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While I agree that the board's premise has value and the investing ideas discussed here are compelling, I would suggest that this level of growth in affluence is unsustainable unless one accepts the idea that the environment in which we become more affluent does not matter. Possibly we should define what 'a sustainable manner' means and begin searching for those companies. To my mind only a carbon and resource neutral company is sustainable. Others may disagree and I'd like to hear those ideas.
Delta Airlines, (DAL) is reporting tomorrow. Expectations are that they'll have a good report since the cost of fuel is down sharply and the cost of airline tickets are up.
The SPX is directionless this morning. It dipped below 4,100 for about 10 minutes and buyers came back in. Looking at sectors, consumer discretionary is down 3/4% and real estate and industrials are up 1/2%. Everything else is just muddling along.
The root of inflation is energy cost. As it moves up the cost of everything else begins to move up. As it moves down everything else begins to move down. There has been about a 3-month lag in this inflation cycle as you can see in the BLS chart below. What's happening now is that business and employees are trying to catch-up to the inflation from several months ago. Medical services were up .6%, transportation services 1.4%, (think the cost of an airline ticket), shelter up .6%. On the other side gasoline dropped 4.6% and nat gas 7.1%.
More specifically on the inflation front airline tickets moved up 4%, auto insurance 1.2%, bakery products 1.9%, meats/eggs 2.8%, women's clothing 4.3%, children's footwear 2.9%, auto parts 1.2%, hotels and other lodging 3.1% and financial services 1.8%. These price increases will begin to moderate and if there's a recession, they'll fall.
I'll take it. At this point if we get another chance to do some buying below 3,900, that's a gift. Although CPI came in low at .1% for all items, less food and energy it was .4% so the market is still cautious and looking forward to earnings for JPM, WFC, C and BLK among others on Friday. I suspect this quarter will be a mixed bag.
Since I have a couple of outstanding calls my preference is for the market to move down through April options expiration but Ms. Market doesn't often listen to me.
Apologies as I've posted this before but sometimes it takes more than one iteration of thought before I give up an old idea and accept a new one. I'm not sure how long I've been posting on this board but I've found the board name intriguing since I was first introduced to it. For me the core question has been; if climate change is a problem we should solve, is affluence more problematic than population growth? I've always thought population growth is the core issue and that was likely correct 20+ years ago. As population grows, incremental changes in middle class consumption of fossil fuels have always been more than off-set by a larger population. We can confirm the veracity this hypothesis by measuring the growth or lack thereof, of CO2 in the atmosphere. No one needs to look this up, growth is unrelenting.
The problem in the 21st Century is that we in the Western world have expanded the idea of the middle class life style to the ROW and it's growing exponentially faster than the overall population. So is affluence now the primary climate problem? If so, I would suggest we've created a problem no one of any standing will even try to solve over the next 20 years because the right to affluence is the fastest growing 21st Century religion and it's about to grow even faster over the rest of the decade according to a 2018 Brookings study, (link below).
So the question is; if the study is reasonably correct and the middle class will grow ~40% over this 12 year period how can we expect atmospheric CO2 to moderate? Should we care when it's clear almost no one does, including the rather righteous Tesla driver? And that's a first world issue. How do you tell a newly middle class person in China who's parents worked in a rice field that their affluence is a problem? How about India? Their economy is only beginning to take off. I might be short sighted but I don't see a solution other than ensuring you're more affluent than the great majority of people seeking affluence. Crass of course but it seems to me that's what the majority of people in the world are doing.
Brookings repost
CPI is coming out tomorrow before the market opens. Expectations are for .2% which is quite low. If we come in at .4% again, (4.8% on a yearly basis), the Fed will likely use that to raise another 25bp on May 3rd.
Wall street snatched back all today's profits in the last half hour. That wasn't very nice. We're back just above SPX 4,100.
It's simple. Their thought leaders are using AI and data-driven synergies to optimize the discovery of value-add products leading to a revolutionary paradigm shift...:).
Yup. Give a man a gun and he'll rob a bank. Give him a bank and he'll rob everyone.
