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Why Larry Summers Thinks We Need Massive Unemployment to Beat Inflation
The economist walked me through the reasoning behind his harsh forecast. Is he right?
https://slate.com/business/2022/07/larry-summers-massive-unemployment-fed-inflation.html
First, economists will generally tell you that when the unemployment rate falls, the inflation rate rises, because workers have the power to bargain for higher wages, which then get passed on to consumers. When the unemployment rate rises, inflation should drop, since workers have less leverage in a weak labor market.
Most traditional economists also believe that the labor market and wider economy have a sort of Goldilocks point. This is theoretical concept is known as the NAIRU—or the nonaccelerating inflation rate of unemployment, if you don’t mind a mouthful. If the jobless rate falls below NAIRU, the labor market gets too hot and inflation accelerates. If it rises above NAIRU, the labor market cools down and inflation decelerates. If it settles at NAIRU, the labor market is just right and inflation stabilizes. The tricky thing about NAIRU is that it changes over time and there is no way to observe it in the moment; economists just kind of have to guess a number.
Second, there’s a long-standing concept called the “sacrifice ratio.” That’s how much extra unemployment is needed to reduce inflation by 1 percentage point.
You might notice that both of these concepts—NAIRU and the sacrifice ratio—involve the labor market. That’s not an accident; for most of the past four decades, economists have basically thought about inflation as an outgrowth of the unemployment rate. Pretty much everybody agrees that the inflation issues during Biden’s term have been a bit more complicated than that, as they’ve been fueled in part by massive, stimulus-fueled consumer spending that collided with crippling supply chain problems in key industries like automobiles. But Summers and others argue that, at this point, prices are also rising thanks to unsustainably low unemployment and fast wage increases. If the Fed wants to quell inflation, in his view, it will likely mean fewer people working.
Or, to put it another way: He thinks the problem is that the jobless rate is way below NAIRU. To fix things, the Fed will need to raise unemployment above that mark.
Now here’s how all this comes together (sorry for the blizzard of numbers):
• In his calculation, Summers assumes NAIRU is 5 percent—in his view, bringing down inflation will require unemployment to rise higher than that, at minimum. Currently, the unemployment rate is 3.6.
• He assumes the sacrifice ratio is 2, which is in line with a lot of historic estimates.
• Finally, he assumes the Fed will have to lower inflation by 2.5 percentage points in order to reach its official target of 2 percent annual price growth. That might sound a little low, given that the main Consumer Price Index is currently up 8.6 percent for the year, but setting aside volatile food and energy prices that have been thrown out of whack temporarily by the war in Ukraine, some measures show underlying inflation rising at closer to a 4 percent annual pace.
Multiplying 2.5 by 2 gives you 5, which is how many extra points of unemployment above NAIRU Summers believe we need to beat inflation. You can spread that over however many years you want, which is how Summers gets his prediction.
This is not a very long bit of arithmetic. But you can have a very, very long argument about basically every single piece of it. Some would argue that Summers is overestimating how much inflation is being driven by low unemployment, as opposed to supply issues or Ukraine. Some might think his estimate of NAIRU is too high, since wage growth already seems to be moderating while unemployment is nowhere near 5 percent.
Jerome Powell and other Fed officials believe that they may be able to cool off wage growth without raising actual unemployment if they can simply lower the very large number of job openings (Summers has argued that, usually, job vacancies only fall when unemployment rises). Johns Hopkins economist Laurence Ball, who did pioneering research on sacrifice ratios, told me he thought Summers was using the concept in a somewhat outdated way given how the economy has changed over time. “It’s not appropriate to take that off the shelf from 1990,” he told me.
What’s worrisome about Summers’ calculations, though, is that while they aren’t self-evidently correct, they aren’t self-evidently crazy either. He certainly could have stacked the deck by picking higher numbers (Jason Furman, the Harvard economist and former Obama adviser, has said the current sacrifice ratio is probably closer to 6 right now). Instead, he’s using some orthodox ideas to tell an at least somewhat plausible story about what the Fed might have to do if it really wants to push inflation all the way down to 2 percent. (In which case, maybe it’s a good idea to let inflation hover a little above 2 percent going forward? That’s just me spitballing).
Powell, for his part, has said that he does not want to “induce a recession.” But the Fed has already begun to hike interest rates aggressively, and he has said he will do more or less whatever it takes to bring inflation back down to normal. He has also implied that he wouldn’t go out of his way to avoid a recession if that’s what was required. Notably, when AOC asked the Fed chair at a recent hearing what he thought of Summers’ forecast, he didn’t exactly dismiss it out of hand.
“I understand how that number can be arrived at or derived, but I think there is so much uncertainty, and in particular, the answer is going to depend to a significant extent on what happens on the supply side,” he said. “If we get these supply side problems worked out, which I think is certainly going to happen in time, then we wouldn’t see anything like that.”
In other words, Powell is hoping things work out better than Summers thinks they will, but he won’t exactly guarantee it.
Recession already here according to Atlanta fed model...
U.S. Recession Already Six Months Old, Says Fed Model
https://www.forbes.com/sites/simonmoore/2022/07/01/us-recession-already-six-months-old-says-fed-model/?sh=1799c6433628
Q1 2022 GDP growth was negative, suggesting a recession may have started. Now, the Atlanta GDPNow model signals Q2 growth may be negative too. If that forecast holds then the recession that seemed likely on an 18-month view, may be here already.
We won’t see the first estimate of Q2 GDP until July 28. However, computing GDP is hardly a secret. It involves combining different the components of economic activity such as consumer spending, business activity and trade.
Many components of GDP for much of Q2 have already been reported. For example the numbers for two of the three months of Q2, April and May, are largely in the books already and June data is coming in now.
The Atlanta Fed GDPNow model is tracking this data, and it looks bad. At the time of writing, roughly a -1% decline in GDP for Q2 is on the cards. Of course, that forecast may change, but unless some upcoming numbers improve, it may mean that we’re already 6 months into a U.S. recession.
US import demand is dropping off a cliff
Inbound container volumes to the US are reverting to pre-pandemic levels
https://www.freightwaves.com/news/us-import-demand-drops-off-a-cliff
The latest ocean container bookings data reveals that despite the strong levels of inbound cargo during the first five months of 2022, import demand is not just softening — it’s dropping off a cliff. Because capacity on the trans-Pacific has remained relatively stable, Freightos’ container spot rates from China to the West Coast have plunged 38% month-over-month to $9,630.
Freight forwarders will enjoy expanding margins on ocean freight, while U.S. trucking carriers and intermodal volume providers may start to see volume risks.
Consumer buying patterns are rapidly normalizing to pre-COVID levels, and U.S. retailers are stuck with too much inventory. Target (NYSE: TGT) shares dropped Tuesday morning after executives said the company would mark down unwanted items, cancel purchase orders and move quickly to get rid of excess inventory.
Container imports bound for the U.S. have dropped over 36% since May 24. (This index measures departing container volumes at the port of origin). This is a troubling sign for domestic U.S. freight markets that have been benefiting from an unprecedented surge of containerized import volumes over the last 18 months. Since ocean transit times for these inbound container volumes have recently been averaging between 30 and 35 days, we will begin seeing the softer volumes show up at U.S. ports in the first couple of weeks of July.
