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Duke Energy"s inclusion of nuclear in carbon plan could boost Wilmington"s GE Hitachi reactor

Duke Energy’s N.C. carbon plan proposals, due to regulators Monday, will include using small modular reactors. A TVA announcement may lead Duke to opt for the GE Hitachi reactor developed in North Carolina......»»

Category: topSource: bizjournalsMay 13th, 2022

As Putin Threatens Nuclear Disaster, Europe Learns to Embrace Nuclear Energy Again

In early March, the world looked on in horror as a fire broke out at Europe’s largest nuclear power plant in southeast Ukraine. The blaze at the Zaporizhzhia facility following shelling by invading Russian forces was eventually brought under control, and no leaked radiation was reported, though the potential for catastrophe prompted Ukraine President Volodymyr… In early March, the world looked on in horror as a fire broke out at Europe’s largest nuclear power plant in southeast Ukraine. The blaze at the Zaporizhzhia facility following shelling by invading Russian forces was eventually brought under control, and no leaked radiation was reported, though the potential for catastrophe prompted Ukraine President Volodymyr Zelenskyy to accuse his Russian counterpart Vladimir Putin of “nuclear terrorism.” “There are six nuclear reactors there,” Zelensky said of Zaporizhzhia. “In Chernobyl, it was one reactor that exploded, only one.” By referencing Chernobyl—the nuclear power plant in northern Ukraine that became the site of the world’s worst nuclear disaster in 1986—Zelensky was making the stakes very plain. But strange as it may sound, those scenes at Zaporizhzhia may inadvertently contribute to a new dawn for nuclear power. [time-brightcove not-tgx=”true”] The instability resulting from the Russian invasion—as well as mounting evidence of war crimes—has made finding alternatives to Russian oil and liquid natural gas (LNG) a policy priority for European nations who want to stop funding Putin’s war machine. With few options that offer true energy sovereignty, there is now renewed enthusiasm for nuclear energy among politicians in Europe. On April 8, British Prime Minister Boris Johnson announced the U.K. would build up to eight new nuclear plants by 2030 to ensure “we are never again subject to the vagaries of global oil and gas prices” and “can’t be blackmailed by people like Vladimir Putin.” Across Europe, there has been a growing acceptance that nuclear energy is a vital plinth of efforts to fight climate change, and Russia’s invasion of Ukraine has catalyzed that trend by injecting a national security argument. And as a leader in revolutionary new nuclear technology, the U.S. stands to be the chief geostrategic beneficiary of any revival. The question is whether engrained, ideological aversion to nuclear power in key stakeholder states, particularly Germany, will quell that momentum. Why Nuclear Power is Back on the Discussion Table Collectively, the E.U. imported more than 60% of its energy in 2019. Of that, 47% of the bloc’s imported coal came from Russia, along with 41% of its imported LNG, and 27% of its imported crude oil. The ideal solution is to replace coal and oil with renewables like wind, solar and tidal power. However, despite some great advances in battery technology amid heaps of investment, there is still not a viable storage solution to provide power when the sun isn’t shining, or wind stops blowing. This means each nation’s energy portfolio requires a “firm” element. The cheapest option is simply to swap out dirty coal for comparatively clean LNG, but Putin’s aggression has underscored the hidden costs of that approach. Not only is nuclear energy immune to the vicissitudes of oil and gas prices, it’s also a zero-carbon technology. Beyond the practically uncountable damage greenhouse gas emissions inflict on the lives and livelihoods of people globally, the air pollution that results from burning fossil fuels directly led to 8.7 million deaths in 2018 alone, according to research published last year. Meanwhile, despite the raft of high-profile disasters, historic fatalities from the civil nuclear industry are measured in the low thousands. In February, the E.U. classified nuclear energy as “green,” drawing a backlash from environmentalists who point to risks associated with accidents and nuclear waste. But many energy experts counter that it’s a necessary element of a viable net-zero economy. “Nuclear power is an important source of low-carbon electricity and heat that can contribute to attaining carbon neutrality and hence help to mitigate climate change,” wrote Olga Algayerova, Executive Secretary of the United Nations Economic Commission for Europe, in a report published in the lead up to November’s COP26 climate talks. And boosting the capacity of Europe’s existing nuclear reactors—which don’t normally run at full tilt, due to the growing inclusion of renewables—was one of the solutions the International Energy Agency (IEA) recently proposed to reduce European reliance on Russian LNG. “The majority of countries in Europe will be even more pro-nuclear now,” says Kai Vetter, a professor of nuclear engineering at the University of California, Berkeley. Even before the war in Ukraine, the IEA was saying that the nuclear industry must nearly double in size over the next two decades to meet global net-zero emissions targets. In 2018, the Intergovernmental Panel on Climate Change (IPCC) published a 400-page special report, “Global Warming of 1.5°C,” which offered four pathways to mitigate global temperature rises. All four pathways increased the use of nuclear power in relation to 2010, by an amount ranging from 59% to 106% by 2030, and from 98% to 501% by 2050. Since the invasion of Ukraine, E.U., policymakers grappling with how to wean their nations off Russian energy are seeing nuclear as an increasingly viable alternative. Why Some E.U. Countries Remain Skeptical of Nuclear On the other hand, nuclear power remains deeply political in Europe, not least after the 2011 Fukushima meltdown in Japan reenergized anti-nuclear advocates in the region. Perhaps the most important country opposing nuclear is Germany—which also happens to be the E.U.’s largest user of Russian energy. Germany’s ruling coalition partner Green Party has its roots as an advocacy group specifically in opposition to nuclear energy, and the country was about to take its nuclear power offline when the war began. As Russian tanks rolled into Ukraine in February, Robert Habeck, German Vice-Chancellor and a Green Party leader, said he wouldn’t rule out extending the life of Germany’s three remaining nuclear plants on “ideological” grounds. But he soon backtracked and insisted decommissioning would take place as planned. Instead, Germany has gone cap in hand to Qatar and the UAE to seek alternative sources of liquid natural gas despite climate and human-rights concerns. “It’s so incomprehensible,” says Vetter. “There’s amazing naiveté in Germany in my opinion.” Nuclear power is an issue that splits Europe. Although most E.U. nations are pro-nuclear, at COP26 a group of five—Austria, Denmark, Germany, Luxembourg and Portugal—banded together to urge the European Commission to keep nuclear out of the E.U.’s green finance taxonomy. “We have plenty of evidence of how dangerous nuclear power can be,” Austrian Energy Minister Leonore Gewessler told a COP26 side-event on Nov. 11. The reasons for each member’s opposition are varied and complex. In Germany and Austria, a sense of powerlessness amid fallout from the Chernobyl disaster melded anti-Soviet sentiment with anti-nuclear. In Portugal, opposition is rooted in historic tensions with neighboring Spain, which has four of its ten nuclear plants using the Tagus River for cooling, which runs into Portugal. Still, other Western European nations such as Finland, Sweden, France, Spain and Belgium have all historically supported the technology, even while adding renewables like wind and solar. In Eastern Europe, Romania, Czech Republic, Slovakia and Hungary are all beginning or expanding their nuclear capabilities. Indeed, appreciation of the myriad benefits is swelling alongside the price of oil and gas. “The question of how nuclear power may come back onto the scene was already being discussed because of climate goals,” says a senior Western diplomat in Central Europe, asking to remain anonymous due to official protocol. “Now we have the whole Russian gas question. And again, it’s an answer.” Jean-Marie Hosatte—Gamma-Rapho/Getty ImagesThe Cruas Nuclear Power Plant, in southern France, on Feb. 13, 2022. France is the E.U. country currently most reliant on nuclear energy. What Comes Next Many obstacles remain, of course: Aside from political hesitancy, nuclear plants are expensive, with steep regulatory hurdles. And there is no quick fix: traditional large-scale plants take 10 years to bring online; even the most cutting-edge, next-generation reactors require at least four. Nevertheless, those next-gen reactors, called Small Modular Reactors (SMRs), can make a difference, say industry watchers. They’re groundbreaking because, as they are modular, with different numbers of “off the shelf” reactors, they can be combined to tailor for specific needs. Rather than being built bespoke to fit on a specific site, SMR modules get shipped to the location by truck, rail, or barge. This makes them more affordable when economies of scale kick in. They are also theoretically much safer, requiring neither manpower nor electricity to go offline in case of a crisis, while also producing less hazardous waste since they are able to “burn” up more fuel. While traditional reactors are ideal for splitting uranium-235 atoms, the neutrons of “fast” SMRs can also split uranium-238, which makes up over 99% of the enriched uranium that’s fed to reactors. This means less frequent refuelings and less waste. “SMRs could potentially change the game and bring nuclear back,” says the Western diplomat. “There’s a lot of countries looking at this type of technology with different designs for small reactors.” Oregon-based NuScale is a leader in the SMR field, and co-founder and Chief Technological Officer Jose Reyes has seen an uptick in inquiries since the war in Ukraine, as nations grapple with an increasingly thorny energy conundrum. “We’ve gotten a lot of interest globally,” he tells TIME. On the sidelines of COP26 last fall, U.S. and Romanian officials inked an agreement for NuScale to build Europe’s first SMR in partnership with local nuclear firm Nuclearelectrica. The collaboration “will contribute to Romania’s energy independence in line with the European vision of protecting the environment and reducing carbon dioxide emissions,” Romanian Prime Minister Nicolae Ciucă told TIME in an interview in March. Indeed, if the E.U. wants a nuclear energy ascendency, the U.S. is a likely partner. In the U.S., nuclear power is largely uncontroversial—even Democrats and Republicans are united on the benefits—and America’s 93 operating nuclear reactors supply 20% of U.S. power, or about half of its carbon-free electricity. The U.S. has also been pushing the power source as a solution for developing countries, unveiling in November $25 million of funding to help build reactors in Brazil, Kenya, and Indonesia. In the E.U., the invasion of Ukraine has galvanized an appreciation of nuclear energy. The new mood has been helped by the fact that France—Europe’s most pro-nuclear country, generating over 70% of its electricity via the technology—is the current rotating president of the E.U. Council and controversially added promotion of nuclear power to its presidential program in what one German Green Party member described to TIME as a “f–k you into the face of Germans.” Many other European nations are making a similar calculation. Of the 10 foreign nations that have signed memoranda of understanding (MoUs)—which establishes the groundwork for exploring building an SMR—with NuScale, half are European. In addition, in December NuScale signed an agreement with Ukraine to offer analysis of necessary licensing revisions for SMR deployment funded by a U.S. Trade and Development Agency grant. Courtesy of NuScale Power, LLCNuScale co-founder and chief technology officer José Reyes on a platform at the firm’s Integral System Test facility at Oregon State University in Corvallis, Oregon Oregon. NuScale may be the first SMR firm to gain U.S. Nuclear Regulatory Commission design approval but it won’t have the field to itself for long. “There are four or five other [SMR] companies in the United States which I really believe will be on the grid within the next 10 years or so,” says Vetter. “And they will be strongly supported by the U.S. government.” The potential strategic benefits for the U.S. pushing this technology overseas are clear. Building a nuclear plant is not like coal or gas—the client is locked into dependency for training, fueling, and maintenance. Russia currently leads the world in exporting civilian nuclear technology, but Putin’s invasion of Ukraine has underscored it as an unreliable partner, and the E.U. is currently mulling whether to ban all collaboration with Russian nuclear providers, especially Rosatom and its subsidiaries. If so, Washington stands to boost its geostrategic clout at the expense of the Kremlin. China could be another potential partner for the E.U. Building more new nuclear reactors than any other country—it plans for as many as 150 by 2030, costing in the region of $500 billion—China will soon overtake the U.S. as the operator of the world’s largest nuclear-energy system. It is also experimenting with SMRs, and given its existing engineering prowess and record of slashing costs, is already offering cost-effective alternatives. But question marks hang over China’s strategic ambitions amid accusations of coercive practices and debt-trap diplomacy. In November 2015, Romania’s Nuclearelectrica signed a MoU with China General Nuclear Power Corporation (CGN) for the redevelopment of its sole existing nuclear power facility, Cernavoda. However, in August 2019, the U.S. blacklisted CGN over the alleged theft of U.S. nuclear technology for military purposes, and Romania canceled the deal less than a year later. Instead, it has agreed to a deal thought to be worth $8 billion to have the U.S. refurbish and expand Cernavoda. It helps that the U.S. is a trusted ally. “Our plants are designed for a 60 year life,” says Reyes. “So that’s a long-term relationship that involves supply chain and operations and training. So it’s a natural bond that’s created between nations when you do that.” German opposition remains the most problematic for the pro-nuclear lobby given the nation’s leadership role within the E.U. One leading Green Party figure, who asked to remain anonymous since energy policy was not his specific brief, tells TIME that any internal dissent regarding doubling down on LNG instead of reevaluating nuclear remains very much a fringe viewpoint. “There are political identity, cultural, and political risk components [to our continued opposition to nuclear],” he says. “And in a situation of crisis like now there are just so many compromises you can sell.” Certainly, the longer the Ukraine war goes on, extricating nations from Russian oil and gas will stay firmly at the top of Western policy agendas. And the nuclear-over-oil drum is one that Washington, Paris, and others, will keep on banging......»»

Category: topSource: timeApr 21st, 2022

Futures Jump After Biden Says Trump"s China Tariffs Under Consideration

Futures Jump After Biden Says Trump's China Tariffs Under Consideration US stock futures advanced for a second day after staging a furious rally late on Friday having slumped into a bear market just hours earlier, after President Joe Biden said China tariffs imposed by the Trump administration were under consideration, although concerns about hawkish central banks and record Covid cases in Beijing continued to weigh on the sentiment.  Contracts on the S&P 500 were up 1% by 7:15 a.m. in New York, trimming earlier gains of as much as 1.4% following remarks from Christine Lagarde that the European Central Bank is likely to start raising interest rates in July and exit sub-zero territory by the end of September which sent the euro sharply higher and hit the USD. Meanwhile, Beijing and Tianjin continue to ramp up Covid restrictions as cases climbed. Nasdaq futures also jumped, rising 1.1%. Europe rose 0.6% while Asian stocks closed mostly in the green, with Nikkei +1% and Hang Seng -1.2%. The dollar and Treasuries retreated, while bitcoin jumped to $30,500 as the crypto rout appears over. Traders interpreted Biden’s comments that he’ll discuss the US tariffs on Chinese imports with Treasury Secretary Janet Yellen when he returns from his Asia trip as a signal there could be a reversal of some Trump-imposed measures, sparking a risk-on rally.  “Today’s appetite for risk has been sparked by the US President’s announcement that trade tariffs imposed on China by the previous Trump administration will be discussed,” said Pierre Veyret, a technical analyst at ActivTrades. “Investors see this as a possible de-escalation of the trade war between the two economic superpowers, and this has revived trading optimism towards riskier assets.” Among the notable movers in premarket trading, VMware surged 19% after Bloomberg News reported that Broadcom is in talks to acquire cloud-computing company; Broadcom fell 3.5% in premarket trading. Here are some other notable premarket movers: Software stocks, such as Oracle (ORCL US), Splunk (SPLK US), ServiceNow (NOW US), Check Point Software Technologies (CHKP US), are in focus after the report on Broadcom and VMware setting up for a blockbuster tech deal. Antiviral and vaccine stocks rise in US premarket trading amid spreading cases of the monkeypox virus. SIGA Technologies (SIGA US) jumps 39%; Emergent BioSolutions (EBS US) rises 15%, Chimerix (CMRX US) gains 15%, Inovio Pharmaceuticals (INO US) +13% Dow (DOW US) shares fall as much as 1.3% premarket after Piper Sandler downgraded the chemicals maker to neutral from overweight, along with peer LyondellBasell (LYB US), amid industry concerns. TG Therapeutics (TGTX US) shares are down 3.3% premarket after falling 11% on Friday, when BofA started coverage on the biotech company with an underperform rating and $5 price target. Upwork (UPWK US) could be in focus as RBC Capital Markets analyst Brad Erickson initiates coverage of the stock with a sector perform recommendation, saying some near-term negatives for the online recruitment services firm are well discounted. US stocks have been roiled in the past two months by concerns the Fed's tightening will push the economy into a recession. A late-session rebound lifted the market from the session’s lows on Friday, though the S&P 500 still capped a seventh straight week of losses - the longest since 2001 - and briefly dipped into bear market territory, while the Dow dropped for 8 consecutive weeks, the longest stretch since 1923! “As we have seen time and time again recently, any attempted rallies appear to be short-lived with the backdrop of macroeconomic uncertainty, and any bullish breakouts have failed to endure with overall market sentiment biased toward the bears,” said Victoria Scholar, head of investment at Interactive Investor. The string of weekly losses has seen the S&P 500’s forward price-to-earnings ratio drop to 16.4, near the lowest since April 2020. This is below the average level of 17.04 times seen over the past decade, making the case for bargain hunters to step in. Separately, Biden said the US military would intervene to defend Taiwan in any attack from China, comments that appeared to break from the longstanding US policy of “strategic ambiguity” before they were walked back by White House officials. Meanwhile, his administration announced that a dozen Indo-Pacific countries will join the US in a sweeping economic initiative designed to counter China’s influence in the region. Minutes of the most recent Fed rate-setting meeting will give markets insight this week into the central bank’s tightening path. St. Louis Fed President James Bullard said the Fed should front-load an aggressive series of rate hikes to push rates to 3.5% at year’s end, which if successful would push down inflation and could lead to easing in 2023 or 2024 In Europe, the Stoxx 50 rose 0.3%. The FTSE 100 outperformed, adding 0.9%, FTSE MIB lags, dropping 1.1%. Energy, miners and travel are the strongest performing sectors. European energy shares vie with the basic resources sector to be the best-performing group in the Stoxx Europe 600 benchmark on Monday as oil stocks rise with crude prices, while Siemens Gamesa rallies after Siemens Energy made a takeover offer. Shell rises 1.7%, BP +2.4%, TotalEnergies +2.1%. Elsewgere, the Stoxx Europe Basic Resources sub-index rallies to the highest level since May 5 to lead gains in the wider regional benchmark on Monday as metals rise amid better demand outlook. Aluminum, copper and iron ore extended rebound after China cut borrowing rates last week, dollar weakened and as investors weighed outlook for lockdown relief in Shanghai. The euro rose to its highest level in four weeks and most of the region’s bonds fell after European Central Bank President Christine Lagarde said the ECB is likely to start raising interest rates in July and exit sub-zero territory by the end of September. Here are the most notable European movers: Siemens Gamesa shares gain as much as 6.7% after Siemens Energy made an offer to acquire the shares in the wind-turbine maker it does not own. Kingfisher shares advance as much as 4.9% after the B&Q owner reported 1Q sales that beat estimates and announced plans for a further GBP300m share buyback. Deutsche EuroShop shares jump as much as 44% after Oaktree and CURA offered to acquire the German retail property company in a deal valuing it at around EU1.39b. Moonpig Group gains as much as 14% as Jefferies analysts say its plan to buy Smartbox Group UK is a good use of the online greeting card company’s strong cash generation. Kainos Group shares jump as much as 25%, as Canaccord Genuity raises the stock’s rating to buy from hold following FY results, saying cost-inflation headwinds are priced in. Intertek shares fall as much as 5.3%, with Stifel cutting its rating on the company to hold from buy, saying none of the key elements of its positive thesis are still intact. Leoni shares drop as much as 7.3% after the wiring systems manufacturer said it was in advanced talks on further financing. Earlier in the session, Asian stocks were mixed as traders assessed Chinese authorities’ efforts to support the economy amid ongoing concerns over its Covid situation. The MSCI Asia Pacific Index was up 0.4%, supported by healthcare and industrials, after paring an early gain of as much as 0.7%. Japanese stocks outperformed and US index futures advanced.  Chinese shares slid after Beijing reported a record number of coronavirus cases, reviving concerns about lockdowns. Covid concerns offset any positive impact from last Friday’s greater-than-expected reduction in a key interest rate for long-term loans in an effort to counter weak demand. Investors may be turning more upbeat on Asian stocks, with the regional benchmark beating global peers last week by the most in more the two years, snapping a streak of six weekly losses. Still, the region faces the same worries about inflation and rising US interest rates that have been rattling markets around the world this year. “The energy crisis in the EU and policy tightening in the US, combined with China’s economic soft patch” are potential headwinds for Asian equities and may lead to “weak external demand for more export-oriented economies like Taiwan and Korea,” Soo Hai Lim, head of Asia ex-China equities at Barings, wrote in a note. Japanese equities climbed as US President Joe Biden’s comments during his visit to the country lifted market sentiment. Biden said a recession in the US isn’t inevitable, and reaffirmed close ties between the two countries. He also said China tariffs imposed by the Trump administration were under consideration, helping to lift regional stocks.  The Topix Index rose 0.9% to 1,894.57 as of market close, while the Nikkei advanced 1% to 27,001.52. Tokio Marine Holdings contributed the most to the Topix Index, increasing 7.6%. Out of 2,171 shares in the index, 1,681 rose and 415 fell, while 75 were unchanged. Defense stocks also got a boost after Prime Minister Fumio Kishida said President Biden supports Japan’s plan for an increase in its defense budget Stocks in India mostly declined after the central bank chief said the Reserve Bank is taking coordinated action with the country’s government to tackle inflation and a few interest rate hikes will be in store in coming months. His comments came soon after the government unveiled measures that will cost the exchequer $26 billion and will probably force the government to issue more debt to bridge the yawning budget deficit. The S&P BSE Sensex ended flat at 54,288.61 in Mumbai after giving up an advance of as much as 1.1%. The NSE Nifty 50 Index dropped 0.3%, its third decline in four sessions. Gauges of mid-sized and small stocks also plunged 0.3% and 0.6%, respectively. Out of the 30 stocks in the Sensex index, 20 advanced while 10 ended lower, with Tata Steel being the biggest drag. Eleven of 19 sector sub-indexes compiled by BSE Ltd. declined, led by metal stocks. Steel stocks plunged after the new rules imposed tariffs on export of some products. Auto and capital stocks were the best performers.  Investors remain wary of the policy decisions the central bank could take in the near-term to tackle in rising inflation, according to Arafat Saiyed, an analyst with Reliance Securities. “Changes in oil prices and amendments to import and export duties might play a role in assessing the market’s trajectory.” In rates, Treasuries dropped as investors debate the Federal Reserve’s tightening path amid mounting worries about an economic slowdown. US bonds were cheaper by 3bp-5bp across the curve with belly leading declines, underperforming vs front- and long-end, following weakness in bunds. 10-year yield around 2.83%, higher by ~5bp on day, and keeping pace with most European bond markets; belly-led losses cheapen 2s5s30s fly by ~1.5bp on the day. US IG credit issuance slate empty so far; $20b-$25b is expected this week, concentrated on Monday and Tuesday. European fixed income faded an initial push higher after Lagarde’s comments while money markets up rate-hike bets. Bund futures briefly trade above 154 before reversing, cash curve bear-flattens with the belly cheapening ~6bps. Peripheral spreads tighten to Germany, 10y Bund/BTP spreads holds above 200bps. In FX, the Bloomberg Dollar Spot Index fell as the greenback traded weaker against all of its Group-of-10 peers. The euro jumped to a session high of $1.0635 and bunds reversed an advance after ECB President Christine Lagarde said the central bank is likely to start raising interest rates in July and exit sub-zero territory by the end of September. The EUR was also bolstered by Germany IFO business confidence index rising to 93.0 in May vs estimate 91.4. The Aussie and kiwi were among the pest G-10 performers as they benefitted from Biden’s comments about the tariffs on China. Aussie was also supported after the Labor Party won the weekend election and is increasingly hopeful of gaining enough seats to form a majority government.  The pound advanced against the dollar, touching the highest level since May 5, amid broad-based greenback weakness. While asking prices rose to a new record for the fourth-straight month, there are signs the housing market is slowing, according to Rightmove. Yen steadied after gains last week as traders sought clues on the global economy. Japanese government bonds were mostly higher. The purchasing power of the yen fell to a fresh half-century low last month. In commodities, WTI rose 1.1% to trade just below $112. Most base metals are in the green; LME aluminum rises 1.4%, outperforming peers. LME nickel lags, dropping 4.2%. Spot gold climbs roughly $18 to trade around $1,865/oz Looking at today's calendar, at 830am we get the April Chicago Fed Nat Activity Index (est. 0.50, prior 0.44). CB speakers include the Fed's Bostic, ECB's Holzmann, Nagel and Villeroy and BoE's Bailey. Market Snapshot S&P 500 futures up 0.6% to 3,922.50 STOXX Europe 600 up 0.6% to 433.69 MXAP up 0.4% to 165.23 MXAPJ little changed at 539.33 Nikkei up 1.0% to 27,001.52 Topix up 0.9% to 1,894.57 Hang Seng Index down 1.2% to 20,470.06 Shanghai Composite little changed at 3,146.86 Sensex up 0.4% to 54,556.08 Australia S&P/ASX 200 little changed at 7,148.89 Kospi up 0.3% to 2,647.38 German 10Y yield little changed at 0.97% Euro up 0.5% to $1.0622 Brent Futures up 0.9% to $113.61/bbl Gold spot up 0.7% to $1,859.91 U.S. Dollar Index down 0.63% to 102.50 Top Overnight News from Bloomberg President Joe Biden said the US military would intervene to defend Taiwan in any attack from China, some of his strongest language yet seeking to deter Beijing from an invasion The Biden administration announced that a dozen Indo-Pacific countries will join the US in a sweeping economic initiative designed to counter China’s influence in the region, even as questions remain about its effectiveness The US Treasury Department is expected to tighten sanctions this week on Russia, threatening about $1 billion owed to bondholders for the rest of this year and putting the country once again on the edge of default The ECB is poised to get the power to oversee so-called transition plans by 2025, in which lenders map out their path to a carbon-neutral future. Yet several national officials who sit on the ECB’s supervisory board are skeptical that climate risks merit new rules to address them, and some are wary that the initiative exceeds the central bank’s mandate Russia is considering a plan to ease a key control on capital flows which has helped drive the ruble to the highest levels in four years as the rally is now threatening to hurt budget revenues and exporters Natural gas prices in Europe fell as much as 5.6% to the lowest level since the start of the war in Ukraine, as storage levels across the continent rise to near-normal levels As the biggest selloff in decades shook the world’s bond markets this year, some extraordinarily long-dated debt went into free fall, tumbling even more than Wall Street’s usual models predicted. To Jessica James, a managing director with Commerzbank AG in London, it wasn’t a surprise. In fact, it was validation A more detailed look at global markets courtesy of Newsquawk APAC stocks were mixed as momentum waned due to China's COVID woes and record Beijing infections. ASX 200 was just about kept afloat before ebbing lower after initial strength in mining names and the smooth change of government in Australia. Nikkei 225 advanced at the open with Tokyo said to be planning to revive its travel subsidy plan for residents. Hang Seng and Shanghai Comp were pressured by ongoing COVID concerns after Beijing extended its halt of dining in services and in-person classes for the whole city, as well as reporting a fresh record of daily COVID infections, while Shanghai restored its cross-district public transport on Sunday but ordered supermarkets and shops in the central Jingan district to shut and for residents to stay home until at least Tuesday Top Asian News Beijing reported 83 new symptomatic cases and 16 new asymptomatic cases for May 22nd with the city's total new cases at a new record, according to Bloomberg. It was also reported that thousands of Beijing residents were relocated to quarantine hotels due to a handful of infections, according to the BBC. Beijing is mulling easing its hotel quarantine requirement to one week in a hotel and one week at home from a previous hotel requirement of ten days and one week at home for international travellers, according to SCMP. Shanghai reported 570 new asymptomatic cases, 52 asymptomatic cases, 3 new COVID-related deaths and zero cases outside of quarantine, according to Reuters. Shanghai’s central district of Jingan will require all supermarkets and shops to close, while residents will be required to stay at home and conduct mass testing from May 22nd-24th, according to Reuters. China NHC Official says the COVID situation, overall, is showing a steady declining trend. Japanese PM Kishida said it is very disappointing that China is unilaterally developing areas in the East China Sea when borders are not yet set which Japan cannot accept, while it has lodged a complaint against China through diplomatic channels, according to Reuters. Japanese PM Kishida told US President Biden that they must achieve a free and open Indo-Pacific together, while President Biden said the US is fully committed to Japan's defence and that the IPEF will increase cooperation with other nations and deliver benefits to people in the region, according to Reuters. US-South Korea joint statement noted they agreed to discuss widening the scope and scale of joint military exercises and the US reiterated its commitment to defending South Korea with nuclear, conventional and missile defence, as well as reaffirmed its commitment to deploy strategic military assets in a timely and coordinated manner as necessary. The sides also condemned North Korea’s missile tests as a grave threat and agreed to relaunch a high-level extended deterrence strategy and consultation group at the earliest date, while they noted the path to dialogue with North Korea remains open and called for a resumption of negotiations, according to Reuters. US President Biden said the US-South Korea alliance has never been stronger and more vibrant. President Biden added they are ready to strengthen the joint defence posture to counter North Korea and are ready to work toward the complete denuclearisation of North Korea, while he offered vaccines to North Korea and said he would meet with North Korean leader Kim if he is serious, according to Reuters. South Korean President Yoon said North Korea is advancing nuclear capabilities and that US President Biden shares grave concerns regarding North Korea’s nuclear capabilities, while Yoon said they discussed the timing of possible deployment of fighter jets and bombers, according to Reuters. European bourses are mixed/modestly-firmer, Euro Stoxx 50 +0.3%, as the initial upside momentum waned amid fresh China COVID updates and hawkish ECB commentary. Note, the FTSE MIB is the noted underperformer this morning, -1.0%, amid multiple large-cap names trading ex-divided. Stateside, futures are firmer but similarly off best levels, ES +0.5%, with recent/familiar themes very much in focus ahead of a thin US-specific docket. XPeng (XPEV) Q1 2022 (USD): EPS -0.32 (exp. -0.30), Revenue 1.176bln (exp. 1.16bln); Vehicle Deliveries 34.56k, +159% YY. -2.8% in pre-market JPMorgan (JPM) has reaffirmed its adjusted expenses guidance; credit outlook remains positive; sees FY22 NII USD 56bln (prev. USD 53bln) Top European News EU’s infectious-disease agency is to recommend member states prepare strategies for possible vaccination programmes to counter increasing monkeypox cases, according to FT. It was also reported that Austria confirmed its first case of monkeypox and that Switzerland also confirmed its first case of monkeypox in the canton of Bern, according to Reuters. EU policymakers are reportedly renewing efforts to push for real-time databases of stock and bond trading information as they believe that a 'consolidated tape' will make EU exchanges more attractive for investors, according to FT. EU Commission has proposed maintaining EU borrowing limits suspension next year amid the war in Ukraine; expects to reinstate limits in 2024; Germany supports the suspension. Fixed Income Bunds and Eurozone peers underperform as ECB President Lagarde signals end of negative rates by September. 10 year German bond nearer 153.00 having topped 154.00, Gilts around 1/4 point below par after trading flat at best and T-note shy of 120-00 within 120-03+/119-21+ range. EU NG issuance covered 1.38 times and Austria announces leads for 2049 Green syndication. In FX Euro joins Kiwi at the top of G10 ranks as President Lagarde chimes with end of NIRP by Q3 guidance, EUR/USD sets fresh May peak near 1.0690. Bulk of NZIER shadow board believe RBNZ will deliver another 50bp hike on Wednesday, NZD/USD hovers comfortably above 0.6450 in the run up to NZ Q1 retail sales. DXY in danger of losing 102.000+ status as Euro revival boosts other index components. Aussie up with price of iron ore and extended Yuan recovery gains with change of PM and Government regime taken in stride; AUD/USD probes 0.7100, USD/CNH not far from Fib support sub-6.6500, USD/CNY a tad lower. Sterling eyes 1.2600 awaiting BoE Governor Bailey at a PM panel discussion, Loonie and Nokkie glean traction via firm WTI and Brent, USD/CAD under 1.2800, EUR/NOK beneath 10.3000. Lira languishing after CBRT survey showing higher end 2022 forecasts for Turkish CPI, current account deficit and USD/TRY circa 17.5690 vs just shy of 16.0000 at present. Commodities WTI and Brent are firmer and in-proximity to session highs amid USD action offsetting the earlier drift with risk sentiment/China's mixed COVID stance. Currently, the benchmarks are just off highs of USD 111.96/bbl and USD 114.34/bbl respectively, vs lows of 109.50 and 111.97 respectively. Saudi Arabia signalled it will stand by Russia as a member of OPEC+ amid mounting pressure from sanctions, according to FT. Iraq’s government aims to set up a new oil company in the Kurdistan region and expects to enter service contracts with local oil firms, according to Reuters. Iran’s Oil Minister agreed to revive the pipeline laying project to pump Iranian gas to Oman which was stalled for nearly two decades, according to IRNA. Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said Iran’s leadership has matters under review regarding “the Iranian nuclear file” and said that pumping additional quantities of Iranian oil to the market will help stabilise crude prices and lower inflation, according to Al Jazeera TV. India cut its excise duty on petrol by INR 8/litre and diesel by INR 6/litre which will result in a revenue loss of about INR 1tln for the government, while Indian Finance Minister Sitharaman announced subsidies on cooking gas cylinders, as well as cuts to custom duties on raw materials and intermediaries for plastic products, according to Reuters. Indian oil minister says oil remaining at USD 110/bbl could lead to bigger threats than inflation, via CNBC TV18. Central Banks ECB's Lagarde says based on the current outlook, we are likely to be in a position to exit negative interest rates by the end of the third quarter; against the backdrop of the evidence I presented above, I expect net purchases under the APP to end very early in the third quarter. This would allow us a rate lift-off at our meeting in July, in line with our forward guidance. The next stage of normalisation would need to be guided by the evolution of the medium-term inflation outlook. If we see inflation stabilising at 2% over the medium term, a progressive further normalisation of interest rates towards the neutral rate will be appropriate. ECB President Lagarde indicated that July is likely for a rate increase as she noted that they will follow the path of stopping net asset purchases and then hike interest rates sometime after that which could be a few weeks, according to Bloomberg. Bundesbank Monthly Report: German GDP is likely to increase modestly in Q2 from current standpoint. Click here for more detail. RBI Governor Das says, broadly, they want to increase rates in the next few meetings, at least at the next one; cannot give a number on inflation at present, the next MPC may be the time to do so. CBRT Survey (May), end-2022 Forecasts: CPI 57.92% (prev. 46.44%), GDP Growth 3.3% (prev. 3.2%), USD/TRY 17.5682 (prev. 16.8481), Current Account Balance USD -34.34bln (prev. USD -27.5bln). US Event Calendar 08:30: April Chicago Fed Nat Activity Index, est. 0.50, prior 0.44 12:00: Fed’s Bostic Discusses the Economic Outlook 19:30: Fed’s George Gives Speech at Agricultural Symposium DB's Jim Reid concludes the overnight wrap After a stressful couple of hours in front of the football yesterday afternoon, there's not too much the market can throw at me this week to raise the heart rate any higher than it was for the brief moments that I thought Liverpool were going to win the Premier League from a very unlikely set of final day circumstances. However it is the hope that kills you and at least we have the Champions League final on Saturday to look forward to now. There will be a lot of market water to flow under the bridge before that. This all follows a fascinating end to last week with the S&P 500 in bear market territory as Europe went home for the weekend after the index had fallen -20.6% from its peak going into the last couple of hours of another brutal week. However a sharp late rally sent the index from c.-2.3% on the day to close +0.01%. There was no catalyst but traders clearly didn’t want to go home for the weekend as lightly positioned as they were. Regardless, this was the first time we’ve seen seven successive weekly declines in the index since the fallout from the dotcom bubble bursting in 2001. Watch out for my CoTD on this later. If you’re not on my daily CoTD and want to be, please send an email to jim-reid.thematicresearch@db.com to get added. For what it's worth the Dow saw the first successive 8 weekly decline since 1923 which really brings home the state of the current sell-off. After having a high conviction recession call all year for 2023, I can't say I have high conviction in the near-term. I don't expect that we will fall into recession imminently in the US or Europe and if that's the case then markets are likely to eventually stabilise and rally back. However if we do see a H2 2022 recession then this sell-off will likely end up at the more severe end of the historical recessionary sell-offs given the very high starting valuations (see Binky Chadha's excellent strategy piece here for more on this). However if I'm right that a 2023 recession is unavoidable then however much we rally back this year we'll be below current levels for equities in 12-18 months' time in my view. Given that my H2 2023 HY credit spread forecast is +850bp then that backs this point up. Longer-term if we do get a recession and inflation proves sticky over that period then equities are going to have a long period of mean reversion of valuations and it will be a difficult few years ahead. So the path of equities in my opinion depends on the recession timing and what inflation does when we hit that recession. Moving from pontificating about the next few years to now looking at what's coming up this week. The global preliminary PMIs for May tomorrow will be front and centre for investors following the growth concerns that have roiled markets of late. Central banks will also remain in focus as we will get the latest FOMC meeting minutes (Wednesday) and the US April PCE, the Fed's preferred inflation proxy, on Friday. An array of global industrial activity data will be another theme to watch. Consumer sentiment will be in focus too, with a number of confidence measures from Europe and personal income and spending data from the US (Friday). Corporates reporting results will include spending bellwethers Macy's and Costco. After last week’s retail earnings bloodbath (e.g. Walmart and Target) these will get added attention. On the Fed, the minutes may be a bit stale now but it’ll still be interesting to see the insight around the biases of 50bps vs 25/75bps hikes after the next couple of meetings. Thoughts on QT will also be devoured. Staying with the US, for the personal income and spending numbers on Friday, our US economists expect the two indicators to slow to +0.2% and +0.6% in April, respectively. The Fed’s preferred inflation gauge, the PCE, will be another important metric released the same day and DB’s economics team expects the April core reading to stay at +0.3%. Other US data will include April new home sales tomorrow and April durable goods orders on Wednesday. A number of manufacturing and business activity indicators are in store, too. Regional Fed indicators throughout the week will include an April gauge of national activity from the Chicago Fed (today) and May manufacturing indices from the Richmond Fed (tomorrow) and the Kansas City Fed (Thursday). In Europe, the May IFO business climate indicator for Germany will be out today, followed by a manufacturing confidence gauge for France (tomorrow) and Italy (Thursday). China's industrial profits are due on Friday. This week will also feature a number of important summits. Among them will be the World Economic Forum’s annual meeting in Davos that has now started and will run until next Thursday. It'll be the first in-person meeting since the pandemic began and geopolitics will likely be in focus. Meanwhile, President Biden will travel to Asia for the first time as US president and attend a Quad summit in Tokyo tomorrow. Details on the Indo-Pacific Economic Framework are expected. Finally, NATO Parliamentary Assembly’s 2022 Spring Session will be held in Vilnius from next Friday to May 30th. In corporate earnings, investors will be closely watching Macy's, Costco and Dollar General after this week's slump in Walmart and Target. Amid the carnage in tech, several companies that were propelled by the pandemic will be in focus too, with reporters including NVIDIA, Snowflake (Wednesday) and Zoom (today). Other notable corporates releasing earnings will be Lenovo, Alibaba, Baidu (Thursday) and XPeng (Monday). Overnight in Asia, equity markets are weak but US futures continue to bounce back. The Hang Seng (-1.75%) is the largest underperformer amid a fresh sell-off in Chinese listed tech stocks. Additionally, stocks in mainland China are also weak with the Shanghai Composite (-0.47%) and CSI (-0.99%) lower as Beijing reported record number of fresh Covid-19 cases, renewing concerns about a lockdown. Elsewhere, the Nikkei (+0.50%) is up in early trade while the Kospi (+0.02%) is flat. S&P 500 (+0.80%), NASDAQ 100 (+1.03%) and DAX (+0.96%) futures are all edging higher though and 10yr USTs are around +3.5bps higher. A quick review of last week’s markets now. Growth fears gripped markets while global central bankers retrenched their expectations for a strong dose of monetary tightening this year to combat inflation. The headline was the S&P 500 fell for the seventh straight week for the first time since after the tech bubble burst in 2001, tumbling -3.05% (+0.01% Friday), after back-and-forth price action which included an ignominious -4% decline on Wednesday, the worst daily performance in nearly two years. The index is now -18.68% from its YTD highs, narrowly avoiding a -20% bear market after a late rally to end the week, after dipping into intraday on Friday. Without one discreet driver, an amalgamation of worse-than-expected domestic data, fears about global growth prospects, and poor earnings from domestic retail giants that called into question the vitality of the American consumer soured sentiment. Indeed, on the latter point, consumer staples (-8.63%) and discretionary (-7.44%) were by far the largest underperformers on the week. European stocks managed to fare better, with the STOXX 600 falling -0.55% (+0.73% Friday) and the DAX losing just -0.33% (+0.72% Friday). The growth fears drove longer-dated sovereign bond yields over the week, with 10yr Treasuries falling -13.7bps (-5.6bps Friday). Meanwhile, the front end of the curve was relatively anchored, with 2yr yields basically unchanged over the week (-2.7bps Friday), and the amount of Fed hikes priced in through 2022 edging +3bps higher over the week to 2.75%, bringing 2s10s back below 20bps for the first time since early May. Chair Powell reiterated his commitment to bring inflation back to target, suggesting that getting policy rates to neutral did not constitute a stopping point if the Fed did not have “clear and convincing” evidence that inflation was falling. In Europe the front end was also weaker than the back end as Dutch central bank Governor Knot became the first General Council member to countenance +50bp hikes. 10yr yields didn't rally as much as in the US, closing the week at -0.4bps (-0.5bps Friday). The spectre of faster ECB tightening and slowing global growth drove 10yr BTPs to underperform, widening +15.2bps (+10.2bps Friday) to 205bps against bund equivalents. Gilts underperformed other sovereign bonds, with 10yr benchmarks selling off +14.9bps (+2.8bps Friday) and 2yr yields increasing +25.8bps (+1.6bps Friday). This came as UK CPI hit a 40yr high of 9.0% in April even if it slightly missed forecasts for the first time in seven months. Oil proved resilient to the growth fears rumbling through markets, with both brent crude (+0.90%, +0.46% Friday) and WTI futures (+2.48%, +0.91% Friday) posting modest gains over the week. Tyler Durden Mon, 05/23/2022 - 07:49.....»»

