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Wolfspeed putting $3B plant in Germany? CEO says stay tuned.

Reports say Durham semiconductor firm Wolfspeed is putting a $3 billion plant in Germany, but the company is staying mum about any plans......»»

Category: topSource: bizjournalsJan 25th, 2023

US Finalizing Next Ukraine Military Aid Package At $2.6 Billion

US Finalizing Next Ukraine Military Aid Package At $2.6 Billion The US is in the final stages of preparing a massive new military aid package to Ukraine which will total as much as $2.6 billion, the Associated Press previewed Wednesday night, and its to include nearly 100 Stryker combat vehicles - marking the first time the Stryker will be introduced to the Ukrainian battlefield - and at least 50 Bradley Fighting Vehicles. File image, USAF It could be announced by the end of the week, and is expected to rank among the biggest single packages unveiled since the start of the war. When pressed for further details, State Department spokesman Ned Price simply said, "Two words: stay tuned." Similar to Bradley vehicles, the Stryker moves infantry across the battlefield, but are lighter and faster than the Bradley. "What we’re trying to look at is the mix of armored and mechanized forces that make sense," undersecretary of defense for policy Colin Kahl said separately on Wednesday. "The Russians are really digging in. They’re digging in. They’re digging trenches, they’re putting in these dragon’s teeth, laying mines. They’re really trying to fortify that that FLOT, that forward line of troops," Kahl continued. "To enable the Ukrainians to break through given Russian defenses, the emphasis has been shifted to enabling them to combine fire and maneuver in a way that will prove to be more effective." But the real question is whether Washington will sign off on going past the 'light tanks' or mere troop carriers that it has currently limited itself to providing. The Scholz government of Germany surprised allies this week in saying it's ready to approve sending German-manufactured Leopard tanks to Ukraine only if Washington leads the way in approving its own heavy tanks. "Germany won’t allow allies to ship German-made tanks to Ukraine to help its defense against Russia nor send its own systems unless the U.S. agrees to send American-made battle tanks, senior German officials said on Wednesday," according to The Wall Street Journal on Wednesday. But given Berlin knew that the Biden administration has shut the door on approving American M1 Abrams (at least for now), this could have been a ploy to effectively end the debate and take the pressure off the Scholz government. Tyler Durden Thu, 01/19/2023 - 22:40.....»»