70 ppb is the federal 8-hour ozone standard which became effective December 2015. This map shows ground ozone levels across the U.S.
https://gispub.epa.gov/airnow/?monitors=ozone&contours=ozone&xmin=-16768450.559531443&xmax=-4245007.845291495&ymin=2722546.754961121&ymax=6371956.233407606
Coastal areas with good air quality away from fracking sites show ozone levels in the 20's or teens.
This article from 2012 mentions Pinedale WY with an ozone level of 120 ppb.
Like Wyoming, Utah finds high wintertime ozone pollution near oil, gas wells
It's currently at 38 ppb according to this map...
https://www.airnow.gov/?city=Pinedale&state=WY&country=USA
Nothing so much in the post except the O&G industry is hell bent on ignoring any environmental consequences of their drilling unless forced to comply by rules imposed by the EPA and Republicans have their back.
There's nothing in Abbott's statement that addresses the concerns for excessive ozone levels and pollution violations that are the basis for the impending regulatory action. It's only the hyperbole of skyrocketing prices due to the EPA throttling production.
Maybe I'm too cynical but it seems there is no moral compass on the right... as long as it's legal or there's no regulation prohibiting it then it's OK. Their solution is not compliance, compromise or cooperation...it's get rid of the regulation.
It's called expressing an opinion based on observations and reasoning. I also vote...the 2 are not mutually exclusive. Windmills are imaginary monsters much unlike the real ones in congress. As to actual work...I'll pass. I'm 71 and the situational forces I'm operating under are not conducive to the effort required. Sorry to annoy you...but that's life.
Think what you want. I don't claim to be a saint. It's a common reaction these days to call out hypocrisy when someone points out hypocrisy. Bravo....you've one upped me.
I have zero confidence that climate change denying, vaccine skeptic, anti-science politicians on the right will ever be part of any meaningful legislation that would protect the health of ordinary citizens if it also means less profits, fewer bonuses and fewer exercised options for their deep pocketed donors. The pro-life façade they project is a farce when at every turn other than the mythical life creating sacred conception they choose to NOT protect life...i,e, COVID, health care, gun control, the environment etc. Their pro-life stance is laughable since there's no downside i.e. no personal involvement or consequences and nothing coming out of their pockets to support that unwanted pregnancy. But after the birth look out...you're on your own. It's nothing but a self-serving feel good exercise to give the illusion that they care about "life"...lol.
This will end up like gun control. Republicans will thwart any attempts to impose sensible restrictions due to hysterical fear of the "slippery slope".
Climate change be damned, carcinogens and pollution be damned, and "just trust us" is not a great idea either. The O&G industry is always going to put their (short term) self interests above any legitimate concerns that might impact the long term health of planet and it's citizens.
he's referring to the dozens of fossil fueled power plants being taken down
Though not as bullish as the BTU Analytics’ numbers, the U.S. Energy Information Administration (EIA) in its Monthly Electric Generator Inventory published in November said it expects 27.3 GW of new natural gas-fired generation capacity to enter operation from 2022 to 2025, a 6% increase above the current 489.1 GW of U.S. capacity as of August 2021. The agency said its data shows that most of the planned new gas-fired capacity will be built in the Appalachia region, which includes the Marcellus and Utica shale plays across West Virginia, Pennsylvania (Figure 1), and Ohio. Those plays accounted for more than one-third of all U.S. dry natural gas production in the first six months of this year.
Bradford said a favorable market for natural gas vs. coal means “gas-fired generation in 2022 should be up slightly at 31.0 Bcf/d vs. 2021 at 30.8 Bcf/d. BTU Analytics expects gas-fired power generation to climb to 31.7 Bcf/d by 2025 as increases in new gas capacity and further coal retirements are offset by competition from renewables and continued retirements of older-dated gas units.”
The EIA earlier this year said more than 60 GW of natural gas-fired generation capacity has been added across the U.S. since 2014.
He would also be referring to the cutback in fossil fuel land and infrastructure needed to continue fuel supply.
WASHINGTON— New federal data shows the Biden administration approved 3,557 permits for oil and gas drilling on public lands in its first year, far outpacing the Trump administration’s first-year total of 2,658.
Nearly 2,000 of the drilling permits were approved on public lands administered by the Bureau of Land Management’s New Mexico office, followed by 843 in Wyoming, 285 in Montana and North Dakota, and 191 in Utah. In California, the Biden administration approved 187 permits — more than twice the 71 drilling permits Trump approved in that state in his first year.
The status of drilling permits during Biden’s administration
The U.S. has more than 24 million acres under lease to oil and gas companies onshore — close to half are not producing.
Before drilling can occur, the leaseholder has to get a federal permit. At the end of 2021, there were 9,173 approved and available permits to drill on federal and Indian lands. Those permits include those issued under Biden and those still active from Trump’s administration and potentially before, said Josh Axelrod, of the National Resources Defense Council. Companies don’t have to immediately begin drilling as their leases last 10 years and can be extended beyond that.
From a federal regulatory standpoint, once a permit is approved, industry can proceed.
The president suggested the onus is on the industry to start drilling. But it’s not as simple as Biden made it seem, because there are some steps before companies begin production.
Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers.
“Producers also have to put a drilling plan together, secure rights of way and work with state and private landowners,” Pett said.
Thousands of unused permits are not uncommon in any presidential administration.
Douglas Holtz-Eakin, an economist and president of the American Action Forum, a center-right think tank, said firms are trying to assess the durability of the global rebound. “They have to be sure that the costly investment (and time) that it takes to turn a lease into a producing well is worth it.”
Oil and gas companies can raise funds from investors by not drilling on leases with proven reserves, said Hugh Daigle, an associate professor at the University of Texas’ Hildebrand Department of Petroleum and Geosystems Engineering.
There is actually an incentive for the companies not to develop these resources because for publicly traded companies, these reserves get reported and influence market valuation, Daigle said.
“Sometimes there might not really even be producible oil and gas on a lease,” Daigle said. “Companies sometimes hold leases as a bit of a mind game with their competitors, or even just because they didn’t properly assess the production potential prior to leasing due to lack of data or that sort of thing.”
In 2020, the oil bust created worker and supply shortages and caused companies to cut their budgets. Investors remain reluctant to invest in fossil fuels. Pavel Molchanov, an analyst at Raymond James, told CNN Business that “oil and gas companies do not want to drill more.”
“They are under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial ‘drill, baby, drill,’ which is the way they would have done things 10 years ago. Corporate strategy has fundamentally changed.”
Woods said efforts to reduce emissions by cutting production prior to addressing consumption needs has left the world struggling to meet energy demands.
Summers fact checked over recession claim. From the interview...
The discouraging fact is that, when you have unemployment below 4% and inflation above 4%, recession always follows within two years.
Fact-checking Larry Summers’ formula for unemployment, inflation, and recessions
• The data Summers based this on did find the likelihood of a recession at 100% under these conditions. However, these conditions almost never occur. They’ve been seen in just a handful of quarters out of the 256 quarters since 1955.