Category: blogSource: zerohedgeMay 23rd, 2022

Germany Bets Big On One Energy Hub To Reduce Reliance On Russian Gas

Germany Bets Big On One Energy Hub To Reduce Reliance On Russian Gas By Robert Rapier of OilPrice.com The ongoing conflict in Ukraine and the subsequent sanctions against Russia have highlighted Europe’s vulnerability when it comes to energy security. At present, the EU receives around 40% of its gas, 46% of its coal, and 30% of its oil from Russia — and has no easy substitutes if supplies are disrupted. I asked Otto Waterlander, Chief Commercial Officer at TES, how green hydrogen and green gas can both support European energy security in the face of the sanctions on Russia, while also taking a lead to support the EU meet its climate change obligations. TES is a green hydrogen company that will accelerate the energy transition through its ambitious plans to develop a green hydrogen hub at Wilhelmshaven in Northern Germany. Through this complex, it will supply green hydrogen and green gas to the mobility, industrial and power sectors. Let’s start with your plans for the clean energy hub at The Wilhelmshaven. What does this entail? “Our ambition is to build the Wilhelmshaven location into a hub for international hydrogen trading and create the infrastructure accordingly. The original plan was that by 2045 TES would supply 100% green hydrogen. Clean hydrogen will be utilized as a bridging fuel in the early years. By 2030 there will likely be a 50:50 split between clean and green hydrogen. In the initial phase, 25 terawatt-hours (TWh) per year of green methane, from which more than half a million metric tons of hydrogen can be produced, will be imported into Wilhelmshaven. That will increase to 250 TWh per year and more than five million metric tons of hydrogen in a final stage. The green hydrogen will be produced using exclusively renewable sources, mainly solar and in several cases, wind and/or hydroelectricity.” In the current volatile situation, I understand that you have brought forward the timelines for the project to help address the security crisis in Europe. “The TES-Wilhelmshaven project is unique in its ability to achieve Germany’s and Europe’s plans to decarbonize in a sustainable way at an industrial scale whilst carefully and prudently navigating the current energy crisis. By fast tracking this project, it will help provide energy security for Germany and the rest of Europe by accelerating the growth of green gas imports. Because of the design and scale of the project, it has the potential to replace the Nordstream 1 or 2 pipeline in terms of energy supply. With green hydrogen at its core, the Wilhelmshaven green gas terminal is sustainable, carbon-neutral, and transitional, meeting the German Government’s short-term and long-term energy requirements.    Given the current situation and immediate crisis of gas supply, this development is now being fast tracked, so that in addition to the green gas envisaged, the location could also accommodate liquefied natural gas (LNG) as an intermediate emergency source of energy supply in large volumes and by as soon as winter 2022/23.” The EU has many ambitious decarbonization strategies such as Fit For 55 and EU Green Deal. Do they need green gas energy sources such as hydrogen to meet these aims? “As Europe strives to meet its decarbonization obligations, its energy demand — especially in the industrial and mobility sectors — cannot be met through locally produced renewable energy such as wind, solar or biomass alone. Therefore, imported green gas and hydrogen are a necessity. In 2020, renewable energy sources made up 37.5% of gross electricity consumption in the EU, up from 34.1% in 2019. Wind and hydro power accounted for more than two-thirds of the total electricity generated from renewable sources (36% and 33%, respectively). The phase-out from coal, natural gas, and nuclear has already started. Aside from the environmental impact of using these fuels, there are also harmful effects from mining and the unsolved storage issue for radioactive waste. The Hydrogen Council estimates that hydrogen can address 18% of global energy demand and abate one-fifth of carbon emissions. But it will come at a significant economic cost. The council says that scaling up the hydrogen economy will require between $20 billion and $25 billion each year through 2030. In June 2020, Germany presented its national hydrogen strategy (NHS). It was one of the first countries worldwide to do so, even publishing before the EU. Only a month later, the German Federal Network Agency issued a paper on the regulation of hydrogen grids. Just over a year ago, the new Renewable Energies Sources Act (EEG 2021) entered into force in Germany, which for the first time contained specific provisions to support the production and industrial usage of green hydrogen. Early in March the European Commission unveiled proposals to further boost renewables and quadruple current 2030 targets for green hydrogen supplies from 5.6 million metric tons to 20.6 million metric tons. This is part of a hastily assembled strategy to cut the EU’s reliance on Russian gas by two-thirds as soon as the end of this year.” Why is the green hydrogen not produced in Germany or Europe? “Producing green hydrogen needs renewable energy, which Germany and the wider European zone do not have an abundance of. Therefore, the only sensible option is to produce the feedstock in a location that has abundant and spare renewable energy resources. We intend to set up production sites in countries with abundant renewable energy sources, to ensure diversification of supply and is targeting its first projects in the stable Middle East Gulf region. For the Wilhelmshaven project, hydrogen will be produced in the Middle East, and we are targeting the development of electrolysis projects at a scale of 1-2 gigawatts (GW) or larger. In the project’s first phase, about 25 TWh of green gas will be imported into our terminal in Germany to produce about half a million metric tons of hydrogen. When all phases are complete 250 TWh green energy corresponding to more than five million metric tons of hydrogen will be made available annually through Wilhelmshaven.” There are many hues of hydrogen with differing environmental footprints. Will all the hydrogen used in the project be green hydrogen? The capacity to produce green hydrogen will steadily be increased. If demand is higher than supply, some clean hydrogen will be used as a bridging energy source. However, the aim is that the plant will operate an exclusively green hydrogen cycle as fast as possible. This approach will enable TES to move forward quickly and significantly reduce emissions. In parallel, the industrial and mobility value chains can immediately start upgrading in preparation for the use of clean and green hydrogen. Can you explain the TES business model which is anchored on the carbon circular economy concept where CO2 is never emitted but systematically recycled? There are three paths for using green gas: combustion in compatible power plants with carbon capture, direct use in industrial clusters, or mobility. To drive the energy transition and reduce CO2 emission, the energy system will be a closed loop with all CO2 captured and returned into the supply chain or sequestered. To transform green hydrogen into green methane, we use CO2 captured in European industrial processes. This CO2 is never emitted and serves as a transportation carrier for green hydrogen. This principle also extends to TES – we aim to recycle the CO2 from our downstream operations, plus the CO2 returned from green methane customers. Tyler Durden Thu, 04/21/2022 - 05:00.....»»

Category: blogSource: zerohedgeApr 21st, 2022

Explaining Germany"s Russian Gas Problem

Explaining Germany's Russian Gas Problem Submitted by Jack Raines via Young Money, "You have stolen my dreams and my childhood with your empty words. And yet I'm one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you! …You are failing us. But the young people are starting to understand your betrayal. The eyes of all future generations are upon you. And if you choose to fail us, I say: We will never forgive you. We will not let you get away with this. Right here, right now is where we draw the line. The world is waking up. And change is coming, whether you like it or not.” – 16-year-old Greta Thunberg at the U.N.’s Climate Action Summit, 2019 *slow claps* Climate change. The existential crisis that has filled every Gen-Zer with dread since they entered grade school. Politicians, CEOs, and other powerful figures fly their private jets to summits around the world each year to condemn the fossil fuel industry as a vile plague that must be destroyed at all costs. To raise awareness about the climate issue, green technology exhibits have popped up in museums around the world. One such museum is the Futurium, located less than a mile from the Reichstag in Berlin, Germany. While backpacking across Europe last year, I spent 10 days in Berlin. After seeing an advertisement at my hostel for the Futurium, I decided to pay the museum a visit. While walking around this exhibit, and I saw all sorts of futuristic examples of climate technology. Green cities with gardens and forests growing on the roofs of skyscrapers. Windmills and solar panels supporting power grids. A future powered by zero-emission, renewable resources. It was certainly a pleasant vision. But there was one glaring omission from this exhibit on clean energy: nuclear power. I stepped aside to ask one of the museum’s curators if they had a nuclear energy section of the green exhibit. “I’m sorry to say that we don’t. This exhibit is meant to highlight Germany’s safe, sustainable green future.” “Oh really? That’s interesting bec-,” I bit my tongue. “Ah, okay thanks. I was just curious.” Back at the hostel that night, I couldn’t stop thinking about the feasibility of the whole thing. Sure, this green future sounded good. A world powered by sunlight and wind power, with no smog or pollution. Green cities with no carbon footprints. It matched the utopic vision that had been forced on me since I was a kid: if we drop fossil fuels tomorrow, the world becomes a better place. The thing is, reality doesn’t give a damn about what ‘could be’ and what ‘should be’. Reality doesn’t give a damn about utopia. Reality is reality. What happens when policy makers sacrifice reality for utopia? The above chart was from September, when supply chain disruptions wreaked havoc on energy prices. Now let’s fast forward a few months. In the wake of a brutal winter, Russia decided to invade Ukraine, and German gas and power prices have soared to new highs. A household using 20,000 kWh per year agreeing to a new annual contract in March had to pay a record $3,632, up 62% from just three months ago. Solar panels and windmills sound great when times are good, energy prices are low, and there’s not a care in the world. However, I can assure you of one thing: when winter sets in, supply chains are wrecked, and war is waging in eastern Europe… a climate crisis is the least of your worries, and tears at a UN podium aren’t going to keep your family warm. So how did Germany get here? Where did Europe’s most innovative nation drop the ball? Let’s go back to the 1950s. The Nuclear Dilemma German nuclear power began with the construction of research reactors in the 1950s and 1960s, and the first commercial plant came online in 1969. However, the anti-nuclear movement is nearly as old as the reactors themselves. As early as 1964, critics claimed that the “dangers and costs of the necessary final disposal of nuclear waste could possibly make it necessary to forego the development of nuclear energy.” As nuclear adoption increased in the 1970s, thousands of protestors would gather at proposed sites for new plants around the country. After the partial meltdown of a US reactor at Three Mile Island in 1979, 200,000 Germans took to the streets in Hannover and Bonn to demonstrate against the use of nuclear power. That being said, the anti-nuclear movement remained largely sporadic and unorganized until 1980. On January 13, 1980, a new political party, The Greens, was founded in the central European nation. The Greens emerged from a wave of new social movements including environmentalism, anti-war, and anti-nuclear power. Suddenly, the anti-nuclear movement had a face. Since the party’s inception, The Greens have been concerned with the immediate halt of construction and operation of all nuclear power stations. As an alternative, they have promoted a shift to non-nuclear renewable energy sources such and solar and wind power. In 1986, large parts of Germany were covered with radioactive contamination from the Chernobyl disaster, sparking widespread hysteria. Anti-nuclear protests broke out across the country, and the Green Party called for “the immediate shut-down of all nuclear facilities.” Support for this new party grew in the wake of Chernobyl, and The Greens increased their share of the vote to 8.3% in the 1987 federal election. Unlike the US, where we have a two-party system, the German legislature is a multi-party system. In 2021, for example, seven parties controlled at least 5% of the parliament’s voting power and seats. Given this structure, The Greens’ 8% voting share in 1987 was significant. After the Chernobyl disaster, the Greens became more radicalized and refused to compromise on the nuclear issue. Fearing public backlash, politicians across all parties began to stress that nuclear was a “transient technology”, but not the future. After 1989, no new commercial nuclear power plants were built in Germany. In 1998, the Social Democratic Party of Germany (SPD) and the Greens led the nation as a joint coalition. Gerhard Schröder, leader of the SPD, was elected as Chancellor. In his first term, Schröder’s government decided to phase out nuclear power and instead double down on funding renewable energies. This phase out plan, known as the “nuclear consensus”, limited the lifespan of all nuclear plants to 32 years. Each plant was allocated an amount of electricity that it could produce before being shut down, with the end goal being the shutdown of all nuclear plants by 2022. The results after 20 years? Germany has certainly succeeded in cutting back its nuclear power production. However, it is far from a green utopia. The chart below from the IEA shows Germany’s electricity generation by source from 1990 to 2020: If colors aren’t your thing, I broke the data down into percentages below. Nuclear is highlighted. Color me shocked, I mean shocked, to see that the face of the green movement gets most of its electricity from… coal. It turns out that coal isn’t the most environmentally friendly fuel source either! It’s actually 273x more harmful than nuclear power. This reliance on coal will be important in a bit. Fascinating stuff, no? Now to Germany’s credit, they have done an excellent job of expanding their wind and solar power, growing them from less than 1% of electricity generation in 2000 to more than 31% in 2020. But that doesn’t answer the question: Why the reduction in nuclear power? According to Our World in Data, nuclear is the cleanest form of energy available. It is also 351x safer than coal, with only a rounding error separating it from wind and solar (and this includes Chernobyl and Fukushima). The shift away from nuclear has little to do with the dangers of nuclear reactors, nor the viability of other renewable energy sources. It has a lot to do with natural gas. Gas Me Up Notice that natural gas jumped from 9% to 17% of German electricity generation since 2000. While Germany was busy cutting its nuclear production, alternative forms of renewable energy couldn’t fill total output deficit left behind. Gas still produces 150x more emissions than nuclear, but it is cleaner than coal and oil. Having already committed to phasing out nuclear, Germany turned to natural gas to fulfill its energy needs. There was just one problem:  Germany produces little natural gas of its own. However, Europe’s estranged neighbor to the east, Russia, happens to produce the second-most most natural gas in the world. So Germany bumped up its Russian imports. How much gas does Germany import from Russia? A lot. Germany’s economy and climate ministry said that in 2022, 55% of its gas imports came from Russia, 30% from Norway, and 13% from the Netherlands. Part of the reason that Germany is so reliant on Russian gas is that it doesn’t have its own liquified natural gas (LNG) import terminals, meaning that all of its gas has to come through pipelines. The Nord Stream 1 pipeline, owned and operated by Russian gas giant Gazprom, can transport up to 55B cubic meters of gas to Germany each year, and the recently completed Nord Stream 2 pipeline would have doubled this capacity. However, in response to Russia’s invasion of Ukraine, Germany put the certification of Nord Stream 2 on hold. German has now made plans to build two domestic import terminals to reduce energy dependence on Russia in the future, but that does little to fix the supply crunch that the country is facing now. To recap: Germany shut down nuclear power, the cleanest form of energy available, and planned to replace it with other renewable energy sources. When demand couldn’t be satisfied by renewable energy alone, it turned to natural gas, a much dirtier form of energy. Germany doesn’t have import terminals for LNG, making it dependent on pipelines. Russia has the highest capacity pipeline network to Germany, making it Germany’s main suitor. Cool. Now let’s bake another layer into Germany’s energy problem. While Germany has reduced its dependence on coal by 50% since 2000, coal is still its primary source of electricity. There are two kinds of coal used for energy: hard coal and brown coal. Hard coal is notoriously bad for the environment, and Germany has ended all domestic mining of this product. However, while 16.9% of Germany’s electricity is generated from the “cleaner” brown coil, 7.4% of the country’s grid is still powered by hard coal. A product that it no longer produces domestically. So Germany now imports 100% of its hard coal, which is responsible for 7.4% of its electricity. And who does Germany import 45% of its hard coal from? Russia. Starting to notice a theme here? So this central European country, that is “leading the charge” against climate change, has terminated its greenest energy source. Germany is now reliant on Russia, a country that doesn’t give a damn about climate change, for two of its main power sources, which both happen to be terrible for the environment. Surprisingly, there wasn’t much information about this at that Futurium exhibit! There Are No Coincidences This must have been a miscalculation, right? Germany must have underestimated how long it would take to implement other renewable energy sources. They underestimated what their energy needs would be in 20 years. Maybe they falsely thought that coal was cleaner than nuclear power! Maybe, but probably not. Let’s circle back to Germany’s Chancellor in year 2000. Since 2017, Gerhard Schröder, the man who led the charge to shut down nuclear in the name of renewable energy, has been the chairman of Russian energy company Rosneft. In February 2022, just weeks before Russia invaded Ukraine, Schröder, the man who led the charge to shut down nuclear in the name of renewable energy, was named to the board of Gazprom, the Russian state-owned multinational energy corporation that did $120B of revenue in 2019. You know, the same Gazprom that owns the Nord Stream Pipelines. Schröder also happened to be the man who authorized construction of this very Nord Stream Pipeline in 2005! It really shouldn’t be a surprise that Schröder has found himself in such an enviable position in the Russian energy industry. After all, he is a long-time friend of Russian president Vladimir Putin, spending several birthdays in St. Petersburg and Moscow. Best friends ❤️ Germany, the most powerful country in the EU, is now at the mercy of Russian energy policy. Guess what product has been conveniently left out of sanctions against Russia in response to its invasion of Ukraine? Energy. There are no coincidences. We knew back in 2014 that Russia was willing to influence foreign energy policy. Anders Fogh Rasmussen, then secretary-general of NATO, stated that he had reliable information that Russia was engaged with British environmental organizations working against shale gas. The UK proceeded to ban fracking in 2019. Why would Putin be anti-shale? Was he worried about the environmental impact of fracking? No. He wanted Europe to remain reliant on Russian gas. Best Story Wins It is the most ironic plot line, no? Russia, a country seemingly stuck in the 1980s era of pollution-heavy industrialization, was actively funding green movements in the United Kingdom. Schröder, the German chancellor who led the “green movement” in his country, who is both best friends with Putin and a board member on multiple Russian energy companies, played an integral role in building the pipeline network from Russia to Germany. Oh the irony. This happened because we humans aren’t moved by data, statistics, and probabilities. We are compelled by stories. I could show you data that zero Germans were adversely affected by the Chernobyl meltdown. I could prove to you that the radiation received from touring the Chernobyl zone is less than what a passenger receives on a NYC to London flight. Or I could bombard you with misinformation about radioactive waste, terrify you with stories of nuclear malfunction, and sow seeds of doubt into the mind of the general populace, “What if Fukushima happens here?” I could show you evidence that solar and wind power can’t generate enough power to fuel the world’s biggest economies, or I could extrapolate temperature “data” to forecast that climate change will destroy the world if we don’t shut down fossil fuels now. Data is no match for powerful stories. Stories tug at our emotions. Fear of nuclear fallout and global warming-induced existential threats, no matter how far-fetched, dominate public opinion. Stories are the reason that Americans are terrified of plane crashes, an event that happens 1 out of every 16 million flights, but we don’t think for a second about heart disease, a condition that kills 1 out of every 4 of us. Stories spread like wildfire, creating protests and demonstrations. The strongest stories make their way into parliaments and congresses around the world, warping public policy, data be damned. Stories helped the Green Party outlaw nuclear energy in Germany, despite it being the safest and cleanest form of energy in the world. Stories led Western European nations to sacrifice energy independence now, to guard against a vague potential threat at some point in the future. Stories made Russia, the silent enemy of the west for fifty years, Europe’s primary energy provider. Putin and company quietly mastered the art of storytelling by using the green energy narrative to increase foreign dependency on Russian gas: Make sure everyone is the world views climate change as a threat, vilify western oil and gas companies, encourage legislation that favors renewable energy, amplify unfounded fears about nuclear power, and profit as countries quietly realize that they need natural gas to keep the lights on. The green movement was, ironically, the most efficient way for Putin and Schröder to pad their pockets at Europe’s expense. But you know what, maybe it would be worth it if it made a difference. Maybe sacrificing energy independence would be a fair trade off if it made the world a cleaner place. But it didn’t. If anything, western energy policy managed to make the world a dirtier place. While western leaders pat themselves on the back for “doing their part”, for shutting down fossil fuel plants and nuclear reactors, for building windmills and solar farms, they don’t realize that they didn’t change a damn thing. The planet isn’t greener, because the pollution didn’t go away. It was simply outsourced with energy independence. Germany and England replaced nuclear reactors and domestic shale with Russian gas, and I doubt Putin is losing sleep over his carbon footprint. Believe it or not, the ozone layer doesn’t discriminate by geography, and outsourced fossil fuels are, in fact, still fossil fuels. The greatest two lies that the green movement ever told were that we could drop fossil fuels for renewables overnight, and nuclear didn’t need to be part of the solution. But these two lies have proven to be quite lucrative for certain Russian energy companies. Who knew that Vladimir Putin was renewable energy’s biggest cheerleader? - Jack If you liked this piece, make sure to subscribe by adding your email below! Tyler Durden Tue, 04/19/2022 - 02:00.....»»