Category: blogSource: zerohedgeJan 19th, 2023

Transcript: Jennifer Grancio, Engine No. 1

       The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is… Read More The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture.        The transcript from this week’s, MiB: Jennifer Grancio, Engine No. 1, is below. You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Jennifer Grancio was there at Barclays when the beginning of ETFs and passive indexing really took off on an institutional basis. She was one of the founding members when BlackRock bought iShares from Barclays and really helped drive broad adoption of passive and ETFs in the financial community. Today, she is the CEO of Engine No. 1, which focuses on the fascinating transitions that are taking place in broad strokes across the economy. There are numerous opportunities in energy, in climate, in robotics, in automation, and her firm helps invest in those spaces. Not quite an activist investor, but she has worked with a number of companies like Exxon and General Motors and Occidental, where the input of Engine No. 1 drove significant changes at those companies. They’re a longtime investor than a black hat activist where they’re looking to buy stock Forza, an exit of the CEO and sell once the stock pops, really fascinating story. I found it quite fascinating and I think you will as well. So with no further ado, my interview with Engine No. 1’s Jennifer Grancio. Let’s start out talking about the early part of your career. I’m really curious how you ended up in BlackRock. But before that, you’re working as a consultant. JENNIFER GRANCIO, CHIEF EXECUTIVE OFFICER, ENGINE NO. 1: Yes. I think like a lot of people in undergrad, I went to Stanford thinking I was going to do genetics and science — RITHOLTZ: Right. GRANCIO: — did an internship, pivoted, ended up doing international relations. Then as you head towards the end of college, you figured you’re going to save the world, then I’m going to go work for the World Bank. The World Bank wants you to take out more student debt and get a master’s degree. So like so many other bright-eyed graduates, I trooped off to, you know, one of the traditional professional services professions. But what’s kind of interesting for me about consulting was this idea that you almost apprentice with somebody that’s senior, and you run around and try to help companies and problems. So it seems like a good idea at that time. RITHOLTZ: At that time. GRANCIO: And that’s what I went off to do. RITHOLTZ: So how do you go from that? How do you end up at a place like BlackRock? iShares seems to have been almost an accidental business line from them. Am I remembering correctly, that was a post financial crisis Barclays’ purchase, something along those lines? GRANCIO: Yes, exactly. Yeah. So if you go back, so management consulting, moved back to California and decided I was going to be a California person, not a New Yorker, no offense to New York, spent a lot of time here, all those things, right? RITHOLTZ: Better weather. The geography is beautiful. Sure. GRANCIO: And so I went looking for what I thought would be the best asset management business, I focused on asset management within the consulting space. Like, this idea that somehow if you got portfolio construction and savings right, you help people over time. And so I joined what was Barclays at that time. The asset management business of Barclays Bank was this little firm called Barclays Global Investors based in San Francisco. RITHOLTZ: And that was not such a little firm at that time, was it? GRANCIO: No. It was growing very quickly. And that business was an institutional business. So as an institutional business, we did indexing. We thought indexing was cool. And the iShares and the ETF idea came from, we just had a fundamental belief it was a better mousetrap. So there’s something about an ETF and we could go into that another time. There’s something about an ETF that’s a better mousetrap than a mutual fund. And so for Barclays Bank, we pitched here’s a great idea. Let’s build this ETF business in the U.S. And it’s a way for Barclays to build in the United States. And so we launched the business in 2000. So we launched it right into the dot-com crisis. RITHOLTZ: So from the dot-com crisis to the global financial crisis, what were the circumstances surrounding BlackRock saying to Barclays, yeah, we’ll take that little worthless business off your hands for a couple of hours? GRANCIO: Yeah. And the interesting thing about an ETF business is that it takes a long time to build. And so to your question, around that time, you’re going into 2008, Barclays needed cash. And the index business was starting to take off in the form of ETFs, or at least we thought that, but it was still a relatively small business. And so who were the other people that probably looked at that acquisition included other big indexers, big asset managers who weren’t sure, was indexing going to be a thing or not? Because remember, at the time, ETFs and index were synonymous, but Larry, you know, was more forward-looking. RITHOLTZ: Larry being? GRANCIO: Larry Fink of BlackRock. RITHOLTZ: Who arguably, and I know who Larry is, I just want the audience to know, arguably the purchase of iShares by BlackRock from Barclays could be one of the great opportunistic distressed purchases in the middle of a crisis ever in financials. What is iShares up to now? Like $4 trillion, something insanely? GRANCIO: Enormous. RITHOLTZ: Yeah. And they picked it up for a teeny tiny fraction of that. So what was your experience like when BlackRock took over iShares? GRANCIO: Yeah. So we built the iShares business first within Barclays. And we were a, you know, small but mighty team doing ETFs. And the whole idea I remember of ETFs is to go and to challenge mutual funds and challenge active management. So that’s a big thing to take on. And so as BlackRock work through the acquisition of all of the BGI business, including iShares, we spent a couple of years then getting to know BlackRock, as a little iShares team, and talking about ETFs and fee-based advice and portfolio construction, and all these things that we thought were trends we could take advantage of and use to build the business. But then the business really just got from strength to strength after that acquisition. We came out of the financial crisis, few rocky years in the ETF industry overall. Vanguard decided to get into ETFs in a serious way. BlackRock and iShares launched that core series as a competitive business. So kind of responding to what was going on in the market, and the business continued to grow and grow. And then I think from an ETF industry perspective, we did some important work on trying to protect the category of ETFs. So we did a lot of work with the U.S. regulators, European regulators and run the business in Europe for a while as well, talking about the differences between like a passive index fund, for example, an ETF that’s got commodity exposure and ETF that’s leveraged or inverse, in terms of trying to protect the vehicle and protect the category. And really since then, there’s just been continued explosive growth. RITHOLTZ: In your wildest dreams, did you ever imagine back from the sleepy early days of passive and ETF at Barclays that would grow up to be just the dominant intellectual force in investing, and reach the size it’s reached? What is even after this year, BlackRock has something like $8 trillion? $9 trillion? GRANCIO: Yeah. I mean, the numbers are huge. I think we did, but maybe we were naïve. But our view was, it was a trend that was going to happen. And if you could own the trend, and if you could accelerate the trend, this was a better way to invest. A better way to invest is to have a low cost solution at the core of the portfolio, and then hire people that are deeply capable to deliver alpha. So I would say we thought it could be big. But you know, it’s pretty amazing. RITHOLTZ: So you talk about accelerating the trend. What exactly do you do to help accelerate that trend? How do you drive acceptance of both ETFs as a wrapper as opposed to traditional ‘40 Act mutual funds, and passive versus more traditional stock picking market timing, active investment? GRANCIO: Yeah. I think when the industry first started, so going back, you know, 20 years now, the two things were synonymous. But, you know, let’s take those one at a time. So from a passive perspective, the argument we made as an industry selling passive ETFs was you really had to take a look at what the portfolio is doing over time, total cost, total risk exposure. And when you did that, you often found that there was a way to get better long-term performance and cheaper, by having some index in a portfolio. So that was the story on indexing. And then we kind of kept driving that into this idea of models. So now, you know, there’s a model, a huge amount of money, you know, trillions of dollars sit in models in U.S. wealth. What does that mean? It means a big wire house. Your brokerage puts a model together, this much of Europe, this much U.S., this much small cap. And then you can use index products to fill all those allocations. And so that was the kind of the 20-year build of how did passive get so big. And then ETF as a wrapper, it’s just a great way to get the price at the moment if you’re buying into the public markets, number one. And number two, it’s a great way to manage tax, where if you buy something now and you sell it in 20 years, and the markets gone up, guess what, we have to pay tax on that. But the kind of annual capital gains gift you get from a lot of mutual funds, it can be managed very astutely in the ETF wrapper. And that’s great. Like, that’s great for all investors. RITHOLTZ: Meaning if you’re a mutual fund owner who’s not selling, but somebody else sells and generates a capital gain, that gets spread around to the other older (ph) — GRANCIO: Exactly. So even if you’re — RITHOLTZ: — which doesn’t make sense at all. GRANCIO: I mean, as somebody that’s been doing ETFs for a long time, I say it doesn’t make any sense, whatsoever, because there’s another way to do it. And we’re finally seeing that now. We’re finally seeing a lot of the big mutual fund companies start converting into ETFs. RITHOLTZ: The flows even in a down year like 2022, the flows have all been towards passive, towards ETFs, towards low cost. It seems like a much better mousetrap. GRANCIO: I think it is. RITHOLTZ: But I’m not going to get much of an argument from you on that. So you mentioned Vanguard, we’re talking about Black Rock. Let’s talk a little bit about the role of brand on in the industry. How important is that when you’re putting out either a low cost passive ETF at 3 or 4 BPS, or something more active or thematic on the ETF side? GRANCIO: Yeah. I mean, the role of brand is pretty critical. And if you think about in the index business, if you’re managing it well, there’s not a lot of performance. It’s are you tracking the index? Yes or no. And so that power of the brand is massive. And my observation in this space is that the average investor, the average retail person that’s going out and investing or talking to an advisor, they don’t necessarily know one product provider or investor versus another. But they definitely know who they do business with or who they buy from. So that retail brokerage brand, their advisory brand has a huge impact on them. So to your question on Vanguard, like Vanguard is a brokerage firm, so you kind of know Vanguard. Vanguard does your 401(k), you’ve heard of Vanguard. And so for other people that enter the industry, and this is certainly what we did in the iShares business or what we do now at Engine No. 1, is you really have to be clear on who are you and what is your story because that brand matters a lot. RITHOLTZ: So you mentioned brokerage firms, and Vanguard does 401(k) brokerage. They do all sorts of obviously mutual funds and ETFs. How do you see some of the bigger custodians and actual brokers like Schwab and Fidelity in terms of ETF developments? We know it’s BlackRock, Vanguard and State Street at the top. These guys are no slouches either, are they? GRANCIO: No. I mean, I would say if we go back and we look at the history of ETFs and how they’ve developed, we see State Street, Vanguard and BlackRock. BlackRock iShares is very dominant, and they’re going to continue to be dominant in passive, period. They’re there. They’re big. They’re so big now. And we’ll come back to this later. I personally think there’s some problems with how big they are. But from an ease of buying decision-making perspective, they’re big. They’re dominant. The brokerages were late to get in the game. So Fidelity and Schwab got in much later. They don’t charge fees for those products. And so it makes it harder for them as a kind of a corporate organism to, you know, have that be a big part of their business. And then what we’re very excited about it Engine No. 1, and what you’re seeing with the mutual fund conversions, the big ones at DFA, at Franklin Templeton, and the list goes on, there are many, is that we’re now ready to move active funds into the ETF structure. And that I think is very exciting. But that’s new, that’s very new development. RITHOLTZ: So let’s talk a little bit about Engine No. 1. First, how did you get there from Black Rock? What led that transition? GRANCIO: Yeah. So I left BlackRock very large. I wanted to do a little bit more innovation. And I think sometimes the biggest firms are great, but they can’t always lead from an innovation or change perspective. RITHOLTZ: Right. GRANCIO: So I spent a couple of years, I built an advisory firm, and took a couple years to decide on, you know, what was the next move? And I did some great work with a number of large wealth and IRA firms that were going through an M&A or selling themselves process, did some work on impact investing, actually led me to Ethic and joined the MannKind board, but decided I was definitely going to be a builder, that there was this opportunity to do something different than traditional mutual fund and passive ETF. And so I started looking for what would be the thing I wanted to build with partners, and then I met Chris James. RITHOLTZ: And did you launch Engine No. 1, or did you join him when it was already existing? GRANCIO: We launched it together. Going back, you know, before we started the firm, so Chris James is our founder at Engine No. 1. And Chris’ background is hedge fund and private fund investments. And what he’s really known for, he’s known for taking an extremely long view on something and doing the work to let’s say, where is the opportunity as you go through a huge transformation or transition? So Chris was hard at work on this and wanted to reach into the wealth space. So rather than just doing products that were private and you could help institutions invest, what could we do that was broad and into the wealth space? So I joined him to collaborate, given my background on that side of the business. And the idea of Engine No. 1 is just to help people benefit from these huge transitions and transformations that are very much not the backwards-looking. Look, Google and Amazon got great. You know, our portfolios have a lot of growth in tech, great. There’s a lot of money to be made in the energy transition, transportation, agriculture. And so really, the idea of the firm is to be able to look forward, find mispricing, and make money as we go through these huge changes. RITHOLTZ: The firm’s name is intriguing. Where does Engine No. 1 come from? GRANCIO: The first firehouse in San Francisco is actually a couple of blocks from our office. And in talking about what we were trying to do, which is maybe it’s grandiose, but if you think about it like capitalism works. And what we were agitated about is we saw the market, you have ESG over here, very small. We think old school ESG does not work. We have a strong view on that. We’ll come back to that. Indexing, too many shares are locked up in indexes. Index don’t vote their shares. And then maybe most important of all, we’re going to need a General Motors and Ford to actually be able to do this huge transition from internal combustion to battery electric vehicles. And so, you know, actually, the firehouse is the center of the community, right. And if you think about how a community survives, the firehouse is the center of the community. It takes care of itself. A well-run business really should be as simple as sort of taking care of the environment, it’s in being aware of it. And in public markets, that means you also have to be able to adapt and manage their change. RITHOLTZ: So tell us a little bit about the strategies you guys employ. What are your key focuses? How do you deploy capital? GRANCIO: Yeah. As a business, we run an alts business, and then we run the ETF platform. So if you think about it very simply, these huge ideas about transition and transformation and how to make money are very common across what we do. But we have two businesses. And the big ideas are these transitions and transformations, and how do you take advantage. And so when we look at public companies, we look at every single company, and we look at what their path is through time. So I think this is one of the problems with a lot of investment strategies right now is they’re looking to short term. And then we build the impact or externality data, we just build it into the financial model, right? Because the data is out there particularly on governance, particularly on environmental issues. And when we do that, in the sectors that are in transition, let’s take energy, for example. If you’re an oil and gas company, and you don’t account for the emissions that you’re dealing with and you don’t decrease them over time, you’re going to have a problem. And we saw this when we started building the business that