• During the nearly half-century from 1970 to 2018 — the part of the data set which is most similar to today’s economy — there were no examples of Summers’ stated conditions occurring. That casts doubt on how reliable this formula is.
• Summers’ broader notion that low unemployment and high inflation presages a recession is well-supported by economic theory. But it’s lacking in the type of empirical support that his talking point implies.
See the sources for this fact-check
Amid the public outcry over inflation hitting 40-year highs, Harvard economist Larry Summers — one of the earliest and most vocal figures to warn that inflation was more worrisome than many policymakers believed — has become something of an oracle on the topic, appearing frequently in print, on television, and even sharing a phone call with President Joe Biden.
Summers, a veteran of the Clinton and Obama administrations but considered something of a centrist, has taken to articulating a clear message. Summers says the current high inflation rate needs to be taken seriously, but he adds that trying to combat it necessarily risks another problem: tipping the economy into a recession.
On June 17, Summers told Barron’s that "when you have unemployment below 4% and inflation above 4%, recession always follows within two years." (Summers used the same formula in an interview with NBC’s "Meet the Press" two days later.)
Currently, the unemployment rate is 3.6% and the inflation rate is 8.6%, so if Summers’ rule is correct, then the U.S. should be facing a recession some time in the next 24 months.
Economists told us that the theory behind Summer’s broader point is solid: To tackle inflation, the Federal Reserve needs to hike interest rates, and doing so will inevitably hamper business expansion, which increases the likelihood of layoffs and slower economic growth.
Still, even if Summers’ logic is sound based on economic theory, we found that Summers’ formula, at least as stated in media appearances, is at best oversimplified and under-nuanced.
Summers’ premise — that there are a decent number of time periods when unemployment was below 4% at the same time inflation was above 4% — has problems from the start. In reality, there haven’t been many such periods.
Let’s start by looking just at the periods when unemployment was below 4%. Since 1948, unemployment has been this low only on four general occasions.
• January 1951 to November 1953, or 35 months.
• February 1957 to April 1957, or three months.
• February 1966 to December 1969, or 47 months.
• April 2000, and September 2000 to December 2000, or five months.
So, before mid-2018, there were a grand total of five months since 1970 in which unemployment was under 4%. That's less than 1% of the months over the past half century or so.
Unemployment has also been below 4% between mid-2018 and the onset of the pandemic in early 2020, and also from December 2021 to the present. But the pandemic recession was an oddity caused by an external factor, and it is this recent period of employment that Summers is using to predict the next recession, so it can’t also be used as historic precedent.
Meanwhile, this is before we factor in high inflation. We cross-checked the months of sub-4% unemployment with inflation rates and found that none of the five months in 2000 also had inflation above 4%.
Putin is squeezing gas supplies. And Europe is getting seriously worried about a total shutdown
https://www.cnbc.com/2022/06/24/putin-is-squeezing-gas-supplies-and-europe-is-getting-seriously-worried-about-a-total-shutdown.html
“Russia is diminishing the supply of gas little by little — to some countries [by] almost 100%; to others, cutting 10, 15%,” Josep Borrel, the EU’s top diplomat, told CNBC Friday.
“I don’t think they are going to cut the gas overnight, especially as we are going into the summer and during the summer the gas is not a strategic weapon. But the winter could be difficult and we have to be prepared in Europe.“
When asked if he was concerned that Russia could fully cut gas supplies, Luxembourg Prime Minister Xavier Bettel told CNBC: “I’m fully aware that they can. They can. It’s their choice, natural choice. They can close or open.”
He stressed the importance of all 27 EU member states agreeing on its approach to the issue. “In Moscow one person can decided by himself to cut energy to Europe.”
Reduced gas flows have deepened concerns that the EU could be about to face a tough economic period. Analysts at Berenberg said this week that the latest cuts in gas meant their new base case for Europe was recession.
“Hit harder than the U.S. by the energy price shock, we project the euro zone economy to enter recession before the U.S.,” analysts at Berenberg said in a note Tuesday.
My wife and I were in Europe for 2 weeks dreading the possibility we could test positive the day before our return (U.S. requirement - since rescinded) back to the U.S. from Schiphol/AMS. We (almost) always dined outside and wore masks when in crowds. It was a great relief when we both tested negative. We made it back but unfortunately my wife came down with symptoms on the 4th day after we touched down. She tested positive on the 5th day. It was apparent to me that she contracted Covid the day we departed either at Schiphol or on the plane. I felt symptoms 2 days after she tested positive and then tested positive on the 3rd day. After a tele-consult with our docs we were both prescribed Pax on the day after testing positive (3rd day of symptoms). The symptoms improved significantly on the 2nd day of dosing. After the 5 day regimen we both tested negative the day after the last dose.. Pax did it's job IMO.
5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation (yikes!)...
https://fortune.com/2022/06/21/larry-summers-calls-for-high-unemployment-to-curb-inflation/
Former Treasury Secretary Larry Summers said unemployment in the U.S. would need to rise significantly for an extended period of time if it has any chance of curbing the inflation that is wreaking havoc on global markets.
“We need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment,” Summers said in a speech in London on Monday, Bloomberg reported.
“There are numbers that are remarkably discouraging relative to the Fed Reserve view,” he added.
Unemployment in the U.S. currently sits at 3.6% after U.S. employers added 390,000 jobs in May, according to the Bureau of Labor Statistics monthly jobs report released in early June.
Inflation historically has an inverse relationship with unemployment, meaning when inflation is high, unemployment is typically low. In basic macroeconomic principle and in the opinion of Larry Summers’, higher unemployment would translate to people having less discretionary income to purchase goods, lowering demand and reducing prices—i.e. inflation.
“The gap between 7.5% unemployment for two years and 4.1% unemployment for one year is immense,” said Summers, adding, “Is our central bank prepared to do what is necessary to stabilize inflation if something like what I’ve estimated is necessary?”
441 ET - US benchmark oil prices fall 6.8% to finish at $109.56 a barrel, marking the biggest one-day percentage decline since March 31 . The drop also gives WTI crude a 9.2% weekly decline, putting to an end a streak of seven weekly increases. Analysts point to several issues causing the sell-off, including risk aversion amid declines in US and global equity markets, and fears of a global economic slowdown that could weaken oil demand. A potential plan by Washington to restrict some exports of fuel, and a pending trip by President Biden to Saudi Arabia were also cited as factors in the price-drop. (dan.molinski@wsj.com)
(END) Dow Jones Newswires
Crude oil futures are down over 10% today breaking below the 50 day MA. The relevant strength is the lowest since Dec 21.
What has changed? Is demand falling off a cliff or is more supply coming on line?
Interesting breakthrough for converting crude oil into gasoline...
Polytriazole membranes with ultrathin tunable selective layer for crude oil fractionation
https://www.science.org/doi/10.1126/science.abm7686
The polytriazole membrane can enrich up to 80 to 95% of the hydrocarbon content with less than 10 carbon atoms (140 gram mole-1). These membranes preferentially separate paraffin over aromatic components, making them suitable for integration in hybrid distillation systems for crude oil fractionation.