Category: personnelSource: nytApr 19th, 2022

4 Reasons to Add Ameren (AEE) to Your Portfolio Right Now

Ameren (AEE) makes a strong case for investments, given the positive estimates movement and systematic investments to strengthen infrastructure and reduce emissions. Ameren Corporation’s AEE ongoing investments to strengthen infrastructure and add more renewable assets to the generation portfolio and its focus on organic projects are expected to drive its performance over the long run.Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Growth Projection & Surprise HistoryThe Zacks Consensus Estimate for Ameren’s 2022 earnings has moved up by 0.5% in the past 60 days to $4.05 per share. The Zacks Consensus Estimate for AEE’s 2023 earnings has moved up by 1.2% in the past 60 days to $4.34 per share.Ameren’s long-term (three to five years) earnings growth is projected at 7.2%.Ameren delivered an average earnings surprise of 3.9% in the last four quarters.DividendAmeren has a long history of dividend payments and has paid dividends to shareholders consecutively since 1998. AEE continues to target a dividend payout ratio of nearly 55% to 70% of its adjusted earnings. The new dividend for 2022 is $2.36 per share, which represents an annualized increase of 7.3% over the previous dividend of $2.2 per share.Currently, Ameren has a dividend yield of 2.4% compared with the Zacks S&P 500 composite's average of 1.5%.Stable Investments & Emissions ReductionAmeren’s growth has been led by the company’s systematic and consistent investments in growth projects and infrastructure upgrades. During the 2022-2026 period, Ameren expects to spend $17.3 billion, up 1.2% from the earlier five-year investment plan. Further, Ameren projects a solid pipeline of regulated infrastructure investments of more than $45 billion in the 2022-2031 period. These investments are aimed at supporting overall system reliability, environmental compliance and electric and natural gas utility infrastructure improvements. Such a notable investment strategy will boost AEE’s future growth prospects.In renewables, Ameren plans to offer electricity through the cleaner and more diverse sources of energy generation, including solar, wind, natural gas, hydro and nuclear power. Ameren targets to expand its renewables portfolio by adding 2,400 megawatts of renewable generation by the end of 2030. Ameren is also closing its coal-fired plants to reduce carbon dioxide emissions and promote green energy. These initiatives will enable Ameren to duly reduce its carbon emissions as planned by 50% by 2030, 85% by 2040 and net-zero by 2050.Return on EquityReturn on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, Ameren’s ROE is 10.3%, higher than the industry average of 9.3%. This indicates that the company is utilizing the funds more effectively than industry peers.Price PerformanceIn the past six months, Ameren’s stock has rallied 18.9% compared with the industry’s 16.6% growth.Image Source: Zacks Investment ResearchOther Stocks to ConsiderSome other similar-ranked stocks from the same industry include Consolidated Edison ED, OGE Energy OGE and WEC Energy Group WEC.The long-term earnings growth of Consolidated Edison, OGE Energy and WEC Energy is projected at 2%, 3.5% and 6%, respectively.Consolidated Edison, OGE Energy and WEC Energy delivered an average earnings surprise of 1.4%, 24.1% and 9.1%, respectively, in the last four quarters.In the past three months, ED, OGE and WEC shares have surged 17.7%, 11.1% and 9.2%, respectively. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ameren Corporation (AEE): Free Stock Analysis Report Consolidated Edison Inc (ED): Free Stock Analysis Report OGE Energy Corporation (OGE): Free Stock Analysis Report WEC Energy Group, Inc. (WEC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksApr 11th, 2022

Futures Grind Higher To Start New Quarter With All Eyes On Payrolls

Futures Grind Higher To Start New Quarter With All Eyes On Payrolls Following yesterday's furious quarter-end puke, which saw the S&P tumble 50 points in the last hour of trading as a massive $10 billion Market on Close sell imbalance sparked a liquidation frenzy, U.S. index futures started off the new quarter on the right foot, rising as investors weighed a drop in oil prices sparked by Biden's unprecedented pre-midterm election draining of the petroleum reserve, ongoing developments in the Ukraine war and tightening monetary policy ahead of ISM and payrolls data. S&P500 and Nasdaq 100 futures gained around 0.5% before March payrolls figures later on Friday, after U.S. stocks ended their worst quarter since the start of the pandemic. Europe’s Stoxx 600 gained after its worst quarter since the pandemic bear market. Oil reversed an earlier decline as euro-area inflation accelerated to another all-time high and Russia’s Gazprom PJSC started telling clients how to pay for gas in rubles. Treasury yields rose and the dollar was steady as traders await the jobs report, which unless it is a total disaster, will strengthen the case for a 50bps rate hike in May. U.S. data on Friday include nonfarm payroll and ISM data while no major company is expected to report earnings. U.S.-listed Chinese stocks jumped in premarket trading after Bloomberg News reported that Chinese authorities are preparing to give U.S. regulators full access to auditing reports of the majority of the 200-plus companies listed in New York. Alibaba shares rose 5.8% in premarket trading; E-commerce peers JD.com up 4% and Pinduoduo up 7.9%. Didi Global was among the top gainers, rising more than 18%, following a 15% drop Thursday. Meanwhile, shares of Lulu’s Fashion Lounge Holdings Inc. rose 27% in U.S. premarket after better-than-expected fourth-quarter and full-year guidance. Here are some other notable premarket movers: Chicken Soup For The Soul Entertainment (CSSE US) shares rise 21% in U.S. premarket, rebounding from yesterday’s losses, after Guggenheim’s Michael Morris (buy) said the company posted a “solid” 4Q performance, with sales modestly below his estimates but adjusted Ebitda slightly better. GameStop (GME US) shares rose 15% in premarket trading and were on course to open at the highest level this year after the video-game retailer announced plans for a stock split, fueling a rally in fellow so-called meme stocks. Redwire (RDW US) slumps 22% in U.S. premarket trading after the space infrastructure company reported 2021 results, with Jefferies saying that while the firm’s outlook was encouraging, it was disappointing versus prior expectations. Meanwhile, the curve between two-year and 10-year Treasuries yields is flipping between positive and negative, signaling that the countdown to the next recession has begun (see "The Yield Curve Inverts: What Happens Next"). “The market, like the Fed, has no idea how much tightening is necessary to stop a wage inflation spiral, but by upping the ante on the market with a series of 50bp rate hikes this year and a higher terminal rate, it can regain the control of the narrative and market expectations,” said Sebastien Galy, senior macro strategist at Nordea. Investors begin a new quarter wondering if the fighting in Ukraine, the isolation of Russia and the Fed’s increasingly hawkish turn will engender still more volatility and losses for stocks and bonds. Raw materials are the only key asset class to deliver major gains so far in 2022. Meanwhile, in Ukraine, talks between Ukraine and Russia resumed Friday via video link, following meetings earlier in the week in Turkey. Russia said two Ukrainian military helicopters made a rare strike across the border, hitting an oil tank facility in the city of Belgorod. Russian Foreign Minister Sergei Lavrov said Moscow is preparing a response to Ukraine’s proposals on ending hostilities; Lavrov also said Russia is preparing a response to Ukraine's proposals, says there has been movement forward; he also added that Russia has seen "much more understanding" of the situation in Crimea and Donbass from the Ukrainian side. Lavrov says peace talks with Ukraine need to continue. UK reportedly urged Ukraine not to back down and is concerned US, France and Germany will push Ukraine to “settle” and make significant concessions to Russia, according to The Times citing a government source. Mayor of Ukraine's Mariupol says Russian forces are not allowing humanitarian aid in; City is dangerous to try and exit. European equities also drifted higher after a slow start. Euro Stoxx 50 rises 0.7%. IBEX outperforms, adding 0.9%, FTSE 100 lags. Retailers, banks and miners are the strongest performing sectors. Euro-zone inflation accelerated to another all-time high as Russia’s invasion roiled global supply chains and provided a fresh driver for already-soaring energy costs. Euro-zone March consumer prices surged 7.5% from a year ago, up from 5.9% in February and far higher than the 6.7% median estimate in a Bloomberg survey. The Stoxx Europe 600 Index however, was on the rise, led by retail and banking stocks.  Here are some of the biggest European movers today: Santander shares rise as much as 3.2% after reiterating its financial targets for the year and saying its business remained resilient in the first quarter. The statement provides reassurance of recent trends, Barclays writes. Vestas Wind Systems gains as much as 5.4% after announcing orders totaling 2,179 MW in 1Q, with Handelsbanken saying the order intake is “promising” and well-above estimates. Bridgepoint Group jumps as much as 7.8% after the private-equity firm was upgraded to buy from neutral at Citi following a drop in the shares since the broker’s initiation in August 2021. Assicurazioni Generali rises as much as 3.8%, climbing for a third session, amid speculation the Italian insurer may get involved in industry M&A going forward. Greggs gains as much as 2.9% after Berenberg reiterates its buy recommendation, saying there is a “rare opportunity” to invest in the U.K. bakery chain at a “reasonable multiple.” Yara climbs as much as 1.8% after the company said it pre-ordered 15 floating bunkering terminals from Azane Fuel Solutions to establish a carbon-free ammonia fuel bunker network in Scandinavia. Stratec rises as much as 21% after a Bloomberg report that EQT and KKR are among several private equity firms weighing bids for the German health-care technology provider. Energiekontor jumps as much as 6.8%, extending its record high, after Warburg raised its price target to a Street- high, saying there is an “appetite for more” following Thursday’s FY results. Sodexo shares fall as much as 10% after the French caterer said the environment “remains uncertain” due to intermittent local outbreaks of Covid-19 and the war in Ukraine. Russian stocks gained for a third day, the longest winning streak since trading resumed on March 24. Talks between Ukraine and Russia will resume Friday via video link, following meetings earlier in the week in Turkey. Russian Foreign Minister Sergei Lavrov said Moscow is preparing a response to Ukraine’s proposals on ending hostilities.   The manufacturing resurgence in Europe and Asia softened in March as factories saw worsening supply shortages and soaring costs after Russia’s invasion. Friday’s data follow inflation overshoots this week from Spain and Germany that prompted investors to bring forward bets on when the European Central Bank will end almost eight years of negative interest rates. Earlier in the session, Asian stock retreated for a second day amid concerns about the extent the war in Ukraine will hurt global growth and as Chinese tech shares extended a selloff.   The MSCI Asia-Pacific Index slid as much as 1.1% before paring about two-thirds of that loss. The benchmark still remained on pace to finish the week up 0.3%, extending its winning streak to a third week.  Tech shares including Taiwan Semiconductor Manufacturing and Alibaba were major drags on Friday as traders assessed economic data and continued to eye possible U.S. delistings of Chinese firms. Equities in Japan underperformed the region while China’s consumer shares boosted the mainland benchmark.  Investors are watching the impact of soaring inflation and higher interest rates on global growth as the war in Europe continues. Asia’s manufacturing resurgence softened in March as factories saw worsening supply shortages and surging costs after Russia’s invasion of Ukraine. Data on Friday showed Japan’s business mood weakened while South Korean imports jumped on rising costs.   Also on investors’ radars are the trading halts of dozens of firms in Hong Kong from today after they missed a deadline to report annual results, increasing uncertainty in the market.  “We are in the middle of a war between two globally vital suppliers of energy and food,” said Justin Tang, the head of Asian research at United First Partners. “The ramifications are plenty and as long as there is no cease fire, we will continue to experience ebbs and flows in volatility.”   Asian stocks finished their worst quarter since early 2020 on Thursday with a drop of nearly 7%. Still, the measure has bounced back from the quarter-low touched in mid-March.   Sri Lanka’s stock market stopped trading on Friday and the rupee extended its loss after protests against surging living costs and daily power cuts amid dwindling foreign-exchange reserves. Trading in 33 Hong Kong-listed stocks was halted after a number of firms missed a deadline to report annual results Japanese stocks fell in Tokyo fell for a third day after U.S. peers declined and the Tankan survey showed a gloomier view of business conditions among Japan’s biggest manufacturers. The yen slipped 0.5% against the dollar during the trading day, helping stocks trim earlier losses. Still, both major gauges capped their first weekly losses in three, shedding more than 1.7% each since March 25. Electronics and auto makers were the biggest drags as the Topix fell 0.1% Friday, paring an earlier slide of as much as 1.3%. Tokyo Electron and Fast Retailing were the largest contributors to a 0.6% loss in the Nikkei 225.  The Tankan index of sentiment dropped to 14 from a revised 17 in the previous quarter, the first deterioration since June 2020, according to the central bank’s quarterly report Friday. The business mood among large non-manufacturers slipped to 9 from a revised 10 in the December report India’s benchmark stocks index completed its third weekly gain in four weeks, as local buying helped steady war-induced volatility in equities. The S&P BSE Sensex rose 1.2% to 59,276.69 in Mumbai, taking it weekly advance to 3.3%. The key gauge completed its best monthly climb since August in the previous session. The NSE Nifty 50 Index rose 1.2% to 17,670.45 on Friday.  HDFC Bank Ltd. surged 2.4% to its highest in more than a month and was the biggest boost to the Sensex, which saw 25 of the 30 shares trading higher. All 19 sectoral sub-indexes compiled by BSE Ltd. rose, led by a measure of utilities. Funds in India bought $5.2 billion worth of shares in March, while foreign investors extended their selling to a sixth consecutive month. The new fiscal year and quarter have started with concerns about the war in Ukraine, a hawkish U.S. Federal Reserve and the impact of higher commodity costs on company earnings.   “We expect FY23 to witness continued volatility in equity markets, especially in the first half of the year with rising interest rates globally and high inflation, which is expected to persist,” Nishit Master, portfolio manager at Axis Securities Ltd., wrote in a note.  The brokerage expects the Nifty index to rise to 20,200 by year-end and is positive on metals, hospitals, oil refining and capital goods.    In FX, the Bloomberg Dollar index inched up as the greenback traded mixed against its Group-of-10 peers; commodity currencies and the Swedish krona led gains while the yen was the worst performer. The euro fell and European bonds came off lows after euro-zone March consumer prices surged 7.5% from a year ago, up from 5.9% in February and more than the 6.7% median estimate in a Bloomberg survey. The pound consolidated against the euro, after rebounding from its weakest level since December on Thursday; the yen slid for the first time in four days. Japanese government bond yield curve resumed its steepening even as the Bank of Japan raised the amounts it plans to buy through regular market operations this quarter. Australia’s yield curve bear flattened, following a similar move in Treasuries. New Zealand dollar weakened; a gauge of consumer confidence dropped to an all-time low last month, according to ANZ data. In rates, Treasuries dropped across the curve Friday as investors positioned before U.S. jobs data forecast to show average hourly earnings accelerated in March, backing the case for a faster pace of Federal Reserve interest-rate hikes. Treasury futures traded off session lows in early U.S. trading, although yields remain cheaper by 4bp to 7bp across the curve after Thursday’s late month-end selling was extended in early Asia. Fixed income weakness is Treasuries centric, with both bunds and gilts outperforming on the day. 10-year yields trade around 2.40% after peaking at 2.437% in early European session - bunds and gilts outperform by 4bp and 2bp in the sector. Long-end led losses steepens 5s30s spread by 1.4bp and 2s10s by 2bp on the day; March jobs report is due at 8:30am with headline change in payrolls expected at 490k vs. 678k prior -- whisper number is higher than estimate at 529k. In Europe, the German curve bear steepened, cheapening up 2-3bps across the back end but broadly brushing off a hot Eurozone inflation print . Peripheral spreads mostly widen to core with long end Spain underperforming. Cash USTs maintain Asia’s bear flatten bias ahead of today’s payrolls release; the belly cheaper by ~6bps. In commodities, crude futures recoup Asia’s weakness. WTI returns to little changed, regaining a $100-handle after a brief dip in late Asia. Base metals are mixed; LME zinc rises 1.4%, outperforming peers. LME copper lags. Spot gold falls roughly $2 to trade near $1,935/oz. The US will also have the March ISM manufacturing reading, while global manufacturing PMIs are due. Otherwise, central bank speakers include the ECB’s Centeno, De Cos, Makhlouf, Schnabel and Knot, as well as the Fed’s Evans. Market Snapshot S&P 500 futures up 0.4% to 4,548.50 STOXX Europe 600 up 0.3% to 457.37 MXAP down 0.4% to 179.71 MXAPJ little changed at 590.96 Nikkei down 0.6% to 27,665.98 Topix down 0.1% to 1,944.27 Hang Seng Index up 0.2% to 22,039.55 Shanghai Composite up 0.9% to 3,282.72 Sensex up 0.7% to 58,980.92 Australia S&P/ASX 200 little changed at 7,493.80 Kospi down 0.6% to 2,739.85 German 10Y yield little changed at 0.58% Euro little changed at $1.1065 Brent Futures down 1.0% to $103.69/bbl Gold spot down 0.3% to $1,931.84 U.S. Dollar Index up 0.16% to 98.47 Top Overnight News from Bloomberg China’s factory activity fell to its worst level since the pandemic’s onset two years ago and a housing slump showed no sign of easing, darkening the outlook for the world’s second- largest economy Bundesbank President Joachim Nagel urged the European Central Bank to respond to quickly accelerating price pressures. Australia named Michele Bullock as the Reserve Bank’s first female deputy governor, propelling her to the front of the queue to succeed Philip Lowe in the top job At the U.S. Commerce Department, Secretary Gina Raimondo’s teams are working on ways to further undermine Putin’s ability to wage war For all the hardships visited on consumers at home and the financial chokehold put on the government from abroad, Bloomberg Economics expects Russia will earn nearly $321 billion from energy exports this year, an increase of more than a third from 2021. Iron ore futures in Asia gained with investors anticipating a strong recovery following the lifting of virus-related restrictions, even as news of Chinese housing giants missing earnings-report deadlines emerged Prime Minister Fumio Kishida’s government signed off on the reappointment of one of the Bank of Japan’s key policy architects in a move that suggests the central bank is looking for policy continuity after Governor Haruhiko Kuroda steps down next April A more detailed look at global markets courtesy of Newsquawk: Asia-Pac stocks were cautious following the uninspiring lead from Wall St, where the major indices closed off their worst quarterly performance in two years and as the region digested weak data releases. ASX 200 traded rangebound as pressure from losses in tech, industrials and financials was counterbalanced by resilience in the commodity-related sectors and upgrade to Australian PMI data. Nikkei 225 was subdued after mixed Tankan data in which the headline Large Manufacturing Index topped estimates, but Large Manufacturers and Non-Manufacturers' sentiment worsened for the first time in 7 quarters. Hang Seng and were mixed with sentiment clouded after the PBoC drained liquidity andShanghai Comp. Chinese Caixin Manufacturing PMI slipped into contraction territory, although the mainland recovered amid the partial lifting of the lockdown in Shanghai and as Chinese press continued to advocate monetary easing Top Asian News Shanghai Shifts Lockdown; Singapore Border: Virus Update Quarantine Eased for Hong Kong Flight Crew in Boost for Cathay China Chipmaker’s Buyer Said to Miss $9 Billion Payment Deadline Kasikornbank Said to Weigh Sale of $2 Billion Asset Manager Unit European equities (Stoxx 600 +0.6%) opened marginally firmer before extending on gains after positive commentary from Russian Foreign Minister Lavrov. The Stoxx 600 set to close the week out with marginal gains of around 0.6% in what has been a choppy week for indices. Sectors in Europe are higher across the board with Retail, Banks and Autos top of the leaderboard. Top European News London IPO Market Hasn’t Been This Bad in More Than a Decade Tiber Crossing Left in Limbo After War Sends Steel Surging Global Manufacturing Rebound Falters as War Takes Its Toll EU to Warn China It Will Hurt Global Role by Helping Russia In FX, the Yen has relented as yields rebound and repatriation demand dries up - Usd/Jpy bounced further from recent lows beyond near term resistance through to circa 122.75. Greenback has regrouped in advance of NFP with the DXY straddling 98.500. Aussie outperforms as risk appetite picks up and 0.7500 continues to prove pivotal. Euro finds a base after marked month end reversal as hot inflation offset lukewarm manufacturing PMIs - Eur/USD holding around 1.1050 after soaking up stops on a minor and brief half round number break.Yuan weaker after sub-50 Caixin Chinese manufacturing print, softer PBoC Cny midpoint fix and 7-day liquidity drain - USDCNH above 6.3650. In commodities, WTI (+0.6%) and Brent (+0.8%) kicked the session off on the backfoot following yesterday’s SPR announcement by the Biden administration with WTI breaching it's weekly low printed on Tuesday at USD 98.44 with Brent so far unable to take out its weekly low of USD 102.19. Since then, crude benchmarks have attempted to claw back lost ground and sit in minor positive territory. White House Press Secretary Psaki said a gas tax holiday is not off the table, according to Reuters. US House Majority Leader Hoyer said oil companies should either produce on leases and drill wells or pay a fee for unused leases and idled wells, according to EIN News. Russian oil and gas condensate production slipped to 11.01mln BPD in March vs. 11.08mln BPD in February, according to Reuters sources Gazprom says refilling storage ahead of winter will be a challenge for the EU. Gazprom says it has begun sending requests of gas-for-rouble payment switch to clients today; sats it remains a responsible partner and continues to secure gas supplies US Event Calendar 08:30: March Change in Nonfarm Payrolls, est. 490,000, prior 678,000 Change in Private Payrolls, est. 495,000, prior 654,000 Change in Manufact. Payrolls, est. 32,000, prior 36,000 March Unemployment Rate, est. 3.7%, prior 3.8% Underemployment Rate, prior 7.2% Labor Force Participation Rate, est. 62.4%, prior 62.3% Average Hourly Earnings YoY, est. 5.5%, prior 5.1%; MoM, est. 0.4%, prior 0% Average Weekly Hours All Emplo, est. 34.7, prior 34.7 09:45: March S&P Global US Manufacturing PM, est. 58.5, prior 58.5 10:00: March ISM Employment, est. 53.1, prior 52.9 ISM Prices Paid, est. 80.0, prior 75.6 ISM New Orders, est. 58.5, prior 61.7 ISM Manufacturing, est. 59.0, prior 58.6 10:00: Feb. Construction Spending MoM, est. 1.0%, prior 1.3% DB's Jim Reid concludes the overnight wrap Filling in while Jim is on holiday, my quick scan for sports-related injuries for this introduction yielded nothing. Meanwhile, a scan of quarter end markets showed sovereign bonds again yielding less than nothing, as 2yr bund yields (-7.8bps) fell back below 0 to -0.09% while the 2s10s Treasury curve closed below zero for the first time since 2019. Yields farther out the curve followed oil and transatlantic equity prices lower as well. No rest for the weary, though, as today’s US employment data kickstarts the new quarter. Before diving into markets, a couple of research plugs. *** Jim’s latest chartbook, “The yield curve inverts … what happens next?”, is out. We looked at all things inversion, including recession risks, asset price performance, the Fed’s viewpoint, our economists' latest recession models and also how yield curve inversions have been explained away in previous cycles. You can take a look here *** Staying in advertising mode, with Q2 starting, we will publish our Q1 performance review shortly. Q1 was a dramatic time in financial markets, with Russia’s invasion of Ukraine, accelerating inflation, the Fed hiking rates, and the yield curve closing the quarter inverted. As a result, it was a pretty bad month for most assets, with losses across equities, credit, and sovereign bonds. The big exception were commodities as energy, metals and agricultural goods realized large gains. See the full report out shortly for more. Turning back to yesterday’s markets, Brent and WTI crude futures fell -4.88% and -6.99%, respectively, following the US’s plan to release 1m barrels per day from its Strategic Petroleum Reserve for the next six months to combat eye-watering energy prices, the largest such SPR release on record. In an address to the nation, President Biden also announced measures to pressure domestic producers to increase their supply to the market along with easing regulations that currently restrict oil transport between American ports to American vessels. The President will also invoke the Defense Production Act to compel manufactures to prioritize the production of minerals used for large capacity batteries. While the UK is considering whether to join the reserve-releasing effort, OPEC+ production will be steady as she goes, with the cartel ratifying the plan to increase production only gradually by 432k barrels a day, in line with expectations. Even without a material increase in OPEC+ production, reports overnight that the US was strategically aligned with allies on Iran inched us closer to a nuclear deal that would open up Iranian supply. Crude oil futures are down a further -3.23% as we go to press this morning. The debate about Russian natural gas invoicing appeared to reach a denouement yesterday; European importers will be able to pay for Russian supply in euros and dollars as contracts specify, with the conversion to rubles happening internally within Russia. Nevertheless, European natural gas gained +5.83%. On the war, more reports joined the chorus signalling that Russian troops were indeed retreating from certain theatres, including various cities, airports, and the Chernobyl nuclear facility. While positive, the consensus is the locus of the war is moving to the east, rather than ending. Negotiations between Ukraine and Russia are set to resume today. Foreshadowed in the lede, European sovereign yields staged a large rally to end the quarter. 10yr bunds, OATs, and BTPs all rallied more than -9bps, led by falling inflation compensation on the drawdown in oil prices; 10yr breakevens across Germany, France, and Italy, narrowed -7.0bps, -8.1bps, and -6.5bps, respectively. The rallies weren’t confined to the long-end, as -6.8bps of expected ECB rate hikes through 2022 were priced out as well. It was smoother sailing for Treasury yields after a stormy quarter, but 2s10s nevertheless managed to dip below zero to close the quarter after briefly testing the waters earlier this week. 2yr yields climbed +2.8bps while 10yr yields dropped anchor, falling -1.1bps, leaving 2s10s at -0.06bps. As was the case earlier this week, the curve re-steepened after the initial inversion plunge, trading at +1.2bps this morning. Stocks retreated on both sides of the Atlantic, with the STOXX 600 and S&P 500 falling -0.94% and -1.57%, cementing the first negative quarterly return for both indices since the original Covid onslaught in Q1 2020. STOXX 600 utilities (+0.37%) were the only sector in the green across both indices, with cyclical stocks the largest underperformers. The retreat was likely exacerbated by quarter end, which served to push the VIX (+1.23ppts) back above 20 for the first time this week. Major Asian bourses are trading on the downbeat with tech stocks among the worst performers. Losses in the region are led by the Hang Seng (-0.72%), extending its previous session losses, with Chinese tech stocks listed in Hong Kong plunging. The Nikkei (-0.42%) is lagging after the BOJ’s quarterly Tankan business sentiment survey revealed that sentiment at Japan’s large manufacturers soured in the first three months of 2022. Chinese Caixin services PMI dropped to 48.1 in March, the steepest rate of contraction since February 2020. The deterioration was mainly triggered by the domestic Covid-19 resurgence. Despite the underwhelming data, Chinese stocks are outperforming the region, with the Shanghai Composite up +0.69%. Outside of Asia, stock futures in the US are pointing to a positive start, with contracts on the S&P 500 (+0.25%), Nasdaq (+0.26%) and Dow Jones (+0.25%) all trading higher. In data, US PCE increased 0.4%, month-over-month, in line with expectations, while the year-over-year measure moved to fresh four-decade high of 5.4%. The Chicago PMI printed at 67.9 vs. expectations of 57.0, while weekly initial jobless claims ticked up to a still low 202k vs. expectations of 196k. German unemployment fell by -18k in March (vs. -20k expected), which is the smallest monthly decline since last April. In turn, the unemployment rate remained at 5.0%, in line with expectations. To the day ahead, Q2 kicks off with the March US employment situation report in the New York morning. Strong January and February data coincided with upside surprises and revisions to payrolls data, lending credence to the Fed’s position that the labor market is ready to withstand much tighter monetary policy, if not beckons it. Our US economists expect nonfarm payrolls to increase by +400k, bringing the unemployment rate to a post-pandemic low of 3.7%. The Euro Area flash CPI will be the other main data, due at 10 am London, and is expected to show inflation rise to a fresh record since the single currency’s formation. After the massive upside surprises from Germany and Spain’s releases on Wednesday, yesterday brought another above-consensus print from France, where inflation rose to +5.1% on the EU-harmonised measure (vs. +4.9% expected). Meanwhile, Italy was the only one of the 4 biggest Euro Area countries not to see an upside surprise, but the +7.0% print (vs. +7.2% expected) nevertheless marked a gain over February’s +6.2% release. The US will also have the March ISM manufacturing reading, while global manufacturing PMIs are due. Otherwise, central bank speakers include the ECB’s Centeno, De Cos, Makhlouf, Schnabel and Knot, as well as the Fed’s Evans. Tyler Durden Fri, 04/01/2022 - 08:06.....»»