The SPX is trading in a very narrow range this morning - 4,103-4,113. Good time to review holdings and maybe find a new investment.
When we bought our home in Annapolis one of the main requirements was that it be at least 10 feet above mean high tide. The home we bought is about 30 feet above the water. The picture below is from the back deck with our tenant's boat tied to the dock. When we move in next year, we're replacing the existing dock with a floating dock to better manage storm conditions and king tides. We're trading fires and drought for storms and flooding. We're also about 70 miles inland from the Atlantic Ocean so we're well protected against the worst hurricane activity.
Respectfully, I think you've made my point. Much of the life on earth may pass but earth will be fine. The earth doesn't require biological existence to survive. Continents will move, ice ages will pass but we don't matter. That's why we've invented gods so we can pretend we do.
I bought my last one earlier this year. Silverado 1500 long bed, diesel. It's the vehicle I use to support our property business. Excellent write-off since it meets the 6,000 lb. tax rule. I'll buy an electric truck in five years or any time after that when there's a charging network I can use as easily as a gas station.
It's unlikely that we're damaging the earth in a manner where the earth will not return to it's recent, (in geological terms), ice age cycle of glacial and interglacial periods once we've worn out our welcome, which we appear to be doing quite quickly now. The most recent interglacial began roughly 12,000 years ago and the melting ice stabilized about 7,000 years ago. Our ancestors moved to the sea shore, learned to fish, farm and life was good.
Were it not for 8MM humans burning fossil fuels, a new glacial period would be starting about now as this recent ice age has 100,000 year cycles where only about 10,000 years are interglacial. Earth, as it's land mass is currently configured, is not as hospitable as we like to imagine.
So a little extra CO2 in the atmosphere isn't necessarily a bad thing. Unfortunately we're using millions of years of stored energy over decades and hoping we'll find an alternative before our economies can no longer count on fossil fuels to grow. That will happen in decades. It doesn't mean we'll run out of fossil fuels, we'll just be fighting over it unless we've collectively figured out another way to massively generate energy. Good times.
That's good news for CA. The great news for the folks living below the dam is that in February 2017 there was a mini-version of the rainfall this year. When they opened the emergency spillway to release excess water it began to crumble. Thankfully dam operators were able to shut down the spillway before it disintegrated and emptied the dam. In 2018 they rebuilt the spillway to handle much larger waterflow. Very fortunate timing.
Oroville Dam floodgates opening as storms fill massive reservoir
Dam operators seek to reduce flood risk as California’s second-largest reservoir steadily rises
In another sign that the drought is ending across much of California, state water officials planned to open the floodgates at Oroville Dam on Friday, (March 10), to let water out of the state’s second-largest reservoir to reduce the risk of flooding to downstream communities.
“After three years of drought and low lake elevations, it’s really good to see the lake rising,” said Ted Craddock, deputy director of the state Department of Water Resources.
On Friday, Oroville reservoir was 75% full — or 115% of its historical average for early March. It has risen 180 feet since Dec. 1, and continued to expand steadily with millions of gallons of water pouring in from recent storms.
Devastating storms in February 2017 caused the spillway at Oroville, whose 770-foot tall dam is the tallest in the United States, to crumble, which prompted emergency officials who feared a potential dam collapse to evacuate 188,000 people downstream.
Investigators later found that the spillway, built in 1967, had corroded rebar and a failed drainage system. Construction crews overseen by a national team of independent dam safety engineers rebuilt the spillway in a $1 billion project by 2018. Friday’s event will mark the second time the new spillway has been used since then. It was used once before, in April 2019.
The new spillway is a colossal chute more than 3,000 feet long and as wide as 15 lanes of freeway. Its concrete is 7 feet thick, and contains 13 million pounds of reinforcing steel.
Craddock said Friday that dam safety engineers were on site for the scheduled noon opening of the gates atop the spillway, and have been performing regular inspections. The new spillway also has instruments to measure pressure, drainage and other factors. Craddock said it performed well in the 2019 release and he expected it to perform well again.
“It’s a very robust structure,” he said.