a lot of these companies were heading towards zero terminal value. So let’s take Exxon, for example — RITHOLTZ: Okay. GRANCIO: — where if you take Exxon, and Exxon keeps doing long-dated fossil fuel projects, and has no plan to reduce emissions at any point in time, and has no plans to develop a green business. Well, that’s not very good for Exxon stock when we get to 7 or 10 years out. And so we see a lot of these opportunities where like it’s just math. The capitalist system is supposed to have the company govern itself, so that it’s making money through time. It has a longer duration of business, and it has a higher value. And that’s the kind of the way that we work in everything that we do. RITHOLTZ: So you mentioned environmental issues and impact. You mentioned governance. This sounds a lot like two-thirds of ESG. GRANCIO: Yeah. We think the way people use that label is a little bit problematic. So people often use that label looking backwards. RITHOLTZ: Flash that out a little more — GRANCIO: Yeah, yeah. RITHOLTZ: — because when I hear someone mentions ESG, I typically think of an investor and for the most part, as we go through this generational wealth transfer, you do surveys of investors, husband passed away, the wife tends to be much more empathetic with issues of equality and environmental concerns. And the next generation is much more concerned. So it seems like there is a desire to express those beliefs in their portfolios. Why does that not work with ESG? GRANCIO: Yeah. I mean, I guess our view on that would be, you can always express values in a portfolio. But if you’re going to express values in a portfolio, say that I am expressing my values in the portfolio, which is different than the core concept of managing money over time generally, for the person that’s doing the managing is to be a fiduciary — RITHOLTZ: Right. GRANCIO: — and drive good outcomes and strong returns. And in general, for the investor, is to drive returns over time. And so the way we think about it is, really, you can do that. And any business that is going to survive over time has to be sustainable, has to address or basically cover their impacts, right, after the cost of capital so that they can be profitable over time. So instead of thinking ESG means it’s values based, I don’t like the company, they’re bad, I’m going to screen them out of my portfolio. We don’t think that’s a great way to manage your core portfolio over time. We think the better way is you simply have to engage with the companies to make sure that their most material impacts that’s financial data, right? That’s risk data if you don’t manage your emissions as an oil and gas company. And so let’s build that into just investing to make returns as opposed to this special class, which, you know, it devalues base and ESG tends to kind of infer value over performance, right, or divesting from companies that you don’t like. And we don’t think that’s a great way to invest. RITHOLTZ: So let me push back a little bit on the low carbon strategy. It seems like it’s half of the economic equation because people seem to be approaching entities like ExxonMobil and others, the suppliers of the carbon-based fuel. What is that doing if you’re ignoring the other half, the consumers? So every other company that is not a carbon energy producer is likely to be a carbon energy consumer. They’re running factories. They’re shipping goods. They’re having offices. Why focus on one half of the equation and not the other? GRANCIO: Yeah. I mean, I think that’s the right question. And we focus on both. And so let’s take for a minute the energy industry, and then the transportation or auto industry. That’s an example of that kind of handshake or handlock, right? So in the case of the car companies, that’s consumption. So if we’re consumers and we’re driving cars, which we still do and people are planning to do in the future, the car company can switch from encouraging the behavior of driving internal combustion engines, which have very high emissions, or the car company can know that the consumer demand is shifting a little bit and they can build a car that is an awesome battery electric, reasonably priced vehicle. And then they can capture that shift in demand. And that’s really good for the car company. So actually, we a hundred percent believe that this has to primarily be driven on the consumer demand side and on my first piece of that. So if I’m a consumer, I buy a car, you’ve got to start with the car company. However, if you look at global emissions, you know, 34 percent of that today comes from the energy companies. So at the same time in parallel, there’s still an opportunity to work with those companies on, as battery electric comes up, as fossil fuel comes down, how do those companies make a lot of money 9 or 10 years from now as we go through that transition? RITHOLTZ: Explain that 34 percent. Because, again, it’s that someone is a buyer, someone is a seller. They’re not burning 34 percent of the fossil fuels, they’re selling it to consumers — GRANCIO: That’s right. RITHOLTZ: — who were burning it. Like, there are some low carbon ETFs. I just don’t understand. It’s why the war on drugs failed, if you’re only going to interdict the supply but ignore the demands, you’re not going to be successful. GRANCIO: Yeah, that’s right. I mean, and we think from an investment perspective, if you want to solve this problem on how do you take emissions down, we think that problem can be solved and you can make money by owning the people that are going to win. So you asked before, like, what do we do? What strategies do we run in the ETF business? Our active team, it’s effectively hedge fund investors. So they’re very concentrated portfolios. We believe we’re right. There’s a handful of names, like under 30 names today in the portfolio. Ticker is NETZ, Transform Climate (NETZ), and what that portfolio holds is it holds companies that have emissions. But we believe that the companies in the portfolio are the companies that have the right strategy to, if I’m an energy company, I’m producing energy. There’s demand for energy, that’s what I do. But I’ll tell you my emissions, I’ll do methane third-party monitoring. I’ll do all the right things. So that from a social license to operate perspective, I’m at the top of my peer group. And in all cases, they have a strategy whereas fossil fuel demand declines, not today, but in 7, 10 years, they have a strategy to actually make money and still have value. So we’re picking the top best performing energy companies. We’re not saying energy is bad. Energy is essential, and we need that energy in the transition. And the portfolio then also holds the car companies that we think win. RITHOLTZ: So let’s talk about a couple of names. So a couple of energy names from NETZ and a couple of core companies from NETZ. GRANCIO: Yeah. And so one of the names we had in the portfolio, which is actually so highly valued, it goes in and out, depending on if it’s overvalued — RITHOLTZ: Right. GRANCIO: — it’s an active fund, is Occidental (OXY). And that’s an example, they were really the leader in the space. So they had started to develop greener businesses so that as fossil use comes down, they have another business and they’re competitive. That’s great for long-term value of the company. And — RITHOLTZ: What are their green businesses? Things like solar and wind or — GRANCIO: They have a range of things that they do in that space, but think of it as committing early to find ways to make money, having these people on staff, on the board that know how to run green businesses. And then from an emissions perspective, also, they were very early on telling us, being very transparent on Scope 1 and 2, and agreeing to oil, gas, methane partnership emissions with third-party monitoring of emissions, which we think is critical because again, methane emissions leaking, that’s probably the biggest thing. RITHOLTZ: Especially with natural gas. But with pretty any form of car being — GRANCIO: That’s right. RITHOLTZ: — capture, your carbon removal from the ground, that’s a big risk. Methane is even worse than CO2 in the atmosphere, right? GRANCIO: That’s right. And that’s right, and that’s some of the active ownership work we did on that portfolio, where Conoco and Devon are companies that we worked with, to join the methane third-party verification partnership this past summer. And that’s when we talk about Engine No. 1 as active owners, it’s not always, you know, the black hat activist. We actually haven’t done that other than Exxon. But the ability to really understand their business and go in and work with them. And actually, having them methane verified is a big deal, because then people understand what you’re doing in that part of the business. And it gives you license to operate because we need that energy source. RITHOLTZ: What are the car companies that are in NETZ? GRANCIO: General Motors is in NETZ. Ford has been, it goes in and out of the portfolio, based on how they’re doing, managing some of their supply chain constraint issues. And then Tesla is in the portfolio. But GM is at a much larger weight than Tesla. And then Tesla went out of the portfolio for governance reasons. RITHOLTZ: Because? Give me more specific. GRANCIO: Twitter. Because of Twitter. So the way that we manage that portfolio, basically what NETZ is, is you’re holding some of the biggest emitters, and you’re holding this 1.8 metric tons of emissions a year, so not low carbon, high carbon. And then what we expect is that those companies are going to take that number down to less than half within a decade. And so if you care about impact or sustainability, yeah, that’s great. That’s a huge win. You’re holding the companies, watching them. They’re taking emissions down. But if you want to make money, you’re holding the companies that are providing energy, but doing it in a way that they have a social license to operate. And then sort of come back to your Tesla example, all of this starts with governance. And so if a public company is going to make money over years and years, it’s all about governance. And do you understand your markets? Do you understand how things change? And so if you’re running Tesla and you have a huge job to do in terms of scaling that business, but you’re also doing other things at the same time — RITHOLTZ: Assess. GRANCIO: — and saying you don’t have time to run Tesla, well, that’s kind of a governance issue. RITHOLTZ: So when I looked at the acquisition of Twitter which started out as a lark, $44 billion, the market drops, wild overpayment. The bigger issue is if you think about who’s Tesla buyers, they seem to not be the people who Elon is playing to on Twitter. And in fact, as much as there are a lot of fanboys and I think you have to give Elon full credit for moving the entire auto industry to EVs, I think all the legacy-makers looked at him and said, we can’t let Elon do to us what Bezos did to the book industry and the booksellers and a dozen other industries. But it seems like he’s alienating that core middle left, all those liberals we’re going to own on Twitter. He seems to be chasing away a lot of his future buyers of Tesla’s. GRANCIO: He may be. That’s good news for GM NASA. We’re okay. We’re covered on that one. RITHOLTZ: And to say nothing about valuation issues and other assorted things — GRANCIO: Right. RITHOLTZ: — I’m assuming this is in strictly an ESG checklist. You looked at the usual — GRANCIO: Not at all. Yeah, we looked at the usual things and that’s maybe our main point, which is the people get in our industry in particular. They get stuck in old frameworks, right? An ETF is an index fund. An activist is somebody that comes in short term and fires the CEO. So I think we need to be careful of those sort of short ways and shorthand ways of thinking in investments. Our point of view is that there’s a lot of data available now. We have a huge amount of data. Take the climate and environmental-related issues. We have a lot of data on carbon, and we can estimate carbon prices. And so in a basic fundamental financial model, you can start with your old traditional financial model. But you can add in, we do this, we can add in the monetization of those emissions. And then as you build out your financial model, you can look at how the company reduces them over time. And we see those as purely financial metrics, right? That large externality for a company is a risk or financial measure. It’s not some separate ESG dot bubble rating system. It’s just their numbers, it’s math. It should go into the long-term valuation of the business. RITHOLTZ: Let’s talk about the Exxon situation. You accumulated a relatively small number of shares, and then reached out to management. Tell us about the process and how they reacted to your overtures. GRANCIO: Yeah. So from a team perspective, we started by making an economic case. So we did the work on here’s what we would do differently, here’s how we think the value of the business wouldn’t be higher if we did this. And the suggestions on what we would do differently included disclosure of emissions. It included better capital allocation decisions between this sort of short-term energy transition period. And we don’t know when it’s going to be, thanks to, you know, Putin and the Ukraine, longer than we thought a year ago. RITHOLTZ: Right. Right. GRANCIO: But at some point, we’re going to start to really pivot into an energy transition. And so what’s your best thinking, Exxon as a company, on what your business looks like, and your capability at a board level to extend the duration of the business, do things that may be renewable, or whatever they may be. What is it that you can do that’s in that area? And so those were the things that we requested. RITHOLTZ: They were receptive to that? GRANCIO: They were not receptive to that. But those are the things that we requested, which is usually how these things start. RITHOLTZ: So .02 percent of outstanding shares doesn’t exactly put the fear of God into them. Why a toe in the water and not a more substantial stake? GRANCIO: Exxon, going back to when we started the proxy campaign — RITHOLTZ: They were giant, right? GRANCIO: They were giant, but also they were a giant in terms of the big asset managers had not been able to get them to pivot from a governance perspective. So there were known concerns about governance. A lot of the big investors take a slower approach to work with management, not cause too much change, request changes. And there just hadn’t been any progress in this case. So we were able to have conversations. And the team did a huge amount of work with investors and passive investors, and active investors, walking through our economic case. If these things happen, better governance, better economic performance, and that, we think, is what allowed us to rally support. And as we were rallying support, as you see in this situation, I’m sure Exxon was talking to some of those investors as well. And so as we went through the campaign process, we saw some of these changes, changes in capital allocation decisions, and intention to launch a green business. So some of these changes started even before the proxy vote where new directors were elected onto the board. RITHOLTZ: So we talk a lot about specific companies. How do you look at the macro environment and geopolitics? You mentioned Putin’s invasion or the Russian invasion of Ukraine. Arguably, that’s going to accelerate the greening of Europe in particular, and the move to alternative energy sources, not dependent on Russia, which is all carbon. GRANCIO: Yeah. And I think to some extent, you can’t control what is the moment in time where the energy transition happens, right? However — RITHOLTZ: Right now. Right. Aren’t we more or less in the midst of this today? GRANCIO: We are in the transition. Absolutely. But we think that if you wanted to not use fossil or carbon intensive now, it wouldn’t possibly work. RITHOLTZ: Right. GRANCIO: We’re not ready to be transitioned. We are in the transition. And so the way we think about it is we have to be very savvy about where do you have a brown business? Where can that brown business be gray? Where does it start to use green techniques? Natural gas is a great example. We need natural gas. So how do you move natural gas in a way where you’re looking at methane. You don’t have methane leaks. You’re using green energy and electric sources to process the natural gas. There are a lot of things we can do even while we’re using fossil to be cleaner, nd to put the people that are cleaner and doing fossil in a better position to sell versus their competitor, because we are seeing these changes. And we do have a lot of people looking at carbon footprint as they’re buying or investing in companies. RITHOLTZ: So my colleague, Matt Levine mentioned your win. And now says, when they see you coming, you are no longer presenting as a scrappy, small startup. You’re bringing some receipts to the table. Hey, Exxon knuckled down. Now, you and I have a conversation. How has that changed since that win? GRANCIO: Yeah. We started with Exxon effectively. And so I wouldn’t say the next day, it was a sea change in a positive way. I would say it’s complicated, because after you’ve done that, the board and the CEO are a little bit worried about what our intentions are and it takes time to build those relationships. And Chris does a lot of this work directly with the CEOs and the companies that are in the portfolios. And it takes time to build trust. But our relationship with them is basically having modeled their business ourselves and modeled all their competitor businesses, and have gone to kind of up and down the supply chains. And once we get to know each other, we’re giving them what they find is actually some very helpful point of view on if I like your business, I think