Category: blogSource: zerohedgeApr 1st, 2022

Japan’s Power Crisis Was a Decade in Making and Won’t Go Away

Japan’s worst power crisis in over a decade is a culmination of events starting from the Fukushima disaster, and is an issue that the nation won’t be able to quickly shake. The world’s third-largest economy has been running on a thinner supply of electricity since the triple meltdown at Fukushima in March 2011 shut its… Japan’s worst power crisis in over a decade is a culmination of events starting from the Fukushima disaster, and is an issue that the nation won’t be able to quickly shake. The world’s third-largest economy has been running on a thinner supply of electricity since the triple meltdown at Fukushima in March 2011 shut its massive fleet of nuclear reactors. Market reforms over the next 10 years aimed at boosting security of supply and making the grid cleaner led to utilities retiring inefficient and dirty power plants, crimping resources further. That set the background for the current scenario. A strong earthquake last week stretched the power grid, and the situation was made worse on Tuesday by a surprise blast of frigid weather across Tokyo. Solar output dropped and there wasn’t enough gas or coal-fired power plants to make up the difference. Now the region’s top utility is scrambling to avoid a blackout in one of the world’s most advanced cities. [time-brightcove not-tgx=”true”] The current crisis would have been “much less severe – perhaps almost a non-event – with more of Japan’s nuclear plants online,” said Dan Shulman, the founder of Japan-based consultancy Shulman Advisory, which advises clients on the nation’s electricity market. The impact of the war in Ukraine on fossil fuel prices and an increased dependence on less-reliable renewables could result in more instability on Japan’s grid, he said. What’s happening in Japan is playing out across other power grids from Texas to Taiwan. The energy transition and natural disasters are throwing new challenges at utilities, stretching grids and triggering blackouts that threaten economies, especially resource-poor and isolated ones like Japan. With Japan’s grid so stretched, a future earthquake, extreme weather event or fuel supply disruption could trigger another power shortage even after this immediate crisis subsides. Japan’s issues can be traced to the magnitude 9 earthquake in March 2011, the biggest ever recorded in the country. A massive tsunami overwhelmed the Fukushima Dai-Ichi nuclear facility, shut off power to cooling systems and led to meltdowns of three reactor cores. In the immediate aftermath, Japan closed all its 54 reactors that supplied about 30% of its electricity needs. Only 10 have restarted under post-Fukushima safety rules due to strong public opposition and a cumbersome regulatory process. Nuclear power now supplies less than 10% of Japan’s electricity. It’s been replaced by a mix of natural gas, coal and solar facilities. “The voting public has been against nuclear generation post Fukushima so it is a tough problem for government to solve,” said Antony Stace, a Sydney-based energy trader who closely monitors the Japanese market. The government was well aware of the dilemma, and sped up liberalization of the power market, with the effort culminating in the 2016 reform to break up monopolies held by regional utilities like Tokyo Electric Power Co. The idea was that more companies would enter the power retail market, increase competition, boost security of supply and ultimately lower electricity rates for consumers. Unforeseen Impact But there was an unforeseen consequence: In order to gain the upper hand against new competitors, regional utilities were quick to retire backup power plants that were expensive and inefficient as a way to cut costs and provide customers with more attractive power rates. That further tightened available supply, and removed a key piece of emergency infrastructure. Meanwhile, the biggest competitors to Japan’s regional utilities weren’t so interested in investing in new generation capacity. They were focused on selling retail electricity that they procured either from the spot market or through a purchase agreement with an existing power plant. Japan had only 142 gigawatts worth of available power capacity before last week’s earthquake, according to data from its electricity exchange. That is 23% lower than in 2016, a few weeks before the market liberalization. Oil-fired power capacity—the most expensive of the fossil fuels—dropped by 73% over the same period. Meanwhile, Japan introduced a feed-in tariff program in 2012 that boosted installations of solar panels. While wildly successful, it also crowded the nation’s grid with intermittent power output, making it difficult—and sometimes not very cost effective—to replace retiring thermal power plants. So when last week’s earthquake hit and knocked offline 12 power plants, Japan had little spare capacity to call upon. The sudden cold blast boosted demand but reduced solar output, forcing the nation’s top utility to ask businesses and households to lower consumption. Recurring Crisis Relief may not come soon. Several coal-fired power plants could remain offline for months, since machinery to load the fuel into the facilities was damaged, according to people with knowledge of the matter. That means Japan will need to purchase spot liquefied natural gas, which isn’t an easy task given that the fuel is facing a global supply shortage. The longer-term view doesn’t look much better. Japan’s effort to drastically reduce dependence on fossil fuels will leave a gap that renewables can’t easily fill for years. The government last year said it aims for renewable energy to make up a third of the nation’s power generation by 2030, up from its previous target of less than a quarter. Meanwhile, the revised plan cuts gas- and coal-fired power generation by roughly half by the end of the decade. The plan also requires Japan to restart basically all of its 33 operable nuclear reactors—a difficult task given the public opposition. Only 10 units have so far resumed. All of this makes it more likely that this week’s crisis could be repeated with the next hiccup. “Many power plants in the country have been closing,” said Go Matsuo, head of Energy Economics and Society Research Institute in Tokyo. “There needs to be a fundamental shift in how to encourage investment in the area. Investment in large-scale power generation takes seven to eight years to decide, so that means there is an urgency.”.....»»

Category: topSource: timeMar 23rd, 2022

Uranium Stocks Soar After EU Seeks Green Light For Nuclear Projects

Uranium Stocks Soar After EU Seeks Green Light For Nuclear Projects Long before European energy prices went stratospheric, in December 2020, we predicted that Uranium stocks were set to surge as it was only a matter of time before the Green lobby lumped the Uranium sector along with the rest of the ESG space (see :"Uranium Stocks Soar: Is This The Beginning Of The Next ESG Craze"). So it would be stand to reason that the case to "bless" nuclear power was that much more powerful when European energy prices just went through a period of unprecedented hyperinflation. That's exactly what happened on the first day of the year, when uranium companies surged higher, extending on one of the best trades in the past year (the Uranium URA ETF is double since we first recommended the space in early Dec 2020), after the European Union said it is planning to allow some nuclear energy projects to be classified as sustainable investments, a proposal that sparked immediate criticism from the Greens who would rather freeze to death and spend all their money to keep warm during the winter than allow a few nuclear power plants to restart. According to the draft, sent on Friday to EU national governments for review, nuclear energy could be classified as sustainable as long as new plants that are granted construction permits by 2045 meet a set of criteria to avoid significant harm to the environment and water resources, Bloomberg reported. “The Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future,” the EU executive arm said in a statement on Saturday. The reason why global uranium stocks spiked is because the design of the EU investment classification system - known as the taxonomy - is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition. The challenge is to ensure the decision on nuclear and gas gets political support, while avoiding the risk of greenwashing, or overstating the significance of emissions cuts, something that has plagued virtually every other aspect of ESG. Europe wants to reach carbon neutrality by the middle of the century under the Green Deal, a sweeping overhaul that aims to accelerate pollution cuts in all areas, from energy production to transport. Yet for some lawmakers, investors and activists, classifying gas or nuclear projects as green would harm the entire sustainable investment rulebook. “Including nuclear power and gas in the EU taxonomy is like labeling a caged egg as organic,” said Michael Bloss, a German member of the Green group in the European Parliament. “Instead of channeling money into investments in the solar and wind industries, old and extremely expensive business models can now be continued under false guise.” On the other hand, considering that it will take years if not decades for solar and wind to be viable alternatives to coal, nat gas or nuclear, it really doesn't matter whether the egg is caged or organic as long as Europeans don't freeze, and one more winter like this one and Europe's parties of "Green" hypocrites will be kicked out of parliament permanently, as the locals decide they'd rather have at least nuclear power than spend their entire paycheck on heating and power bills. As Bloomberg notes, the taxonomy aims to guide investors to clean projects. The decision on whether it should include gas and nuclear power was delayed in April following criticism that such an addition could undermine the credibility of the system. Giving a temporary green label to certain gas projects gas projects could facilitate investments in cleaning up coal-based heating systems in countries such as Poland. That’s an argument often raised by East European politicians. Meanwhile, the inclusion of some nuclear energy projects would help attract private finance in nations from France to the Czech Republic, which plan to rely on atomic power in their transition to net-zero emissions. The Commission is also planning to ensure a high degree of transparency to investors concerning gas and nuclear energy, introducing specific disclosure requirements for non-financial and financial undertakings. Member states and the Platform on Sustainable Finance have until Jan. 12 to provide feedback. The Commissions will then adopt the delegated act later this month. In the next step, it will be sent to EU nations and the European Parliament for scrutiny. And while we wait, the market is clearly looking for a favorable outcome, leading to surges across most uranium sector names including: Uranium Energy up 7.5% Uranium Royalty up 8.2% Energy Fuels up 7.9% Denison Mines up 7.3% NexGen Energy up 5.9% Cameco up 4.0% Global X Uranium ETF (URA) gains 5.00% If the European outcome is favorable, expect much more upside as our core thesis plays out. Tyler Durden Mon, 01/03/2022 - 15:55.....»»

Category: blogSource: zerohedgeJan 3rd, 2022

"Santa Rally Is Finally Here": Futures Hit All Time High Day After Powell Goes Full Jean-Claude Trichet

"Santa Rally Is Finally Here": Futures Hit All Time High Day After Powell Goes Full Jean-Claude Trichet One day before what everyone knew would be a hawkish pivot by the Fed, the mood was dour with tech names tumbling and futures hanging one for dear life. One day after, Jerome Powell confirmed he would go full Jean-Claude Trichet as the Fed would not only turbo-taper into a sharply slowing economy, ending its QE program by March but then proceed with hiking rates as many as 3 times in 2022 (more than the 2 hike consensus), with the BOE shocking markets moments ago with a surprise rate hike and even the ECB trimming its turbo QE, and futures are.... at all time highs. That's right - eminis are higher by 140 points in 24 hours because the Fed was more hawkish than consensus expected.  At 8:00 a.m. ET, Dow e-minis were up 215 points, or 0.61%, S&P 500 e-minis were up 27.25 points, or 0.57%, and Nasdaq 100 e-minis were up 100 points, or 0.61%. Treasury yields jumped alongside European bonds after the BOE became the first major central bank to raise rates since the pandemic, while the dollar fell and the pound jumped. The Euro also hit session highs after the ECB seemed to turn ever so slightly more hawkish as its monthly QE is set to shrink in the coming year. "The market likes facts it can digest. With the uncertainty now gone, it finds relief,” said Frederik Hildner, a portfolio manager at Salm-Salm & Partner. Gradual rising rates “provides more firepower for the next downturn, as it displays the ability normalize monetary policy.” On Wednesday, Jerome Powell said the U.S. economy no longer needed increasing amounts of policy support as annual inflation has been running at more than double the central bank's target in recent months, while the economy nears full employment. Recent readings on surging producer and consumer prices as well as the fast-spreading Omicron variant of the coronavirus have fueled anxiety as the benchmark S&P 500 inches closer to a record high. "Is the Santa Rally finally here? Markets certainly seem to have a spring in their step... the prospect of three interest rate hikes in 2022 would suggest the central bank has a clear plan to not let inflation get out of control," Russ Mould, investment director at AJ Bell wrote in a client note. "Equally, it isn't being too aggressive to trip up the economy. This sense of balance is exactly what investors want, and an upbeat tone from the Fed certainly seems to have rubbed off on markets" Bell said, clearly goalseeking his narrative to the market's response as just 24 hours later he would be saying just the opposite when futures were tanking of hawkish Fed fears. Big tech stocks and banks led gains in premarket trading. Shares in Tesla, Microsoft, Meta and Amazon.com rose between 0.7% and 2.4%, with the lift pushing Apple shares nearer to an historic market value of $3 trillion. Bank stocks including JPMorgan, Morgan Stanley, Bank of America, Wells Fargo and Citigroup all gained between 0.7% and 0.8%. Here are some of the biggest U.S. movers today: Apple (APPL) and other big U.S. tech stocks rise after the Federal Reserve said that it would speed up its taper, joining in with a broader relief rally across risk assets. Apple shares are up 0.6%, with the stock drawing nearer to an historic market capitalization of $3 trillion. Also Thursday, Goldman Sachs said lead times for Apple’s iPhone have declined in the latest week. Assertio (ASRT US) shares rise 4% after the company announced the $44 million acquisition of the Otrexup device from Antares Pharma. Blue Bird (BLBD US) dropped 6% after the school bus-maker provided a weaker-than-expected sales outlook. The company also offered $75m shares at $16/share in a private placement. Danimer Scientific (DNMR) falls 10% after announcing that it plans to offer $175 million of convertible senior notes. Delta Air Lines (DAL) is up 2% after saying it expects to report a profit for the fourth quarter, citing a strong demand for travel over the winter holiday period and a decline in jet fuel prices. Other airline stocks are also higher. DocuSign (DOCU) falls 2% as Morgan Stanley issued a downgrade, saying third-quarter results changed the firm’s view regarding the durability of growth through tough post-pandemic comparables. Freyr Battery (FREY) gains 14% after executing its inaugural offtake agreement for at least 31 GWh of low-carbon battery cells. IronNet (IRNT US) slumps 25% after the cybersecurity company’s results fell short of expectations, prompting a Street-low target from Jefferies. Lennar Corp. (LEN US) declined 6% after it reported a forecast for purchase contracts that was weaker than expected. Plug Power (PLUG) gains 5% after signing an agreement with Korean electric-vehicle manufacturer Edison Motors to develop an electric city bus powered by hydrogen fuel cells. Syndax Pharmaceuticals (SNDX) falls 8% after pricing 3.2 million shares at $17.50 each. Tesla (TSLA) is up 2%, rising with other electric vehicle stocks amid a broader gain in technology stocks and U.S. futures on hopes that the Federal Reserve’s policy tightening will fight high inflation without hampering economic growth. Wayfair (W) falls 2% after BofA downgraded the stock to underperform, citing weak near-term data and difficult comparisons through the first quarter of 2022 for the online furniture retailer. European equities rally with Euro Stoxx 50 up as much as 2.1% before drifting off best levels. The U.K.’s exporter-heavy FTSE 100 Index pared some gains after the BOE decision, while European dipped modestly after the European Central Bank’s meeting.  Miners, tech and autos are the best performers, utilities and media names lag. Equities have whipsawed in recent weeks as investors attempted to price in the prospect of rate hikes, while assessing risks from the spread of the omicron variant. The market’s early response to the Fed signals some relief arising from policy clarity, and optimism that the rebound from pandemic lows can weather the pivot away from ultra-loose monetary settings. “The market is breathing a sigh of relief that the FOMC meeting suggested that it is taking inflation risks in the United States more seriously,” Ann-Katrin Petersen, an investment strategist at Allianz Global Investors, said in an interview with Bloomberg TV. “The question really will be whether the Fed will dare to do even more in order to taper the inflation risk.” Asian stocks rose, halting a four-day slide, as confidence in Federal Reserve policy allowed investors to take on riskier assets. The MSCI Asia Pacific Index climbed as much as 0.8%, buoyed by energy and technology shares. Japan was Asia’s top performer, aided by a weaker yen. Hong Kong and China stocks eked out gains amid ongoing concern over U.S. sanctions. Australian equities declined for a third day. Asia’s benchmark advanced for the first time this week on hopes the Fed will effectively combat surging prices without choking off economic growth. The U.S. central bank said it will double the pace of its asset tapering program to $30 billion a month and projected three interest-rate increases in 2022. In the run-up to the Fed’s decision, Asia’s equity gauge slumped almost 2% over the past four days, keeping it below the 50-day moving average.    The short-term boost to stock market sentiment is from Fed Chair Jerome Powell’s comments about wage inflation not being the main issue for now, and expectations that there’ll be full employment next year, said Ilya Spivak, head of Greater Asia at DailyFX. However, there’s a “meaningful risk” that the Fed’s latest policy stance will trigger liquidation as Asia stock portfolios are de-risked, Spivak said. Japan’s stocks rose for a second day after the yen weakened and U.S. stocks rallied amid speculation the Federal Reserve will combat surging prices without choking off economic growth. The Topix index climbed 1.5% to close at 2,013.08 in Tokyo, while the Nikkei 225 Stock Average advanced 2.1% to 29,066.32. Keyence Corp. contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,181 shares in the index, 1,674 rose and 421 fell, while 86 were unchanged. “It wouldn’t be strange to see the discount on Japanese equities narrowing following the FOMC meeting results, with market interest centered around electronics, machinery, automakers and marine transportation stocks,” said Takashi Ito, an equity market strategist at Nomura Securities. Electronics firms and automakers helped lift the Topix as the yen headed for a four-day slump against the dollar, with the currency falling 0.1% to 114.19 Australia's S&P/ASX 200 index fell 0.4% to close at 7,295.70, extending its losing streak to a third day.  CSL was the worst performer after the benchmark’s second-biggest company by weighting completed a placement to fund its Vifor acquisition. Mesoblast was the top performer after saying it plans to conduct an additional U.S. Phase 3 trial of rexlemestrocel-L in patients with chronic low back pain.  Investors also digested November jobs data. Australian employment soared last month, smashing expectations and pushing the jobless rate lower as virus restrictions eased on the east coast. In New Zealand, the S&P/NZX 50 index fell 0.7% to 12,777.54 In rates, cash USTs bull steepened, bolstered by a large curve steepener that blocked in early London. Bunds are soft at the back end, peripherals slightly wider ahead of today’s ECB meeting. Gilts bear steepen slightly, white pack sonia futures are lower by 2-3.5 ticks. In FX, the dollar slipped for a second day and oil rose; cable snapped to best levels of the week after the BOE unexpectedly hiked rates.  The Bloomberg Dollar Spot Index fell for a second day as the greenback weakened against all its Group-of-10 peers apart from the yen; Tresury yields fell, led by the belly of the curve. Commodity currencies were the best G-10 performers, led by the krone, which reversed an earlier loss after Norway’s central bank raised its interest rate for the second time this year and flagged another increase in March as officials acted to cool the rebounding economy despite renewed coronavirus concerns. The Australian and New Zealand dollars reversed earlier losses amid upbeat stock markets; the Aussie earlier weakened as RBA Governor Lowe hinted at the prospect of no rate hikes next year. The yen fell as the Federal Reserve’s decision reaffirmed yield differentials ahead of the Bank of Japan’s outcome on Friday. Bonds rose after a solid auction. Elsewhere in FX, NOK outperforms in G-10 after Norges Bank rate action, other commodity currencies are similarly well bid. In commodities, Crude futures hold a narrow range around best levels of the session. WTI is up 1.1% near $71.70, Brent near $74.70. Spot gold grinds higher, adding ~$9 near $1,786/oz. LME copper outperforms in a well-bid base metals complex To the day ahead now, and the main highlights will be the aforementioned policy decisions from the ECB and the BoE. On the data side, we’ll also get the flash PMIs for December from around the world, the Euro Area trade balance for October, and in the US there’s November data on industrial production, housing starts and building permits, as well as the weekly initial jobless claims. Finally, EU leaders will be meeting for a summit in Brussels. Market Snapshot S&P 500 futures up 0.5% to 4,734.25 STOXX Europe 600 up 1.2% to 476.39 MXAP up 0.8% to 193.11 MXAPJ up 0.5% to 623.76 Nikkei up 2.1% to 29,066.32 Topix up 1.5% to 2,013.08 Hang Seng Index up 0.2% to 23,475.50 Shanghai Composite up 0.8% to 3,675.02 Sensex up 0.1% to 57,851.57 Australia S&P/ASX 200 down 0.4% to 7,295.66 Kospi up 0.6% to 3,006.41 Brent Futures up 1.0% to $74.59/bbl Gold spot up 0.5% to $1,786.03 U.S. Dollar Index down 0.36% to 96.16 German 10Y yield little changed at -0.36% Euro up 0.2% to $1.1316 Top Overnight News from Bloomberg The greenback is set for its biggest annual gain in six years and its rally appears to be far from over, market participants say. The prime mover: a hawkish Federal Reserve that’s drawn a roadmap of interest-rate increases over the next three years, while other central banks look much more reticent to withdraw stimulus The ECB is poised to unveil a gradual withdrawal from extraordinary pandemic stimulus in the face of soaring inflation whose path is further clouded by the omicron coronavirus variant The “phenomenal pace” at which the new Covid-19 omicron strain is spreading across the U.K. will trigger a surge in hospital admissions over the holiday period, according to Boris Johnson’s top medical adviser The Swiss National Bank kept both the deposit and the policy rate at -0.75%, as widely predicted by economists. With the global economic recovery on shaky footing due to the omicron variant, President Thomas Jordan and fellow policy makers also reiterated their pledge to supplement subzero rates with currency interventions as needed France will impose tougher rules on people traveling from the U.K., including a ban on non-essential trips and a requirement to self-isolate, as it tries to slow the spread of the omicron variant IHS Markit said its index tracking output across the U.K. economy fell to 53.2 this month from 57.6 in November, reflecting weaker-than-expected growth in service industries including hotels, restaurants and travel-related businesses. Business-to-business services stalled European power prices soared to records after Electricite de France SA said that two nuclear reactors will stop unexpectedly and two will have prolonged halts -- just as the continent heads for a cold snap with already depleted gas inventories Hungary’s central bank increased the effective base interest rate for the fifth time in as many weeks to tackle the fastest inflation since 2007 and shore up the battered forint A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as the region digested the FOMC meeting. The ASX 200 (-0.4%) was negative with heavy losses in the healthcare sector and as COVID infections remained rampant. There were also notable comments from RBA Governor Lowe that the board discussed tapering bond purchases in February and ending it in May or could even end purchases in February if economic progress is better than expected, although it is also open to reviewing bond buying again in May if the data disappoints. The Nikkei 225 (+2.1%) outperformed and reclaimed the 29k level after the Lower House recently passed the record extra budget stimulus and with the latest trade data showing double-digit percentage surges in Imports and Exports, despite the latter slightly missing on expectations. The Hang Seng (+0.2%) and Shanghai Comp. (+0.8%) were varied with Hong Kong pressured by losses in the big tech names amid ongoing frictions between the world’s two largest economies and as US lawmakers proposed a bill to allow the US oversight of China audits, although the mainland was kept afloat amid further speculation of a potential LPR cut this month, as well as reports that China will boost financial support for small businesses and offer more longer-term loans to manufacturers. Finally, 10yr JGBs were indecisive despite the constructive mood in Tokyo and with price action stuck near the 152.00 focal point, while demand was also sidelined amid mixed results at the 20yr JGB auction and as the BoJ kickstarts its two-day meeting. Top Asian News Indonesia Reports First Omicron Case in Jakarta Facility Asia Stocks Snap Four-Day Drop as Traders Take on Risk After Fed Shimao Group Shares Set for Best Day in Month Money Manager Vanishes With $313 Million From China Builder Equities in Europe have taken their cue from the post-FOMC rally seen across Wall Street (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) following somewhat mixed APAC trade. As a reminder, markets saw relief with one of the major risk events out of the way, and with Chair Powell refraining from throwing hawkish curveballs. That being said, the forecast does see three rate hikes next year, whilst the Fed Board next year will also be more hawkish – at least within the rotating voters - with George, Mester and Bullard poised to vote from 2022. Nonetheless, US equity future continues grinding higher with all contracts in the green and the RTY (+1.3%) outperforming vs the NQ (+0.7%), ES (+0.6%), and YM (+0.5%). Bourses in Europe also experience broad-based gains with no real outliers, although the upside momentum somewhat waned amid some softer-than-expected PMI metrics ahead of ECB. Sectors in Europe paint a clear pro-cyclical bias. Tech outperforms following a similar sectorial performance seen on Wall Street. Basic Resources and Oil & Gas follow a close second, with Autos and Travel & Leisure also among the biggest gainers. The downside sees Personal & Household Goods, Telecoms and Food & Beverages. Healthcare meanwhile fares better than its defensive peers as Novartis (+4%) is bolstered after commencing a new USD 15bln buyback, highlighting confidence in growth and pipeline. On the flip side, EDF (-12%) shares have slipped after it narrowed FY EBITDA forecasts and highlighted some faults with some nuclear reactors amid corrosion. Top European News Britain’s Covid Resurgence Cuts Growth to Slowest Since Lockdown SNB Says Franc Is Highly Valued as Omicron Clouds Outlook Norway Delivers Rate Hike That Omicron Had Threatened to Derail Erdogan Approves Third Capital Boost for State Banks Since 2019 In FX, not much bang for the Buck fits the bill accurately as it is panning out in the FOMC aftermath even though market expectations were matched and arguably exceeded in terms of dot plots showing three hikes in 2022 vs two anticipated by most and only one previously, while the unwinding of asset purchases will occur in double quick time to end in March next year instead of June. However, there appears to be enough in the overall statement, SEP and Fed chair Powell’s post-meeting press conference to offset the initial knee-jerk spike in the Dollar and index that lifted the latter very close to its current y-t-d peak at 96.914 vs 96.938 from November 24. Indeed, the terminal rate was maintained at 2.5%, no decision has been taken about whether to take a break after tapering before tightening, and the recovery in labour market participation has been disappointing to the point that it will now take longer to return to higher levels. In response, or on further reflection, the DXY has recoiled to 96.141 and through the 21 DMA that comes in at 96.238 today. NZD/AUD/CAD/GBP/EUR/CHF - All on the rebound vs their US counterpart, with the Kiwi back on the 0.6800 handle and also encouraged by NZ GDP contracting less than feared in Q3, while the Aussie is hovering around 0.7200 in wake of a stellar jobs report only partly tempered by dovish remarks from RBA Governor Lowe who is still not in the 2022 hike camp and non-committal about ending QE next February or extending until May. Elsewhere, the Loonie has clawed back a chunk of its losses amidst recovering crude prices to regain 1.2800+ status ahead of Canadian wholesale trade that is buried between a raft of US data and survey releases, Sterling is flirting with 1.3300 in advance of the BoE that is likely to hold fire irrespective of significantly hotter than forecast UK inflation, the Euro is pivoting 1.1300 pre-ECB that is eyed for details of life after the PEPP and the Franc is somewhat mixed post-SNB that maintained rates and a highly valued assessment of the Chf with readiness to intervene as required. Note, Usd/Chf is meandering from 0.9256 to 0.9221 vs Eur/Chf more elevated within a 1.0455-30 band. JPY - The Yen is underperforming on the eve of the BoJ and looking technically weak to compound its yield and rate disadvantage after Usd/Jpy closed above a key chart level on Wednesday (at 114.03). As such, Fib resistance is now exposed at 114.38 vs the circa 114.25 high, so far, while decent option expiry interest may be influential one way or the other into the NY cut given around 1.3 bn at the 114.25 strike, 1.7 bn at 114.30 and 1.2 bn or so at 114.50. In commodities, WTI and Brent front-month futures are taking advantage of the risk appetite coupled with the softer Buck. WTI Jan trades on either side of USD 71.50/bbl (vs low USD 71.39/bbl) while Brent Feb sees itself around USD 74.50/bbl (vs low USD 74.28/bbl). Complex-specific news has again been on the quiet end, with prices working off the macro impulses for the time being, and with volumes also light heading into Christmas trade. Elsewhere spot gold and silver ebb higher – in tandem with the Dollar, with the former eyeing a group of DMAs to the upside including the 100 (1,788/oz), 21 (1,789/oz) 200 (1,794/oz) and 50 (1,796/oz). Turning to base metals, LME copper has been catapulted higher amid the risk and weaker Dollar, with prices re-testing USD 9,500/t to the upside. Meanwhile, a Chinese government consultancy has said that China's steel consumption will dip 0.7% on an annual basis in 2022 amid policies for the real estate market and uncertainties linked to COVID-19 curb demand. US event calendar 8:30am: Dec. Initial Jobless Claims, est. 200,000, prior 184,000; Continuing Claims, est. 1.94m, prior 1.99m 8:30am: Nov. Housing Starts MoM, est. 3.1%, prior -0.7% 8:30am: Nov. Housing Starts, est. 1.57m, prior 1.52m 8:30am: Nov. Building Permits MoM, est. 0.5%, prior 4.0%, revised 4.2% 8:30am: Nov. Building Permits, est. 1.66m, prior 1.65m, revised 1.65m 8:30am: Dec. Philadelphia Fed Business Outl, est. 29.6, prior 39.0 9:15am: Nov. Manufacturing (SIC) Production, est. 0.7%, prior 1.2%; Industrial Production MoM, est. 0.6%, prior 1.6% 9:45am: Dec. Markit US Manufacturing PMI, est. 58.5, prior 58.3 9:45am: Dec. Markit US Services PMI, est. 58.8, prior 58.0 DB's Jim Reid concludes the overnight wrap Yesterday’s biggest story was obviously the Fed. In line with our US economists call (their full recap here), the FOMC doubled the pace of taper to $30bn a month, which would bring an end to QE in mid-March. The new dot plot showed three rate hikes in 2022, up from the Committee being split over one hike in September. Farther out, the median dot had 3 additional hikes in 2023 and 2 hikes in 2024, bringing fed funds just below their estimate of the longer-term rate. Notably, all 18 Committee members have liftoff occurring next year, and 10 have 3 hikes penciled in, suggesting consensus behind the recent hawkish turn was strong. Short-end market pricing increased in line and now has around 2.9 hikes priced for 2022. The first hike is fully priced for the June meeting, but notably, meetings as early as March are priced as live, more on that in a bit. In the statement, the Committee admitted that inflation had exceeded target for some time (dropping ‘transitory’ completely), and that liftoff would be tied to the economy reaching full employment. By the sounds of the press conference, progress toward full employment has proceeded pretty rapidly. Chair Powell noted that while labour force participation progress has been disappointing, almost every other measure of labour market strength shows a very strong labour market, and could create upside risks to inflation should wage growth start to increase beyond productivity. It is within that context that he framed the decision to taper faster, it will leave the Fed in a position to react as needed, providing optionality. In that vein, he stressed a few times that the lag between the end of taper and liftoff need not be as long as it was in the last cycle, and that the Fed will raise rates after taper is done whenever needed, hence meetings as early as March being live. Notably on Omicron, the Chair, like the rest of us, recognises we don’t know much about the variant yet, but seemed optimistic about the economy’s ability to withstand subsequent Covid shocks, regardless of Omicron’s specifics. While Covid shocks can tighten supply chains, discourage labour participation, and reduce demand, as more people get vaccinated those impacts should dwindle over time, so his argument went. Hammering the point home, he sounded confident that the economy can handle whatever Omicron brings without any additional QE, justifying the accelerated taper path despite Covid risks. The hawkish turn had been well forecast through Fed speakers since the last meeting, not least of which the Chair himself during Congressional testimony, which served to dull the market impact. Treasury yields were slightly higher, (2yr Tsys +0.6bps and 10yr Tsys +1.5 bps) but were quite docile for an FOMC afternoon. The dollar initially strengthened on the statement release before reversing course and ending the day -0.24% lower. Stocks were the real outperformers, as the S&P 500 rallied through the FOMC events, gaining +1.63%, the best daily performance in two months, while the Nasdaq increased +2.15%. The Russell 2000 matched the S&P, gaining +1.65%. Obviously the market was anticipating the change in policy, but if doubling taper and adding three rate hikes in the next year isn’t enough to tighten financial conditions, what is? The Chair was asked about that in so many words in the press conference, where he responded by noting financial conditions could change on a dime. Indeed, they will have to tighten from historically easy levels if the Fed is to bring inflation back to target through policy. The Fed may be out of the way now, but the central bank excitement continues today as both the ECB and the BoE announce their own policy decisions later on. We’ll start with the ECB, who like the Fed have faced much higher than expected inflation lately, with the November flash estimate coming in at +4.9%, which is the highest since the formation of the single currency. Whilst Omicron has cast a shadow of uncertainty, with Commission President von der Leyen saying yesterday that it was likely to become dominant in Europe by mid-January, our European economics team doesn’t think there has been anything concrete enough to alter the ECB from their course (like the Fed). In our European economists’ preview (link here) they write the ECB appears on track to initiate a transition to a monetary policy stance based more on policy rates and rates guidance and less on liquidity provision. The ECB is set to confirm that PEPP net purchases will end in March, but will cushion the blow by working flexibility into the post-PEPP asset purchase arrangement. They are also set to make the policy framework more flexible to better respond to inflation uncertainties. One thing to keep an eye out for in particular will be the latest inflation projections, with a report from Bloomberg suggesting that they’ll show inflation beneath the 2% target in both 2023 and 2024. So if that’s true, that could offer a route to arguing against a tightening of monetary policy for the time being, since the ECB’s forward guidance has been that it won’t raise rates until it sees inflation at the target “durably for the rest of the projection horizon”. Today’s other big decision comes from the BoE, where our UK economist is expecting that there’ll be a 15bps increase in Bank Rate, taking it up to 0.25% although they suggest it’s a very close call. See here for the rationale. Ahead of that decision later on, we received a very strong UK inflation print for November, with CPI rising to +5.1% (vs. +4.8% expected), up from +4.2% in October and the fastest pace in a decade. That’s running ahead of the BoE’s own staff forecasts in the November Monetary Policy Report, which had seen inflation at just +4.5% that month, so six-tenths beneath the realised figure. We’ll get their decision at 12:00 London time, 45 minutes ahead of the ECB’s. In terms of the latest on the Omicron variant, there are continued signs of concern in South Africa, with cases coming in at a record 26,976 yesterday, whilst the number in hospital at 7,339 is up +73% compared to a week ago. Meanwhile the UK recorded their highest number of cases since the pandemic began, at 78,610. England’s Chief Medical Officer, Chris Whitty, said that a lot of Covid records would be broken in the coming weeks, and also that a majority of cases in London were now from the Omicron variant. Separately, the French government is set to hold a meeting tomorrow on Covid measures, and EU leaders will be discussing the pandemic at their summit today. When it comes to Omicron’s economic impact, we could see some light shed on that today as the December flash PMIs are released from around the world. Overnight we’ve already had the numbers out of Australia and Japan where hints of a slowdown are apparent. Japan's Manufacturing PMI came out at 54.2 (54.5 previous) and the Composite at 51.8 (53.3 previous) while Australia’s Manufacturing and Composite came in at 57.4 and 54.9 respectively (59.2 and 55.7 previous). Overnight in Asia stocks are trading mostly higher led by the Nikkei (+1.78%) followed by the Shanghai Composite (+0.28%), and KOSPI (+0.22%). However the CSI (-0.07%) and Hang Seng (-0.81%) are losing ground on concerns of US sanctions on Chinese tech companies. In Australia, the November employment report registered a strong beat by adding 366.1k jobs against 200k consensus. This is being reflected in a +12.75 bps surge in Australia's 3y bond. Elsewhere, in India wholesale inflation for November rose +14.2% year on year, levels last seen in 2000 against a consensus of +11.98% on the back of higher food and input prices. DM futures are indicating a positive start to markets today with S&P 500 (+0.19%) and DAX (+1.04%) contracts both higher as we type. Ahead of the Fed, European markets had put in a fairly steady performance yesterday, with the STOXX 600 up +0.26%. That brought an end to a run of 5 successive declines, with technology stocks in particular seeing an outperformance. Sovereign bond markets were also subdued ahead of the ECB and BoE meetings later, with yields on 10yr bunds (+0.9bps), OATs (+0.5bps) and gilts (+1.2bps) only seeing modest moves higher. In DC, despite optimistic sounding talks earlier in the week, the latest yesterday was President Biden and Senator Manchin remained far apart on the administration’s build back better bill, imperiling its chances of passing before Christmas. Elsewhere, reports suggested the President would have more nominations for the remaining Fed Board vacancies this week. Looking at yesterday’s other data, US retail sales underwhelmed in November with growth of just +0.3% (vs. +0.8% expected), and measure excluding gas and motor vehicles was also up just +0.2% (vs. +0.8% expected). Also the NAHB’s housing market index for December moved up to a 10-month high of 84, in line with expectations. To the day ahead now, and the main highlights will be the aforementioned policy decisions from the ECB and the BoE. On the data side, we’ll also get the flash PMIs for December from around the world, the Euro Area trade balance for October, and in the US there’s November data on industrial production, housing starts and building permits, as well as the weekly initial jobless claims. Finally, EU leaders will be meeting for a summit in Brussels. Tyler Durden Thu, 12/16/2021 - 08:29.....»»