But the paper linked in the first paragraph is the cutting edge of membrane filtration. The authors report a very interesting membrane made from a polyaryltriazole material, highly crosslinked with phenol groups bridging through the polymer. The material is cast into membrane form from a polar solvent like NMP before being thermally crosslinked, and it comes out quite mechanically robust. And it's full of nonpolar pores that will pass small aliphatic hydrocarbons, but not large ones or polyaromatic ones. In other words, you can put dilute crude oil on one side of the membrane and, by applying pressure, drain off what is more or less gasoline from the other. The pressure is about half what you'd use for desalination, so it's nothing extreme.
California's electrical grid has an EV problem
https://finance.yahoo.com/news/ev-adoption-behavioral-changes-101718236.html
Like adding one or two air conditioners'
Globally, the number of electric vehicles is expected to swell from 7 million to 400 million by 2040. The transition to zero-emission cars is estimated to add 2,000 TWh to annual energy demand by 2050 — a 40% increase — according to a study by global advisory group ICF.
Rajagopal’s team of researchers at Stanford developed a model framework to help utility companies around the world calculate charging patterns to better manage electricity demand. In California, it found that peak charging demand would more than double by 2030 if EV owners opted to charge in the evening at home.
“The use of an electric vehicle is like adding one or two air conditioners to your residence in terms of its energy increase,” Mike Jacobs, Senior Energy Analyst at Union of Concerned Scientists, told Yahoo Finance. “So when the local utility engineer looks at this, he thinks of that air conditioning in the afternoon and the electric vehicle coming home at the same time.”
A study from Boston Consulting Group estimated utility companies with two to three million customers will need to invest between $1,700 and $5,800 in grid upgrades per EV through 2030 in order to reliably meet the surge in energy demand.
Re: PFAS...beware if you live in Maine
‘Forever chemicals’ upended a Maine farm — and point to larger problem
https://www.washingtonpost.com/nation/2022/04/11/pfas-forever-chemicals-maine-farm/
State wildlife officials had detected high levels of perfluoroalkyl and polyfluoroalkyl substances in deer killed by hunters in the town of Fairfield, 20 miles west. PFAS — commonly known as “forever chemicals” because of their persistence in the environment once present — can be found in items such as cookware, carpets, pizza boxes and paper plates, and the stubborn chemicals have been linked to illnesses, including several types of cancer.
The PFAS levels in the deer in Maine were high enough for an official state warning. People were advised not to eat venison from deer killed near Fairfield. Several farms there had been fertilized in the 1990s with municipal or industrial sludge — essentially, treated sewage — that contained an unknown amount of PFAS. The deer had ingested it over time and should now be avoided, the state announced.
The problem, however, was far bigger than the state indicated at the time. In the 1990s, farms across Maine had been fertilized with the same sort of sludge that had poisoned the deer in Fairfield — and Songbird Farm’s concerned customer wanted Nordell and Davis to know that their land was on the list. According to a state map easily found online, but not shown to the couple before, the sludge was probably in their fields, too.
Songbird Farm tested positive for PFAS in its soil and spinach, but especially its water. The water tests revealed levels of PFAS that were 400 times higher than Maine’s state guideline.. Nordell and Davis immediately informed customers that they were suspending production at the farm while they tried to learn more — or at least until the state could install a filtration system to mitigate the problem. Then they ordered two blood tests. They couple wanted to know the amount of PFAS in their own bodies, and the results made clear just how pervasive the chemicals were: They had PFAS levels 250 times greater than the average American, higher even than some industrial workers.
Using maps, property records and information the state has posted online, the couple has tracked the problem at their farm back to May 1992, when a pair of dairy farmers, Amy and Russell Barden — two owners before them and long since gone — agreed to have 4,600 cubic yards of sludge spread on their fields from the Kennebec Sanitary Treatment District, a district that includes a large manufacturer that in the 1990s advertised itself as “the worldwide leader in molded fiber packaging” — including paper plates.
Meanwhile, in Unity, Nordell thinks about the decision all the time, and other farmers in Maine are starting to think about it, too. At least one other organic farmer in nearby Albion, eight miles from Unity, has suspended operations in recent weeks after discovering high levels of PFAS in her well water — and her farm, she pointed out, wasn’t even in a sludge field. It was due north of one.
The Yield-Curve Strawman and the Week Ahead
http://www.marctomarket.com/2022/04/the-yield-curve-strawman-and-week-ahead.html
Consider Bill Dudley's latest criticism of the Federal Reserve, published a few hours before the 2-10 curve inverted in the middle of last week. The title says it all: "The Fed has made a US recession inevitable," and he does not cite the yield curve once. Instead, his focus is on the impact of the necessary tightening on unemployment. It draws on the "Sahm Rule" that holds that if the three-month average of unemployment rises by more than 0.5%, a recession is inevitable.
The reason our outlook has darkened also had little directly to do with the yield curve. We saw monetary and fiscal policy tightening in a pro-cyclical fashion as the economy pumped-up by massive stimulus, and the easing of the pandemic was already slowing. Say what you want about Powell, but the market has historically aggressive tightening priced in for the rest of the year. The market is not waiting for the Fed to move. Rates have jumped a multiple of the Fed's 25 bp hike. From the March 1 low to the April 1 high, the two-year note rose 120 bp.
Many critics under-appreciate the power of the central bank's communication channel, which also speaks to the Fed's credibility. Some critics assert that the Fed's credibility has been undermined by being so far behind the curve but are hard-pressed to provide compelling evidence. Also, it seems that the role of the market as a discounting mechanism is not sufficiently recognized. Powell & Co have signaled their intention to hike rates, and the market believes them. That is why 216 bp of tightening has been priced into the Fed funds futures market. Of the remaining six FOMC meetings this year, the pricing of the Fed funds futures strip is consistent with two 50 bp hikes and leaning (almost 70% chance) toward a third.
At the same time, fiscal policy is tightening dramatically, but it does not seem to get nearly the same attention as monetary policy. The median forecast in Bloomberg's survey sees the budget deficit going to be more than halved from 10.8% to 5.1%. To say this is the largest percentage point drop in the budget deficit may not capture the magnitude of the fiscal contraction that is underway. Consider that it took four years (2010-2013) to reduce the deficit was as much after the Great Financial Crisis. The smaller deficit in part reflects less spending. The fall in government spending is translated into less household income. Income helps drive consumption, which contributes something on the magnitude of 70% of the US economy.
In addition to the significant tightening of monetary and fiscal policy, another major headwind is the rise in food and energy prices. The reason that they are excluded from the common but not universal measure of core inflation is not that they are volatile, as some claim. They are excluded because the change in their prices is driven by supply, not demand. And, the headline rate, over time, converges to the core rate, not the other way around. The squeeze on the cost of living will likely adversely impact consumption. The last three recessions were preceded by a doubling of the price of oil. Consider that the 20-day moving average of WTI was near $47.50 at the end of 2020 and is now around $107.60.
Two tailwinds for growth in recent quarters cannot be counted going forward. First, the inventory cycle is mature after accounting for the lion's share of growth in the final three months of last year. Businesses are still accumulating inventories, but what counts is the change in the change, and this looks set to slow going forward. Also, the boost in savings spurred by the pullback in consumption and the transfer payments have been drawn down, especially for lower- and middle-income households.