this, you know, consumer demand is going to flip sooner, you’re going to miss it, or how organized are you on supply chain? What are your bottlenecks? And so it’s become really very constructive with a lot of the companies that we work with. RITHOLTZ: It sounds like your early training in the consultant world wasn’t for naught. This is almost a hybrid between activist investing and consultants. GRANCIO: And just investing, right, high quality investing means you really have to understand what a company strategy is and what are the bottlenecks, what are the places where they may miss. If you understand those, you can make those faster, shorter, better, less risk. Then that’s really positive for being more sure that the company increases in value. RITHOLTZ: So let’s talk a little bit about your toolbox. You mentioned proxy voting, you mentioned modeling. What else does Engine No. 1 bring to the table as ways to get management to see the world from your perspective? GRANCIO: Yeah. And part of it is the data science work that we do around the sizing of emissions, comparative emissions, monetization of emissions, so call that our total value approach to looking at the externalities of these companies. So we bring that. We’ve done the modeling all the fundamental work that we do. And then it’s very active engagement, where we want to stay engaged. That’s part of where the alts business came from. If there’s something in the private markets that could work differently to help a big public company move, can we make connections? Can we help that move along? And then proxy voting is important. So most of what we do is this kind of very intense active engagement. And we’re active owners of the company, not always an activist in a traditional meaning. We also launched an index product. So you know, our view is that you really have to hold these companies if you want to own the winners over time. And if you want to drive change, you also have to hold the companies, you can’t divest. A problem in the dominance of the current index providers is that they’re big and it’s complicated to vote shares, because you have people on different sides of every issue. So while we’re at it, put a new index product out on the market, that ticker is VOTE, which is pretty simple. It’s literally an index. We vote the shares in line with our economic outcomes, and we post them as soon as we vote. So a little option for people that still want to use index instead of active. RITHOLTZ: That’s really interesting. We’ve talked about Exxon so far, and Tesla and Ford. Tell us about your involvement in General Motors, what attracted you to the company, and what sort of positioning do you have with it. GRANCIO: Yeah. And General Motors, it’s going to take some time, right? So General Motors has been in the portfolio since we launched NETZ and still is, and has stayed there. And when we work with General Motors, a lot of our work has been about how do we accelerate the transition to battery electric vehicles for them as a manufacturer, and not for an ideological reason, purely because we think the consumer demand is shifting more quickly. RITHOLTZ: That’s where the market is going. GRANCIO: Right. That’s where the market is going. RITHOLTZ: That’s where the consumer demand is moving. GRANCIO: Again, this is an economic argument for us in working with General Motors, that the faster you get to all battery electric, which means you need to build the battery plants, you need to build them bigger, you need to build them faster, you need supply agreements locked up for the rare metals, and then you need to work on bringing the cost of batteries down. Because as all of that happens, GM makes 8 to 9 million cars a year. And so if those cars are all battery electric vehicles and the battery cost comes down, you know, what’s Tesla’s multiple, right? They have the opportunity to go from where the GM multiple is today, which is very low, very depressed value stock, all the way up to what producing BEVs at scale is going to look like. And that’s a huge value creation opportunity. RITHOLTZ: Let’s talk about what’s going on in the world of ESG and greenwashing and wokeism. There’s so many things happening here and I think people don’t really use these buzzwords appropriately. Let’s start out with greenwashing. Tell us your view of it and why it’s problematic. GRANCIO: Well, I think if you could do everything from scratch, I get this a lot from people that run large asset management companies, they’re like, gosh, I wish I could just start everything from scratch again in this environment. So I think the reality is, if you’re running a strategy and you don’t care, or you don’t have risk metrics on, let’s say, the environment and your strategy, it’s very hard to fit them on top. And I think a lot of people get caught in that from a greenwashing perspective. What we do is we start from scratch. We think about these material impact things as financial data, and it’s just part of our process. And so there’s no greenwashing there. But for people that were investing in something and now want to take advantage of a moment in time, or people that are investing and actually don’t really understand how environmental risk factor into the portfolio, I do think you just have to take a timeout and go back to basics and better articulate what the strategy is and what you’re actually doing to the market. And if it’s not a green strategy, you kind of have to say that. RITHOLTZ: It seems like a lot of this has just been on the hot buzzword of the day. GRANCIO: Well, a lot of our society right now has been on the buzzword of the day. So I think we need to be very careful about that when it comes to investing. RITHOLTZ: So let’s talk about wokeism. You’re describing ESG as sort of a risk management tool to filter out certain potential problems down the road. But if I pick up the Wall Street Journal or the New York Post and flip it to the editorial section, all I hear is woke capitalism and this is what Disney is doing, and this is what Apple is doing, and this is what Nike is doing. Is this really woke capitalism? Tell us what’s happening in that space. GRANCIO: Yeah, I think we have to remember what capitalism is. And then I’m not sure what we mean by woke, which is part of the problem. So your capitalism is meant to be you in public markets kind of, you know, put that in the private markets as well. It’s meant to be you have a set of financial shareholders, you have other stakeholders. You’re making money for the shareholders over time. That’s the definition of capitalism. It’s really hard to make money for shareholders, the financial shareholders over time if you don’t treat your workers well or you destroy the community in which you live. That’s just kind of good business or doing business the right way. I think we sometimes get confused when we talk about values or practices, and you can’t link it directly back to financial returns. So, listen, when it comes to climate, we feel like we can do a pretty good job with the data out there, to link how a company handles climate and environment with how they perform as a stock over time. You know, there’s not enough data on the social side. The research is spotty. I really hope there’s better data. I hope the research gets better. I hope we have causality there. But I think as investors, we have to be careful what we’re talking about. If the company has less emissions, they get credit for trying to do the right thing and the stock price goes up. That’s capitalism. Where from a values-based perspective, we want to ask a company to do something, that’s a little bit different. So I think that distinction is really important. RITHOLTZ: And it’s pretty robust then on governance, if you — GRANCIO: Yes, it did. RITHOLTZ: — elevate women to senior members, if you have people on your board that are diverse. Those companies historically have outperformed the companies that have not. GRANCIO: Yeah. And the board, for a minute, is another one that’s very hard to reduce into one stat. So if you think about all the research that’s been done on boards, in Engine No. 1, we do a lot of work with academics. So we’re always trying to look for these places where we’ve got data and causality, and we can link it to economic outcomes. And when it comes to boards, what a lot of the research would tell us is if a board is deeply non-diverse, that first, if you add one diverse person or thinker, they may actually have worse performance. But if a board starts to have multiple varieties of diversity, and the board listens to the diverse points of view, those are the boards where we get the real outperformance. And then remember, it’s a board. So it’s not just diversity of thought, it has to be diversity of capability. Because as these companies go through change, you know, you need other CEOs that have been successful through change. You know, if you’re an old school media company, you need people on the board that are successful with where the puck is going. So I think we have to look for both of those kinds of diversity. And boards that listen to each other, have diversity and have that important diversity of capability, absolutely, those are going to be the highest performing ones. RITHOLTZ: So we talked about Exxon. We talked about GM, and Ford, and Tesla. What other companies are you looking at as being on the cutting edge of change to take advantage of this transitional moment? GRANCIO: Yeah. I mean, one of the things we’re excited about, I can’t talk about the product because we’re not through the SEC with it yet — RITHOLTZ: Right. GRANCIO: — although it’s in filing. But from a theme perspective, we’re super excited for the U.S., from a U.S. competitiveness perspective. What happened during COVID is supply chains were too global, too fragile, and they broke. RITHOLTZ: Right. GRANCIO: And so what we’re already seeing, and we’re going to see a lot more of this in the next few years, is we’re seeing a huge resurgence of manufacturing jobs in the U.S. and it’s going to be great for a lot of these communities. So we see semiconductor plants. We see battery plants, Michigan, Tennessee, Kentucky. RITHOLTZ: Arizona is starting a big chip — GRANCIO: — Texas. Exactly. So it’s happening already. There’s a huge increase in manufacturing. And then as that happens, if you build a manufacturing plant, there’s a huge job multiplier. You have people come in to build the plant, and people work in the plant, and people work to move goods in and out of a plant. And we’re going to see a huge growth, we believe, in railroads. So if you’re going to increase manufacturing in the North America, guess what, you don’t need to ship things overseas. You need better, more effective railroad, continuing to strengthen the lines and the movement of goods around the U.S. And then automation, so good and bad is, you know, we have less birthrate and less people coming to the U.S. And we’re going to have a huge number of quality jobs. And so companies like Rockwell Automation, that high quality jobs and brand new factories, with automation to assist in the manufacturing. It’s going to be pretty awesome from an investment team perspective. RITHOLTZ: So Rockwell just isn’t terrifying us with YouTube videos of robots that are coming to kill jobs (ph)? GRANCIO: No. The high quality blue collar, if you will, workers and all these new plants, they’re not going to be enough of them. And they’re going to be happy that robots are there to help them RITHOLTZ: Really quite interesting. So let’s talk a little bit about some of the political pushback to the sort of investing you do. Maybe Florida is the best example, passing laws to punish a specific company, Disney, who objected to Florida’s anti-LGBTQ sort of legislation. Is the environment changing for this sort of proxy voting and criticism and working with companies? Or is Florida just Florida and you know, it’s kind of a one-off? GRANCIO: Listen, I think companies have consumers. And so if I’m a company, if I’m Disney and I have consumers, and I feel like my company needs to stand for something because it allows me to serve my consumers to say my brand has value, that’s something that Disney is going to have to push for. So I think, first of all, when it comes to public companies, some of them have one audience, some of them have another audience, and they may need to behave in ways to make their audience feel good so they can be in business and sell their product. And I think, separately, if we talk about proxy voting, successful proxy votes should be economic. So back to the kind of fiduciary concept we were talking about earlier. So if a proxy vote says, you know, can you please disclose more information about your workforce? That’s helpful to investors. Great. That often makes sense to us. If the proxy vote says, I don’t like this thing you do, please don’t do it. But there’s no economic causality. RITHOLTZ: Right. GRANCIO: I think it’s hard for that to be a proxy voting issue versus a values-based conversation with the company. So our belief is proxy votes matter. We should all use our vote. But proxy voting is a tool to drive kind of long-term economic performance with companies. Sometimes there are just value-based issues that shouldn’t be tackled through proxy votes. RITHOLTZ: I know I only have you for a limited amount of time. So let’s jump to our favorite questions that we ask all of our guests starting with, tell us about your early mentors who helped to shape your career. GRANCIO: Yeah. It’s funny, I don’t have a lot of mentors where it was that one guiding light. I found that I picked up little bits and pieces from different people. So Condi Rice was a provost when I was at Stanford. RITHOLTZ: Really? GRANCIO: And so it was that inspiration that sort of sent me off down the international relations path. There was just a level of smarts and confidence that I really appreciated, that I picked up from her. And then a professor in business school who said women can definitely have it all. But you’re kidding yourself if you think you can have it all at the same time. So, like, pace yourself, Like, go after it, but pace yourself. You can’t literally do it all at the same time, which is good advice. And then I think there are a lot of people for me, where I learned one or two lessons from different people. And now, I do a lot of mentoring of other people. And that is my overarching suggestion on this is you got to ask a lot of questions. And you don’t always have to have a lifetime relationship with everyone, but get any nugget you can get and run with it. RITHOLTZ: I like it. Let’s talk about books. What are some of your favorites and what are you reading currently? GRANCIO: So Maya Angelou is actually a favorite of mine. I find it relaxing and it’s so different than what I do every day, and kind of American and lyrical. Harry Potter, one of our kids is younger, so working our way through Harry Potter. And then the Daniel Kahneman Thinking Fast and Acting Slow, I read that last year. I like that a lot because you got to remember sometimes how our brains work. And the fact that we rush to things and we shortcut, and we group things. And so I find that helpful sometimes and just being calm about how else can we solve a problem, or why is somebody reacting the way that they do. RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in either impact ESG activist, whatever you want to call it, type investing, or ETF and passive investing? GRANCIO: Well, first, I’d say those are great areas to go into. You should go into it. And definitely learn how to invest, learn how to be an investor. Don’t stick to one fad or one mousetrap. If you can learn how to be an investor, or how investors think, that will serve you so well in our business. And I guess to new graduates, I would say don’t give up hope. It’s going to be a bad job market. So take those internships, be a little bit scrappy, and just learn from whatever that first job is, two years in, because you’ll pick up a phenomenal amount of information. And if it’s not what you love, great, then go do something else after it. But it’s a great place to build a career. RITHOLTZ: Really interesting. And our final question, what do you know about the world of investing today that you wish you knew 30 or so years ago? GRANCIO: I think it’s that the overall portfolio construction matters, right? So as an investor, thinking about when you build, like when we build Engine No. 1, we built products or we put strategies out into the market, the more you can make them balanced and with some duration. So if somebody puts something in the portfolio, they sort of understand what it’s going to do, and what the return stream looks like and what the risk looks like, as we’re investing and then selling to other people. I think that ability to build products that are durable, and it’s clear what they do is really, really important. It lets you build your brand. It lets you build trust with the investors. RITHOLTZ: Really interesting. Thank you, Jennifer, for being so generous with your time. We have been speaking with Jennifer Grancio. She is the CEO of Engine No. 1. If you enjoy this conversation, well, check out any of our previous 450 interviews. You can find those at iTunes, Spotify, YouTube, wherever you get your favorite podcasts. Sign up from my daily reads at ritholtz.com. You can follow me on Twitter @ritholtz. Check out all of the Bloomberg podcast @podcast. I would be remiss if I did not thank our crack team who helps put these conversations together each week. Sarah Livesey is my audio engineer. Atika Valbrun is my project manager. Sean Russo is my head of Research. Paris Wald is my producer. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END ~~~   The post Transcript: Jennifer Grancio, Engine No. 1 appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureJan 17th, 2023