Category: blogSource: zerohedgeDec 16th, 2021

A New Generation of Nuclear Reactors Could Hold the Key to a Green Future

On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials,… On a conference-room whiteboard in the heart of Silicon Valley, Jacob DeWitte sketches his startup’s first product. In red marker, it looks like a beer can in a Koozie, stuck with a crazy straw. In real life, it will be about the size of a hot tub, and made from an array of exotic materials, like zirconium and uranium. Under carefully controlled conditions, they will interact to produce heat, which in turn will make electricity—1.5 megawatts’ worth, enough to power a neighborhood or a factory. DeWitte’s little power plant will run for a decade without refueling and, amazingly, will emit no carbon. ”It’s a metallic thermal battery,” he says, coyly. But more often DeWitte calls it by another name: a nuclear reactor. [time-brightcove not-tgx=”true”] Fission isn’t for the faint of heart. Building a working reactor—even a very small one—requires precise and painstaking efforts of both engineering and paper pushing. Regulations are understandably exhaustive. Fuel is hard to come by—they don’t sell uranium at the Gas-N-Sip. But DeWitte plans to flip the switch on his first reactor around 2023, a mere decade after co-founding his company, Oklo. After that, they want to do for neighborhood nukes what Tesla has done for electric cars: use a niche and expensive first version as a stepping stone toward cheaper, bigger, higher-volume products. In Oklo’s case, that means starting with a “microreactor” designed for remote communities, like Alaskan villages, currently dependent on diesel fuel trucked, barged or even flown in, at an exorbitant expense. Then building more and incrementally larger reactors until their zero-carbon energy source might meaningfully contribute to the global effort to reduce fossil-fuel emissions. At global climate summits, in the corridors of Congress and at statehouses around the U.S., nuclear power has become the contentious keystone of carbon reduction plans. Everyone knows they need it. But no one is really sure they want it, given its history of accidents. Or even if they can get it in time to reach urgent climate goals, given how long it takes to build. Oklo is one of a growing handful of companies working to solve those problems by putting reactors inside safer, easier-to-build and smaller packages. None of them are quite ready to scale to market-level production, but given the investments being made into the technology right now, along with an increasing realization that we won’t be able to shift away from fossil fuels without nuclear power, it’s a good bet that at least one of them becomes a game changer. If existing plants are the energy equivalent of a 2-liter soda bottle, with giant, 1,000-megawatt-plus reactors, Oklo’s strategy is to make reactors by the can. The per-megawatt construction costs might be higher, at least at first. But producing units in a factory would give the company a chance to improve its processes and to lower costs. Oklo would pioneer a new model. Nuclear plants need no longer be bet-the-company big, even for giant utilities. Venture capitalists can get behind the potential to scale to a global market. And climate hawks should fawn over a zero-carbon energy option that complements burgeoning supplies of wind and solar power. Unlike today’s plants, which run most efficiently at full blast, making it challenging for them to adapt to a grid increasingly powered by variable sources (not every day is sunny, or windy), the next generation of nuclear technology wants to be more flexible, able to respond quickly to ups and downs in supply and demand. Engineering these innovations is hard. Oklo’s 30 employees are busy untangling the knots of safety and complexity that sent the cost of building nuclear plants to the stratosphere and all but halted their construction in the U.S. ”If this technology was brand-‘new’—like if fission was a recent breakthrough out of a lab, 10 or 15 years ago—we’d be talking about building our 30th reactor,” DeWitte says. But fission is an old, and fraught, technology, and utility companies are scrambling now to keep their existing gargantuan nuclear plants open. Economically, they struggle to compete with cheap natural gas, along with wind and solar, often subsidized by governments. Yet climate-focused nations like France and the U.K. that had planned to phase out nuclear are instead doubling down. (In October, French President Emmanuel Macron backed off plans to close 14 reactors, and in November, he announced the country would instead start building new ones.) At the U.N. climate summit in Glasgow, the U.S. announced its support for Poland, Kenya, Ukraine, Brazil, Romania and Indonesia to develop their own new nuclear plants—while European negotiators assured that nuclear energy counts as “green.” All the while, Democrats and Republicans are (to everyone’s surprise) often aligned on nuclear’s benefits—and, in many cases, putting their powers of the purse behind it, both to keep old plants open in the U.S. and speed up new technologies domestically and overseas. It makes for a decidedly odd moment in the life of a technology that already altered the course of one century, and now wants to make a difference in another. There are 93 operating nuclear reactors in the U.S.; combined, they supply 20% of U.S. electricity, and 50% of its carbon-free electricity. Nuclear should be a climate solution, satisfying both technical and economic needs. But while the existing plants finally operate with enviable efficiency (after 40 years of working out the kinks), the next generation of designs is still a decade away from being more than a niche player in our energy supply. Everyone wants a steady supply of electricity, without relying on coal. Nuclear is paradoxically right at hand, and out of reach. For that to change, “new nuclear” has to emerge before the old nuclear plants recede. It has to keep pace with technological improvements in other realms, like long-term energy storage, where each incremental improvement increases the potential for renewables to supply more of our electricity. It has to be cheaper than carbon-capture technologies, which would allow flexible gas plants to operate without climate impacts (but are still too expensive to build at scale). And finally it has to arrive before we give up—before the spectre of climate catastrophe creates a collective “doomerism,” and we stop trying to change. Not everyone thinks nuclear can reinvent itself in time. “When it comes to averting the imminent effects of climate change, even the cutting edge of nuclear technology will prove to be too little, too late,” predicts Allison Macfarlane, former chair of the U.S. Nuclear Regulatory Commission (NRC)—the government agency singularly responsible for permitting new plants. Can a stable, safe, known source of energy rise to the occasion, or will nuclear be cast aside as too expensive, too risky and too late? J R Eyerman—The LIFE Picture Collection/ShutterstockLaboratory personnel developing a fusion device in Project Sherwood at the Los Alamos National Laboratory, 1958 Trying Again Nuclear began in a rush. In 1942, in the lowest mire of World War II, the U.S. began the Manhattan Project, the vast effort to develop atomic weapons. It employed 130,000 people at secret sites across the country, the most famous of which was Los Alamos Laboratory, near Albuquerque, N.M., where Robert Oppenheimer led the design and construction of the first atomic bombs. DeWitte, 36, grew up nearby. Even as a child of the ’90s, he was steeped in the state’s nuclear history, and preoccupied with the terrifying success of its engineering and the power of its materials. “It’s so incredibly energy dense,” says DeWitte. “A golf ball of uranium would power your entire life!” DeWitte has taken that bromide almost literally. He co-founded Oklo in 2013 with Caroline Cochran, while both were graduate students in nuclear engineering at the Massachusetts Institute of Technology. When they arrived in Cambridge, Mass., in 2007 and 2008, the nuclear industry was on a precipice. Then presidential candidate Barack Obama espoused a new eagerness to address climate change by reducing carbon emissions—which at the time meant less coal, and more nuclear. (Wind and solar energy were still a blip.) It was an easy sell. In competitive power markets, nuclear plants were profitable. The 104 operating reactors in the U.S. at the time were running smoothly. There hadn’t been a major accident since Chernobyl, in 1986. The industry excitedly prepared for a “nuclear renaissance.” At the peak of interest, the NRC had applications for 30 new reactors in the U.S. Only two would be built. The cheap natural gas of the fracking boom began to drive down electricity prices, razing nuclear’s profits. Newly subsidized renewables, like wind and solar, added even more electricity generation, further saturating the markets. When on March 11, 2011, an earthquake and subsequent tsunami rolled over Japan’s Fukushima Daiichi nuclear power plant, leading to the meltdown of all three of its reactors and the evacuation of 154,000 people, the industry’s coffin was fully nailed. Not only would there be no renaissance in the U.S, but the existing plants had to justify their safety. Japan shut down 46 of its 50 operating reactors. Germany closed 11 of its 17. The U.S. fleet held on politically, but struggled to compete economically. Since Fukushima, 12 U.S. reactors have begun decommissioning, with three more planned. At MIT, Cochran and DeWitte—who were teaching assistants together for a nuclear reactor class in 2009, and married in 2011—were frustrated by the setback. ”It was like, There’re all these cool technologies out there. Let’s do something with it,” says Cochran. But the nuclear industry has never been an easy place for innovators. In the U.S., its operational ranks have long been dominated by “ring knockers”—the officer corps of the Navy’s nuclear fleet, properly trained in the way things are done, but less interested in doing them differently. Governments had always kept a tight grip on nuclear; for decades, the technology was under shrouds. The personal computing revolution, and then the wild rise of the Internet, further drained engineering talent. From DeWitte and Cochran’s perspective, the nuclear-energy industry had already ossified by the time Fukushima and fracking totally brought things to a halt. “You eventually got to the point where it’s like, we have to try something different,” DeWitte says. He and Cochran began to discreetly convene their MIT classmates for brainstorming sessions. Nuclear folks tend to be dogmatic about their favorite method of splitting atoms, but they stayed agnostic. “I didn’t start thinking we had to do everything differently,” says DeWitte. Rather, they had a hunch that marginal improvements might yield major results, if they could be spread across all of the industry’s usual snags—whether regulatory approaches, business models, the engineering of the systems themselves, or the challenge of actually constructing them. In 2013, Cochran and DeWitte began to rent out the spare room in their Cambridge home on Airbnb. Their first guests were a pair of teachers from Alaska. The remote communities they taught in were dependent on diesel fuel for electricity, brought in at enormous cost. That energy scarcity created an opportunity: in such an environment, even a very expensive nuclear reactor might still be cheaper than the current system. The duo targeted a price of $100 per megawatt hour, more than double typical energy costs. They imagined using this high-cost early market as a pathway to scale their manufacturing. They realized that to make it work economically, they wouldn’t have to reinvent the reactor technology, only the production and sales processes. They decided to own their reactors and supply electricity, rather than supply the reactors themselves—operating more like today’s solar or wind developers. “It’s less about the technology being different,” says DeWitte, “than it is about approaching the entire process differently.” That maverick streak raised eyebrows among nuclear veterans—and cash from Silicon Valley venture capitalists, including a boost from Y Combinator, where companies like Airbnb and Instacart got their start. In the eight years since, Oklo has distinguished itself from the competition by thinking smaller and moving faster. There are others competing in this space: NuScale, based in Oregon, is working to commercialize a reactor similar in design to existing nuclear plants, but constructed in 60-megawatt modules. TerraPower, founded by Bill Gates in 2006, has plans for a novel technology that uses its heat for energy storage, rather than to spin a turbine, which makes it an even more flexible option for electric grids that increasingly need that pliability. And X-energy, a Maryland-based firm that has received substantial funding from the U.S. Department of Energy, is developing 80-megawatt reactors that can also be grouped into “four-packs,” bringing them closer in size to today’s plants. Yet all are still years—and a billion dollars—away from their first installations. Oklo brags that its NRC application is 20 times shorter than NuScale’s, and its proposal cost 100 times less to develop. (Oklo’s proposed reactor would produce one-fortieth the power of NuScale’s.) NRC accepted Oklo’s application for review in March 2020, and regulations guarantee that process will be complete within three years. Oklo plans to power on around 2023, at a site at the Idaho National Laboratory, one of the U.S.’s oldest nuclear-research sites, and so already approved for such efforts. Then comes the hard part: doing it again and again, booking enough orders to justify building a factory to make many more reactors, driving costs down, and hoping politicians and activists worry more about the menace of greenhouse gases than the hazards of splitting atoms. Nuclear-industry veterans remain wary. They have seen this all before. Westinghouse’s AP1000 reactor, first approved by the NRC in 2005, was touted as the flagship technology of Obama’s nuclear renaissance. It promised to be safer and simpler, using gravity rather than electricity-driven pumps to cool the reactor in case of an emergency—in theory, this would mitigate the danger of power outages, like the one that led to the Fukushima disaster. Its components could be constructed at a centralized location, and then shipped in giant pieces for assembly. But all that was easier said than done. Westinghouse and its contractors struggled to manufacture the components according to nuclear’s mega-exacting requirements and in the end, only one AP1000 project in the U.S. actually happened: the Vogtle Electric Generating Plant in Georgia. Approved in 2012, its two reactors were expected at the time to cost $14 billion and be completed in 2016 and 2017, but costs have ballooned to $25 billion. The first will open, finally, next year. Oklo and its competitors insist things are different this time, but they have yet to prove it. “Because we haven’t built one of them yet, we can promise that they’re not going to be a problem to build,” quips Gregory Jaczko, a former NRC chair who has since become the technology’s most biting critic. “So there’s no evidence of our failure.” Georg Zinsler—Anzenberger/Redu​xA guided tour in the control room of reactor No. 2 inside the Chernobyl Nuclear Power Plant The Challenge The cooling tower of the Hope Creek nuclear plant rises 50 stories above Artificial Island, New Jersey, built up on the marshy edge of the Delaware River. The three reactors here—one belonging to Hope Creek, and two run by the Salem Generating Station, which shares the site—generate an astonishing 3,465 megawatts of electricity, or roughly 40% of New Jersey’s total supply. Construction began in 1968, and was completed in 1986. Their closest human neighbors are across the river in Delaware. Otherwise the plant is surrounded by protected marshlands, pocked with radiation sensors and the occasional guard booth. Of the 1,500 people working here, around 100 are licensed reactor operators—a special designation given by the NRC, and held by fewer than 4,000 people in the country. Among the newest in their ranks is Judy Rodriguez, an Elizabeth, N.J., native and another MIT grad. “Do I have your permission to enter?” she asks the operator on duty in the control room for the Salem Two reactor, which came online in 1981 and is capable of generating 1,200 megawatts of power. The operator opens a retractable belt barrier, like at an airport, and we step across a thick red line in the carpet. A horseshoe-shaped gray cabinet holds hundreds of buttons, glowing indicators and blinking lights, but a red LED counter at the center of the wall shows the most important number in the room: 944 megawatts, the amount of power the Salem Two reactor was generating that afternoon in September. Beside it is a circular pattern of square indicator lights showing the uranium fuel assemblies inside the core, deep inside the concrete domed containment building a couple hundred yards away. Salem Two has 764 of these constructions; each is about 6 inches sq and 15 ft. tall. They contain the source of the reactor’s energy, which are among the most guarded and controlled materials on earth. To make sure no one working there forgets that fact, a phrase is painted on walls all around the plant: “Line of Sight to the Reactor.” As the epitome of critical infrastructure, this station has been buffeted by the crises the U.S. has suffered in the past few decades. After 9/11, the three reactors here absorbed nearly $100 million in security upgrades. Everyone entering the plant passes through metal- and explosives detectors, and radiation detectors on the way out. Walking between the buildings entails crossing a concrete expanse beneath high bullet resistant enclosures (BREs). The plant has a guard corp that has more members than any in New Jersey besides the state police, and federal NRC rules mean that they don’t have to abide by state limitations on automatic weapons. The scale and complexity of the operation is staggering—and expensive. ”The place you’re sitting at right now costs us about $1.5 million to $2 million a day to run,” says Ralph Izzo, president and CEO of PSEG, New Jersey’s public utility company, which owns and operates the plants. “If those plants aren’t getting that in market, that’s a rough pill to swallow.” In 2019, the New Jersey Board of Public Utilities agreed to $300 million in annual subsidies to keep the three reactors running. The justification is simple: if the state wants to meet its carbon-reduction goals, keeping the plants online is essential, given that they supply 90% of the state’s zero-carbon energy. In September, the Illinois legislature came to the same conclusion as New Jersey, approving almost $700 million over five years to keep two existing nuclear plants open. The bipartisan infrastructure bill includes $6 billion in additional support (along with nearly $10 billion for development of future reactors). Even more is expected in the broader Build Back Better bill. These subsidies—framed in both states as “carbon mitigation credits”—acknowledge the reality that nuclear plants cannot, on their own terms, compete economically with natural gas or coal. “There has always been a perception of this technology that never was matched by reality,” says Jaczko. The subsidies also show how climate change has altered the equation, but not decisively enough to guarantee nuclear’s future. Lawmakers and energy companies are coming to terms with nuclear’s new identity as clean power, deserving of the same economic incentives as solar and wind. Operators of existing plants want to be compensated for producing enormous amounts of carbon free energy, according to Josh Freed, of Third Way, a Washington, D.C., think tank that champions nuclear power as a climate solution. “There’s an inherent benefit to providing that, and it should be paid for.” For the moment, that has brought some assurance to U.S. nuclear operators of their future prospects. “A megawatt of zero-carbon electricity that’s leaving the grid is no different from a new megawatt of zero carbon electricity coming onto the grid,” says Kathleen Barrón, senior vice president of government and regulatory affairs and public policy at Exelon, the nation’s largest operator of nuclear reactors. Globally, nations are struggling with the same equation. Germany and Japan both shuttered many of their plants after the Fukushima disaster, and saw their progress at reducing carbon emissions suffer. Germany has not built new renewables fast enough to meet its electricity needs, and has made up the gap with dirty coal and natural gas imported from Russia. Japan, under international pressure to move more aggressively to meet its carbon targets, announced in October that it would work to restart its reactors. “Nuclear power is indispensable when we think about how we can ensure a stable and affordable electricity supply while addressing climate change,” said Koichi Hagiuda, Japan’s minister of economy, trade and industry, at an October news conference. China is building more new nuclear reactors than any other country, with plans for as many as 150 by the 2030s, at an estimated cost of nearly half a trillion dollars. Long before that, in this decade, China will overtake the U.S. as the operator of the world’s largest nuclear-energy system. Francesca Todde—contrasto/Redux Civaux nuclear power plant, in Civaux, France, May 2018 The future won’t be decided by choosing between nuclear or solar power. Rather, it’s a technically and economically complicated balance of adding as much renewable energy as possible while ensuring a steady supply of electricity. At the moment, that’s easy. “There is enough opportunity to build renewables before achieving penetration levels that we’re worried about the grid having stability,” says PSEG’s Izzo. New Jersey, for its part, is aiming to add 7,500 megawatts of offshore wind by 2035—or about the equivalent of six new Salem-sized reactors. The technology to do that is readily at hand—Kansas alone has about that much wind power installed already. The challenge comes when renewables make up a greater proportion of the electricity supply—or when the wind stops blowing. The need for “firm” generation becomes more crucial. “You cannot run our grid solely on the basis of renewable supply,” says Izzo. “One needs an interseasonal storage solution, and no one has come up with an economic interseasonal storage solution.” Existing nuclear’s best pitch—aside from the very fact it exists already—is its “capacity factor,” the industry term for how often a plant meets its full energy making potential. For decades, nuclear plants struggled with outages and long maintenance periods. Today, improvements in management and technology make them more likely to run continuously—or “breaker to breaker”—between planned refuelings, which usually occur every 18 months, and take about a month. At Salem and Hope Creek, PSEG hangs banners in the hallways to celebrate each new record run without a maintenance breakdown. That improvement stretches across the industry. “If you took our performance back in the mid-’70s, and then look at our performance today, it’s equivalent to having built 30 new reactors,” says Maria Korsnick, president and CEO of the Nuclear Energy Institute, the industry’s main lobbying organization. That improved reliability has become its major calling card today. Over the next 20 years, nuclear plants will need to develop new tricks. “One of the new words in our vocabulary is flexibility,” says Marilyn Kray, vice president of nuclear strategy and development at Exelon, which operates 21 reactors. “Flexibility not only in the existing plants, but in the designs of the emerging ones, to make them even more flexible and adaptable to complement renewables.” Smaller plants can adapt more easily to the grid, but they can also serve new customers, like providing energy directly to factories, steel mills or desalination plants. Bringing those small plants into operation could be worth it, but it won’t be easy.”You can’t just excuse away the thing that’s at the center of all of it, which is it’s just a hard technology to build,” says Jaczko, the former NRC chair. “It’s difficult to make these plants, it’s difficult to design them, it’s difficult to engineer them, it’s difficult to construct them. At some point, that’s got to be the obvious conclusion to this technology.” But the equally obvious conclusion is we can no longer live without it. “The reality is, you have to really squint to see how you get to net zero without nuclear,” says Third Way’s Freed. “There’s a lot of wishful thinking, a lot of fingers crossed.”.....»»