In a relatively subdued week of US economic data, the minutes from the FOMC's recent meeting may be the most anticipated (April 6). Chair Powell said at his press conference that the minutes would provide more insight into its thinking about the coming balance sheet reduction. There are two issues, timing, and pace. Word cues from Fed officials suggest that unwinding can begin shortly after the May 4 FOMC meeting. Like the 2017-2019 experience, there may be a rolling start.
The balance sheet shrinks when the Federal Reserve does not reinvestment the full amount of the principle of its maturing assets. In 2017-2019, the Federal Reserve allowed a maximum of $30 bln of Treasuries and $20 bln of mortgage-backed securities a month not to be reinvested. A consensus appears to favor a faster pace, and some suspect it can be a combined total of $100 bln. This time, the Fed's balance sheet includes around $325 bln in T-bills; last time, none. This could add another wrinkle, but we suspect the bill sector will not be included in the caps. The maturing of Treasuries will extinguish reserves, and allowing the T-bills to roll off as they mature, the use of the Fed's reverse repo facility will likely decline.
Out of 92 Sars-Cov-2 infected pts treated w/molnupiravir none had detectable virus after 3 days...
Merck and Ridgeback to Present Data Demonstrating That Treatment With LAGEVRIO™ (molnupiravir) Was Associated With More Rapid Elimination of Infectious SARS-CoV-2 Than Placebo
https://www.businesswire.com/news/home/20220401005097/en/
In participants with infectious virus isolated at baseline and for whom post-baseline infectivity data were available, molnupiravir was associated with more rapid elimination of infectious virus than placebo. At Day 3 of treatment, among patients with infectious virus at baseline, infectious SARS-CoV-2 was detected in 0.0% (n=0/92) of patients who received LAGEVRIO, compared with 21.8% (n=20/96) of patients who received placebo. At Day 5, infectious virus was detected in 0.0% (n=0/91) of patients in the LAGEVRIO arm compared with 2.2% (n=2/89) in the placebo arm. At Day 10, no infectious virus was detected in either arm for patients with infectious virus at baseline. Molnupiravir was also associated with greater mean reductions from baseline in SARS-CoV-2 RNA than placebo from Days 3 through 10, though molnupiravir and placebo were associated with comparable rates of viral RNA clearance through Day 29.
Global supply lines brace for ‘menacing’ economic storm to widen
https://economictimes.indiatimes.com/small-biz/trade/exports/insights/global-supply-lines-brace-for-menacing-economic-storm-to-widen/articleshow/90508218.cms
On top of the wartime setbacks, omicron outbreaks are widening China’s use of strict lockdowns in major trade hubs, the latest in Shanghai. A.P. Moller-Maersk A/S, the world’s No. 2 container carrier, said Monday that some depots serving local ports have closed indefinitely, and trucking to and from terminals will be “severely impacted.”
Economists at Barclays on Monday said the world is entering a new era of higher volatility for growth and inflation. Allianz Research on Friday warned of a greater risk of a “double whammy” in world trade — lower volumes and higher prices — in 2022. Clarksons Research, a shipping analytics firm in London, last week trimmed its projections for global trade this year and next, saying its port congestion indexes are rising again and the latest shocks are “amplifying an already disrupted maritime transport system.”
According to data compiled by Bloomberg, the German ports of Hamburg and Bremerhaven saw new highs in ship congestion this month, while Rotterdam, the continent’s busiest gateway for container traffic, saw its vessel backup at the start of the month reach an 11-month high.
The snarls make any return to normal unlikely this year unless demand unexpectedly craters. Ocean shipping, the workhorse for some 80% of global trade, was stretched so thin that the spot rate to send a 40-foot container of goods to the U.S. from Asia averaged more than $10,000 in the second half of last year — about seven times higher than the pre-pandemic level. Those rates have come down in recent weeks, but experts say the reprieve probably reflects a seasonal lull before transport demand and costs pick up again.
Even greater than the risks Russia’s war in Ukraine pose to global supply fluidity are the Covid-19 cases and targeted lockdowns in China, according to economists Ana Boata and Françoise Huang at Euler Hermes, a unit of Allianz Group. They see a risk that container freight prices approach or even exceed their previous peaks, before returning to current levels by year end.
“Overall, even if not returning to the peaks of 2021, the cost and congestion levels of global supply-chains are likely to remain high for most of 2022,” Boata and Huang wrote in an email. “The normalization may start more visibly only from 2023.”
Watch 10-year, 3-month...
Stock-market investors should watch this part of the yield curve for the ‘best leading indicator of trouble ahead’
https://www.marketwatch.com/story/why-this-part-of-the-treasury-yield-curve-may-be-the-best-leading-indicator-of-trouble-ahead-11648210025
“The focus has been on the 10s and 2s,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, in Horsham, Penn, a northern suburb of Philadelphia.
“I will hold out until the 10s to 3-month bills inverts before I turn too negative on the economic outlook,” he said, calling it “the best leading indicator of trouble ahead.”
Watch 10-year, 3-month
Instead of falling, that spread climbed in March, continuing its path higher since turning negative two years ago at the onset of the pandemic (see chart).
“The 3-month Treasury bill really tracks the Federal Reserve’s target rate,” said Gavin Stephens, director of portfolio management at Goelzer Investment Management in Indiana, by phone.
“So it gives you a more immediate picture of if the Federal Reserve has entered a restrictive state in terms of monetary policy and, thus, giving the possibility that economic growth is going to contract, which would be bad for stocks.”
By watching the 10s and 2s TMUBMUSD02Y, 2.336% spread, “You are looking at the expectations of where Fed Reserve interest rate policy is going to be over a period of two years,” Stephens said. “So, effectively, it’s working with a lag.”
On average, from the time the 10s and 2s curve inverts, until “there’s a recession, it’s almost two years,” he said, predicting that with unemployment recently pegged around 3.8% that, “this curve is going to invert when the economy is really strong.”
The Federal Reserve Bank of San Francisco also called the 3-month TMUBMUSD03M, 0.540% and 10-year curve relationship its “preferred spread measure because it has the strongest predictive power for future recessions,” such as in 2019, back when the yield curve was more regularly flashing recession warning signs.
Contrarian view... J.P. Morgan's Kolanovic is skeptical of yield curve inversion, likes biotech and tech stocks
https://seekingalpha.com/news/3815896-jp-morgans-kolanovic-skeptical-of-yield-curve-inversion-likes-biotech-and-tech-stocks
The gap between the 2-year Treasury yield (NASDAQ:SHY) and the 10-year Treasury yield (NYSEARCA:TBT) (NASDAQ:TLT) is below 20 basis points for the first time this cycle, but likely won't turn negative in 2022, J.P. Morgan strategist Marko Kolanovic says.
Investors are concerned with an "ominous signal about the longevity of this cycle, i.e. the inversion of the 5s10s curve in the US following the FOMC meeting," Kolanovic wrote in a note. "In our view, it is the 2s10s that investors should watch. Historically, the 5s10s has inverted more frequently than the 2s10s and has given many more false signals (e.g. various inversion in early 1970s, 1984 and 1994) while the 2s10s has been much more reliable."