Who Will Start The First Major War Of 2023?

Who Will Start The First Major War Of 2023? Authored by Michael Snyder via TheMostImportantNews.com, Tensions are on the rise all over the planet, and global conflict will be one of the big trends that we will all be watching in 2023.  And that is extremely unfortunate, because more global conflict won’t be good for any of us.  Considering what we have been through the past several years, we could really use a time of peace.  Sadly, as I write this article it appears that more war is inevitable.  But where will it erupt first?  In recent days, the mainstream media has suggested several potential candidates… Will it be Serbia? Things haven’t been this tense between Serbia and Kosovo since Bill Clinton was president. There have been several alarming incidents over the past month, and now it is being reported that the president of Serbia has just raised the alert level of his military to the “highest level of combat readiness”… As Russia’s unprovoked war in Ukraine heads towards its one-year anniversary, another European flashpoint is in danger of reigniting a second war on the continent. Kosovo was at the center of the last all out-war in Europe in the late ‘90s and tensions there have never fully dissipated. Serbian President Aleksandar Vucic has this week put his army on its “highest level of combat readiness” to protect ethnic Serbian areas in northern Kosovo he says are under threat from Kosovo. Vucic says his military will “take all measures to protect our people and preserve Serbia.” But I don’t think that Serbia will be first. The major powers of western Europe are desperate to avoid a second war in their own backyard, and both sides still seem open to a diplomatic solution. Will it be North Korea? Just a few years ago, things were going so much better with North Korea. But now with Joe Biden in the White House any hope for lasting peace has gone out the window. The North Koreans have been getting increasingly aggressive, and this week they actually sent a drone almost all the way to Seoul. In response, the South Korean military “flew surveillance assets” into North Korea… South Korea’s military fired warning shots, scrambled fighter jets and flew surveillance assets across the heavily fortified border with North Korea on Monday, after North Korean drones violated its airspace for the first time in five years in a fresh escalation of tensions. South Korea’s military detected five drones from North Korea crossing the border, and one traveled as far as the northern part of the South Korean capital region, which is about an hour’s drive away, South Korea’s Joint Chiefs of Staff said. I think that the North Koreans were trying to probe South Korea’s defenses. If this keeps happening, South Korea is promising to “thoroughly and resolutely respond”… “Our military will thoroughly and resolutely respond to this kind of North Korean provocation,” Maj. Gen. Lee Seung-o, spokesman for the South Korean Joint Chiefs of Staff, said at a press briefing. Tensions along the militarized border have already been high due to Pyongyang firing off a record number of ballistic and other missiles this year, including a pair fired last week toward Japan. With now days left in 2022, analysts have tracked over 90 missiles fired this year. Tensions on the Korean peninsula are the highest that they have been in decades, but I don’t think that this will be the first major war to erupt in 2023 either. Personally, it is my opinion that North Korea will not seriously consider an invasion of South Korea until China invades Taiwan. Will it be China? Years ago, a lot of people thought that I was nuts for warning that the U.S. and China would eventually go to war. And I could definitely understand the skepticism, because our stores are filled with goods made in China and our ties with the Chinese just kept getting tighter and tighter. But now “the Taiwan issue” has changed everything. This week, the Chinese “sent 71 planes and seven ships toward Taiwan” in just one 24 hour period… China’s military sent 71 planes and seven ships toward Taiwan in a 24-hour display of force directed at the island, Taiwan’s defense ministry said Monday, after China expressed anger at Taiwan-related provisions in a recently approved U.S. annual defense spending bill. China’s military harassment of self-ruled Taiwan, which it claims is its own territory, has intensified in recent years, and the Communist Party’s People’s Liberation Army has sent planes or ships toward the island on a near-daily basis. When China ultimately invades Taiwan, the U.S. and China will instantly be in a state of war. And once that happens, the flow of goods from China immediately ends. Are you prepared for that? But I don’t think that such a scenario will play out just yet. My personal opinion is that there is another major conflict that is likely to erupt even sooner. Will it be Iran? For years, Benjamin Netanyahu pledged that he would never, ever allow the Iranians to build their own nuclear weapons. Well, the IAEA claims that the Iranians are now “one technical step away” from enriching weapons-grade uranium. So it is put up or shut up time for Netanyahu. Either he takes military action or he lives with a nuclear Iran. Of course if Israel launches an attack on Iran, the Iranians will hit back extremely hard. In fact, the Iranians just threatened to raze Tel Aviv “to the ground” if Israel decides to attack… Iran has threatened to raze Tel Aviv ‘to the ground’ in a chilling video explaining how Tehran would respond to an Israeli strike on its nuclear plant. The video that the Iranians have produced actually contains “several terrifying explosions to demonstrate what would happen to Tel Aviv”… The two and a half minute video – posted by @MEMRIReports – contains violent footage of missiles going off and several terrifying explosions to demonstrate what would happen to Tel Aviv. ‘This is what the first few minutes of the Iranian response will look like,’ the video explained. Once this war starts, it is going to be incredibly destructive. But I don’t think that it will start the way that most people are expecting. As they say, stay tuned for future developments. Meanwhile, I believe that things in Ukraine are about to get even more “interesting”. On Monday, Russian Foreign Minister Sergey Lavrov issued a statement that some media sources are describing as an “ultimatum”… “Our proposals for the demilitarization and denazification of the territories controlled by the regime, the elimination of threats to Russia’s security emanating from there, including our new lands, are well known to the enemy,” state news agency TASS quoted Lavrov as saying late on Monday. “The point is simple: Fulfill them for your own good. Otherwise, the issue will be decided by the Russian army.” Other Russian officials have also issued puzzling statements in recent days. Are they trying to give diplomacy one final chance before they take this war to a point of no return? Because if the Russians launch another massive invasion of Ukraine from the north, there will be no going back. The Russians continue to move more military assets into position for such a campaign, but that doesn’t mean that it will actually happen. However, if Vladimir Putin does pull the trigger there will be no hope for a peaceful solution. Meanwhile, the Russians continue to try to frame this conflict as a great battle between good and evil.  In fact, a commercial has just been released that portrays Vladimir Putin as a Santa Claus figure that is delivering a boy from the twisted values of the western world… Russian President Vladimir Putin has been portrayed as Santa in an anti-Western propaganda video released on the country’s social media. The film – made by a production company called Signal – depicts ‘Santa Putin’ swapping a photograph of a child’s same-sex parents for one of a mother and father, and gifting the boy being raised as a girl a football, toy cars and a drum kit. The video feeds into Russian prejudices about Europe and the United States which have been fuelled by pro-Kremlin propagandists during the war in Ukraine to frame the conflict as a clash of values between Russia and Ukraine’s western allies. I would very much encourage you to watch the video.  It will give you some insight into how the Russians really view their conflict with the west. The Russians truly consider themselves to be “the good guys”, and they believe that the western powers are an existential threat to the future of their civilization. Meanwhile, the Biden administration and the western European elite also consider themselves to be “the good guys”, and they believe that the Russians must be crushed at all costs. Unfortunately, leaders on both sides are not exactly behaving rationally at this juncture, and this has brought us to the brink of a global war of cataclysmic proportions. In case you haven’t noticed, Russia, China, North Korea and Iran have all been deepening ties with one another. Three of them already have nuclear weapons, and Iran will be able to construct their own nukes soon. Perhaps we should pull back from the precipice before the missiles start flying. Rational leaders would be looking for a peaceful way out of this mess. Sadly, rational behavior among our leaders is in very short supply at this point. *  *  * It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon. Tyler Durden Sun, 01/01/2023 - 07:00.....»»

Category: blogSource: zerohedgeJan 1st, 2023

Polar Blast Warms Up Natural Gas ETFs: Will the Rally Continue?

An arctic cold snap wrapped up the United States and should boost the price of natural gas as heating demand increased. An arctic cold snap swept the United States just as Christmas approached. Snow and ice have draped much of the United States and Canada. Icy winds paralyzed civilization ahead of the holiday weekend. This week, the hauling winds may slow down while temperatures are expected to fluctuate between single digits and the mid-20s, according to the National Weather Service forecast.The government cautioned of wind chills of 20 to 25 degrees below zero. Moreover, “the cold wind chills could cause frostbite on exposed skin in as little as 30 minutes,” according to the news release. About two-thirds of the country — will see extreme inclement weather, said Ryan Maue, a private meteorologist in the Atlanta area, as quoted on voanews.com. Against this backdrop, natural gas ETFs are good bets.Natural GasNatural gas prices should bask in the glow of winter chills. Normally, Arctic Chills give life to this commodity every winter. The cold snap boosts electricity demand across the region, putting natural gas in focus. Since almost 50% of Americans use natural gas for heating purposes, withdrawal in natural gas supplies pushes up the commodity’s prices.Extreme cold this week increased spot power and gas prices to their highest in years across much of the country and cut gas production to a nine-month low by freezing oil and gas wells in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere, as quoted on investing.com.Extreme cold normally curbs natural gas production and demand for heating surges as people seek to stay warm. An ETF tracking natural gas futures, namely United States Natural Gas Fund UNG should benefit.UNG in FocusThe Natural Gas Price Index is the futures contract on natural gas as traded on the NYMEX. The United States Natural Gas ETF LP is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices. The expense ratio of UNG is 1.11%.First Trust Natural Gas ETF FCG in FocusThe underlying ISE-Revere Natural Gas Index is an equal-weighted index comprising exchange-listed companies that derive a substantial portion of their revenues from the exploration and production of natural gas. The fund charges 60 bps in fees and yields 3.00% annually.Will the Rally Continue?Gas demand jumped globally after Russia cut off Europe's primary supply. And the United States and Canada are expected to contribute to huge demand for exports in coming years, thanks to high prices. The two countries produced a record combined 116 billion cubic feet per day (bcfd) in 2022.Traders said the biggest doubt for the market remains when Freeport LNG will restart its LNG export plant in Texas. Small amounts of gas started to flow to Freeport for the first time since August and continued to flow on Wednesday, according to data provider Refinitiv, per investing.com. In short, there is hope for a rally in the natural gas market while the market could stay suppressed over the long term.  Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>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 First Trust Natural Gas ETF (FCG): ETF Research Reports United States Natural Gas ETF (UNG): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksDec 27th, 2022

The "world"s coolest dictator" rounded up 60,000 people in a supposed crackdown on MS-13. A shrimp farming community is fighting back.