Lake Oroville, built on the Feather River about 70 miles north of Sacramento by former Gov. Pat Brown in the 1960s, is the linchpin of the State Water Project, a system of dams, canals and pumps that provide water to 27 million Californians from the Bay Area to Los Angeles. The purpose of the dam is not only to store water, but also to provide flood protection to communities in the Sacramento Valley.
In wet years, dam operators draw down the reservoir in winter when its level gets too high. The purpose is to create enough space in the lake so that it can capture huge inflows of water in atmospheric river storms, or in heat waves that might melt the Sierra snowpack. That extra capacity reduces the risk that deluges will hit an already full reservoir, sending water uncontrollably downstream and leading to major flood damage to homes, farms and businesses.
As the weeks pass and spring nears with less and less likelihood of major storms, dam operators allow reservoirs to fill to the top to maximize water storage.
Craddock said Friday that with the huge Sierra Nevada snowpack this winter — the largest in 30 years — the water being let out now will be replaced.
“We expect to see a full lake when we get out of the rainy season,” he said. “A full reservoir will mean we’ll have additional water supply — more than we’ve had in the last few years of the drought.”
Releases from Oroville were at 1,000 cubic feet per second a week ago. They have been increased to 3,500 in recent days, then 7,000 Wednesday, and on Friday were planned to hit 15,000 cfs. The spillway is built to handle nearly 20 times as much water, 270,000 cfs.
State and federal dam operators have begun similar releases for flood safety at other large reservoirs, including Folsom, northeast of Sacramento and Millerton, near Fresno.
“In California, we’re used to the swings between dry weather and wet weather,” Craddock said. “What we’ve been seeing in the last couple of decades is more extreme swings between drought conditions and very wet conditions.”
That makes things more challenging for dam operators who are trying to fill reservoirs, but also reduce flood risk.
“It’s new reality that we’re dealing with,” Craddock said.
There may be trouble in the Canadian banking business this year.
I read that article this morning and it begs the question; which non-banks are they talking about?
Interesting. I've looked at some of their electric and hybrid options; nice cars. Is it possible that Americans are realizing their next car will need to be an electric or hybrid electric vehicle and many are saying: Not yet. I know that's the case for all of us in my family.
I did not see them in the group I published earlier.
Thanks Elroy. I should have said SIPC which regulates the brokerage side, instead of FDIC. Cash carried in a brokerage or IRA account is also only insured up to $250k per individual.
Since this appears to be nothing but good news Thursday, BBBY's vendors no longer want to extend credit. Tick, tick, tick...
Bed Bath & Beyond Adds Vendor Consignment Plan to Avoid Bankruptcy
Bed Bath & Beyond (BBBY) announced it signed a vendor consignment agreement to get merchandise on its store shelves as it fights to stave off bankruptcy.
The struggling retailer explained that the deal is with ReStore Capital, a unit of diversified financial services firm Hilco Global, which says it provides “creative financing solutions” to businesses.
Bed Bath & Beyond indicated that ReStore Capital will buy up to $120 million of pre-arranged merchandise from the company’s key suppliers “on a revolving basis at any given time.” It added the idea is to supplement inventory levels already sold at its namesake and buybuy BABY stores.
CEO Sue Gove said the move is part of the company’s effort to execute plans to help it “overcome near-term operational and financial challenges.” She indicated that the vendor consignment program will enable Bed Bath & Beyond to “increase our inventory position in top items that customers are buying and improve the customer experience.”
Gove also argued that the company is “doing what we must to sustain our business immediately and unlock our true value over the long-term, for all stakeholders.” Bed Bath & Beyond warned in January and again last month that it may have to seek bankruptcy protection unless it can raise more cash to keep it afloat.
Today’s news didn’t help the stock, as shares tumbled 5% to an all-time low.
Schwab is in trouble. Of the 12 preferred stocks that I purchased at the beginning of the year, the poorest performing is the Schwab preferred. I came across this chart on Seeking Alpha this morning and it clearly explains why investments in Schwab are not doing well. As you can see, only Silicon Valley Bank had greater exposure to a run on uninsured deposits. Some things to note:
* Investments made through Schwab will not be effected if Schwab becomes insolvent.