"One way of seeing this is to separate episodes of 5s10s inversion in two groups, i.e. those happening with 2s10s inversion and those happening without," he said. "Quite interestingly, two conclusions emerge. First, the 12m following inversion are usually good for risk markets regardless of whether the 2s10s inverted or not. Second, the 2nd year following inversion is usually challenging only when the 2s10s inverted originally."
"We think the 2s10s should stay positive in 2022 but even if it falls in the year, the evidence suggests risk markets should start to feel some headwind only from late 2023."
The Fed is facing a lose-lose situation with either hot inflation or a recession, but high prices would be preferable, says Mohamed El-Erian
https://markets.businessinsider.com/news/bonds/federal-reserve-mohamen-elerian-inflation-recession-economy-prices-investors-2022-3
Volatility has seized markets since the Fed first signaled it would hike interest rates, but uneven messaging from the central bank has caused investors to become even more skittish.
El-Erian said the Fed keeps flip-flopping between hawkish and dovish signals, so he isn't sure what to expect. However, El-Erian said he'd err on the side of high prices over a recession as the preferred outcome of the Fed's actions.
"Now that you're in this position and you're going to end up making a mistake, which is a high probability outcome, I'd rather make a mistake of letting inflation persist than throw this economy into recession," El-Erian said.
Traders See Key Part of Treasury Yield Curve Inverting by June
https://www.bloomberg.com/news/articles/2022-03-21/traders-see-key-part-of-treasury-yield-curve-inverting-by-june
Treasury forwards are pricing in that two-year yields will be at about 2.29% by June, one basis point more than the expected yield on 10-year bonds in similar contracts. That gap is up slightly from 0.4 basis points on Friday, when the forward market priced in such an inversion in that segment of the yield curve for the first time since 2007.
The pricing in the forward contracts contrasts with the spot Treasury market, where 10-year yields are holding above 2-year rates. But that gap has narrowed to about 0.22% from as much as 1.62% a year ago as traders anticipate that the Federal Reserve’s monetary tightening will slow growth or even tip the economy into a recession.
Volkswagen says high demand is helping its EVs turn a profit sooner than expected
https://www.cnbc.com/2022/03/15/volkswagen-vow-vwagy-2022-annual-meeting-ev-updates.html
Volkswagen has worked for several years on an aggressive plan to transition to electric vehicles, aiming to have EVs account for half of its global production by 2030. While the plan isn’t expected to hit its full stride until the middle of this decade, it’s already bearing fruit. Volkswagen was the leading seller of EVs in Europe, with about 25% of the market. In the U.S., it was second behind Tesla with about 7.5% share last year.
Volkswagen’s share of China’s EV market is still relatively small, but it’s growing quickly. The group’s EV deliveries in the country jumped fourfold last year to nearly 93,000, and VW expects that total to double again in 2022.
“We see better scale, we see better margins, we see high customer demand,” CFO Arno Antlitz told reporters during a call ahead of the company’s annual meeting on Tuesday. “Originally we thought it takes two to three years until we see the [profit] parity of ICE and battery-electric vehicles.”
Part of that “better scale” is coming courtesy of rival Ford Motor Company. Ford and VW announced on Monday that there will now be two electric Fords built on Volkswagen’s EV architecture for the European market, with production of the pair expected to total about 1.2 million vehicles over six years starting in 2023. That’s about twice as many as originally planned.
These strawberries were grown in a New Jersey warehouse — and they may revolutionize how Americans eat
https://www.cnbc.com/2022/03/15/bowerys-vertical-farming-strawberries-go-on-sale-in-new-york-.html
Inside of a warehouse in this factory town neighboring Newark, thousands of strawberries grow in rows beneath bright lights.
This is one of Bowery Farming’s research and development centers, and these berries are destined for a second life in the big city.
One of Bowery’s competitors, Plenty, said Tuesday that it plans to build an indoor strawberry farm to serve customers and retailers in the Northeast with major berry grower Driscoll’s. Their rivals include venture-backed start-ups AeroFarms, PlantLab and BrightFarms.
Christine Zimmermann-Loessl, chair of the Association for Vertical Farming, said companies must prove they can grow a wide variety of fruits and vegetables to become a more meaningful part of the food supply.
Investors are pouring money into agriculture technology companies at a time when food’s price and availability are on the minds of more retailers and consumers.
Inflation has pushed up food prices by 7.9% over the past 12 months, according to the U.S. Bureau of Labor Statistics data reported this month. The pandemic left some grocery shelves bare and underscored the complexities of the supply chain. In recent weeks, Russia’s invasion of Ukraine has illustrated the risks of relying on other countries to produce energy or grow food.
The only lubricant you can use is pure whale sperm.
Interesting...panic sell of 60K shares at the open today.
Opened at 13.87 and low of 13.50.
Recovered nicely though.
Currently at 16.31.
I don't believe it would be "enjoyable" to not work, not have any other source of income and live on government assistance alone. It would be very difficult to feed & cloth a family and pay rent without also working. A lot of those on government assistance have children, are poorly educated and have low incomes or making minimum wage. Most of these families are forced to go on assistance based on situations & circumstances they have no control over and not from some desire to avoid work by gaming the system.
Biden administration plan calls for $5 billion network of electric vehicle chargers along interstates
https://www.washingtonpost.com/transportation/2022/02/10/electric-vehicle-charging/
Various groups disagree about the proximity of chargers. A group of Western state transportation departments said the current 50-mile standard was hard to meet in rural areas. But the Alliance for Automotive Innovation, which represents major carmakers, said the distance should be closer to offer convenience similar to filling up at a gas station.
Ultimately, the federal government will consider a particular corridor fully built out when it has at least four 150-kilowatt charging points every 50 miles, with limited exceptions. Once states meet that goal, they can use their remaining money for other charging projects.
States have until Aug. 1 to submit plans for using the money. If states don’t submit a plan or don’t take steps to implement it, the federal transportation department can withhold money or give it to local governments. The Federal Highway Administration is set to approve plans by Sept. 30.
The infrastructure legislation includes another $2.5 billion the Transportation Department can use to target rural areas or city neighborhoods with poor access to charging. Officials say they expect to set out plans for that funding later this year.
On Tuesday, President Biden hosted the chief executive of Australian charging company Tritium at the White House. The company is planning to open a manufacturing plant in Tennessee to make 30,000 chargers a year.
Why This Could Be a Critical Year for Electric Cars
https://www.nytimes.com/2022/02/08/business/energy-environment/electric-cars-vehicles.html
Booming in a depressed market, battery-powered vehicles are a plus for the climate but pose a big threat to carmakers and parts suppliers that are slow to change.
By Jack Ewing and Neal E. Boudette
Published Feb. 8, 2022
Updated Feb. 9, 2022, 10:04 a.m. ET
Sales of cars powered solely by batteries surged in the United States, Europe and China last year, while deliveries of fossil fuel vehicles were stagnant. Demand for electric cars is so strong that manufacturers are requiring buyers to put down deposits months in advance. And some models are effectively sold out for the next two years.