The MS-13 gang made El Salvador one of the most violent places not at war. The "world's coolest dictator" created a new layer of misery. Residents of the Bajo Lempa meet weekly at a retreat center to discuss the mass arrests.Fred Ramos for InsiderGang violence has made El Salvador one of the world's most violent places not at war. The crackdown by its "Bitcoin president" created a new layer of misery.SISIGUAYO, EL SALVADOR — On the morning that Walber Rodriguez was arrested last May, he was just two minutes from his home in Sisiguayo, El Salvador.Walber and his wife Estefany had worked the overnight shift at the shrimp cooperative, and then taken their six-year-old daughter Michelle to visit a relative. Walber was driving the family motorcycle, and Estefany and Michelle sat behind him. They were headed home.Walber was pulled over at "El Ceibo," a gathering place in Sisiguayo that's marked by a sturdy tree with an abundant canopy. Soon, Walber's sister, mother, and father had arrived, trying to reason with the officer, who knew them by name. They didn't understand why Walber was being handcuffed. Sisiguayo was a place that saw police and soldiers as allies. Back in 2015, when the MS-13 gang descended on the hamlet looking to recruit local teenagers, the cops had come down hard, even murdering some of the gang members, and Walber and his neighbors had raised money to build a new police station. Now, backup was arriving for the officer. Two navy soldiers showed up, including one who had been with Walber just the night before, watching a soccer game, and informed the others that Walber was "a working man." A patrol vehicle full of additional cops followed. No one named anything that Walber had done wrong. Yet the family's pleas didn't work. "Look," said the officer who led Walber off, flipping his wrist to the sky, "this comes from above." Within days of Walber's arrest, the Rodriguezes learned he was being accused of belonging to MS-13. "El Ceibo," a gathering place in Sisiguayo, is marked by a sturdy tree with an abundant canopy. It was here that Walber Rodriguez was arrested on May 1, 2022.Fred Ramos for InsiderScenes like this have been playing out across El Salvador since March, when President Nayib Bukele declared a "state of exception" and suspended certain constitutional rights, ostensibly to deal with MS-13 and two offshoots of the rival Barrio 18 gang, Barrio 18 Sureños and Barrio 18 Revolucionarios — all of which have terrorized El Salvador and made it one of the world's most violent places not at war. The declaration was meant to be temporary, lasting 30 days, but Bukele's administration has renewed it nine times. More than 60,000 people, mostly working-age men, have been arrested, while signs along roadways feature cinematic images of heavily-armed police ridding the country of "terrorists." Just as commercial fishermen trawl their way through columns of water to maximize their catch, Salvadoran authorities have rounded people up indiscriminately and with flimsy explanations.The 'world's coolest dictator' Even before authorities crushed in tens of thousands in a span of mere weeks, El Salvador's prisons were overcrowded and disease-ridden. It now tops the list of countries with the highest percentage of their populations behind bars, according to the World Prison Brief, a distinction that has been previously held by the United States. The supposed targets, MS-13 and Barrio 18, began in Los Angeles in the late twentieth century and arrived in El Salvador by way of gang members deported from the US. In 2018, then-President Donald Trump referenced MS-13 to say the US had allowed "animals" to cross into the country, and to justify draconian immigration policies. In El Salvador, the gangs have become one of the country's biggest employers, and they have cemented their power through backroom deals with elected leaders. That appears to have continued under Bukele, a former executive at a family public relations firm who was elected president in 2019 and has fashioned himself, in his ever-changing Twitter bio, as the "world's coolest dictator." Outside El Salvador, Bukele is best known for adopting Bitcoin as a national currency. A sign in the capital, San Salvador, announces the anti-gang crackdown.Fred Ramos for InsiderLast year, the US Treasury sanctioned two senior officials from Bukele's administration for cutting a deal with the gangs in exchange for support in the 2021 midterm elections — which saw Bukele's New Ideas party win a supermajority — and committing fewer homicides. What preceded the state of exception was a horrific weekend in which the gangs killed nearly 90 people. It, too, was allegedly a product of that deal: Salvadoran journalists at the investigative news outlet El Faro reported that the rampage was MS-13's retribution for a break-down in the agreement. The cooperation doesn't end there. Earlier this year, when the U.S. federal court of the Eastern District of New York requested the extradition of MS-13's leadership to stand trial on terrorism charges, Bukele-allied judges blocked some of the extraditions. The administration then released one of the wanted gang leaders from prison, and a senior official helped him flee to Guatemala. The administration denies all this, and, so far, things appear to be going Bukele's way. Tough-on-crime stances have historically been as popular in El Salvador as in the United States. And, as in the U.S., the public is primed to believe that anyone targeted by police is guilty until proven innocent. A Gallup poll released in October recorded Bukele's public approval at 86%. Police make an arrest in San Salvador on June 14th, 2022.Fred Ramos for InsiderThe word on the street, according to family members gathered at prisons for news of loved ones, is that while local gang cliques have gone quiet, they're still out there — hiding in full knowledge of the police, whose focus is elsewhere. According to the Passionist Social Services, nearly 40% of the murders in El Salvador since the beginning of the state of exception have been committed by police. Meanwhile, the administration has steadily eroded public access to information about who they are taking and why. El Faro obtained documents involving 690 arrests between March and April, and found that, overwhelmingly, the police are using criteria like "looking suspicious" or "acting nervous" to justify the arrests. Bukele, for his part, has breezily mentioned a margin of "one percent error." "This time, they're not coming out," he tweeted about the state of exception detainees in mid-April. The administration is building a new prison that Bukele says will house 40,000 "terrorists" who "will be cut off from the outside world." But, by terrorists, the president seems to mean people like Walber. 'Until we can embrace them'Once it became clear that Walber had been caught up in the crackdown, the Rodriguez family's hope for a quick release evaporated. By this point, they had discovered that they were not alone. All around them in Sisiguayo and the surrounding Bajo Lempa valley, people were arrested with no satisfactory explanation. The sons of two cousins who lived in a nearby community, Mario and Pablo, were among the first to be taken; their boys were handcuffed while drinking beers after a soccer game. Another neighbor was arrested even though he'd obtained and was carrying around his spotless police record, believing, wrongly, that such a thing would matter to police. He was detained holding his one-year-old in his arms.Residents of the Bajo Lempa who'd been touched by the arrests had begun meeting weekly at a nearby retreat center. There were only about a dozen attendees then, most of them trembling in fear and unable to tell their stories without crying. Now, Estefany, along with Walber's sister, Glenda, and Walber's parents, Tomas and Margarita, became the group's newest members. The group had started in April, launched by Rossy Iraheta Marinero and José Salvador Ruiz, known as Chamba  — two lay pastoral guides whose faith follows the tenets of Latin American liberation theology. They came from the same limited economic reality as their neighbors, and, in fact, they have full-time jobs and families. None of their own relatives had been detained. But they'd been stirred by the plight and compelled by their own theological solidarity practices to act. In the early days, they found that even civil society organizations that were traditionally fearless in denouncing state violence seemed reluctant to aid the so-called "terrorists." A handful of human rights organizations, principally one called Cristosal and a feminist collective in San Salvador, stepped up and, through them, the group has now filed 111 claims of habeas corpus  — a legal demand that prosecutors present their evidence against a detained person, or forfeit custody. "The families have hope that their loved ones are still alive, but they don't have certainty of that," Rossy told me. They also created a website where they posted photos of their imprisoned kin, and composed a song, "Until we can embrace them," that enshrines their suffering and their demands.   Few groups elsewhere in the country have coalesced in this way to lobby. Rossy evokes groups in Argentina and Mexico – and even in El Salvador itself – who never stopped agitating for justice on behalf of loved ones who had been disappeared by the state in earlier decades, leaving maps for others to follow. "A long battle" lies ahead, Rossy cautioned them in one meeting. "You have to be prepared."Outside MarionaWalber, and many of the others from the Bajo Lempa, had ended up at a prison informally known as Mariona, for the municipality where it's located. Under the state of exception, prisons were sealed off. Not even lawyers could get in. There was no protocol for finding out how Walber was doing, or if he was even alive. In El Salvador, it falls to families to help feed and clothe incarcerated relatives. Although the State provides meals to those in prison, Bukele has limited the men to two meager plates per day, as punishment. To leave supplemental food and other essentials, or to elicit a nugget of information from a bureaucrat at the prison's entrance, Estefany, Glenda, and others from Sisiguayo had no choice but to camp out outside Mariona. It's mostly men who have been arrested, and, in the first months of the crackdown, it was mostly women waiting outside prisons, by the thousands, for days at a time, sharing meals and makeshift cardboard mattresses. Everyone was taking on debt to afford the litany of expenses that follow an arrest, and some said they'd lost their jobs because they had spent so many days waiting. It was rumored that some police were offering to trade a man's freedom for sex or money.Glenda Rodriguez walks to the Mariona prison to get news of her brother, Walber Rodriguez, on June 20, 2022.Fred Ramos for Insider The jailings came so fast that Cristosal rushed to set up an online system where families could report arrests and sign up for support as they navigated the justice system. Families described traveling hours to a public defender's office and finding a line so long they lost hope of being seen. There's now about one public defender for every 200 arrests. Initial hearings include up to 500 defendants simultaneously, and Bukele has warned he'll be monitoring judges for "favoring delinquents."  If a name disappears from the register of detainees, it could mean they'd been moved to another prison, or to a hospital, or to a morgue. The country's major newspapers run regular reports of families being unceremoniously delivered the lifeless bodies of loved ones. One of the few men who'd been held at Izalco prison and then released told the Salvadoran outlet La Prensa Grafica that prisoners had been made to run barefoot in circles for hours. When one man fell from exhaustion, the guards broke his ribs, and he died eight days later, the man said. This is the kind of news the families of the Bajo Lempa live in terror of receiving. 'We fear each other again'Sisiguayo sits in the fertile valley where the Lempa river makes its final stretch through El Salvador before flowing out to the Pacific Ocean. Here, the air tastes salty and thick, a reminder of the mangrove forests and the ocean just beyond them. Homes are one-story cinderblock structures, painted in tropical greens and blues and surrounded by clotheslines, palm trees and outhouses. A communal speaker system broadcasts news and emergency alerts.A sunbaked dirt road connects Sisiguayo to the nearest highway, and along it, residents commute by bicycle or motorbike, bending around the cows, horses and dogs that loll about. Every year around November, the rainy season leaves behind deep potholes, so each family gives the share of money they can spare to pay for gas to power the construction equipment loaned from the mayor's office to fortify the road. Most young people work in shrimp cooperatives, where many tasks are nocturnal. It's a life of little sleep and hard manual labor. Night shifts start at around three in the morning. The workers return home for breakfast at about nine, and head off to a second job, like seasonal farming or bricklaying. Here, as everywhere else, the state of exception has been a financial drain. More than a dozen men from one of the shrimp cooperatives were netted in the crackdown, and what normally takes the cooperative two weeks to accomplish now takes two or three months. Roxana, another one of the Rodriguezes' neighbors, was hit especially hard by the arrests. Her two sons, a daughter-in-law and a brother-in-law were rounded up, as well as her boyfriend Jeremias' two nephews. Now, she spends much of her time running endless arrest-related errands. Her youngest daughter, who's 12, had to leave school to help run the family's corner store and care for Roxana's 5-year-old grandchild. Within the first six weeks, the costs ballooned to around $1000 — a small fortune that's twice the amount Roxana spent to open and fully stock her shop. By the late summer, Jeremias is usually out in the fields alongside Roxana's two boys and his two nephews, planting corn for the family to eat. With them in prison, he had to forgo the crop this year, because it's too much to handle alone.  The state of exception "has a human cost that we still can't fully see," said Noah Bullock, Executive Director of Cristosal. "There is the torture, the inhumane treatment, the more than eighty deaths in prisons, and that's only talking about the people who are detained. Life projects that people have built slowly over generations are suddenly paralyzed and collapsed. There's the loss of income and the simultaneous expenses. The social cost of being stigmatized as 'terrorists.'" The administration seems unperturbed by the volume of blameless people it has locked up. "There will always be victims in war," Vice President Felix Ulloa has said of the state of exception. Walber's father, Tomas, at home in Sisiguayo, on June 17, 2022.Fred Ramos for InsiderThe last time state security forces were targeting the people of the Bajo Lempa en masse and without explanation, it was in the middle of a civil war. From late 1979 until 1992, vicious US-backed government forces clashed with a leftist guerrilla movement. More than 75,000 Salvadorans died and thousands more were disappeared. A United Nations truth commission later found that 85% of the war kidnapping, torture and murder were committed by the government forces, including police and military. Walber's parents were among those fighting on the side of the guerrillas. In 1992, when they dropped their rifles after U.N.-brokered peace talks, they were given land as a way to return to civilian life. Margarita, Tomas and their neighbors came to inhabit Sisiguayo, with its rich coastal tracts, generous for fishing and farming. For Margarita, her son's senseless arrest reminded her of the state-sponsored kidnappings that had led her to take up arms. "That's what most hurts," she told me. "Now we fear each other again."  A photo of Walber Rodriguez's father, Tomas, from when he was a member of a guerrilla group during the Salvadoran civil war, hangs in his house.Fred Ramos for InsiderThe Bajo Lempa is also a flood plain, a condition that was exacerbated by poor government management of the hydroelectric dams that line the river. During repeated devastating floods in the past three decades, the people of the region, the Rodriguez family among them, lobbied and protested, even marching about sixty miles on foot to the capital to demand better dam administration. For Walber and his older sister Glenda, who were children at the time, this was an early education in democracy. The Bajo Lempa won. San Salvador committed to building the levies needed to ameliorate the annual floods, and to communicating its plans to discharge water from the dams, so the communities in harms' way could evacuate in time.Now, they are again under siege. Surf City Abroad, Bukele is best known for two things. First, his announcement, at the Bitcoin 2021 conference in Miami, that his government would "push humanity at least a tiny bit in the right direction" by adopting Bitcoin as a national currency. Second, his "Surf City" initiative along El Salvador's 190-mile Pacific coastline, where consistent eight-to-ten-foot waves in prime spots makes it one of the best surfing destinations in the Americas. Bukele's target audience for Surf City is Bitcoin enthusiasts and international surfers. And everyone knows that Surf City is his. After the apparent breakdown in negotiations between the administration and MS-13, the gangs left a message for Bukele in the form of a mangled cadaver on the highway that connects the beaches to the capital.By June 2022, Bloomberg estimated that Bukele's crypto gamble had cost El Salvador nearly $56 million. That same month, as thousands of Salvadorans were being locked up, Surf City was playing host to the World Surf League's Championship Tour at a beach called Punta Roca. "Eighty-two degree water, no wetsuits!" a voice thundered from the loudspeaker.Nearby, cameramen grumbled to a Salvadoran surfer that they couldn't pan without a uniformed man with a rifle coming into the image.  Locals, who in theory stand to benefit from all of this, were remarking that whitewashing the entrance wall to one beach, El Tunco, and stamping it with an English name left it looking like a drive-through bank. "It was good that he saw the potential in our waves," Enzo, who runs a couple of cafes in the area, told me one evening. Promised infrastructural improvements, like finally completing a waste-water treatment plant so that businesses aren't reliant on bottled water, haven't arrived. Meanwhile, new luxury apartments with a base price of $400,000 are being marketed to crypto enthusiasts, prompting worry that excessive development will smother the area's natural beauty and put everyone out of business. It's almost as if Surf City is Bukele's Potemkin Village, thrown up to boost his standing in a handful of elite circles as he loses legitimacy elsewhere. Bukele "wants to promote the country as a place that other people can buy," said Bullock of Cristosal. "But what is his plan for the middle-aged man who has sold coconuts in Punta Roca his whole life? El Tunco already has local commerce and its own identity. Why not honor that identity?"'Dad's not working, is he?'When Walber was jailed, Estefany told their six-year-old, Michelle, that Walber had gone out of town for a job. When Estefany and Glenda left for days camped outside the prison, she said they were studying. Michelle's questions became harder to escape. When he was away working, Walber usually sent a flood of adoring messages to his daughter on Estefany's phone, but this time, there were none to show. Before ten days had passed, Michelle cornered her mom: "Dad's not working, is he?"  At six, Michelle is absorbing that her life is built on shifting sands — a father in prison, a mother who might withhold the truth. Estefany tried to explain, saying, "The authorities make mistakes." But it's just another tectonic lesson for a child. Walber and Estefany have known each other since they were kids and they've been partners for years, but it was only last year that they finally got married. They were the first in the family to have a real wedding, and Glenda remembers how they both giggled when they asked her to save the date — Dec. 17. Graduation photos of Walber Rodriguez, left, and his sister, Glenda Rodriguez, right, at the family house in Sisiguayo.Fred Ramos for InsiderEstefany's dress, which Glenda and Margarita helped her choose, was the color of red wine and had a sparkling brooch at the bosom. Walber had splurged on a new oxford shirt, jeans, and white tennis shoes. He also surprised Estefany with a wedding ring, which he had secretly saved for months to buy. It was a luxury she had never imagined. The cake, a single-tier white sphere adorned with fruit, held the children rapt until it was time to dig in. When Glenda thinks about the politicians and the police who get to return home to their families at night, so easy in their freedom, it fills her with rage. They can't even begin to comprehend what they have stolen from their people.'No one else will defend him but us' The retreat center where the families met every week was a thirty-minute crawling drive down the potholed dirt road from where Walber was arrested. In late June, 54 days after Walber's arrest, three-dozen of them sat as they usually did, in a circle of plastic chairs in an open-air pavilion, roofed in ceramic tile and ringed in a garden of carefully-manicured green.Rossy stood in the middle of the circle, wearing flip-flops and a white tunic embroidered with flowers, calling on people to speak. Chamba kept a notebook propped between his thigh and the arm of his wheelchair. The families were debating: Should they stay the course, and pursue their habeas corpus claims in court? Or was it time to take to the streets? The habeas corpus route had been Rossy's idea. Back in 2020, right when COVID-19 upended global travel, Rossy was in Ecuador at a theological conference. Bukele was about to close the borders and implement some of the most restrictive pandemic measures in the world. She managed to get onto the last flight into the Salvadoran airport and ended up at a quarantine center for six weeks. Desperate for a way out, a lawyer friend advised her to file a habeas corpus claim. It worked – she was released. Now, it's a tactic that more than 1,800 other Salvadorans across the country have also used since March, but to little effect since the administration has wrenched the legal system into its orbit, forcing many judges to retire and intimidating the rest, along with flooding the system with many times more defendants than it can handle. Members of the group have been harassed by the police, and there was always concern that cops might show up in the middle of the meeting to arrest everyone. One woman who had started attending after her husband was arrested was then herself arrested. Now, the neighbors couldn't agree on what was best. The state of exception allowed the police to detain anyone for any reason. If they protested and ended up incarcerated alongside their loved ones, who would defend them then?  People clamored to speak. Rossy called on a gray-haired man in a cowboy hat. He was one of the many who had spent consecutive days and nights on the street outside Mariona, where his son was being held, and while there, he heard rumor that the guards take vengeance on prisoners whose families caused trouble out front. He rose slowly, and then stated his firm opposition to any public action. He reminded the group that it wasn't only themselves who would pay the price for protesting. When he took up arms in the civil war, he said, it was his own life he was putting at risk. But now, any action might put his son's life at risk. When he finished speaking, Glenda – who, at 28 years old, was among the youngest group members – raised her hand. "I may not have as much life experience as many of you. And I didn't live the war fighting in the mountains like many of you did," she began. But, she continued, she did know that all of El Salvador's civil rights victories, including democracy itself, were the product of struggles on the street. She too had camped outside Mariona, and she had learned that viral malicious rumors appeared on social media as part of an attempt to silence families. A meeting of the Bajo Lempa families on June 17, 2022.Fred Ramos for Insider"If the state is going to kill my brother, it will do so whether or not I speak out. If it will incarcerate me – the same is true," she reasoned. "No one else will defend him but us." Finally, there was simply the value of the truth: "The president wants to make this country look like a wonderland, like everything is Surf City," she said – but the world needed to know what was really happening in El Salvador.  The group ultimately decided that Glenda was right: it was time to take the streets. And just as each Bajo Lempa family had discovered that they were not alone when they found the group, now they saw there were hundreds of families around the country who, like them, were ready to march in San Salvador. They began regularly joining the others in the capital to protest and speak to the media, while continuing their habeas corpus petitions. Just before Christmas, the families of the Bajo Lempa packed a bridge on a main thoroughfare and demanded their loved ones be freed. For now, the Bukele administration remains unmoved. The group is now planning to sue their government in an international human rights court.One day last summer, before anyone comprehended how long this would last, Roxana told me something that multiple women in the Bajo Lempa echoed: Since her children were detained, she has been dreaming of them. In one dream, she was sitting at home in the dark, and one of her three sons walked through the front door. He paused in the threshold. She thought it was Cristian, the only one who has not yet been taken. But when he stepped out of the shadow, she saw that it was Javier, her youngest. He was dressed just as he had been on April 27, the night the police hauled him away. She called to him – and then the dream ended. "As a mother," she said, "you wake up to a nightmare."This reporting was supported by the International Women's Media Foundation's Howard G. Buffett Fund for Women Journalists.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 27th, 2022