Category: topSource: timeNov 16th, 2021

Uranium Stocks Soar As Market Discovers China"s Plans For 150 Nuclear Reactors

Uranium Stocks Soar As Market Discovers China's Plans For 150 Nuclear Reactors With every passing day, our core thesis set here last December that uranium stocks are poised for a historic surge (see "Uranium Stocks Soar: Is This The Beginning Of The Next ESG Craze"), is getting closer to widespread adoption, and today uranium stock spiked to a fresh multi-year high The reason behind the latest spike is a report that in a world where ESG is all the rage, and the transition from coal to cleaner sources of energy is paramount, China has emerged as "the world’s last great believer" in nuclear power "with plans to generate an eye-popping amount of nuclear energy, quickly and at relatively low cost." As Bloomberg reports, China has over the course of the year "revealed the extensive scope of its plans for nuclear, an ambition with new resonance given the global energy crisis and the calls for action coming out of the COP26 Climate Summit in Glasgow. The world’s biggest emitter, China’s planning at least 150 new reactors in the next 15 years, more than the rest of the world has built in the past 35." And while this information was publicly available, it wasn't until today's extensive report from Bloomberg that traders finally paid attention. The effort, which could cost as much as $440 billion and which by the middle of this decade could see China surpass the U.S. as the world’s largest generator of nuclear power, would mean an unprecedented scramble to secure uranium raw materials, including yellow cake, oxide and so on. To be sure, Beijing has never been shy about its interest in nuclear, along with renewable sources of energy, as part of President Xi Jinping’s goal to make China’s economy carbon-neutral by mid-century. But earlier this year, the government singled out atomic power as the only energy form with specific interim targets in its official five-year plan. Shortly after, the chairman of the state-backed China General Nuclear Power articulated the longer-term goal: 200 gigawatts by 2035, enough to power more than a dozen cities the size of Beijing. What makes China's nuclear ambitions so appetizing to uranium investors is that unlike other countries, it can actually achieve them: It would be the kind of wholesale energy transformation that Western democracies — with budget constraints, political will and public opinion to consider — can only dream of. It could also support China’s goal to export its technology to the developing world and beyond, buoyed by an energy crunch that’s highlighted the fragility of other kinds of power sources. Slower winds and low rainfall have led to lower-than-expected supply from Europe’s dams and wind farms, worsening the crisis, and expensive coal and natural gas have led to power curbs at factories in China and India. Yet nuclear power plants have remained stalwart. “Nuclear is the one energy source that came out of this looking like a champion,” said David Fishman, an energy consultant with The Lantau Group. “It generated the whole time, it was clean, the price didn’t change. If the case for nuclear power wasn't already strong, it’s a lot stronger now.” It may not have changed much until now, but as demand for nuclear surges, we would expect a gradual increase in baseline prices as operators pass through costs. Reactor units under construction at the Tianwan nuclear power plant in Lianyungang, Jiangsu province, in May. By ramping NPP production, China would kill two birds with on stone: not only would it boost its GDP, but it could also deflect criticism that it hasn't done anything to offset it massive CO emissions. China says its plans could prevent about 1.5 billion tons of annual carbon emissions, more than what’s generated by the U.K., Spain, France and Germany combined. For those who see nuclear power as critical to weaning off planet-warming fuels like coal, it’s a wildly exciting experiment at a scale proportional to the problem. China’s ultimate plan is to replace nearly all of its 2,990 coal-fired generators with clean energy by 2060. To make that a reality, wind and solar will become dominant in the nation’s energy mix. Nuclear power, which is more expensive but also more reliable, will be a close third, according to an assessment last year from researchers at Tsinghua University. According to Bloomberg, other countries would have to stretch to afford even a fraction of China’s investments. But about 70% of the cost of Chinese reactors are covered by loans from state-backed banks, at far lower rates than other nations can secure, said Francois Morin, China director at the World Nuclear Association. That makes a huge difference because most of the cost of atomic energy is in upfront construction. At 1.4% interest, about the minimum for infrastructure projects in places like China or Russia, nuclear power costs about $42 per megawatt-hour, far cheaper than coal and natural gas in many places. At a 10% rate, at the high end of the spectrum in developed economies, the cost of nuclear power shoots up to $97, more expensive than everything else. “People say nuclear is expensive in the West, but they forget to say it’s expensive because of interest rates,” Morin said. While China keeps the exact costs a state secret, analysts including the World Nuclear Association estimate China can build plants for about $2,500 to $3,000 per kilowatt, about one-third of the cost of recent projects in the U.S. and France. The 2035 goal of an additional 147 gigawatts would cost between $370 billion and $440 billion, a potential windfall for investors in CGN Power Co., China National Nuclear Power Co., and China Nuclear Engineering & Construction Corp. As it is, shares in listed units of all three state-owned companies are up between 19% and 43% since August, compared with a 2.3% drop in Hong Kong’s Hang Seng Index. Remarkably, prior to the meltdown at Fukushima, China’s nuclear goals were even bigger. Within a week of the tsunami that triggered a meltdown at the Japanese atomic plant, the Chinese government put a moratorium on new projects and began a deep safety review of its entire program. By 2014, it decided against building any more reactors that required active safety measures, like the one at Fukushima did. It paused approvals again for several years until it was satisfied with its new technology. There is much more on China's nuclear ambitions in the Bloomberg article, but one thing is clear - for China to reach its green ambitions and to shift away from an economy mostly reliant on coal, it will have no choice but to aggressively ramp up nuclear power. And the biggest winners will be those who were investing in the uranium sector with precisely this catalyst in mind... Tyler Durden Wed, 11/03/2021 - 15:55.....»»

Category: worldSource: nytNov 3rd, 2021

Uranium Bull Case Strengthens As Japan Calls Nuclear "Key" To Its Decarbonization Goals

Uranium Bull Case Strengthens As Japan Calls Nuclear "Key" To Its Decarbonization Goals Submitted by Quoth the Raven at QTR's Fringe Finance, Days after the U.K. said that nuclear would be “at the heart” of its decarbonization strategy, Japan has now called nuclear reactor restarts “key” to achieving its own green energy goals. This marks a far quicker global adoption of nuclear during the ESG age than I had anticipated and, in my opinion, will likely bode well for my long-term uranium bull case. Source: AnadoluLast Friday, Japan adopted a new energy policy that went little noticed by those participating in the uranium market. The plan seeks to bring the country to carbon neutrality by 2050, according to AP. And while this plan is mostly in line with what many other countries are implementing, the proverbial angel for uranium investors may be in the details. "Japan has been undecided over what to do about its nuclear power industry since the 2011 Fukushima plant disaster. It now says reactor restarts are key to meeting emissions targets as Japan tries to step up in the global effort against climate change," the AP report reads. Fumio Kishida, who is replacing Prime Minister Yoshihide Suga, is officially "a backer of nuclear plant restarts", the report notes. As you can see by the below chart, the country’s operable nuclear power capacity has dwindled in the years following the 2011 incident, after rising steadily in the 4 decades prior. As common sense slowly starts to win the day in counties like Japan, I am expecting this capacity to once again rise to, and past, all time highs. Source: World-Nuclear.orgI had pointed out a couple weeks ago a wonderful piece by Zerohedge that said Suga’s replacement would likely back nuclear. The AP report continued: The plan keeps the target for nuclear power unchanged at 20-22%. Japan says it aims to reduce its reliance on nuclear power as much as possible but that nuclear will remain an important energy source. Experts say a phase out is unlikely anytime soon. Economy and industry minister Koichi Hagiuda has said “drastic energy conservation, maximum promotion of renewables and safe restarts of nuclear reactors” are key. Japan will continue its nuclear fuel reprocessing cycle, in which spent nuclear fuel is converted to plutonium, despite the failure of its Monju plutonium-burning reactor and international concerns over safeguards for its plutonium stockpile. A government taskforce will “accelerate” restarts of reactors, which have been slowed by stricter safety standards set after the Fukushima meltdowns, the plan says. And while new reactors don't seem to be on the agenda just yet, common sense says they will be, in time. Japan, like France, is also looking at developing small modular reactors for power. Remember, just days ago I noted that a second large uranium trust - in addition to Sprott’s already active trust - could soon be a buyer in the uranium spot market. I also noted that China could be in the midst of adoption nuclear, a path I thought would make tons of sense for the country. I explained my reasoning in this article: Days prior to that, I wrote about how widespread coming adoption of nuclear as an ESG solution - especially in places like the U.K. - could be a serious catalyst that keeps uranium prices moving higher. With Japan now seriously throwing its hat in the ring, I continue to expect long-term tailwinds for uranium heading into 2022 and plan to remain long the commodity. As a wonderful supplement, the World Nuclear Association has prepared a massive and comprehensive report on the state of the nuclear industry in Japan, which can be read here. Remember that I laid out my case for why I was going long uranium in detail in a subscriber-only post that can be viewed here. -- Zerohedge readers get 10% off an annual subscription to my blog by using this special link here. DISCLAIMER: I own URA, URNM, CCJ and have tons of uranium stocks and options. None of this is a solicitation to buy or sell securities.  Tyler Durden Fri, 10/29/2021 - 17:05.....»»

Category: blogSource: zerohedgeOct 29th, 2021

Smashing Atoms: The History Of Uranium And Nuclear Power

Smashing Atoms: The History Of Uranium And Nuclear Power Uranium has been around for millennia, but we only recently began to understand its unique properties. Today, the radioactive metal fuels hundreds of nuclear reactors, enabling carbon-free energy generation across the globe. But, Visual Capitalist's Govind Bhutada details below, how did uranium and nuclear power come to be? The infographic below, from the Sprott Physical Uranium Trust, outlines the history of nuclear energy and highlights the role of uranium in producing clean energy. From Discovery to Fission: Uncovering Uranium Just like all matter, the history of uranium and nuclear energy can be traced back to the atom. Martin Klaproth, a German chemist, first discovered uranium in 1789 by extracting it from a mineral called “pitchblende”. He named uranium after the then newly discovered planet, Uranus. But the history of nuclear power really began in 1895 when German engineer Wilhelm Röntgen discovered X-rays and radiation, kicking off a series of experiments and discoveries—including that of radioactivity. In 1905, Albert Einstein set the stage for nuclear power with his famous theory relating mass and energy, E = mc2. Roughly 35 years later, Otto Hahn and Fritz Strassman confirmed his theory by firing neutrons into uranium atoms, which yielded elements lighter than uranium. According to Einstein’s theory, the mass lost during the reaction changed into energy. This demonstrated that fission—the splitting of one atom into lighter elements—had occurred. “Nuclear energy is incomparably greater than the molecular energy which we use today.” - Winston Churchill, 1955. Following the discovery of fission, scientists worked to develop a self-sustaining nuclear chain reaction. In 1939, a team of French scientists led by Frédéric Joliot-Curie demonstrated that fission can cause a chain reaction and filed the first patent on nuclear reactors. Later in 1942, a group of scientists led by Enrico Fermi and Leo Szilard set off the first nuclear chain reaction through the Chicago Pile-1. Interestingly, they built this makeshift reactor using graphite bricks on an abandoned squash court in the University of Chicago. These experiments proved that uranium could produce energy through fission. However, the first peaceful use of nuclear fission did not come until 1951, when Experimental Breeder Reactor I (EBR-1) in Idaho generated the first electricity sourced from nuclear power. The Power of the Atom: Nuclear Power and Clean Energy Nuclear reactors harness uranium’s properties to generate energy without any greenhouse gas emissions. While uranium’s radioactivity makes it unique, it has three other properties that stand out: Material Density: Uranium has a density of 19.1g/cm3, making it one of the densest metals on Earth. For reference, it is nearly as heavy (and dense) as gold. Abundance: At 2.8 parts per million, uranium is approximately 700 times more abundant than gold, and 37 times more abundant than silver. Energy Density: Uranium is extremely energy-dense. A one-inch tall uranium pellet contains the same amount of energy as 120 gallons of oil. Thanks to its high energy density, the use of uranium fuel makes nuclear power more efficient than other energy sources. This includes renewables like wind and solar, which typically require much more land (and more units) to generate the same amount of electricity as a single nuclear reactor. But nuclear power offers more than just a smaller land footprint. It’s also one of the cleanest and most reliable energy sources available today, poised to play a major role in the energy transition. The Future of Uranium and Nuclear Power Although nuclear power is often left out of the clean energy conversation, the ongoing energy crisis has brought it back into focus. Several countries are going nuclear in a bid to reduce reliance on fossil fuels while building reliable energy grids. For example, nuclear power is expected to play a prominent role in the UK’s plan to reach net-zero carbon emissions by 2050. Furthermore, Japan recently approved restarts at three of its nuclear reactors after initially phasing out nuclear power following the Fukushima accident. The resurgence of nuclear power, in addition to reactors that are already under construction, will likely lead to higher demand for uranium—especially as the world embraces clean energy. Tyler Durden Thu, 10/28/2021 - 23:20.....»»

Category: blogSource: zerohedgeOct 29th, 2021

Macron Says Small Nuclear Reactors Will Be A Part Of His "France 2030" Energy Plan

Macron Says Small Nuclear Reactors Will Be A Part Of His "France 2030" Energy Plan Nuclear power is officially a part of President Emmanuel Macron's plan for France to become a green leader by 2030. The country is looking at the idea of building smaller nuclear reactors, according to a plan to become a leader in green hydrogen that was detailed this week. "We must wage the battle of innovation and industrialisation at the same time," the French president told a gathering of business leaders and young entrepreneurs, unveiling plans to invest €30 billion ($35 billion) to "re-industrialise," Macron said in remarks, according to France 24.  Widely seen as laying out his plan for reelection, Macron said that France was going to build "a low-carbon plane, a small modular reactor as well as two megafactories for the production of green hydrogen" by 2030.  He called his plans "France 2030" and said they would offer benefits to smaller startup companies in the space. Speaking about ongoing supply chain shortages, he said: "We must rebuild a framework to ensure the productive independence of France and Europe. The winner takes it all."  Macron seems to be adopting the attitude of countries like Finland and Japan, both of whom seem to be once again warming up to the idea of nuclear power. Finland, we noted today, is officially lobbying the EU for "sustainable" status for nuclear power.  Last month, we pointed out when shares of Japanese utility companies surged after after Taro Kono, the administrative reform minister and the most likely candidate to replace Yoshihide Suga as prime minister, said Japan needs to restart nuclear power plants, in order to realize its goal of achieving carbon neutrality by 2050. "It's necessary to some extent to restart nuclear plants that are confirmed to be safe, as we aim for carbon neutrality," Kono, currently regulatory reform minister, told reporters according to Japan Times. "Basically, our priority is to increase the use of renewable energy sources, but it would be possible to use nuclear plants whose safety is confirmed for now if there are power supply shortages," Kono said, adding that while "nuclear plants will disappear eventually, I'm not saying that they should be scrapped immediately, like tomorrow or next year." Tyler Durden Thu, 10/14/2021 - 04:15.....»»