Battery-powered cars are having a breakthrough moment and will enter the mainstream this year as automakers begin selling electric versions of one of Americans’ favorite vehicle type: pickup trucks. Their arrival represents the biggest upheaval in the auto industry since Henry Ford introduced the Model T in 1908 and could have far-reaching consequences for factory workers, businesses and the environment. Tailpipe emissions are among the largest contributors to climate change.
While electric vehicles still account for a small slice of the market — nearly 9 percent of the new cars sold last year worldwide were electric, up from 2.5 percent in 2019, according to the International Energy Agency — their rapid growth could make 2022 the year when the march of battery-powered cars became unstoppable, erasing any doubt that the internal combustion engine is lurching toward obsolescence.
The proliferation of electric cars will improve air quality and help slow global warming. The air in Southern California is already a bit cleaner thanks to the popularity of electric vehicles there. And the boom is a rare piece of good news for President Biden, who has struggled to advance his climate agenda in Congress.
The auto industry is on track to invest half a trillion dollars in the next five years to make the transition to electric vehicles, Wedbush Securities, an investment firm, estimates. That money will be spent to refit and build factories, train workers, write software, upgrade dealerships and more. Companies are planning more than a dozen new electric car and battery factories just in the United States.
“It’s one of the biggest industrial transformations probably in the history of capitalism,” Scott Keogh, chief executive of Volkswagen Group of America, said in an interview. “The investments are massive, and the mission is massive.”
But not everyone will benefit. Makers of mufflers, fuel injection systems and other parts could go out of business, leaving many workers jobless. Nearly three million Americans make, sell and service cars and auto parts, and industry experts say producing electric cars will require fewer workers because the cars have fewer components.
Over time, battery ingredients like lithium, nickel and cobalt could become more sought after than oil. Prices for these materials are already skyrocketing, which could limit sales in the short term by driving up the cost of electric cars.
The transition could also be limited by the lack of places to plug in electric cars, which has made the vehicles less appealing to people who drive long distances or apartment residents who can’t charge at home. There are fewer than 50,000 public charging stations in the United States. The infrastructure bill that Congress passed in November includes $7.5 billion for 500,000 new chargers, although experts say even that number is too small.
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And it could take time to see the climate benefits of electric cars: Replacing the 250 million existing fossil-fuel cars and light trucks could take decades unless governments provide larger incentives to car buyers. Cleaning up heavy trucks, one of the biggest sources of greenhouse gas emissions, could be even harder.
Still, the electric car boom is already reshaping the auto industry.
The biggest beneficiary — and the biggest threat to the established order — is Tesla. Led by Elon Musk, the company delivered nearly a million cars in 2021, a 90 percent increase from 2020.
Tesla is still small compared with auto giants, but it commands the segment with the fastest growth. Wall Street values the company at about $1 trillion, more than 10 times as much as General Motors. That means Tesla, which is building factories in Texas and Germany, can easily expand.
“At the rate it’s growing now, it will be bigger than G.M. in five years,” said John Casesa, a former Ford executive who is now a senior managing director at Guggenheim Securities, at a Federal Reserve Bank of Chicago forum in January.
Most analysts figured that electric vehicles wouldn’t take off until they became as inexpensive to buy as gasoline models — a milestone that is still a few years away for moderately priced cars that most people can afford.
But as extreme weather makes the catastrophic effects of climate change more tangible, and word gets around that electric cars are easy to maintain, cheap to refuel and fun to drive, affluent buyers are increasingly going electric.
Ford will soon start selling the Lightning, an electric version of the F-150 pickup truck, which has topped U.S. sales charts for decades. It initially planned to make 75,000 a year. But demand has been so strong that the company is racing to double production of the Lightning, which starts at $40,000 and runs up to more than $90,000. Ford stopped taking reservations after amassing 200,000.
“We’re going to be able to sell every one we can build,” said Hau Thai-Tang, Ford’s chief product platform and operations officer.
A growing selection of electric pickups and sport utility vehicles is attracting buyers uninterested in Tesla’s minimalist cars, which are most popular in coastal cities and suburbs.
Take Eddie Berry, the owner of an auto-parts delivery business in Groveport, Ohio, near Columbus. He has long relied on pickup trucks for work and camping trips. He had little interest in electric vehicles until the Lightning. His roughly $75,000 truck will be delivered this spring.
“There’s so much about this truck that’s going to help me,” Mr. Berry said. The locking front trunk, where an engine normally sits, will give him a secure space to carry parts. He won’t spend $80 for fuel every few days.
And since the Lightning can be used as a power source, it will revolutionize his tailgate at Ohio State football games. “I’ll be able to set up my big-screen TV,” Mr. Berry said. “I can power the electric smoker I use for ribs and pork. I’m superexcited. I’m going to be the guy everybody’s talking about.”
Sales of electric cars might have been even higher in 2021 but for production bottlenecks. Volkswagen sold about 17,000 ID.4 S.U.V.s in the United States, but could have sold four times as many, Mr. Keogh said.
Ford’s Dearborn Truck Plant in Michigan is under construction to expand its output. Credit...Brittany Greeson for The New York Times
Mike Sullivan, owner of LAcarGUY, a dealership chain, sold out his ID.4s within weeks of their arrival. “When we have them it’s the best-selling model,” he said. Supply will increase this year when Volkswagen begins producing ID.4s in Chattanooga, Tenn., rather than importing them from Germany.
At the upper end, electric vehicles are already competitive on price and could save buyers thousands on maintenance and gasoline. (Electric cars do not need oil changes, and electricity is generally cheaper per mile than gasoline.)
The Tesla Model 3 and Jaguar XF P250 sedans retail for around $46,000. But owning the Tesla for five years costs $16,000 less, according to calculations by Kelley Blue Book, a vehicle valuation company.
If Europe and China are any measure, sales of electric vehicles in the United States will continue to explode. In December, battery-powered cars outsold diesel cars in Europe for the first time. In 18 countries, including Britain, more than 20 percent of new cars were electric, according to Matthias Schmidt, an independent analyst in Berlin.
In 2015, more than half of Europe’s new cars ran on diesel, the result of tax policies that make diesel cheaper than gasoline. But government incentives for electric cars, and penalties for carmakers that don’t meet emissions targets, have changed the equation.
About 4 percent of new cars were electric last year in the United States, up from about 2 percent in 2020.
The point of electric cars is to cut tailpipe emissions, a leading source of carbon dioxide and the pollutants that cause of smog. In Southern California, electric cars have already had a small impact on air quality, leading to a 4 percent reduction in nitrogen oxide emissions from passenger cars compared with what they would have been otherwise, according to the South Coast Air Quality Management District, which includes Los Angeles.
Of course, battery-powered cars also have an environmental cost. But even taking into account the energy and raw materials they require, electric vehicles are much better for the climate than conventional cars, according to a Yale School of the Environment study.
Inevitably, a transition this momentous will cause dislocation. Most new battery and electric car factories planned by automakers are in Southern states like Georgia, Kentucky, North Carolina and Tennessee. Their gains could come at the expense of the Midwest, which would lose internal combustion production jobs.
That hasn’t happened yet, because gasoline vehicles still dominate sales. But as battery power takes market share, conventional models will benefit less from the cost savings that come from stamping out the same vehicle hundreds of thousands of times.