The "world"s coolest dictator" rounded up 60,000 people in a crackdown on MS-13. A shrimp farming community is fighting back.

The MS-13 gang made El Salvador one of the most violent places not at war. The 'world's coolest dictator' created a new layer of misery. Residents of the Bajo Lempa meet weekly at a retreat center to discuss the mass arrests.Fred Ramos for InsiderGang violence has made El Salvador one of the world's most violent places not at war. The crackdown by its "Bitcoin president" created a new layer of misery.SISIGUAYO, EL SALVADOR — On the morning that Walber Rodriguez was arrested last May, he was just two minutes from his home in Sisiguayo, El Salvador.Walber and his wife Estefany had worked the overnight shift at the shrimp cooperative, and then taken their six-year-old daughter Michelle to visit a relative. Walber was driving the family motorcycle, and Estefany and Michelle sat behind him. They were headed home.Walber was pulled over at "El Ceibo," a gathering place in Sisiguayo that's marked by a sturdy tree with an abundant canopy. Soon, Walber's sister, mother, and father had arrived, trying to reason with the officer, who knew them by name. They didn't understand why Walber was being handcuffed. Sisiguayo was a place that saw police and soldiers as allies. Back in 2015, when the MS-13 gang descended on the hamlet looking to recruit local teenagers, the cops had come down hard, even murdering some of the gang members, and Walber and his neighbors had raised money to build a new police station. Now, backup was arriving for the officer. Two navy soldiers showed up, including one who had been with Walber just the night before, watching a soccer game, and informed the others that Walber was "a working man." A patrol vehicle full of additional cops followed. No one named anything that Walber had done wrong. Yet the family's pleas didn't work. "Look," said the officer who led Walber off, flipping his wrist to the sky, "this comes from above." Within days of Walber's arrest, the Rodriguezes learned he was being accused of belonging to MS-13. "El Ceibo," a gathering place in Sisiguayo, is marked by a sturdy tree with an abundant canopy. It was here that Walber Rodriguez was arrested on May 1, 2022.Fred Ramos for InsiderScenes like this have been playing out across El Salvador since March, when President Nayib Bukele declared a "state of exception" and suspended certain constitutional rights, ostensibly to deal with MS-13 and two offshoots of the rival Barrio 18 gang, Barrio 18 Sureños and Barrio 18 Revolucionarios — all of which have terrorized El Salvador and made it one of the world's most violent places not at war. The declaration was meant to be temporary, lasting 30 days, but Bukele's administration has renewed it nine times. More than 60,000 people, mostly working-age men, have been arrested, while signs along roadways feature cinematic images of heavily-armed police ridding the country of "terrorists." Just as commercial fishermen trawl their way through columns of water to maximize their catch, Salvadoran authorities have rounded people up indiscriminately and with flimsy explanations.The 'world's coolest dictator' Even before authorities crushed in tens of thousands in a span of mere weeks, El Salvador's prisons were overcrowded and disease-ridden. It now tops the list of countries with the highest percentage of their populations behind bars, according to the World Prison Brief, a distinction that has been previously held by the United States. The supposed targets, MS-13 and Barrio 18, began in Los Angeles in the late twentieth century and arrived in El Salvador by way of gang members deported from the US. In 2018, then-President Donald Trump referenced MS-13 to say the US had allowed "animals" to cross into the country, and to justify draconian immigration policies. In El Salvador, the gangs have become one of the country's biggest employers, and they have cemented their power through backroom deals with elected leaders. That appears to have continued under Bukele, a former executive at a family public relations firm who was elected president in 2019 and has fashioned himself, in his ever-changing Twitter bio, as the "world's coolest dictator." Outside El Salvador, Bukele is best known for adopting Bitcoin as a national currency. A sign in the capital, San Salvador, announces the anti-gang crackdown.Fred Ramos for InsiderLast year, the US Treasury sanctioned two senior officials from Bukele's administration for cutting a deal with the gangs in exchange for support in the 2021 midterm elections — which saw Bukele's New Ideas party win a supermajority — and committing fewer homicides. What preceded the state of exception was a horrific weekend in which the gangs killed nearly 90 people. It, too, was allegedly a product of that deal: Salvadoran journalists at the investigative news outlet El Faro reported that the rampage was MS-13's retribution for a break-down in the agreement. The cooperation doesn't end there. Earlier this year, when the U.S. federal court of the Eastern District of New York requested the extradition of MS-13's leadership to stand trial on terrorism charges, Bukele-allied judges blocked some of the extraditions. The administration then released one of the wanted gang leaders from prison, and a senior official helped him flee to Guatemala. The administration denies all this, and, so far, things appear to be going Bukele's way. Tough-on-crime stances have historically been as popular in El Salvador as in the United States. And, as in the U.S., the public is primed to believe that anyone targeted by police is guilty until proven innocent. A Gallup poll released in October recorded Bukele's public approval at 86%. Police make an arrest in San Salvador on June 14th, 2022.Fred Ramos for InsiderThe word on the street, according to family members gathered at prisons for news of loved ones, is that while local gang cliques have gone quiet, they're still out there — hiding in full knowledge of the police, whose focus is elsewhere. According to the Passionist Social Services, nearly 40% of the murders in El Salvador since the beginning of the state of exception have been committed by police. Meanwhile, the administration has steadily eroded public access to information about who they are taking and why. El Faro obtained documents involving 690 arrests between March and April, and found that, overwhelmingly, the police are using criteria like "looking suspicious" or "acting nervous" to justify the arrests. Bukele, for his part, has breezily mentioned a margin of "one percent error." "This time, they're not coming out," he tweeted about the state of exception detainees in mid-April. The administration is building a new prison that Bukele says will house 40,000 "terrorists" who "will be cut off from the outside world." But, by terrorists, the president seems to mean people like Walber. 'Until we can embrace them'Once it became clear that Walber had been caught up in the crackdown, the Rodriguez family's hope for a quick release evaporated. By this point, they had discovered that they were not alone. All around them in Sisiguayo and the surrounding Bajo Lempa valley, people were arrested with no satisfactory explanation. The sons of two cousins who lived in a nearby community, Mario and Pablo, were among the first to be taken; their boys were handcuffed while drinking beers after a soccer game. Another neighbor was arrested even though he'd obtained and was carrying around his spotless police record, believing, wrongly, that such a thing would matter to police. He was detained holding his one-year-old in his arms.Residents of the Bajo Lempa who'd been touched by the arrests had begun meeting weekly at a nearby retreat center. There were only about a dozen attendees then, most of them trembling in fear and unable to tell their stories without crying. Now, Estefany, along with Walber's sister, Glenda, and Walber's parents, Tomas and Margarita, became the group's newest members. The group had started in April, launched by Rossy Iraheta Marinero and José Salvador Ruiz, known as Chamba  — two lay pastoral guides whose faith follows the tenets of Latin American liberation theology. They came from the same limited economic reality as their neighbors, and, in fact, they have full-time jobs and families. None of their own relatives had been detained. But they'd been stirred by the plight and compelled by their own theological solidarity practices to act. In the early days, they found that even civil society organizations that were traditionally fearless in denouncing state violence seemed reluctant to aid the so-called "terrorists." A handful of human rights organizations, principally one called Cristosal and a feminist collective in San Salvador, stepped up and, through them, the group has now filed 111 claims of habeas corpus  — a legal demand that prosecutors present their evidence against a detained person, or forfeit custody. "The families have hope that their loved ones are still alive, but they don't have certainty of that," Rossy told me. They also created a website where they posted photos of their imprisoned kin, and composed a song, "Until we can embrace them," that enshrines their suffering and their demands.   Few groups elsewhere in the country have coalesced in this way to lobby. Rossy evokes groups in Argentina and Mexico – and even in El Salvador itself – who never stopped agitating for justice on behalf of loved ones who had been disappeared by the state in earlier decades, leaving maps for others to follow. "A long battle" lies ahead, Rossy cautioned them in one meeting. "You have to be prepared."Outside MarionaWalber, and many of the others from the Bajo Lempa, had ended up at a prison informally known as Mariona, for the municipality where it's located. Under the state of exception, prisons were sealed off. Not even lawyers could get in. There was no protocol for finding out how Walber was doing, or if he was even alive. In El Salvador, it falls to families to help feed and clothe incarcerated relatives. Although the State provides meals to those in prison, Bukele has limited the men to two meager plates per day, as punishment. To leave supplemental food and other essentials, or to elicit a nugget of information from a bureaucrat at the prison's entrance, Estefany, Glenda, and others from Sisiguayo had no choice but to camp out outside Mariona. It's mostly men who have been arrested, and, in the first months of the crackdown, it was mostly women waiting outside prisons, by the thousands, for days at a time, sharing meals and makeshift cardboard mattresses. Everyone was taking on debt to afford the litany of expenses that follow an arrest, and some said they'd lost their jobs because they had spent so many days waiting. It was rumored that some police were offering to trade a man's freedom for sex or money.Glenda Rodriguez walks to the Mariona prison to get news of her brother, Walber Rodriguez, on June 20, 2022.Fred Ramos for Insider The jailings came so fast that Cristosal rushed to set up an online system where families could report arrests and sign up for support as they navigated the justice system. Families described traveling hours to a public defender's office and finding a line so long they lost hope of being seen. There's now about one public defender for every 200 arrests. Initial hearings include up to 500 defendants simultaneously, and Bukele has warned he'll be monitoring judges for "favoring delinquents."  If a name disappears from the register of detainees, it could mean they'd been moved to another prison, or to a hospital, or to a morgue. The country's major newspapers run regular reports of families being unceremoniously delivered the lifeless bodies of loved ones. One of the few men who'd been held at Izalco prison and then released told the Salvadoran outlet La Prensa Grafica that prisoners had been made to run barefoot in circles for hours. When one man fell from exhaustion, the guards broke his ribs, and he died eight days later, the man said. This is the kind of news the families of the Bajo Lempa live in terror of receiving. 'We fear each other again'Sisiguayo sits in the fertile valley where the Lempa river makes its final stretch through El Salvador before flowing out to the Pacific Ocean. Here, the air tastes salty and thick, a reminder of the mangrove forests and the ocean just beyond them. Homes are one-story cinderblock structures, painted in tropical greens and blues and surrounded by clotheslines, palm trees and outhouses. A communal speaker system broadcasts news and emergency alerts.A sunbaked dirt road connects Sisiguayo to the nearest highway, and along it, residents commute by bicycle or motorbike, bending around the cows, horses and dogs that loll about. Every year around November, the rainy season leaves behind deep potholes, so each family gives the share of money they can spare to pay for gas to power the construction equipment loaned from the mayor's office to fortify the road. Most young people work in shrimp cooperatives, where many tasks are nocturnal. It's a life of little sleep and hard manual labor. Night shifts start at around three in the morning. The workers return home for breakfast at about nine, and head off to a second job, like seasonal farming or bricklaying. Here, as everywhere else, the state of exception has been a financial drain. More than a dozen men from one of the shrimp cooperatives were netted in the crackdown, and what normally takes the cooperative two weeks to accomplish now takes two or three months. Roxana, another one of the Rodriguezes' neighbors, was hit especially hard by the arrests. Her two sons, a daughter-in-law and a brother-in-law were rounded up, as well as her boyfriend Jeremias' two nephews. Now, she spends much of her time running endless arrest-related errands. Her youngest daughter, who's 12, had to leave school to help run the family's corner store and care for Roxana's 5-year-old grandchild. Within the first six weeks, the costs ballooned to around $1000 — a small fortune that's twice the amount Roxana spent to open and fully stock her shop. By the late summer Jeremias, is usually out in the fields alongside Roxana's two boys and his two nephews, planting corn for the family to eat. With them in prison, he had to forgo the crop this year, because it's too much to handle alone.  The state of exception "has a human cost that we still can't fully see," said Noah Bullock, Executive Director of Cristosal. "There is the torture, the inhumane treatment, the more than eighty deaths in prisons, and that's only talking about the people who are detained. Life projects that people have built slowly over generations are suddenly paralyzed and collapsed. There's the loss of income and the simultaneous expenses. The social cost of being stigmatized as 'terrorists.'" The administration seems unperturbed by the volume of blameless people it has locked up. "There will always be victims in war," Vice President Felix Ulloa has said of the state of exception. Walber's father, Tomas, at home in Sisiguayo, on June 17, 2022.Fred Ramos for InsiderThe last time state security forces were targeting the people of the Bajo Lempa en masse and without explanation, it was in the middle of a civil war. From late 1979 until 1992, vicious US-backed government forces clashed with a leftist guerrilla movement. More than 75,000 Salvadorans died and thousands more were disappeared. A United Nations truth commission later found that 85% of the war kidnapping, torture and murder were committed by the government forces, including police and military. Walber's parents were among those fighting on the side of the guerrillas. In 1992, when they dropped their rifles after U.N.-brokered peace talks, they were given land as a way to return to civilian life. Margarita, Tomas and their neighbors came to inhabit Sisiguayo, with its rich coastal tracts, generous for fishing and farming. For Margarita, her son's senseless arrest reminded her of the state-sponsored kidnappings that had led her to take up arms. "That's what most hurts," she told me. "Now we fear each other again."  A photo of Walber Rodriguez's father, Tomas, from when he was a member of a guerrilla group during the Salvadoran civil war, hangs in his house.Fred Ramos for InsiderThe Bajo Lempa is also a flood plain, a condition that was exacerbated by poor government management of the hydroelectric dams that line the river. During repeated devastating floods in the past three decades, the people of the region, the Rodriguez family among them, lobbied and protested, even marching about sixty miles on foot to the capital to demand better dam administration. For Walber and his older sister Glenda, who were children at the time, this was an early education in democracy. The Bajo Lempa won. San Salvador committed to building the levies needed to ameliorate the annual floods, and to communicating its plans to discharge water from the dams, so the communities in harms' way could evacuate in time.Now, they are again under siege. Surf City Abroad, Bukele is best known for two things. First, his announcement, at the Bitcoin 2021 conference in Miami, that his government would "push humanity at least a tiny bit in the right direction" by adopting Bitcoin as a national currency. Second, his "Surf City" initiative along El Salvador's 190-mile Pacific coastline, where consistent eight-to-ten-foot waves in prime spots makes it one of the best surfing destinations in the Americas. Bukele's target audience for Surf City is Bitcoin enthusiasts and international surfers. And everyone knows that Surf City is his. After the apparent breakdown in negotiations between the administration and MS-13, the gangs left a message for Bukele in the form of a mangled cadaver on the highway that connects the beaches to the capital.By June 2022, Bloomberg estimated that Bukele's crypto gamble had cost El Salvador nearly $56 million. That same month, as thousands of Salvadorans were being locked up, Surf City was playing host to the World Surf League's Championship Tour at a beach called Punta Roca. "Eighty-two degree water, no wetsuits!" a voice thundered from the loudspeaker.Nearby, cameramen grumbled to a Salvadoran surfer that they couldn't pan without a uniformed man with a rifle coming into the image.  Locals, who in theory stand to benefit from all of this, were remarking that whitewashing the entrance wall to one beach, El Tunco, and stamping it with an English name left it looking like a drive-through bank. "It was good that he saw the potential in our waves," Enzo, who runs a couple of cafes in the area, told me one evening. Promised infrastructural improvements, like finally completing a waste-water treatment plant so that businesses aren't reliant on bottled water, haven't arrived. Meanwhile, new luxury apartments with a base price of $400,000 are being marketed to crypto enthusiasts, prompting worry that excessive development will smother the area's natural beauty and put everyone out of business. It's almost as if Surf City is Bukele's Potemkin Village, thrown up to boost his standing in a handful of elite circles as he loses legitimacy elsewhere. Bukele "wants to promote the country as a place that other people can buy," said Bullock of Cristosal. "But what is his plan for the middle-aged man who has sold coconuts in Punta Roca his whole life? El Tunco already has local commerce and its own identity. Why not honor that identity?"'Dad's not working, is he?'When Walber was jailed, Estefany told their six-year-old, Michelle, that Walber had gone out of town for a job. When Estefany and Glenda left for days camped outside the prison, she said they were studying. Michelle's questions became harder to escape. When he was away working, Walber usually sent a flood of adoring messages to his daughter on Estefany's phone, but this time, there were none to show. Before ten days had passed, Michelle cornered her mom: "Dad's not working, is he?"  At six, Michelle is absorbing that her life is built on shifting sands — a father in prison, a mother who might withhold the truth. Estefany tried to explain, saying, "The authorities make mistakes." But it's just another tectonic lesson for a child. Walber and Estefany have known each other since they were kids and they've been partners for years, but it was only last year that they finally got married. They were the first in the family to have a real wedding, and Glenda remembers how they both giggled when they asked her to save the date — Dec. 17. Graduation photos of Walber Rodriguez, left, and his sister, Glenda Rodriguez, right, at the family house in Sisiguayo.Fred Ramos for InsiderEstefany's dress, which Glenda and Margarita helped her choose, was the color of red wine and had a sparkling brooch at the bosom. Walber had splurged on a new oxford shirt, jeans, and white tennis shoes. He also surprised Estefany with a wedding ring, which he had secretly saved for months to buy. It was a luxury she had never imagined. The cake, a single-tier white sphere adorned with fruit, held the children rapt until it was time to dig in. When Glenda thinks about the politicians and the police who get to return home to their families at night, so easy in their freedom, it fills her with rage. They can't even begin to comprehend what they have stolen from their people.'No one else will defend him but us' The retreat center where the families met every week was a thirty-minute crawling drive down the potholed dirt road from where Walber was arrested. In late June, 54 days after Walber's arrest, three-dozen of them sat as they usually did, in a circle of plastic chairs in an open-air pavilion, roofed in ceramic tile and ringed in a garden of carefully-manicured green.Rossy stood in the middle of the circle, wearing flip-flops and a white tunic embroidered with flowers, calling on people to speak. Chamba kept a notebook propped between his thigh and the arm of his wheelchair. The families were debating: Should they stay the course, and pursue their habeas corpus claims in court? Or was it time to take to the streets? The habeas corpus route had been Rossy's idea. Back in 2020, right when COVID-19 upended global travel, Rossy was in Ecuador at a theological conference. Bukele was about to close the borders and implement some of the most restrictive pandemic measures in the world. She managed to get onto the last flight into the Salvadoran airport and ended up at a quarantine center for six weeks. Desperate for a way out, a lawyer friend advised her to file a habeas corpus claim. It worked – she was released. Now, it's a tactic that more than 1,800 other Salvadorans across the country have also used since March, but to little effect since the administration has wrenched the legal system into its orbit, forcing many judges to retire and intimidating the rest, along with flooding the system with many times more defendants than it can handle. Members of the group have been harassed by the police, and there was always concern that cops might show up in the middle of the meeting to arrest everyone. One woman who had started attending after her husband was arrested was then herself arrested. Now, the neighbors couldn't agree on what was best. The state of exception allowed the police to detain anyone for any reason. If they protested and ended up incarcerated alongside their loved ones, who would defend them then?  People clamored to speak. Rossy called on a gray-haired man in a cowboy hat. He was one of the many who had spent consecutive days and nights on the street outside Mariona, where his son was being held, and while there, he heard rumor that the guards take vengeance on prisoners whose families caused trouble out front. He rose slowly, and then stated his firm opposition to any public action. He reminded the group that it wasn't only themselves who would pay the price for protesting. When he took up arms in the civil war, he said, it was his own life he was putting at risk. But now, any action might put his son's life at risk. When he finished speaking, Glenda – who, at 28 years old, was among the youngest group members – raised her hand. "I may not have as much life experience as many of you. And I didn't live the war fighting in the mountains like many of you did," she began. But, she continued, she did know that all of El Salvador's civil rights victories, including democracy itself, were the product of struggles on the street. She too had camped outside Mariona, and she had learned that viral malicious rumors appeared on social media as part of an attempt to silence families. A meeting of the Bajo Lempa families on June 17, 2022.Fred Ramos for Insider"If the state is going to kill my brother, it will do so whether or not I speak out. If it will incarcerate me – the same is true," she reasoned. "No one else will defend him but us." Finally, there was simply the value of the truth: "The president wants to make this country look like a wonderland, like everything is Surf City," she said – but the world needed to know what was really happening in El Salvador.  The group ultimately decided that Glenda was right: it was time to take the streets. And just as each Bajo Lempa family had discovered that they were not alone when they found the group, now they saw there were hundreds of families around the country who, like them, were ready to march in San Salvador. They began regularly joining the others in the capital to protest and speak to the media, while continuing their habeas corpus petitions. Just before Christmas, the families of the Bajo Lempa packed a bridge on a main thoroughfare and demanded their loved ones be freed. For now, the Bukele administration remains unmoved. The group is now planning to sue their government in an international human rights court.One day last summer, before anyone comprehended how long this would last, Roxana told me something that multiple women in the Bajo Lempa echoed: Since her children were detained, she has been dreaming of them. In one dream, she was sitting at home in the dark, and one of her three sons walked through the front door. He paused in the threshold. She thought it was Cristian, the only one who has not yet been taken. But when he stepped out of the shadow, she saw that it was Javier, her youngest. He was dressed just as he had been on April 27, the night the police hauled him away. She called to him – and then the dream ended. "As a mother," she said, "you wake up to a nightmare."This reporting was supported by the International Women's Media Foundation's Howard G. Buffett Fund for Women Journalists.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 27th, 2022