Category: blogSource: zerohedgeOct 14th, 2021

Futures Surge On Debt Ceiling Reprieve, Slide In Energy Prices

Futures Surge On Debt Ceiling Reprieve, Slide In Energy Prices The nausea-inducing rollercoaster in the stock market continued on Thursday, when US index futures continued their violent Wednesday reversal - the biggest since March - and surged with Nasdaq futures up more than 1%, hitting a session high, as Chinese technology stocks rebounded from a record low, investors embraced progress on the debt-ceiling impasse in Washington, a dip in oil prices eased worries of higher inflation and concerns eased about the European energy crisis fueled a risk-on mood. At 7:30am ET, S&P futures were up 44 points or 1.00% and Dow futures were up 267 points or 0.78%. Oil tumbled as much as $2, dragging breakevens and nominal yields lower, while the dollar dipped and bitcoin traded around $54,000. Wednesday's reversal started after Mitch McConnell on Wednesday floated a plan to support an extension of the federal debt ceiling into December, potentially heading off a historic default, a proposal which Democrats have reportedly agreed to after Senate Majority Leader Chuck Schumer suggested an agreement would be in place by this morning. While the deal is good news for markets worried about an imminent default, it only kicks the can to December when the drama and brinksmanship may run again. Markets have been rocked in the past month by worries about the global energy crisis, elevated inflation, reduced stimulus and slower growth. Meanwhile, the prospect of a deal to boost the U.S. debt limit into December is easing concern over political bickering, while Friday’s payrolls report may shed light on the the Federal Reserve’s timeline to cut bond purchases. “We have several things that we are watching right now -- certainly the debt ceiling is one of them and that’s been contributing to the recent volatility,” Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, said on Bloomberg Television. “But we look for these 5% corrections to add money to the equity markets.” Tech and FAAMG stocks including Apple (AAPL US +1%), Nvidia (NVDA +2%), Microsoft (MSFT US +0.9%), Tesla (TSLA US 0.8%) led the charge in premarket trading amid a dip in 10-year Treasury yields on Thursday, helped by a slide in energy prices on the back of Putin's Wednesday announcement that Russia could ramp up nat gas deliveries to Europe, something it still has clearly not done. Perhaps sensing that not all is at Putin said, after plunging on Wednesday UK nat gas futures (NBP) from 407p/therm to a low of 209, prices have ominously started to rise again. As oil fell, energy stocks including Chevron, Exxon Mobil and APA led declines with falls between 0.6% and 2.1%. Here are some of the other big movers today: Twitter (TWTR US) shares rise 2% in U.S. premarket trading after it agreed to sell MoPub to AppLovin for $1.05 billion in cash Levi Strauss (LEVI US) rises 4% in U.S. premarket trading after it boosted its adjusted earnings per share forecast for the full year; the guidance beat the average analyst estimate NRX Pharmaceuticals (NRXP US) drops in U.S. premarket trading after Relief Therapeutics sued the company, alleging breach of a collaboration pact Osmotica Pharmaceuticals (OSMT US) declined 28% in premarket trading after launching an offering of shares Rocket Lab USA (RKLB US) shares rose in Wednesday postmarket trading after the company announced it has been selected to launch NASA’s Advanced Composite Solar Sail System, or ACS3, on the Electron launch vehicle U.S. Silica Holdings (SLCA US) rose 7% Wednesday postmarket after it started a review of strategic alternatives for its Industrial & Specialty Products segment, including a potential sale or separation Global Blood Therapeutics (GBT US) climbed 2.6% in Wednesday after hours trading while Sage Therapeutics (SAGE US) dropped 3.9% after Jefferies analyst Akash Tewari kicked off his biotech sector coverage On the geopolitical front, a senior U.S. official said President Joe Biden’s plans to meet virtually with his Chinese counterpart before the end of the year. Tensions are escalating between the two countries, with U.S. Secretary of State Antony Blinken criticizing China’s recent military maneuvers around Taiwan. European equities rebounded, with the Stoxx 600 index surging as much as 1.3% boosted by news that the European Central Bank was said to be studying a new bond-buying program as emergency programs are phased out. Also boosting sentiment on Thursday, ECB Governing Council member Yannis Stournaras said that investors shouldn’t expect premature interest-rate increases from the central bank. Here are some of the biggest European movers today: Iberdrola shares rise as much as 6.8% after an upgrade at BofA, and as Spanish utilities climbed following a report that the Ministry for Ecological Transition may suspend or modify the mechanism that reduces the income received by hydroelectric, nuclear and some renewables in relation to gas prices. Hermes shares climb as much as 3.8%, the most since February, after HSBC says “there isn’t much to worry about” from a possible slowdown in mainland China or questions over trend sustainability in the U.S. Edenred shares gain as much as 5.2%, their best day since Nov. 9, after HSBC upgrades the voucher company to buy from hold, saying that Edenred, along with Experian, offers faster recurring revenue growth than the rest of the business services sector. Valeo shares gain as much as 4.9% and is Thursday’s best performer in the Stoxx 600 Automobiles & Parts index; Citi raised to neutral from sell as broker updated its model ahead of 3Q results. Sika shares rise as much as 4.2% after company confirms 2021 guidance, which Baader said was helpful amid market concerns of sequentially declining margins due to rising raw material prices. Centrica shares rise as much as 3.6% as Morgan Stanley upgrades Centrica to overweight from equalweight, saying the utility provider will add market share as smaller U.K. companies fail due to the spike in wholesale energy prices. Earlier in the session, Asian stocks rallied, boosted by a rebound in Hong Kong-listed technology shares and optimism over the progress made toward a U.S. debt-ceiling accord. The MSCI Asia Pacific Index climbed as much as 1.3%, on track for its biggest jump since Aug. 24. Alibaba, Tencent and Meituan were among the biggest contributors to the benchmark’s advance. Equity gauges in Hong Kong and Taiwan led a broad regional gain, while Japan’s Nikkei 225 also rebounded from its longest losing run since 2009. Thursday’s rally in Asia came after U.S. stocks closed higher overnight on a possible deal to boost the debt ceiling into December. Focus now shifts to the reopening of mainland China markets on Friday following the Golden Week holiday, and also the U.S. nonfarm payrolls report due that day. READ: China Tech Gauge Posts Best Day Since August After Touching Lows “Risk off sentiment has persisted due to a number of negative factors, but worry over some of these issues has been alleviated for the near term,” said Shogo Maekawa, a strategist at JPMorgan Asset Management in Tokyo. “One is that concern over stagflation has abated, with oil prices pulling back.” Sentiment toward risks assets was also supported as a senior U.S. official said President Joe Biden plans to meet virtually with Chinese President Xi Jinping before the end of the year. Of note, holders of Evergrande-guaranteed Jumbo Fortune bonds have yet to receive payment; the holders next step would be to request payment from Evergrande. The maturity of the bond in question was Sunday October 3rd, with a Monday October 4th effective due data, though the bond does have a five-day grace period only in the event that payment failure is due to an administrative/technical error. Australia's S&P/ASX 200 index rose 0.7% to close at 7,256.70. All subgauges finished the day higher, with the exception of energy stocks as Asian peers tumbled with a retreat in crude oil prices.  Collins Foods was among the top performers after the company signed an agreement to become KFC’s corporate franchisee in the Netherlands. Whitehaven tumbled, dropping the most for a session since June 17.  In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,104.61. Oil extended its decline from a seven-year high as U.S. stockpiles grew more than expected, and European natural gas prices tumbled on signals from Russia it may increase supplies to the continent. The yield on the U.S. 10-year Treasury was 1.526%, little changed on the day after erasing a 2.4bp increase; bunds outperformed by ~1.5bp, gilts by less than 1bp; long-end outperformance flattened 2s10s, 5s30s by ~0.5bp each. Treasuries pared losses during European morning as fuel prices ebbed and stocks gained. Bunds and gilts outperform while Treasuries curve flattens with long-end yields slightly richer on the day. WTI oil futures are lower after Russia’s offer to ease Europe’s energy crunch. Negotiations on a short-term increase to U.S. debt-ceiling continue.    In FX, the Bloomberg Dollar Spot Index was little changed and the greenback was weaker against most Group-of-10 peers, though moves were confined to relatively tight ranges. The U.S. jobs report Friday is the key risk for markets this week as a strong print could boost the dollar. Options traders see a strong chance that the euro manages to stay above a key technical support, at least on a closing basis. Risk sensitive currencies such as the Australian and New Zealand dollars as well as Sweden’s krona led G-10 gains, while Norway’s currency was the worst performer as European natural gas and power prices tumbled early Thursday after signals from Russia it may increase supplies to the continent. The pound gained against a broadly weaker dollar as concerns over the U.K. petrol crisis eased and focus turned to Bank of England policy. A warning shot buried deep in the BoE’s policy documents two weeks ago indicating that interest rates could rise as early as this year suddenly is becoming a more distinct possibility. Australia’s 10-year bonds rose for the first time in two weeks as sentiment was bolstered by a short-term deal involving the U.S. debt ceiling. The yen steadied amid a recovery in risk sentiment as stocks edged higher. Bond futures rose as a debt auction encouraged players to cautiously buy the dip. Looking ahead, investors will be looked forward to the release of weekly jobless claims data, likely showing 348,000 Americans filed claims for state unemployment benefits last week compared with 362,000 in the prior week. The ADP National Employment Report on Wednesday showed private payrolls increased by 568,000 jobs last month. Economists polled by Reuters had forecast a rise of 428,000 jobs. This comes ahead of the more comprehensive non-farm payrolls data due on Friday. It is expected to cement the case for the Fed’s slowing of asset purchases. We'll also get the latest August consumer credit print. From central banks, we’ll be getting the minutes from the ECB’s September meeting, and also hear from a range of speakers including the ECB’s President Lagarde, Lane, Elderson, Holzmann, Schnabel, Knot and Villeroy, along with the Fed’s Mester, BoC Governor Macklem and PBoC Governor Yi Gang. Market Snapshot S&P 500 futures up 1% to 4,395.5 STOXX Europe 600 up 1.03% to 455.96 MXAP up 1.2% to 193.71 MXAPJ up 1.8% to 633.78 Nikkei up 0.5% to 27,678.21 Topix down 0.1% to 1,939.62 Hang Seng Index up 3.1% to 24,701.73 Shanghai Composite up 0.9% to 3,568.17 Sensex up 1.2% to 59,872.01 Australia S&P/ASX 200 up 0.7% to 7,256.66 Kospi up 1.8% to 2,959.46 Brent Futures down 1.8% to $79.64/bbl Gold spot up 0.0% to $1,762.96 U.S. Dollar Index little changed at 94.19 German 10Y yield fell 0.6 bps to -0.188% Euro little changed at $1.1563 Top Overnight News from Bloomberg Democrats signaled they would take up Senate Republican leader Mitch McConnell’s offer to raise the U.S. debt ceiling into December, alleviating the immediate risk of a default but raising the prospect of another bruising political fight near the end of the year The European Central Bank is studying a new bond-buying program to prevent any market turmoil when emergency purchases get phased out next year, according to officials familiar with the matter Market expectations for interest-rate hikes “are not in accordance with our new forward guidance,” ECB Governing Council member Yannis Stournaras said in an interview with Bloomberg Television Creditors have yet to receive repayment of a dollar bond they say is guaranteed by China Evergrande Group and one of its units, in what could be the firm’s first major miss on maturing notes since regulators urged the developer to avoid a near-term default Boris Johnson’s plan to overhaul the U.K. economy is a 10-year project he wants to see out as prime minister, according to a senior official. The time frame, which has not been disclosed publicly, illustrates the scale of Johnson’s gamble that British voters will accept a long period of what he regards as shock therapy to redefine Britain The U.K.’s surge in inflation has boosted the cost of investment-grade borrowing in sterling to the most since June 2020. The average yield on the corporate notes climbed just past 2%, according to a Bloomberg index A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded positively as the region took impetus from the mostly positive close in the US where the major indices spent the prior session clawing back opening losses, with sentiment supported amid a potential Biden-Xi virtual meeting this year, and hopes of a compromise on the debt ceiling after Senate Republican Leader McConnell offered a short-term debt limit extension to December. The ASX 200 (+0.7%) was led higher by strength in the tech sector and with risk appetite also helped by the announcement to begin easing restrictions in New South Wales from next Monday. The Nikkei 225 (+0.5%) attempted to reclaim the 28k level with advances spearheaded by tech and amid reports Tokyo is to lower its virus warning from the current top level. The Hang Seng (+3.1%) was the biggest gainer owing to strength in tech and property stocks, with Evergrande shareholder Chinese Estates surging in Hong Kong after a proposal from Solar Bright to take it private. Reports also noted that the US and China reportedly reached an agreement in principle for a Biden-Xi virtual meeting before year-end and with yesterday’s talks in Zurich between senior officials said to be more meaningful and constructive than other recent exchanges. Finally, 10yr JGBs retraced some of the prior day’s after-hours rebound with haven demand hampered by the upside in stocks and after the recent choppy mood in T-notes, while the latest enhanced liquidity auction for longer-dated JGBs resulted in a weaker bid-to-cover. Top Asian News Vietnam Faces Worker Exodus From Factory Hub for Gap, Nike, Puma Japan’s New Finance Minister Stresses FX Stability Is Vital Korea Lures Haven Seekers With Bonds Sold at Lowest Spread Africa’s Free-Trade Area to Get $7 Billion in Support From AfDB Bourses in Europe hold onto the gains seen at the cash open (Euro Stoxx 50 +1.5%; Stoxx 600 +1.1%) following on from an upbeat APAC handover, albeit the upside momentum took a pause shortly after the cash open. US equity futures are also firmer across the board but to a slightly lesser extent, with the tech-laden NQ (+1.0%) getting a boost from a pullback in yields and outperforming its ES (+0.7%), RTY (+0.6%) and YM (+0.6%). The constructive tone comes amid some positive vibes out of the States, and on a geopolitical note, with US Senate Minority Leader McConnell offered a short-term debt ceiling extension to December whilst US and China reached an agreement in principle for a Biden-Xi virtual meeting before the end of the year. Euro-bourses portray broad-based gains whilst the UK's FTSE 100 (+1.0%) narrowly lags the Euro Stoxx benchmarks, weighed on by its heavyweight energy and healthcare sectors, which currently reside at the foot of the bunch. Further, BoE's Chief Economist Pill also hit the wires today and suggested that the balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long-lasting than originally anticipated. Broader sectors initially opened with an anti-defensive bias (ex-energy), although the configuration since then has turned into more of a mixed picture, although Basic Resource and Autos still reside towards the top. Individual movers are somewhat scarce in what is seemingly a macro-driven day thus far. Miners top the charts on the last day of the Chinese Golden Week Holiday, with base metal prices also on the front foot in anticipation of demand from the nation – with Antofagasta (+5.1%), Anglo American (+4.2%) among the top gainers, whist Teamviewer (-8.2%) is again at the foot of the Stoxx 600 in a continuation of the losses seen after its guidance cut yesterday. Ubisoft (-5.1%) are also softer, potentially on a bad reception for its latest Ghost Recon game announcement. Top European News ECB’s Stournaras Reckons Investor Rate-Hike Bets Are Unwarranted Shell Flags Financial Impact of Gas Market Swings, Hurricane Johnson’s Plans for Economy Signal Ambitions for Decade in Power U.K. Grid Bids to Calm Market Saying Winter Gas Supply Is Enough In FX, the latest upturn in broad risk sentiment as the pendulum continues to swing one way then the other on alternate days, has given the Aussie a fillip along with news that COVID-19 restrictions in NSW remain on track for being eased by October 11, according to the state’s new Premier. Aud/Usd is eyeing 0.7300 in response to the above and a softer Greenback, while the Aud/Nzd cross is securing a firmer footing above 1.0500 in wake of a slender rise in AIG’s services index and ahead of the latest RBA FSR. Conversely, the Pound is relatively contained vs the Buck having probed 1.3600 when the DXY backed off further from Wednesday’s w-t-d peak to a 94.102 low and has retreated through 0.8500 against the Euro amidst unsubstantiated reports about less hawkish leaning remarks from a member of the BoE’s MPC. In short, the word is that Broadbent has downplayed the prospects of any fireworks in November via a rate hike, but on the flip-side new chief economist Pill delivered a hawkish assessment of the inflation situation in the UK when responding to a TSC questionnaire (see 10.18BST post on the Headline Feed for bullets and a link to his answers in full). Back to the Dollar index, challenger lay-offs are due and will provide another NFP guide before claims and commentary from Fed’s Mester, while from a technical perspective there is near term support just below 94.000 and resistance a fraction shy of 94.500, at 93.983 (yesterday’s low) and the aforementioned midweek session best (94.448 vs the 94.283 intraday high, so far). NZD - Notwithstanding the negative cross flows noted above, the Kiwi is also taking advantage of more constructive external and general factors to secure a firmer grip of the 0.6900 handle vs its US counterpart, but remains rather deflated post-RBNZ on cautious guidance in terms of further tightening. EUR/CHF/CAD/JPY - All narrowly mixed against their US peer and mostly well within recent ranges as the Euro reclaims 1.1500+ status in the run up to ECB minutes, the Franc consolidates off sub-0.9300 lows following dips in Swiss jobless rates, the Loonie weighs up WTI crude’s further loss of momentum against the Greenback’s retreat between 1.2600-1.2563 parameters awaiting Canada’s Ivey PMIs and a speech from BoC Governor Macklem, and the Yen retains an underlying recovery bid within 111.53-23 confines before a raft of Japanese data. Note, little reaction to comments from Japanese Finance Minister, when asked about recent Jpy weakening, as he simply said that currency stability is important, so is closely watching FX developments, but did not comment on current levels. In commodities, WTI and Brent front month futures are on the backfoot, in part amid the post-Putin losses across the Nat Gas space, with the UK ICE future dropping some 20% in early trade. This has also provided further headwinds to the crude complex, which itself tackles its own bearish omens. WTI underperforms Brent amid reports that the US was mulling a Strategic Petroleum Reserve (SPR) release and did not rule out an export ban. Desks have offered their thoughts on the development. Goldman Sachs says a US SPR release would likely be of up to 60mln barrels, only representing a USD 3/bbl downside to the year-end USD 90/bbl Brent forecast and stated that relief would only be transitory given structural deficits the market will face from 2023 onwards. GS notes that any larger price impact that further hampers US shale activity would lead to elevated US nat gas prices in 2022, and an export ban would lead to significant disruption within the US oil market, likely bullish retail fuel price impact. RBC, meanwhile, believes that these comments were to incentivise OPEC+ to further open the taps after the producers opted to maintain a plan to hike output 400k BPD/m. On that note, sources noted that the OPEC+ decision against a larger supply hike at Monday's meeting was partly driven by concern that demand and prices could weaken – this would be in-fitting with sources back in July, which suggested that demand could weaken early 2022. The downside for crude prices was exacerbated as Brent Dec fell under USD 80/bbl to a low of near 79.00/bbl (vs 81.14/bbl), whilst WTI Nov briefly lost USD 75/bbl (vs high 77.23/bbl). Prices have trimmed some losses since. Metals in comparison have been less interesting; spot gold is flat and only modestly widened its overnight range to the current 1,756-66 range, whilst spot silver remains north of USD 22.50/bbl. Elsewhere, the risk tone has aided copper prices, with LME copper still north of USD 9,000/t, whilst some also cite supply concerns as a key mining road in Peru (second-largest copper producer) was blocked, with the indigenous community planning to continue the blockade indefinitely, according to a local leader. It is also worth noting that Chinese markets will return tomorrow from their Golden Week holiday. US Event Calendar 7:30am: Sept. Challenger Job Cuts YoY, prior -86.4% 8:30am: Oct. Initial Jobless Claims, est. 348,000, prior 362,000; Continuing Claims, est. 2.76m, prior 2.8m 9:45am: Oct. Langer Consumer Comfort, prior 54.7 11:45am: Fed’s Mester Takes Part in Panel on Inflation Dynamics 3pm: Aug. Consumer Credit, est. $17.5b, prior $17b DB's Jim Reid concludes the overnight wrap On the survey, given how fascinating markets are at the moment I think the results of this month’s edition will be especially interesting. However the irony is that when things are busy less people tend to fill it in as they are more pressed for time. So if you can try to spare 3-4 minutes your help would be much appreciated. Many thanks. It was a wild session for markets yesterday, with multiple asset classes swinging between gains and losses as investors sought to grapple with the extent of inflationary pressures and potential shock to growth. However US equities closed out in positive territory and at the highs as the news on the debt ceiling became more positive after Europe went home. Before this equities had lost ground throughout the London afternoon, with the S&P 500 down nearly -1.3% at one point with Europe’s STOXX 600 closing -1.03% lower. Cyclical sectors led the European underperformance, although it was a fairly broad-based decline. However after Europe went home – or closed their laptops in many cases – the positive debt ceiling developments saw risk sentiment improve throughout the rest of New York session. The S&P rallied to finish +0.41% and is now slightly up on the week, as defensive sectors such as utilities (+1.53%) and consumer staples (+1.00%) led the index while US cyclicals fell back like their European counterparts. Small cap stocks didn’t enjoy as much of a boost as the Russell 2000 ended the day -0.60% lower, while the megacap tech NYFANG+ index gained +0.82%. Risk sentiment improved following reports that Senate Minority Leader Mitch McConnell was willing to negotiate with Democrats to resolve the debt ceiling impasse and allow Democrats to raise the ceiling until December. This means President Biden and Congressional Democrats would be able to finish their fiscal spending package – now estimated at around $1.9-2.2 trillion – and include a further debt ceiling raise into one large reconciliation package near year-end. Senate Majority Leader Schumer has not publicly addressed the deal yet, but Democrats have signaled that they’ll accept the deal, although they’ve also indicated they’d still like to pass the longer-term debt ceiling bill under regular order in a bipartisan manner when the time came near year-end. Interestingly, if we did see the ceiling extended until December, this would put another deadline that month, since the government funding extension only went through to December 3, so we could have yet another round of multiple congressional negotiations in just a few weeks’ time. The news of a Republican offer coincided with President Biden’s virtual meeting with industry leaders, where the President implored them to join him in pressuring legislators to raise the debt limit. Treasury Secretary Yellen also attended the meeting, and re-emphasised her estimate for the so-called “drop dead date” to be October 18. Potentially at risk Treasury bills maturing shortly thereafter rallied a few basis points, signaling investors took yesterday afternoon’s debt ceiling developments as positive and credible. This was a far cry from where markets opened the London session as turmoil again gripped the gas market. UK and European natural gas futures both surged around +40% to reach an intraday high shortly after the open. However, energy markets went into reverse following comments from Russian President Putin that the country was set to supply more gas to Europe and help stabilise energy markets, with European futures erasing those earlier gains to actually end the day down -6.75%, with their UK counterpart similarly reversing course to close -6.96% too. The U.K. future traded in a stunning 255 to 408 price range on the day. We shouldn’t get ahead of ourselves here though, since even with the latest reversal, prices are still up by more than five-fold since the start of the year, and this astonishing increase over recent weeks has attracted attention from policymakers across the world as governments look to step in and protect consumers and industry. In the EU, the Energy Commissioner, Kadri Simson, said that the price shock was “hurting our citizens, in particular the most vulnerable households, weakening competitiveness and adding to inflationary pressure. … There is no question that we need to take policy measures”. However, the potential response appeared to differ across the continent. French President Macron said that more energy capacity was required, of which renewables and nuclear would be key elements, while Italian PM Draghi said that joint EU gas purchases had wide support. However, Hungarian PM Orban took the opportunity to blame the European Commission, saying that the Green Deal’s regulations were “indirect taxation”, which shows how these price spikes could create greater resistance to green measures moving forward. Elsewhere, blame was also cast on carbon speculators, with Spanish environment minister Rodriguez saying that “We don’t want to be hostages of external financial investors”, and outside the EU, Serbian President Vucic said that his country could ban power exports if there were further issues, which just shows how energy has the potential to become a big geopolitical issue this winter. Those declines in natural gas prices were echoed across the energy complex, with both Brent Crude (-1.79%) and WTI (-1.90%) oil prices subsiding from their multi-year highs the previous day, just as coal also fell -10.20%. In turn, that served to alleviate some of the concerns about building price pressures and helped measures of longer-term inflation expectations decline across the board. Indeed by the close, the 10yr breakeven in the US had come down -1.4bps, and the equivalent measures in Germany (-4.6bps), Italy (-6.1bps) and the UK (-4.2bps) had likewise seen declines of their own. In spite of those moves for inflation expectations, this proved little consolation for European sovereign bonds as higher real rates put them under continued pressure, even if yields had pared back some of their gains from the morning. Yields on 10yr bunds (+0.6bps), OATs (+0.9bps) and BTPs (+3.2bps) were all at their highest levels in 3 months, whilst those on Polish 10yr debt were up +13.7bps after the central bank there unexpectedly became the latest to raise rates, with the 40bps hike to 0.5% marking the first increase since 2012. However, for the US it was a different story, with yields on 10yr Treasuries down -0.5bps to 1.521%, having peaked at 1.57% earlier in the London morning. There was a late story in Europe that could bear watching in the coming weeks as Bloomberg reported that the ECB is studying a new bond-buying tool that could help ease market volatility if a “taper tantrum”-esque move were to happen when the PEPP purchases end in March. The plan would reportedly target purchases selectively if there were to be a larger selloff in more heavily indebted economies, which differs from the existing programs that buys debt in relation to the size of each member’s economy. Asian stocks overnight have performed strongly, with the Hang Seng (+2.28%), Nikkei (+1.68%) and KOSPI (+1.61%) all advancing after the positive news on the debt-ceiling, as well on news that US President Biden was set to meeting with Chinese President Xi by the end of the year. All the indices were lifted by the IT and consumer discretionary sectors, and the Hang Seng Tech index has rebounded by +3.29% this morning. Separately, Evergrande-related news has been subsiding in recent days, but China Estates, a company controlled by a backer of Evergrande, rose 30% after the company disclosed an offer to take it private for $245mn. Otherwise, US futures are pointing to a positive start later, with those on the S&P 500 (+0.50%) and DAX (+1.19%) both advancing. Turning to Germany, exploratory talks will be commencing today between the centre-left SPD, the Greens and the Liberal FDP, who together would make up a so-called “traffic-light” coalition. That marks a boost for the SPD, who beat the CDU/CSU bloc into first place in the September 26 election, although CDU leader Armin Laschet said that his party were “still ready to hold talks”. However, the CDU/CSU have faced internal tensions after they slumped to their worst-ever election result, whilst a Forsa poll out on Tuesday said that 53% of voters wanted a traffic-light coalition, versus just 22% who favoured the Jamaica option led by the CDU/CSU. So momentum seems clearly behind the traffic light option for now. Looking at yesterday’s data, in the US the ADP’s report at private payrolls came in at an unexpectedly strong +568k (vs. +430k expected), which is the highest in their series for 3 months and comes ahead of tomorrow’s US jobs report. However in Germany, factory orders in August fell by -7.7% (vs. -2.2% expected) amidst various supply issues. To the day ahead now, and data releases include German industrial production and Italian retail sales for August, whilst in the US we’ve got the weekly initial jobless claims and August’s consumer credit.From central banks, we’ll be getting the minutes from the ECB’s September meeting, and also hear from a range of speakers including the ECB’s President Lagarde, Lane, Elderson, Holzmann, Schnabel, Knot and Villeroy, along with the Fed’s Mester, BoC Governor Macklem and PBoC Governor Yi Gang. Tyler Durden Thu, 10/07/2021 - 07:57.....»»

Category: blogSource: zerohedgeOct 7th, 2021

The Department of Defense will build a prototype mobile nuclear microreactor to meet energy demands of US military

Microreactor prototype designs from two teams will be reviewed by the Department of Defense in early 2022. This Nov. 29, 2018, file photo, shows the Transient Test Reactor at the Idaho National Laboratory about 50 miles west of Idaho Falls, in eastern Idaho. The U.S. Department of Defense is taking public comments on its plan to build an advanced mobile nuclear microreactor prototype at the Idaho National Laboratory in eastern Idaho. AP Photo/Keith Ridler, File A Defense Science Board recommended the department use small modular reactors to meet its growing energy needs. In early 2022, the Department of Defense will review final prototype designs from two teams. Critics told the Associated Press that adversaries could target the microreactors during transport. See more stories on Insider's business page. The US Department of Defense is taking public comment on a prototype mobile nuclear microreactor that it plans on assembling at the Idaho National Laboratory, the Associated Press reported.The department's colossal energy consumption - 30 terawatt hours of electricity per year and more than 10 million gallons of fuel per day - is projected to increase significantly over the next few years, according to the project's environmental impact statement. A Defense Science Board commissioned by the department recommended it deploy small modular reactors to meet its increasing energy needs, the environmental impact statement said. The Idaho National Laboratory defines micronuclear reactors as small nuclear reactors that produce roughly 1-50 megawatts and can operate independently from electric grids.Two teams, BWXT Advance Technologies from Virginia and X-energy from Maryland, are developing final designs for the prototype, which will be reviewed by the department in early 2022, according to a March press release. Following the completion of the project's environmental analysis, one of the teams may be selected to build and demonstrate a prototype, the release said."A safe, small, transportable nuclear reactor would address this growing demand with a resilient, carbon-free energy source that does not add to the DOD's fuel needs, while supporting mission-critical operations in remote and austere environments," a March press release from the Department of Defense said.Still, critics expressed fears to the Associated Press that microreactors could be targeted by US adversaries, particularly during their transportation."In my view, these reactors could cause more logistical problems and risks to troops and property than they would solve problems," Edwin Lyman, director of the nonprofit Nuclear Power Safety at the Union of Concerned Scientists, told the Associated Press. "And unless the Army is willing to spend what it would take to make them safe for use, especially in potential combat situations or foreign operating bases, then I think it's probably unwise to deploy nuclear reactors in theaters of war without providing the protection they would need."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 25th, 2021

The Crypto Industry Was On Its Way to Changing the Carbon-Credit Market, Until It Hit a Major Roadblock

Crypto entrepreneurs hoped to revolutionize the carbon credit market to fight climate change. They've been met with resistance. Last year, the startup Toucan launched with a bold vision: it was going to use the blockchain to upend the entire carbon credits system. The traditional voluntary carbon market—in which polluting companies can pay for credits that fund emission-reducing efforts—was disorganized, archaic, and lacked incentives, Toucan’s founders argued. By pushing carbon markets onto the blockchain—a public and decentralized database—they felt they could turbocharge the climate fight with crypto economics, provide a global infrastructure data layer, and force polluting companies to either pay higher prices for carbon credits or seek more environmentally friendly approaches to their businesses. And upend the system they did—though not necessarily in the ways that they hoped. Toucan’s aim was to create infrastructure to facilitate the buying of carbon credits, which would be retired and then placed on-chain in the form of a new token. From there, the tokens would be stored publicly and safely, and could then be bought and traded like any other crypto asset, with the hopes of enticing prospective buyers who previously had no interest in the carbon credit world. And in October, millions of carbon credits started arriving on chain thanks to a campaign from another crypto environmental group called KlimaDAO. But many of them were attached to low-quality, long-dormant projects that didn’t actually improve the environment, according to some scientists and watchdogs. Market prices swung wildly, causing mild panic among traditional carbon-credit issuers and buyers. [time-brightcove not-tgx=”true”] Now, after several months of deliberation, Verra, the primary carbon credits issuer and a standard-bearer for the industry, has taken a stand against Toucan’s activity. On May 25, Verra announced it would ban the conversion of retired Verra credits into crypto tokens, which is Toucan’s central mechanism. After just seven months, the first phase of the crypto’s supposed carbon-credit revolution is over. Verra did open the door for a potential new chapter of collaboration, in which only live Verra credits could be tokenized. This would give Verra greater control and oversight over the flow of credits throughout these new markets. But Robin Rix, the chief legal, policy, and markets officer at Verra, told TIME that while his organization definitely wants to scale up the carbon-credit market, it is now leaning towards trying to do so through bank-led initiatives, like Carbonplace, as opposed to crypto ones. The decision will force Toucan and others to make a hard pivot in their operational models. Toucan’s initial response about Verra’s news was cautiously optimistic: it believes that Verra’s actions show Toucan’s outsize impact, and that despite Verra’s rhetoric about preferring banks, Toucan will nonetheless somehow play a role in this next stage of innovation. Carbon credit insiders, for their part, believe that while crypto carries long-term potential in the fight against climate change, many difficulties and obstacles stand in the way in the creation of a streamlined system that all parties are happy with. “Both crypto and carbon are pretty complex and difficult—And when you put them together, it’s like difficulty squared,” says Ollie Gough, strategy lead for the carbon-rating startup Sylvera. “Mistakes have been made—and we’re waiting to see how it pans out.” Streamlining a messy market The voluntary carbon market was developed in the ‘90s as a means by which companies in industries ranging from air travel to banking to oil could, in theory, track and offset their CO2 emissions. The idea was to ascribe a specific cost of the environmental damage of CO2 emissions, and then enable companies to purchase carbon offsets, which were similarly cost-assessed based on their ability to reduce environmental damage. Those credits might be tied to a forestation project, say, or a new wind farm. But three decades later, the carbon market is still largely unregulated and fragmented, with interested parties squabbling over criteria for inclusion and decision-making processes. Several studies have shown that the system has overvalued projects that have had little-to-no positive impact on the environment. One study from last year, for example, found that many forest-growing carbon-reduction projects in California systemically over-exaggerated their climate benefits. “I am continually underwhelmed by the quality we’re seeing,” Grayson Badgley, a co-author of that study and a research scientist at the climate nonprofit CarbonPlan, says. “I think there are a lot of low-quality carbon-offset projects that are out there, and I think their usefulness has been exaggerated.” Crypto proponents believe the blockchain could be wielded to keep a streamlined public record of the whole system. The blockchain, for example, could help solve the problem of “double counting,” in which two parties claim credit for the same emission-reducing action. Many members of the traditional carbon world were immediately intrigued. “It’s important to understand how untransparent the markets are,” Gough says. “This was really the first time ever you had some sort of indices roughly tracking the price at which the market was paying for carbon in a very public format.” Sweeping the floor Toucan hoped that other crypto projects would build on top of its infrastructure. In October, an organization called KlimaDAO did just that, creating its own token, Klima, that could be acquired with Toucan’s token, BCT, with the hopes of turning carbon credits into an in-demand market commodity. If crypto traders got involved and started investing in these tokens, KlimaDAO’s team argued, they might drive the price of the credits up, forcing polluting companies to either pay for higher-priced, higher-quality carbon credits or find more energy-efficient production methods. KlimaDAO’s first approach was what they called “sweeping the floor,” or rallying crypto enthusiasts to buy the cheapest carbon credits available via Toucan. (Cheaper credits are often attached to projects that the market has determined are of dubious environmental value, like Chinese hydropower dams.) The idea was to take all of the bad credits out of commission, so that only the better and more expensive ones remained. And crypto traders eagerly jumped in: in Toucan’s first six months, more than a quarter of all carbon credits bought on Verra were done so via Toucan and transferred on-chain. But there was one problem: most of these bad credits hadn’t been in circulation for years, because established carbon credit buyers already understood their lack of worth. Because of their age, many of these credits weren’t even eligible to be sold on some established trading markets. So instead, KlimaDAO’s tokens created fake value for worthless carbon-credits, worsening the situation. Suddenly, dozens of old projects that were once deemed unsellable began to reemerge, taking advantage of a gold rush and offering themselves up to this new clientele. “We aren’t convinced that ‘sweeping the floor’ is doing anything but increasing churn in a market that needs fundamental reform, not new software platforms,” Badgley and Danny Cullenward, policy director of Carbonplan, wrote on the non-profit’s website in April. The Toucan team, first excited by KlimaDAO’s entrance, now watched with alarm as scientists and carbon credit issuers like Verra began to criticize or distance themselves from crypto carbon projects. “I do think that hype ultimately wasn’t beneficial for everyone. It pushed expectations and prices into areas that made zero sense,” Raphaël Haupt, co-founder of Toucan, says. “And it’s really hard for an infrastructure provider like Toucan to suddenly have to play the police.” For months, the Toucan team debated on the best way to excise these bad credits from the system. In May, they finally changed their criteria to ban old, low-integrity credits. But the gaffe made clear the perils of a brash approach to a complicated problem. Haupt argues that Toucan had no choice but to take an imperfect approach—and that by doing so, they were able to both galvanize the crypto world’s interest while forcing issuers like Verra to adapt to their methods. “We don’t see retirement as the right way of doing things, but it was the lack of a clear system that forced us to take this route,” he said. “It was the first little door we could open to match the demand that exists right now.” Bigger problems with carbon credits Toucan’s efforts exposed some of the baseline flaws of the carbon market: the lack of a single standard of quality, and the likelihood that many sub-optimal projects end up being valued even if they aren’t helping the environment. In 2020, Greenpeace even went as far as calling the entire system “​​a distraction from the real solutions to climate change,” like actually reducing the emissions from fossil-fuel energy generation. Gough, at Sylvera, says it’s extremely difficult to establish a simple set of criteria for valuating carbon-offset projects because of all of the different factors in play. “You can try and do it by registry, age, or project type, but it doesn’t work: You will let some things in of low quality, and you will cut out actually high quality stuff,” he says. This year, a carbon-offset task force of hundreds of companies and sustainability experts were forced to scale back their efforts because they couldn’t agree on how to define a high-quality project. Meanwhile, many carbon-reducing programs already set in motion have also raised questions about viability. A recent study by Kyla Mandel in TIME found that current reforestation plans would require nearly 1.4 million square miles to meet their goals, which is nearly half of the continental United States. Even if all those trees get planted, there’s no guarantee of their long-term impact. “Trees can die, burn, or get chopped down,” says Badgley, all of which immediately negate any CO2 offsetting they’d offered. More crypto confusion Environmentalists and carbon market experts are also concerned by the volatility crypto introduces into their efforts. So much of crypto markets is currently fueled by speculation: the desire for traders to make money fast on tokens that swing wildly in value. “If [carbon-offset] prices keep fluctuating as widely as some of the crypto assets have been fluctuating, that makes it difficult…to plan and develop” carbon-reduction projects, says Ben Rattenbury, vice president of policy at Sylvera. In recent weeks, values have been depressed across the crypto world, and carbon crypto projects are no exception: As of writing, Toucan’s BCT token is less than half of what it was in February, and KlimaDAO’s token is a third of what it was in March. The number of credits coming on chain through those two projects has essentially grinded to a halt; with prices so low, there’s very little incentive for people to enter the market. Haupt, at Toucan, says he’s fine with this slowdown. “We’re in the consolidation phase. We came out guns blasting more than we thought,” he says. “We’re building this long-term, and it’s cool to have the opportunity to speak with different people on how they see the world and make sure we build a functioning system.” Toucan is far from the only player in this space. Since its launch last year, venture capital money has flooded into the space and a slew of new crypto carbon projects have been launched, each one jockeying for attention with what they argue is a unique twist or perspective. There’s Chia, an independent blockchain that’s forged a partnership with the World Bank’s Climate Warehouse; Flow Carbon, which is backed by WeWork founder Adam Neumann and just raised $70 million; Open Forest Protocol, Moss, and many more. Some of the projects collaborate and are interoperable; others are not. Many players in the space expect that some sort of consolidation will happen, although there is little agreement on exactly how that might come to pass. “Now we have like a trillion carbon projects that all want to bring carbon to web 3 that all use their own tokens and are not compatible with each other,” Haupt says. And then there’s the question of the climate harm of these blockchain projects themselves. In March, President Biden signed an executive order requesting research on the potential climate impact of digital assets, given the high energy costs of crypto mining. A letter written in response, penned by a climate-focused blockchain committee that included members of Toucan, conceded that “currently, Blockchains do have an energy problem,” before pledging to make the entire crypto industry net-zero in terms of greenhouse gas emissions by 2040, in part by switching completely to renewable sources of energy. (Some critics are skeptical that this is an achievable goal.) Verra halts Toucan’s activity Verra’s decision to stop the tokenization of retired credits means Toucan’s main activity will halt for the foreseeable future. Meanwhile, it’s unclear what will happen to 22 million retired credits that have already been placed on chain, and whether they will be worth anything going forward. Both the Toucan and Klima tokens dropped severely in price following Verra’s decision. The Twitter user who goes by Rez and is the head of protocol for the climate-crypto community Solid World DAO wrote on Twitter that Verra’s announcement sent the climate-crypto markets “into a sort of existential limbo.” Crypto carbon proponents hope they will be able to help Verra build a new system of tokenizing “live” credits as opposed to retired ones. But Verra’s legal officer Rix told TIME that Verra is leaning toward working with a project like Carbonplace, which was created by a consortium of banks including CIBC and UBS. Carbonplace has many similar aims to Toucan, including to scale and organize carbon markets. But crucially, it operates on a closed, proprietary system, as opposed to the blockchain, which theoretically allows anyone to see its code, contribute to its governance processes, and build on top of it. Verra choosing a more centralized project like Carbonplace would also allow greater control over who buys credits; Rix expressed concern over crypto tokens being used for shady purposes like laundering money. “Banks have sophisticated KYC [know-your-customer] processes in place. They’re regulated entities,” Rix says. “That strikes us as a very good model to follow and a way to work with credible leading financial institutions.” When asked if crypto projects could play a role in this next stage of development, Rix didn’t rule it out, and said Verra would begin a public consultation process. “It doesn’t have to be banks. It could be any entity that has sophisticated KYC checks and the infrastructure to be able to do this,” he said. “But [banks] are probably the direction things are going.” Haupt, in an interview on Wednesday morning, held out hope that Toucan and other crypto entities would be involved moving forward. “Given the point we are in this climate crisis, I don’t think restricting the amount of innovation you can have around this is the right way to go,” he says. “I personally think this is unstoppable: I don’t see a world in which only banks will have the monopoly over carbon.”.....»»