The next few years could be perilous for carmakers that have been slow to offer electric vehicles. Toyota, a pioneer in hybrid vehicles, will not offer a car powered solely by batteries until later this year. Ram does not plan to release a competitor to Ford’s Lightning until 2024.
Chinese companies like SAIC, which owns the British MG brand, are using the technological shift to enter Europe and other markets. Young companies like Lucid, Rivian and Nio aim to follow Tesla’s playbook.
Old-line carmakers face a stiff learning curve. G.M. recalled its Bolt electric hatchback last year because of the risk of battery fires.
The companies most endangered may be small machine shops in Michigan or Ontario that produce piston rings and other parts. At the moment, these businesses are busy because of pent-up demand for all vehicles, said Carla Bailo, chief executive of the Center for Automotive Research in Ann Arbor, Mich.
“A lot of them kind of have blinders on and are not looking that far down the road,” Ms. Bailo said. “That’s troubling.”
Maybe there's still hope for Meta - lol...
A Turkish Farmer Tests Out VR Goggles on Cows To Get More Milk
https://interestingengineering.com/a-turkish-farmer-tests-out-vr-goggles-on-cows-to-get-more-milk
According to the Turkish news outlet Anadolu Ajansi, Kocak thought that tricking the cows into thinking they were actually outside through VR headsets would make them happier and produce more milk, since the cows are trapped indoors, especially in winters.
Kocak said that he had to look for alternative ways to produce more milk after the rising fodder prices in Turkey. Before trying out VR goggles, Kocak said that he had played soothing classical music to his cattle. Speaking to Anadolu Ajansi, he said that "In Russia, cows were fitted with virtual reality goggles. We decided to try it in our own business. In the first stage, we trialed the virtual reality goggles on two of our animals. We monitored the process for about 10 days. We observed an increase in both the quality and quantity of milk in animals wearing the goggles." According to Kocak, the cows’ milk output has gone from 5 gallons (22 liters) to 7 gallons (27 liters) a day.
The VR headsets for cattle were initially tested in Moscow, Russia and were reportedly developed in coordination with veterinarians. Since the goggles proved to be a success on his farm, Kocak said that he's planning to order 10 more headsets from Russia and install them on his animals.
Meta’s Virtual-Reality Arm Is a ‘Flaming Bag of Sh*t’
On the latest Pivot podcast, Kara Swisher and Scott Galloway discuss why Mark Zuckerberg’s pivot to virtual reality doesn’t seem to be resonating with investors.
https://nymag.com/intelligencer/2022/02/metas-virtual-reality-arm-is-a-flaming-bag-of-sh-t.html
Kara Swisher:
And again, the spending on Meta is insane — they lost $10 billion on that division, the Reality Labs division. And 2022 could bring challenges for both Alphabet and Meta. The Senate is considering a bill that would force them to pay news publishers, similar to the Australian law that took effect. Zuckerberg blamed Apple’s anti-tracking feature for the losses, but the big thing was this $10 billion cost for the Metaverse investment. So what do you think about the situation?
Scott Galloway:
This is the quarter that Google disarticulates from Facebook, much less Pinterest and Snap. Search is its own form of communications and advertising that continues to just grow. But even at scale, the ad-supported model seems to be under pressure. Facebook, for the first time in 18 years, had a decline in daily active users. It’s never registered that. So just some positives because I’m always critical of Facebook: Mark Zuckerberg is a brilliant business person. He’s doing exactly what he should be doing, and that is, he’s making a staggering investment in trying to pivot the Titanic and finding something big enough to replace what he sees as the sun passing midday on their core business model.
Swisher: He’s also bored with it, right? You can feel it.
Galloway: He’s doing exactly the right thing strategically. The problem is the tactics make no sense. The people in this universe are not impressed with the universe he envisions, and specifically the portal. One of my predictions in November of 2021, when I made 2022 predictions, was that the biggest failure in tech-product history might be the Oculus. The Reality Labs group grew from $1 billion to $2 billion, but to spend $10 billion to get to $2 billion … If he pulls it off, it’ll be one of the most impressive feats in — not even corporate renewal — but vision around maintaining growth. I don’t think they’re going to. I think this thing is already a giant flaming bag of shit.
Swisher: Well, he’s got some pattern-matching when they move to mobile, so it feels like that’s what he’s thinking about. But he really is spending.
Galloway: You can’t argue that the guy isn’t bold and isn’t a visionary. But the two words that are missing from the narrative, or your narrative around the problem and why they have hit a wall here — the first word is Tik and the second is Tok.
Swisher: That’s another thing — I left that out. They talked about TikTok, the audience issue.
Galloway: TikTok has learned from Facebook. The majority of the complaints I see about TikTok are creators upset that their content got taken down, so they’ve pivoted the other way. I want to be clear, they have problems, but directionally, I think they’re more about joy and creativity, as opposed to arguing and calling other people out and teen depression and all this shit. So I’m a big fan of TikTok. If it can disarticulate itself in a credible way from this fear that it could be weaponized on a moment’s notice by the CCP, it will probably be one of the ten most valuable companies in the world in the next 24 to 36 months.
PFE > How Pfizer made an effective anti-covid pill
https://www.technologyreview.com/2022/02/04/1044714/pfizer-covid-pill-paxlovid-pandemic/
Chemists at Pfizer’s research facility in Connecticut dusted off some ideas the company had developed during the SARS outbreak in 2003. Even back then, an obvious line of attack had been to block a well-understood component of the virus life cycle involving a key protease, a protein that orchestrates how the virus copies itself. Find a chemical that is able to stick tightly enough to that protein, and it would stop the virus from replicating in the body, lessening the chances that a patient would become seriously ill.
Right away, researchers got a lucky break. When Pfizer checked, it found that none of the thousands of proteins in the human body shared the same bit of molecular structure they planned to interfere with in SARS-CoV-2. That meant they could hit the virus hard and not expect any major side effects. Nature had provided the scientists with a big bull’s-eye. “This is the most solid biological target I have ever worked on,” says Pfizer chemist Dafydd Owen.
Crucially, the protease is, in the jargon of biologists, a “highly conserved” molecule. That means that even as the virus evolves, this part rarely changes. So while the coronavirus has been mutating quickly to evade vaccines, so far it looks as though Paxlovid will work just as well against any variant—whether it’s omicron or whatever comes next.
In fact, laboratory tests run by Pfizer suggest Paxlovid will work against all coronaviruses, maybe even one still lurking in a bat cave somewhere. If so, it means the company has hit on a potential defense against the next outbreak, too. “It has the potential to be a pan-coronavirus agent and stockpiled against future pandemics,” says Owen, the Pfizer chemist. “But it’s here for this pandemic, because we did it super fast.”
surviving a previous infection now provided greater protection.”
"Her philosophy was that she was more okay with the idea of catching COVID than getting vaccinated,"
We have an update to our study which found enhancement of Delta immunity with #Omicron infection.
We have an update to our study which found enhancement of Delta immunity with #Omicron infection.
— Alex Sigal (@sigallab) January 17, 2022
We were able to add study participants to see more clearly the effect of vaccination.
Available at https://t.co/rGaEB9GdmS and soon on medRxiv