* At this point it would be foolish to keep cash in a Schwab account over the FDIC insurance level.
* It's likely that Schwab is in a better position today as they can pledge some or all of their under performing securities to the Fed at par.
* Schwab stock, (SCHW), is not an investment I'd make.
This is an important point for any non-professional investing in stocks. As the saying goes; time in the market is more important than timing the market. As for taxes, anyone managing their own accounts should be managing their taxable income as closely as their investments. It's not that difficult it just takes time and a layman's understanding of tax law. One personal rule that will trigger a sell is when any investment exceeds 5% of my taxable account. It's my sleep well at night rule.
Unless investing is your primary business and your primary source of income and you have a track record of success, you should use other people's companies as a way to preserve assets and make small gains over time. Like Las Vegas the stock market is not how the average person in the US gets rich it's how the successful person preserves assets without having to manage it every day.
Maybe I'll put my SPX 4,100 hat away for a while. We should notice that the SPX had moved up through the upper Bollinger Band on both Thursday and Friday. Bollinger Bands are not a primary indicator unless one is short term trading, (my opinion only), but they do advise caution when breaching the upper band. When I was trading regularly I used a 3X BB instead of the standard 2X shown here for trading purposes when I subscribed to DeMark's Symbolik software. I could scan a thousand companies in 2-3 minutes and usually get under five results. These were often positive or negative earnings bounces that would moderate over the next couple of days. I've been much too busy over the last year or so to trade effectively but after we move I'll set aside an account for trading. As Nick can tell you, it's a full time job++ if you really want to make money.
To answer this question we have to be able to scale the earplug lawsuit damages. If those damage claims come to about 20% as much as JNJ will be paying, then they're likely OK. If they equal the JNJ settlement that's about 18 months of net profit wiped out. JNJ nets about $26B a year and MMM nets about $5.5B. Can they really cut the number of actual damage cases by 90%? Does the average person get $100,000? That's about $2.5B and a manageable settlement. For me there are still too many questions.
I think that's right. They're staying open for an additional week this year. We're normally lucky if we get 100" of snow on the mountain but this year 230".
Good find, thanks. I checked four or five different sites that had zero information. I also looked for an annual report. No matter what Mr. Mitchell does with the Pine Flat Dam water, this isn't going to be a good decade for any farms in the Tulare Lake basin.
New Yorkers treated her to a real New York welcome, blowing whistles every time she started speaking on her bullhorn. You really couldn't hear her and she gave up after a couple of minutes. She really should lay off the steroids, they make you so angry.
From two weeks ago: The head of the Deer Creek Storm Water District, Jack Mitchell got a call from the Boswell company:
While he's not as infamous as TFG, (the former guy) and his alleged 34 felony charges, SBF of FTX infamy has managed to rack up a 13th charge, this one for bribery. They'll add that on to his possible 155 years in prison. What's funny is that some of his charges are for campaign finance violations. We'll have to wait a couple of hours to know what TFG is charged with.
Roughly half way between Los Angeles and San Francisco lies Tulare Lake. It's been dry for most of the last 100 years and is currently covered with some of the best farmland in the world along with homes, businesses and highways. A good portion of that area will flood this summer as California's exceptional snowfall melts. Estimates are that 200 square miles of farmland will flood. Story below from the NYT:
Tulare Lake Was Drained Off the Map. Nature Would Like a Word
A barrage of storms has resurrected what was once the largest body of fresh water west of the Mississippi River, setting the stage for a disaster this spring.
CORCORAN, Calif. — It is no secret to locals that the heart of California’s Central Valley was once the largest body of fresh water west of the Mississippi River, dammed and drained into an empire of farms by the mid-20th century.
Still, even longtime residents have been staggered this year by the brute swiftness with which Tulare Lake has resurfaced: In less than three weeks, a parched expanse of 30 square miles has been transformed by furious storms into a vast and rising sea.
The lake’s rebirth has become a slow-motion disaster for farmers and residents in Kings County, home to 152,000 residents and a $2 billion agricultural industry that sends cotton, tomatoes, safflower, pistachios, milk and more around the planet. The wider and deeper Tulare Lake gets, the greater the risk that entire harvests will be lost, homes will be submerged and businesses will go under.