Category: topSource: timeMay 26th, 2022

6 Years Late And 250% Over Budget: Georgia"s Newest Nuclear Plant

6 Years Late And 250% Over Budget: Georgia's Newest Nuclear Plant Authored by Leonard Hyman and William Tilles via OilPrice.com, Vogtle 3 and 4 stations are now likely to cost roughly $34 billion. Nuclear power continues to fail to gain commercial respectability in the U.S. The Vogtle plant is up to 10 times more expensive than alternative projects in Europe. It has not been a good week for advocates of new nuclear power plant construction in the US. An energy cooperative in Georgia, the Municipal Energy Authority of Georgia (MEAG), announced in a recent filing that the new twin unit Vogtle 3 and 4 nuclear generating stations approaching completion in Waynesboro, Georgia were now likely to cost roughly $34 billion. MEAG, along with other electric co-ops like Oglethorpe Power and Dalton Utilities own minority stakes in the nuclear facility along with majority owner Georgia Power. The two Westinghouse design AP1000 reactors, which are now scheduled to enter commercial service in 2023, were originally estimated to cost $14 billion and enter commercial service in 2016/2017, that is, six years late and 250% over budget. And people wonder why this technology is still struggling for commercial respectability.   As for regulators, the Georgia Public Service Commission (PSC) might sound to some like an extension of Georgia Power’s legal and accounting departments. PSC Commissioner Nichols has extolled the virtues of this wildly expensive plant on two interesting grounds. First, he cited the likelihood of a large carbon tax, which we should point out, most Republicans strongly oppose. And second, he emphasized the so-called “war on fossil fuels”. Sorry but anyone watching oil and gas stock prices lately knows the war on fossil fuels is as real as the war on Christmas. Bottom line: we would expect the Georgia PSC to disallow a token amount of the egregious cost overruns, the company will respond publicly by lamenting a grievous financial wrong, while its stock and bonds rally strongly.  To us, few words define this AP1000 saga as well as “debacle.” Let's take a look at what was initially promised. Six year construction times, factory built modules to speed up construction, and a commercial service cost of $6,400 per kilowatt. Instead, we see a fourteen-year construction project at an astounding $15,500 per kilowatt. It isn’t even controversial to say this technology is deader than a proverbial doornail in the US. What’s more important is that the small modular reactor business has made many of the same claims (factory built, short construction times, smaller physical footprint), all of which deserve increasing scrutiny. But the key energy statistic of the week was from Europe where last year they spent about $40 billion to add 26,000 MWs of renewables. In the US we’re spending $34 billion for 2200 MWs. That makes Vogtle ten times as expensive, on a MW basis, as the European alternatives. Even after adjusting for the fact that renewables only produce about one third of the time, compared to 90% of the time for a well-run nuke, Vogtle looks expensive.  As we have said previously, generating electricity from nuclear energy may be a worthwhile societal endeavor (think defense, national energy security, security, research, radioisotopes used in medicine) but it is not even remotely commercial. This means that further nuclear power developments need to proceed as a government-financed or owned enterprises, as they are in most other countries.  Otherwise, nuclear power in the US it is likely to go the way of the dodo. Tyler Durden Sun, 05/15/2022 - 08:10.....»»

Category: smallbizSource: nytMay 15th, 2022

Rivian Collapse, Potential Brownouts, Highlight The Danger Of Illinois Lawmakers Picking Winners And Losers

Rivian Collapse, Potential Brownouts, Highlight The Danger Of Illinois Lawmakers Picking Winners And Losers By Ted Dabrowski and John Klinger of Wirepoints Electric car-maker Rivian’s stock price collapse is a clear example of why Illinois politicians have no business trying to pick industry winners and losers. And so are the warnings of potential brownouts in downstate Illinois.  Start with companies. Back in November 2021, Gov. J.B. Pritzker signed the “Reimagining Electric Vehicles in Illinois Act,” a green energy bill that provided a series of subsidies and tax breaks to electric vehicle and parts manufacturers. The law was quite clear in its intentions: “It is the intent of the General Assembly that Illinois should lead the nation in the production of electric vehicles. The General Assembly finds that, through investments in electric vehicle manufacturing, Illinois will be on the forefront of emerging technologies that are currently transforming the auto manufacturing industry.” Lawmakers were counting on Illinois becoming an EV manufacturing powerhouse emerging around the Rivian plant in Normal, Illinois, as well as improved prospects for the Ford factory in South Chicago and the Stellantis plant near Rockford. Rivian’s stock price grew rapidly, jumping 120% in the short time between the company going public (IPO price was $78) and the day before the bill was signed. On November 15, 2021, Rivian’s stock price hit a peak of $172. It’s been all downhill from there. Today the carmaker’s stock price is down to just over $20, a drop of nearly 90 percent. The automaker’s slide had a number of causes, starting with the fact that Rivian is a startup and all the risks that entails. There have been manufacturing issues, skyrocketing material costs and supply-chain problems. Not to mention the fact that the company lost out on even more potential subsidies when the federal Build Back Better bill died.  And then there’s all the bad news related to Ford. Last November, Rivian and Ford terminated a partnership to jointly develop a vehicle. More recently, Ford elected to dump 8 million shares of Rivian. On top of that, Ford manufactures the F-150 Lightning, a direct competitor to Rivian’s vehicles. That’s not to say Rivian can’t one day be a market leader. Anything can happen. But the point is nobody knows – certainly not government bureaucrats. Pritzker and other Illinois lawmakers shouldn’t be gambling with taxpayer dollars based on an ideological whim. Now to industries. Pritzker and his supermajorities have also bet the ranch on renewable energy, primarily wind and solar. Goodbye to all carbon-based energy – and even nuclear. Under the green energy omnibus package the legislature passed last year, Illinois will have to have 50% of its electricity production from renewable sources by 2040 and 100% from clean energy sources by 2050. Sen. Don Harmon (D-Oak Park), called the bill “the most aggressive, most progressive climate bill in the nation.” Reaching those goals will be exceptionally difficult and expensive. And according to the industry experts Wirepoints talked to, there’s no real plan for how to get there. In fact, Wirepoints FOIA’d the governor’s office for his plan to achieve “100% from clean energy sources by 2050.” We never got one. The omnibus bill was simply the culmination of politicians’ long war on carbon-based energy – and coal in particular. Illinoisans may soon be dealing with the consequences of that war. Solar and wind have not kept pace with the capacity lost as fossil fuel plants have been shut down. In fact, Melville Nickerson with NRG Energy warned during a recent Illinois House committee hearing of “the potential for rolling blackouts in central and southern Illinois” this summer. Again, it’s hard to know how all this will play out. But once again, it’s Illinois bureaucrats making another bet, not only with taxpayer dollars, but with Illinoisans’ quality of life. Tyler Durden Fri, 05/13/2022 - 17:00.....»»

Category: personnelSource: nytMay 13th, 2022

With World Gripped By Fertilizer Crisis, Biden Admin Clings To "Climate-Inspired Utopian Food-Production Fantasies"

With World Gripped By Fertilizer Crisis, Biden Admin Clings To "Climate-Inspired Utopian Food-Production Fantasies" Authored by Nathan Worcester via The Epoch Times, Samantha Power: ‘Never let a crisis go to waste.’ Do the World Economic Forum and China agree? “Fertilizer shortages are real now.” Uttered by USAID’s Samantha Power in a May 1 ABC interview with former Democratic advisor George Stephanopoulos, the words briefly drowned out the din of the news cycle. They were not unexpected to some. Power, who served as U.N. ambassador under Obama, mentioned fertilizer shortages after weeks of hints from the Biden administration. White House Press Secretary Jen Psaki repeatedly alluded to challenges obtaining fertilizer in recent press briefings. So did President Joe Biden himself in a joint statement with EU President Ursula von der Leyen. “We are deeply concerned by how Putin’s war in Ukraine has caused major disruptions to international food and agriculture supply chains, and the threat it poses to global food security. We recognize that many countries around the world have relied on imported food staples and fertilizer inputs from Ukraine and Russia, with Putin’s aggression disrupting that trade,” the leaders stated. In an April report titled, “The Ukraine Conflict and Other Factors Contributing to High Commodity Prices and Food Insecurity,” the USDA’s Foreign Agriculture Service acknowledged that “for agricultural producers around the world, high fertilizer and fuel prices are a major concern.” While political rhetoric has often focused on Russia, the rise in fertilizer prices did not begin with its invasion of Ukraine. An analysis from the Peterson Institute of International Economics shows that fertilizer prices have rapidly climbed since mid-2021, spiking first in late 2021 and again around the time of the invasion. Industry observers have pointed out that commodity prices are not solely affected by Vladimir Putin. Max Gagliardi, an Oklahoma City oil and gas industry commentator who cofounded the energy marketing firm Ancova Energy, told The Epoch Times that the war and sanctions have helped drive the upward climb of natural gas prices in Europe. A worker walks at the Yara ammonia plant in Porsgrunn, Norway, on Aug. 9, 2017. (Lefteris Karagiannopoulos/Reuters) Natural gas is used in the Haber-Bosch process, which generates the ammonia in nitrogen fertilizers. Those fertilizers feed half the planet. Gagliardi thinks the picture is more complicated at home, where environmental, social, and corporate governance (ESG) has become a controversial tool of stakeholder capitalism, often used to force divestment from fossil fuels or other industries disfavored by the left. “It’s a combination of record demand domestically and from LNG [liquid natural gas] exports combined with less than expected supply, in part due to the starving of capital for the O&G industry due to the ESG/green movement pressures on capital providers, plus pressure from Wall Street to spend less capital and return value to shareholders,” he said. Language from Power Echoes Green Activists, EU, WEF In the case of increasing costs for oil, natural gas, and coal, some politicians and green activists have argued that those fast-rising prices mark an opportunity to accelerate a move from hydrocarbons to wind, solar, and electrification. “Big Oil is price gouging American drivers. These liars do nothing to make the United States energy independent or stabilize gas prices. It’s time we break up with Big Oil and ignite a clean energy revolution,” Sen. Ed Markey (D-Mass.) said on Twitter in March. “I say we take this opportunity to double down on our renewable energy investments and wean ourselves off of planet-destroying fossil fuels[.] Never let a crisis go to waste,” said former Joe Biden delegate and political commentator Lindy Li in a Twitter post about ExxonMobil’s exit from Russia’s Far East. Meanwhile, Mandy Gunasekara, an environmental lawyer who served as the Environmental Protection Agency’s chief of staff under President Trump, said in an interview with The Epoch Times, “It’s always been part of their plan to make the price of traditional energy sources go up, so then wind and solar could actually compete with them.” Describing how fertilizer shortages could actually help advance a particular agenda, Power sounded much like Li. She even used an identical phrase: “Never let a crisis go to waste.” Intentionally or not, this echoed a line from another high-profile Obama alum, Rahm Emanuel: “Never let a serious crisis go to waste.” Emanuel was talking about the 2008-2009 financial meltdown. “Less fertilizer is coming out of Russia. As a result, we’re working with countries to think about natural solutions, like manure and compost. And this may hasten transitions that would have been in the interest of farmers to make anyway. So, never let a crisis go to waste,” Power told Stephanopoulos. Power’s language of setting crisis as opportunity parallels similar statements from environmental groups. Writing to EU President von der Leyen and other EU bureaucrats, a group of European and international environmental organizations urged the union to stay the course on environmental policy. “The crisis in Ukraine is yet another reminder of how essential it is to implement the Green Deal and its Farm to Fork and Biodiversity Strategies,” the letter states. The Farm to Fork Strategy confidently asserts that its actions to curb the overuse of chemical fertilizers “will reduce the use of [fertilizers] by at least 20 percent by 2030.” “Ploughing more farmland, as is currently being put forward, to grow crops for biofuels and intensive animal farming by using even more synthetic pesticides and [fertilizers] would be absurd and dangerously increase ecosystem collapses, the most severe threat to social-ecological stability and food security,” the activists’ letter argues. “The European Union must tackle the current challenges by accelerating the implementation of its strategies to reduce the use of synthetic pesticides and [fertilizers], to preserve its natural environment and the health of its citizens.” Numerous publications from the World Economic Forum (WEF), known for its role in orchestrating the global response to COVID-19, have made similar arguments. A 2020 white paper from WEF and the consulting firm McKinsey and Company warns of greenhouse gas emissions and potential runoff from fertilizers, advocating for an end to fertilizer subsidies in developing countries and praising China for its efforts to reduce fertilizer use. A 2018 WEF white paper, co-authored with the consulting firm Accenture, claims that “a 21st century approach to organic farming” should strive to close the gap in yields between organic and conventional farming. WEF’s vision of 21st century agriculture comes into greater focus in another 2018 report titled, “Bio-Innovation in the Food System.” It advocates for the bioengineering of new microbes to fix nitrogen more efficiently in plants. “This offers the prospect of lowering and more optimally applying nitrogen fertilizer,” WEF’s report states. WEF has also pushed the use of “biosolids”—in other words sewage sludge—as fertilizer. Urine, it notes, “makes an excellent agricultural fertilizer.” Gunasekara, formerly of the EPA, said that fertilizer overuse and runoff presents serious risks, giving rise to toxic algal blooms in the Great Lakes and the Gulf of Mexico. However, “generally speaking, the farmers are very, very efficient with their fertilizer use. They have a built-in incentive not to waste something that is a high input cost,” she told The Epoch Times, adding that in her experience, industry and communities could work out positive solutions with regulators. Heavy-handed restrictions, she argued, are not the solution. The UK Absolute Zero report, produced by academics at top British universities, goes even further than some other reports in its opposition to nitrogen-based fertilizers and conventional agriculture more generally. This photo shows sheep feeding on lush grass on the property of Australian farmer Kevin Tongue near the rural city of Tamworth in New South Wales, Australia, on May 4, 2020. (Peter Parks/AFP via Getty Images) It anticipates a phaseout of beef and lamb production, with “fertilizer use greatly reduced,” in order to meet net-zero emissions targets by 2050. “There are substantial opportunities to reduce energy use by reducing demand for [fertilizers],” the report states. It also envisions cuts to energy in the food sector of 60 percent before 2050. That imagined energy austerity, with its many unforeseeable consequences for human life, apparently will not last forever. The report claims that after 2050, energy for fertilizer and other aspects of food production will “[increase] with zero-emissions electricity.” “A food crisis/famine advances the long-term goal of more centralized control of energy, food, transportation, etc., as advanced by the Davos crowd of the WEF. Governments must expand their powers to ‘handle’ crises, and that is what progressives love more than anything,” Marc Morano, proprietor of the website Climate Depot, told The Epoch Times. Sri Lanka’s Organic Experiment a Stark Warning Though Power’s remarks were consistent with talking points from Democrats, WEF, the EU, and similar factions, they came at a particularly inconvenient moment for advocates of organic fertilizer—Sri Lanka’s recent experiment with abandoning chemical fertilizer has plunged the island nation into chaos that shows no signs of letting up. According to a 2021 report from the USDA Foreign Agriculture service,  Sri Lankan agricultural economists warned that a rapid shift from chemical to organic fertilizers “will result in significant drops in crop yields.” The country has since had to compensate one million of its farmers to the tune of $200 million, as reported by Al Jazeera. With food shortages now a reality, anti-government protests prompted Sri Lankan President Gotabaya Rajapaksa to declare a state of emergency on May 6—the second in two months. “[Sri Lanka is] now literally on the verge of famine, because they’ve had massive crop failures,” Gunasekara said. A farmer prepares a paddy field for sowing in Biyagama on the outskirts of Colombo on October 21, 2020. (Ishara S. Kodikara/AFP via Getty Images) “This administration wants to use this as an opportunity to push their Green New Deal-style farming tactics, which we’ve seen implemented elsewhere, that cause significant problems beyond what we’re currently facing from our farmers’ perspective and what consumers are going to be facing,” she added. “Manure cannot compete with modern chemical agriculture for high yield farming that the world depends on,” Morano of Climate Depot said. Rufus Chaney, a retired USDA scientist known for his research on sewage sludge-based fertilizers, echoed Morano’s skepticism about making up for missing chemical fertilizers with organic alternatives. “There are not enough useful (and not already being used) organic fertilizers to change the balance of any chemical fertilizer shortages,” Rufus told The Epoch Times via email. “Nearly all organic fertilizers are built on livestock manure and can only be shipped short distances before it becomes cost-prohibitive,” he added. These realities underscore another apparent contradiction in green policy—even as climate activists push for cuts to chemical fertilizer use and greater reliance on organic alternatives, they are working assiduously to cull the livestock populations that provide manure for those fertilizers. In Northern Ireland, for example, a newly passed climate Act will require the region to lose a million sheep and cattle. The EU’s Farm to Fork Strategy even states that work on fertilizers will be focused “in hotspot areas of intensive livestock farming and of recycling of organic waste into renewable fertilizers.” “For years we were warned that ‘climate change’ would cause food shortages, but now it appears that climate policy will be one of the biggest factors in causing food shortages,” Morano told The Epoch Times. Bails of hay sit in a paddock containing a failed wheat crop on farmer Trevor Knapman’s property in Gunnedah, NSW, Australia, on Oct. 4, 2019. (David Gray/Getty Images) He cited research suggesting that a move to organic farming in the United Kingdom could actually raise carbon dioxide emissions, as the decrease in domestic yields can be expected to boost carbon-intensive imports. “What the Biden admin is doing is seizing on ‘crises’ to advance their agenda. Greta [Thunberg] famously said, ‘I want you to panic.’ Because when you panic, you don’t think rationally and calmly, and you make poor choices. The only way they can sell these climate-inspired utopian energy and food production fantasies is during times of COVID crisis or wartime crisis,” he added. China’s Role Scrutinized Still, others see the focus on Russia as a distraction from China’s maneuvering on the world stage. In 2021, China limited exports of both phosphate and urea fertilizers. The country has also stepped up its fertilizer imports. China’s export restrictions came after it rapidly emerged as “the most important and most influential country in the fertilizer business,” according to an outlook document from the Gulf Chemicals & Petrochemicals Association. The Peterson Institute’s analysis shows that as global fertilizer prices shot upward in 2021 and 2022, China’s fertilizer prices mostly leveled off. Although the USDA’s April report did note the impact of China’s fertilizer export restrictions and heavy fertilizer imports, its executive summary drew greater attention to the Russia-Ukraine conflict. That summary did not mention China by name among the “countries imposing export bans and restrictions.” Stanford University’s Gordon Chang, a China expert, warned on Twitter on May 6 that China has been “buying chemical companies whose products are needed for fertilizer and, more generally, food production,” citing comments from onshoring advocate Jonathan Bass. The Epoch Times has reached out to Chang and Bass for additional details. We must, as a national priority, protect our farmland, ranches, processing facilities, distribution channels, and all the other elements that support agriculture and the food chain. #China’s regime is seeking control. Its intentions are undoubtedly malign. #CCP — Gordon G. Chang (@GordonGChang) May 7, 2022 China has also been buying up American farmland as well as ports around the world, including ports in the now-food insecure Sri Lanka. Physicist Michael Sekora, a former project director in the Defense Intelligence Agency (DIA), told The Epoch Times that worldwide fertilizer shortages could reflect China’s long-range technology strategy. A key element of that strategy, he argued, is undercutting the United States whenever and wherever possible. “Our ability to produce food is very much under attack right now. Some people say, ‘Oh, it’s just a coincidence.’ It’s China,” Sekora said. “China has been very strategic in making sure they shore up what they have and restricting access throughout the rest of the world,” Gunasekara said. “When you have people come in that are very anti-development and anti-growth, China can put its finger on the global market, making it that much harder, and then try to use that as an example to exert more authority and have access to greater power.” Pain Felt Around the World “It’s been hectic,” said South African tobacco farmer Herman J. Roos. Roos told The Epoch Times that fertilizer prices near him have jumped since the invasion of Ukraine, on the heels of steep increases over the previous year. He was able to buy all the fertilizer he needs for this year before the latest price shock. Yet, he expects shortages of urea, monoammonium phosphate (MAP), and other fertilizers to strain a population of farmers already under significant stress. Copper theft, lack of government support, and the ever-present threat of physical violence are all pushing Roos and producers like him to the brink. Yet, for all the challenges in South Africa, Roos anticipates the fallout will be worse elsewhere in the continent. “The economy will be hit harder in countries like Mozambique, Zambia, and Zimbabwe—countries where your agricultural system is more focused on subsistence farming,” Roos added. They and other sub-Saharan African countries are heavily dependent on South Africa for their food supply. Roos prays food riots won’t come to South Africa. The country is still recovering from a wave of riots in summer 2021, prompted by the arrest of former South African President Jacob Zuma. He does predict that some farmers in the country will go bankrupt. Let the master gardeners foot the bill and do all the work, then show up to get in on the harvest. (StockMediaSeller/Shutterstock) Back in the United States, Connecticut landscaper Adam Geriak does not yet face such stark choices. He told The Epoch Times that fertilizer prices near him are up, in line with estimates a Connecticut garden store provided to The Epoch Times. “I do primary garden work and use organic fertilizers, which primarily come from poultry manure,” Geriak said, adding that the price of poultry manure fertilizer may have risen too. He does not think fertilizer price increases will have much of an effect on him. Yet, other facets of the current economic picture are worrisome to him as tries to manage his small business most effectively. “I’m having a hard time planning for the future because of the uncertainty, and I think other owners are feeling this too. In the previous two years, clients seemed to have open coffers. They wanted more projects done and there seemed to be a lot of money going around. Clients seem to be a bit tighter now, asking how they can save money on certain projects and such,” Geriak said. “Being on the verge of a recession, and retirement accounts down may be leading to these issues,” he added. The USDA report on Sri Lanka’s organic experiment states that the country’s government made impossible promises to different parties. It informed farmers it would handle the cost of moving away from chemical fertilizers while telling consumers that rice on their shelves would not become pricier, all while attempting to realize environmental and public health benefits through a breakneck transition to organic fertilizers. “If you put too much emphasis on environmental issues, and you ignore the very real impact that can have to people’s daily lives, it can have dire consequences,” Gunasekara told The Epoch Times. “Unfortunately, we’re seeing it in the most dire of circumstances, which is a suppressed food supply. I think that situation is only going to get worse because of the rise in prices for fertilizers and diesel and everything else that’s going to make it harder for farmers in the U.S. to produce, then also globally.” Josh, a farmer in Texas who raises small livestock, also believes things will get worse before they get better. He did not want to share his last name. “I personally think that we haven’t even begun to feel the effects of inflation in our grocery store bills, because last year, the costs to produce were 1/3 to 1/2 the cost farmers and ranchers are having to pay this year. That cost has to be absorbed by the buyer to make it feasible for them to even continue,” he said in a message to The Epoch Times. “My family is preparing now and stocking up our freezers and pantry because we are really concerned how bad it can get this next year.” He estimates that fertilizer prices near him have increased 200 or even 300 percent, “dependent on what program you are running.” The rise in diesel prices has hurt him the most. “Farm equipment runs on diesel,” he pointed out. According to AAA’s gas price website, diesel in Texas is running at an average of $5.231, up from $2.820 a year ago. “I can’t imagine how anyone would profit or sustain raising crops or cattle with all these price increases that effect your overhead,” Josh said, saying he has heard about other ranchers and farmers culling their herds to avoid losses. “Food shortages are a great way to collapse the current system and install a Great Reset,” Morano, of Climate Depot, told The Epoch Times. Tyler Durden Mon, 05/09/2022 - 20:30.....»»

Category: blogSource: zerohedgeMay 9th, 2022