road – the so-called Balkan Route – for drug and human trafficking into EU

Kosovan route particularly important for east-west heroin transfers, which come through turkey and into the Albanian border from Kosovo

Around 40% of European heroin traffic

If a conflict would re-route drug supplies from this Balkan region it’s essentially an inflationary push

11:27 JR: Do you recall what Bismarck said on the Balkans?


11:27 DGG: No.


11:28 JR: They are not worth the healthy bones of a single Pomeranian grenadier.


11:28 DGG: I miss Tito is all I can say.


11:30 JR: We always seem to end on a note of despair but the world is the world and it writes no human narratives that end in love

Nunc tempus taciendi

11:30 DGG: Thank you John!

And goodbye all

And reminder – no show tomorrow

11:31 JR: We will see you in December

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