Across the region, the surprise barrage of atmospheric rivers that swept through California over the past three months already has saturated the ground, overflowed canals and burst through levees. The fear now is that record walls of snow in the southern Sierra Nevada will liquefy in the intensifying spring heat into a downhill torrent that will inundate the Central Valley.
And the resurrected Tulare Lake (pronounced too-LAIR-ee), already more vast than all but one of California’s reservoirs, could remain for two years or longer, causing billions of dollars in economic damage and displacing thousands of farmworkers while transforming the area into the giant natural habitat it had been before it was conquered by farmers. “The Big Melt,” unsettled meteorologists have begun to call it.
“This could be the mother of all floods,” said Phil Hansen, 56, a fifth-generation farmer who has already lost more than a third of his 18,000 acres to a breached levee. “This could be the biggest flood we’ve ever seen.”
Already, several communities have been evacuated, and hundreds of homes and farm buildings have been destroyed or damaged. Sandbags are being helicoptered in. Dairy cattle have been hustled to higher ground by the tens of thousands. The authorities said last month that a local poultry facility surrounded by water was weighing whether to move or slaughter a million chickens. And farmers are sparring over whose land should get flooded first, knowing that inundation likely will be a question of when, not if.
In the lake’s revival, scientists, historians and growers see an epic rematch gathering between nature and humans. For now, nature seems determined to win in an era of climate change with extended dry periods followed by storms that deliver more water than anyone knows what to do with. The runoff has no natural place to drain, and experts say there is no easy way to send this water to other areas of the state that could use it for irrigation or residential purposes, even as the state remains desperate for long-term drought solutions.
Around the farm and prison town of Corcoran, gray-blue waves now whoosh surreally to the horizon. Snowy white cranes soar over dirt levees that, so far, are shielding some 22,000 residents and inmates. Submerged fields lie bereft of the tomatoes and Pima cotton that would ordinarily fill them, an agricultural Atlantis larger than Manhattan.
The lake bed is essentially a 790-square-mile bathtub — the size of four Lake Tahoes — that dates back to the Ice Age. Mammoths once sipped at Tulare Lake’s shores, and tule elk ranged in its marshlands.
Now the landscape is among the most heavily engineered in the nation. Great dams, run by the federal government and underwritten over the years by large growers, manage the water released into it from the Kings, Tule, Kaweah and Kern Rivers. Downstream, farmers and cities have erected hundreds of miles of levees and canals.
High in the southern Sierra Nevada, a record snowpack, triple the historical average, will strain the water managers who are already running that plumbing system like never before as the days lengthen and the spring skies heat.
The load of water waiting to course downhill dwarfs what is there already. It is so immense that officials project that in addition to expanding Tulare Lake, it will fill the area’s four largest reservoirs two or three times over. If the snow melts too fast, it could overwhelm flood protections, wiping out crops and inundating already-saturated farm towns. Veterans of past floods say that, even with all the fortifications in place, the lake could spread to 200 square miles or more.
“We have no control over nature, and we have no control over the water flows that are coming around us,” said Greg Gatzka, the city manager of Corcoran, where county authorities have repeatedly expressed concern about the height of the levees.
In 1983, when a long-lasting snowmelt submerged about 130 square miles of the lake bed, the damage just in Kings County cost nearly $300 million in today’s dollars, and the water took two years to clear, according to John T. Austin, the author of “Floods and Droughts in the Tulare Lake Basin,” a book about the region. That summer, two men kayaked through the floodwaters from the banks of the Kern River just outside downtown Bakersfield to the San Francisco Bay, a meandering 450-mile journey across what would typically be sun-baked land.
Since then, the population has roughly doubled, both in Kings County and in the surrounding San Joaquin Valley that includes Fresno and Merced, a region that is now home to about three million people.
Mark Grewal, an agricultural consultant and former executive at the dominant J.G. Boswell Company, one of the largest privately owned farms in the nation, said that the long-term, regionwide economic impact could be exponentially higher than in 1983 because the commodities that are now grown — high-end crops such as nuts, tomatoes and Pima cotton — are much costlier and are spiking in value with inflation. The region is so crucial to the world’s supply that sustained substantial flooding could lead to higher prices for consumers.
Emergency officials have sought to drive home the enormous catastrophe that could develop as the thaw comes.
David Robinson, the sheriff of Kings County, recalled that he was 12 years old when the 1983 flood hit, and he never imagined he would see such a spectacle twice in his lifetime. In an interview, his assistant sheriff, Robert Thayer, said aerial footage was not reassuring. Both men described the potential for flooding as “biblical.”
“This will impact the world, if people can just grasp that,” Sheriff Robinson said at a news conference after asking the public to stop using the lake for boating. “We’re going to have a million acre-foot of water covering up an area that feeds the world.”
In Corcoran, city officials are struggling to keep the roads open and waiting for the state to decide whether to evacuate 8,000 inmates from two prisons. Brian Ferguson, a spokesman for the California Governor’s Office of Emergency Services, said that local power plants, oil wells and derricks are also an intense concern. Gov. Gavin Newsom issued an executive order on Friday that was intended to accelerate flood preparations in the Tulare Lake basin, and a team from the California Department of Forestry and Fire Prevention arrived last month in neighboring Tulare County to prepare for a potential disaster.
But coordination on the ground has been fraught.
At tense emergency meetings last month, farmers claimed that rogue actors were secretly cutting holes in levees, violating longstanding traditions about the order in which farms were supposed to be flooded in wet years.
At one session, a public works official in Corcoran reported that the city had posted an armed guard at the levees protecting it. At another, county authorities thanked farmers for refraining from engaging in fistfights. Kings County has twice ordered the Boswell Company to release some floodwater onto its own land.
In smaller towns, residents worry that the protection of their homes will be at the mercy of powerful growers.
“All around, if you drive in your car, it’s just water everywhere,” said Cecilia Leal, 27, who lives across the county line in nearby Alpaugh, where evacuations were ordered last month after a levee breach. “You turn, there’s water.”
She and her parents stayed behind for Cesi’s Cafe, the family restaurant they operate from the front of their house on a country road. But only one route into town is open, and she said she feared the town’s only gas station would run out of fuel.
A video of desperate pistachio growers launching two dirt-filled pickup trucks into a local levee breach has gone viral. At the Lake Bottom Brewery and Distillery in Corcoran — which finally was compelled to end its $3-a-pint drought-related “Pray for Rain” special — Fred Figueroa joked that he and his sons, who own the bar, were considering naming their latest beer “Two Chevys in a Levee.”
Nature’s ascendance is not all bad news. Birds that once wintered at Tulare Lake — ibises, blackbirds and American coots — are returning in increasing numbers. On a recent sunny afternoon, a row of pelicans glided over drowned furrows, and long-legged herons rested on the muddy banks of a drainage canal near Alpaugh. A tiny bird with tall, skinny legs and a black ring around its neck scuttled across the road.
Navigating his white pickup truck last week across a tilled landscape that might soon be underwater, Mr. Grewal, 66, the consultant, said there was no way these flatlands, stretching for miles under wide blue skies, would avoid inundation. He said the melting snow would have far worse impacts than the flooding that had already occurred.
“A heavy snowmelt in May is going to be a disaster,” Mr. Grewal said. “This lake could cover hundreds of square miles here by the time everything comes down.”
Another good day in the market today. SPX is up 8% since mid March.
Even for JNJ that's a damaging amount of money.
Did I read this correctly? Ten years ago Florida decided to let Florida Man sue his insurance company and no matter the outcome the insurance company has to pay attorney fees? As if there weren't enough ambulance chasers in Florida.
How do you get a lawyer out of a tree? Cut the rope.
And the MSM is set to make millions in ad revenue from the Donald Trump show arriving in New York tomorrow. Maybe CNN will have a camera on his empty limo while he's inside getting his mug shot.
Thanks Court. I check in on them every month or so and keep them on my watch list. I'll do some more research this spring and see if the numbers make sense for me.