The "world"s coolest dictator" rounded up 60,000 people he claims are MS-13 gang members. A shrimp farming community is fighting back.

The MS-13 gang made El Salvador one of the most violent places not at war. The 'world's coolest dictator' created a new layer of misery. Residents of the Bajo Lempa meet weekly at a retreat center to discuss the mass arrests.Fred Ramos for InsiderGang violence has made El Salvador one of the world's most violent places not at war. The crackdown by its "Bitcoin president" created a new layer of misery.SISIGUAYO, EL SALVADOR — On the morning that Walber Rodriguez was arrested last May, he was just two minutes from his home in Sisiguayo, El Salvador.Walber and his wife Estefany had worked the overnight shift at the shrimp cooperative, and then taken their six-year-old daughter Michelle to visit a relative. Walber was driving the family motorcycle, and Estefany and Michelle sat behind him. They were headed home.Walber was pulled over at "El Ceibo," a gathering place in Sisiguayo that's marked by a sturdy tree with an abundant canopy. Soon, Walber's sister, mother, and father had arrived, trying to reason with the officer, who knew them by name. They didn't understand why Walber was being handcuffed. Sisiguayo was a place that saw police and soldiers as allies. Back in 2015, when the MS-13 gang descended on the hamlet looking to recruit local teenagers, the cops had come down hard, even murdering some of the gang members, and Walber and his neighbors had raised money to build a new police station. Now, backup was arriving for the officer. Two navy soldiers showed up, including one who had been with Walber just the night before, watching a soccer game, and informed the others that Walber was "a working man." A patrol vehicle full of additional cops followed. No one named anything that Walber had done wrong. Yet the family's pleas didn't work. "Look," said the officer who led Walber off, flipping his wrist to the sky, "this comes from above." Within days of Walber's arrest, the Rodriguezes learned he was being accused of belonging to MS-13. "El Ceibo," a gathering place in Sisiguayo, is marked by a sturdy tree with an abundant canopy. It was here that Walber Rodriguez was arrested on May 1, 2022.Fred Ramos for InsiderScenes like this have been playing out across El Salvador since March, when President Nayib Bukele declared a "state of exception" and suspended certain constitutional rights, ostensibly to deal with MS-13 and two offshoots of the rival Barrio 18 gang, Barrio 18 Sureños and Barrio 18 Revolucionarios — all of which have terrorized El Salvador and made it one of the world's most violent places not at war. The declaration was meant to be temporary, lasting 30 days, but Bukele's administration has renewed it nine times. More than 60,000 people, mostly working-age men, have been arrested, while signs along roadways feature cinematic images of heavily-armed police ridding the country of "terrorists." Just as commercial fishermen trawl their way through columns of water to maximize their catch, Salvadoran authorities have rounded people up indiscriminately and with flimsy explanations.The 'world's coolest dictator' Even before authorities crushed in tens of thousands in a span of mere weeks, El Salvador's prisons were overcrowded and disease-ridden. It now tops the list of countries with the highest percentage of their populations behind bars, according to the World Prison Brief, a distinction that has been previously held by the United States. The supposed targets, MS-13 and Barrio 18, began in Los Angeles in the late twentieth century and arrived in El Salvador by way of gang members deported from the US. In 2018, then-President Donald Trump referenced MS-13 to say the US had allowed "animals" to cross into the country, and to justify draconian immigration policies. In El Salvador, the gangs have become one of the country's biggest employers, and they have cemented their power through backroom deals with elected leaders. That appears to have continued under Bukele, a former executive at a family public relations firm who was elected president in 2019 and has fashioned himself, in his ever-changing Twitter bio, as the "world's coolest dictator." Outside El Salvador, Bukele is best known for adopting Bitcoin as a national currency. A sign in the capital, San Salvador, announces the anti-gang crackdown.Fred Ramos for InsiderLast year, the US Treasury sanctioned two senior officials from Bukele's administration for cutting a deal with the gangs in exchange for support in the 2021 midterm elections — which saw Bukele's New Ideas party win a supermajority — and committing fewer homicides. What preceded the state of exception was a horrific weekend in which the gangs killed nearly 90 people. It, too, was allegedly a product of that deal: Salvadoran journalists at the investigative news outlet El Faro reported that the rampage was MS-13's retribution for a break-down in the agreement. The cooperation doesn't end there.: Earlier this year, when the U.S. federal court of the Eastern District of New York requested the extradition of MS-13's leadership to stand trial on terrorism charges, Bukele-allied judges blocked some of the extraditions. The administration then released one of the wanted gang leaders from prison, and a senior official helped him flee to Guatemala. The administration denies all this, and, so far, things appear to be going Bukele's way. Tough-on-crime stances have historically been as popular in El Salvador as in the United States. And, as in the U.S., the public is primed to believe that anyone targeted by police is guilty until proven innocent. A Gallup poll released in October recorded Bukele's public approval at 86%. Police make an arrest in San Salvador on June 14th, 2022.Fred Ramos for InsiderThe word on the street, according to family members gathered at prisons for news of loved ones, is that while local gang cliques have gone quiet, they're still out there — hiding in full knowledge of the police, whose focus is elsewhere. According to xxx, nearly 40% of the xxx murders in El Salvador since the beginning of the state of exception have been committed by police. Meanwhile, the administration has steadily eroded public access to information about who they are taking and why. El Faro obtained documents involving 690 arrests between March and April, and found that, overwhelmingly, the police are using criteria like "looking suspicious" or "acting nervous" to justify the arrests. Bukele, for his part, has breezily mentioned a margin of "one percent error." "This time, they're not coming out," he tweeted about the state of exception detainees in mid-April. The administration is building a new prison that Bukele says will house 40,000 "terrorists" who "will be cut off from the outside world." But, by terrorists, the president seems to mean people like Walber. 'Until we can embrace them'Once it became clear that Walber had been caught up in the crackdown, the Rodriguez family's hope for a quick release evaporated. By this point, they had discovered that they were not alone. All around them in Sisiguayo and the surrounding Bajo Lempa valley, people were arrested with no satisfactory explanation. The sons of two cousins who lived in a nearby community, Mario and Pablo, were among the first to be taken; their boys were handcuffed while drinking beers after a soccer game. Another neighbor was arrested even though he'd obtained and was carrying around his spotless police record, believing, wrongly, that such a thing would matter to police. He was detained holding his one-year-old in his arms.Residents of the Bajo Lempa who'd been touched by the arrests had begun meeting weekly at a nearby retreat center. There were only about a dozen attendees then, most of them trembling in fear and unable to tell their stories without crying. Now, Estefany, along with Walber's sister, Glenda, and Walber's parents, Tomas and Margarita, became the group's newest members. The group had started in April, launched by Rossy Iraheta Marinero and José Salvador Ruiz, known as Chamba  — two lay pastoral guides whose faith follows the tenets of Latin American liberation theology. They came from the same limited economic reality as their neighbors, and, in fact, they have full-time jobs and families. None of their own relatives had been detained. But they'd been stirred by the plight and compelled by their own theological solidarity practices to act. In the early days, they found that even civil society organizations that were traditionally fearless in denouncing state violence seemed reluctant to aid the so-called "terrorists." A handful of human rights organizations, principally one called Cristosal and a feminist collective in San Salvador, stepped up and, through them, the group has now filed 111 claims of habeas corpus  — a legal demand that prosecutors present their evidence against a detained person, or forfeit custody. "The families have hope that their loved ones are still alive, but they don't have certainty of that," Rossy told me. They also created a website where they posted photos of their imprisoned kin, and composed a song, "Until we can embrace them," that enshrines their suffering and their demands.   Few groups elsewhere in the country have coalesced in this way to lobby. Rossy reminds the families ofthat they are not friendless in their woe, evoking groups in earlier decades in Argentina and Mexico – and even in El Salvador itself – who never stopped agitating for justice on behalf of loved ones who had been disappeared by the state in earlier decades, leaving maps for others to follow. "A long battle" lies ahead, Rossy cautioned them in one meeting. "You have to be prepared."Outside MarionaWalber, and many of the others from the Bajo Lempa, had ended up at a prison informally known as Mariona, for the municipality where it's located. Under the state of exception, prisons were sealed off. Not even lawyers could get in. There was no protocol for finding out how Walber was doing, or if he was even alive. In El Salvador, it falls to families to help feed and clothe incarcerated relatives. Although the State provides meals to those in prison, Bukele has limited the men to two meager plates per day, as punishment. To leave supplemental food and other essentials, or to elicit a nugget of information from a bureaucrat at the prison's entrance, Estefany, Glenda, and others from Sisiguayo had no choice but to camp out outside Mariona. It's mostly men who have been arrested, and, in the first months of the crackdown, it was mostly women waiting outside prisons, by the thousands, for days at a time, sharing meals and makeshift cardboard mattresses. Everyone was taking on debt to afford the litany of expenses that follow an arrest, and some said they'd lost their jobs because they had spent so many days waiting. It was rumored that some police were offering to trade a man's freedom for sex or money.Glenda Rodriguez walks to the Mariona prison to get news of her brother, Walber Rodriguez, on June 20, 2022.Fred Ramos for Insider The jailings came so fast that Cristosal rushed to set up an online system where families could report arrests and sign up for support as they navigated the justice system. Families described traveling hours to a public defender's office and finding a line so long they lost hope of being seen. There's now about one public defender for every 200 arrests. Initial hearings include up to 500 defendants simultaneously, and Bukele has warned he'll be monitoring judges for "favoring delinquents."  If a name disappears from the register of detainees, it could mean they'd been moved to another prison, or to a hospital, or to a morgue. The country's major newspapers run regular reports of families being unceremoniously delivered the lifeless bodies of loved ones. One of the few men who'd been held at Izalco prison and then released told the Salvadoran outlet La Prensa Grafica that prisoners had been made to run barefoot in circles for hours. When one man fell from exhaustion, the guards broke his ribs, and he died eight days later, the man said. This is the kind of news the families of the Bajo Lempa live in terror of receiving. 'We fear each other again'Sisiguayo sits in the fertile valley where the Lempa river makes its final stretch through El Salvador before flowing out to the Pacific Ocean. Here, the air tastes salty and thick, a reminder of the mangrove forests and the ocean just beyond them. Homes are one-story cinderblock structures, painted in tropical greens and blues and surrounded by clotheslines, palm trees and outhouses. A communal speaker system broadcasts news and emergency alerts.A sunbaked dirt road connects Sisiguayo to the nearest highway, and along it, residents commute by bicycle or motorbike, bending around the cows, horses and dogs that loll about. Every year around November, the rainy season leaves behind deep potholes, so each family gives the share of money they can spare to pay for gas to power the construction equipment loaned from the mayor's office to fortify the road. Most young people work in shrimp cooperatives, where many tasks are nocturnal. It's a life of little sleep and hard manual labor. Night shifts start at around three in the morning. The workers return home for breakfast at about nine, and head off to a second job, like seasonal farming or bricklaying. Here, as everywhere else, the state of exception has been a financial drain. More than a dozen men from one of the shrimp cooperatives were netted in the crackdown, and what normally takes the cooperative two weeks to accomplish now takes two or three months. Roxana, another one of the Rodriguezes' neighbors, was hit especially hard by the arrests. Her two sons, a daughter-in-law and a brother-in-law had all been rounded up, as well as her boyfriend Jeremias' two nephews. Now, she spends much of her time running endless arrest-related errands. Her youngest daughter, who's 12, had to leave school to help run the family's corner store and care for Roxana's 5-year-old grandchild. Within the first six weeks, the costs ballooned to around $1000 — a small fortune that's twice the amount Roxana spent to open and fully stock her shop. By the late summer, Jeremias, is usually out in the fields alongside Roxana's two boys and his two nephews, planting corn for the family to eat. With them in prison, he had to forgo the crop this year, because it's too much to handle alone.  The state of exception "has a human cost that we still can't fully see," said Noah Bullock, Executive Director of Cristosal. "There is the torture, the inhumane treatment, the more than eighty deaths in prisons, and that's only talking about the people who are detained. Life projects that people have built slowly over generations are suddenly paralyzed and collapsed. There's the loss of income and the simultaneous expenses. The social cost of being stigmatized as 'terrorists.'" The administration seems unperturbed by the volume of blameless people it has locked up. "There will always be victims in war," Vice President Felix Ulloa has said of the state of exception. Walber's father, Tomas, at home in Sisiguayo, on June 17, 2022.Fred Ramos for InsiderThe last time state security forces were targeting the people of the Bajo Lempa, en masse and without explanation, it was in the middle of a civil war. From late 1979 until 1992, vicious US-backed government forces clashed with a leftist guerrilla movement. More than 75,000 Salvadorans died and thousands more were disappeared. A United Nations truth commission later found that 85% of the war kidnapping, torture and murder were committed by the government forces, including police and military. Walber's parents were among those fighting on the side of the guerrillas. In 1992, when they dropped their rifles after U.N.-brokered peace talks, they were given land as a way to return to civilian life. Margarita, Tomas and their neighbors came to inhabit Sisiguayo, with its rich coastal tracts, generous for fishing and farming. For Margarita, her son's senseless arrest reminded her of the state-sponsored kidnappings that had led her to take up arms. "That's what most hurts," she told me. "Now we fear each other again."  A photo of Walber Rodriguez's father, Tomas, from when he was a member of a guerrilla group during the Salvadoran civil war, hangs in his house.Fred Ramos for InsiderThe Bajo Lempa is also a flood plain, a condition that was exacerbated by poor government management of the hydroelectric dams that line the river. During repeated devastating floods in the past three decades, the people of the region, the Rodriguez family among them, lobbied and protested, even marching about sixty miles on foot to the capital to demand better dam administration. For Walber and his older sister Glenda, who were children at the time, this was an early education in democracy. The Bajo Lempa won. San Salvador committed to building the levies needed to ameliorate the annual floods, and to communicating its plans to discharge water from the dams, so the communities in harms' way could evacuate in time.Now, they are again under siege. Surf City Outside El Salvador, Bukele is best known for two things. First, his announcement, at the Bitcoin 2021 conference in Miami, that his government would "push humanity at least a tiny bit in the right direction" by adopting Bitcoin as a national currency. Second, his "Surf City" initiative along El Salvador's 190-mile Pacific coastline, where consistent eight-to-ten-foot waves in prime spots makes it one of the best surfing spots in the Americas. Everyone knows that Surf City is his, and that Bukele's target audience is Bitcoin enthusiasts and international surfers. After the apparent breakdown in negotiations between the administration and MS-13, the gangs left a message for Bukele in the form of a mangled cadaver left on the highway that connects the beaches to the capital.By June 2022, Bloomberg estimated that Bukele's crypto gamble had cost El Salvador nearly $56 million. That same month, as thousands of Salvadorans were being locked up, Surf City was playing host to the World Surf League's Championship Tour at a beach called Punta Roca. "Eighty-two degree water, no wetsuits!" thundered from the sportscaster.Nearby, cameramen grumbled to a Salvadoran surfer that they couldn't pan without a uniformed man with a rifle coming into the image.  Locals, who in theory stand to benefit from all of this, were remarking that whitewashing the entrance wall to one beach, El Tunco, and stamping it with an English name left it looking like a drive-through bank. "It was good that he saw the potential in our waves," Enzo, who runs a couple of cafes in the area, told me one evening. And promised infrastructural improvements, like finally completing a waste-water treatment plant so that businesses aren't reliant on bottled water, haven't arrived. Meanwhile, new luxury apartments with a base price of $400,000 are being marketed to crypto enthusiasts, prompting worry that excessive development will smother the area's natural beauty and put everyone out of business. It's almost as if Surf City is Bukele's Potemkin Village, thrown up to boost his standing in a handful of elite circles as he loses legitimacy elsewhere. Bukele "wants to promote the country as a place that other people can buy," said Bullock of Cristosal. "But what is his plan for the middle-aged man who has sold coconuts in Punta Roca his whole life? El Tunco already has local commerce and its own identity. Why not honor that identity?"'Dad's not working, is he?'When Walber was jailed, Estefany told their six-year-old, Michelle, that Walber had gone out of town for a job. When Estefany and Glenda left for days camped outside the prison, she said they were studying. Michelle's questions became harder to escape. When he was away working, Walber usually sent a flood of adoring messages to his daughter on Estefany's phone, but this time, there were none to show. Before ten days had passed, Michelle cornered her mom: "Dad's not working, is he?"  At six, Michelle is absorbing that her life is built on shifting sands — a father in prison, a mother who might withhold the truthcapable of deceiving her. Estefany tried to explain, saying, "The authorities make mistakes." But it's just another tectonic lesson for a child. Walber and Estefany have known each other since they were kids and they've been partners for years, but it was only last year that they finally got married. They were the first in the family to have a real wedding, and Glenda remembers how they both giggled when they asked her to save the date — Dec. 17. Graduation photos of Walber Rodriguez, left, and his sister, Glenda Rodriguez, right, at the family house in Sisiguayo.Fred Ramos for InsiderEstefany's dress, which Glenda and Margarita helped her choose, was the color of red wine and had a sparkling brooch at the bosom. Walber had splurged on a new oxford shirt, jeans, and white tennis shoes. He also surprised Estefany with a wedding ring, which he had secretly saved for months to buy. It was a luxury she had never imagined. The cake, a single-tier white sphere adorned with fruit, held the children rapt until it was time to dig in. When Glenda thinks about the politicians and the police who get to return home to their families at night, so easy in their freedom, it fills her with rage. They can't even begin to comprehend what they have stolen from their people.'No one else will defend him but us' The retreat center where the families met every week was a thirty-minute crawling drive down the potholed dirt road from where Walber was arrested. In late June, 54 days after Walber's arrest, three-dozen of them sat as they usually did, in a circle of plastic chairs in an open-air pavilion, roofed in ceramic tile and ringed in a garden of carefully-manicured green.Rossy stood in the middle of the circle, wearing flip-flops and a white tunic embroidered with flowers, calling on people to speak. Chamba kept a notebook propped between his thigh and the arm of his wheelchair. The families were debating: Should they stay the course, and pursue their habeas corpus claims in court? Or was it time to take to the streets? The habeas corpus route had been Rossy's idea. Back in 2020, right when COVID-19 upended global travel, Rossy was in Ecuador at a theological conference. Bukele was about to close the borders and implement some of the most restrictive pandemic measures in the world. She managed to get onto the last flight into the Salvadoran airport and ended up at a quarantine center for six weeks. Desperate for a way out, a lawyer friend advised her to file a habeas corpus claim. It worked – she was released. Now, it's a tactic that more than 1,800 other Salvadorans across the country have also used since March, but to little effect since the administration has wrenched the legal system into its orbit, forcing many judges to retire and intimidating the rest, along with flooding the system with many times more defendants than it can handle. Members of the group have been harassed by the police, and there was always concern that cops might show up in the middle of the meeting to arrest everyone. One woman who had started attending after her husband was arrested was then herself arrested. Now, the neighbors couldn't agree on what was best. The state of exception allowed the police to detain anyone for any reason. If they protested and ended up incarcerated alongside their loved ones, who would defend them then?  People clamored to speak. Rossy called on a gray-haired man in a cowboy hat. He was one of the many who had spent consecutive days and nights on the street outside Mariona, where his son was being held, and while there, he heard rumor that the guards take vengeance on prisoners whose families caused trouble out front. He rose slowly, and then stated his firm opposition to any public action. He reminded the group that it wasn't only themselves who would pay the price for protesting. When he took up arms in the civil war, he said, it was his own life he was putting at risk. But now, any action might put his son's life at risk. When he finished speaking, Glenda – who, at 28 years old, was among the youngest group members – raised her hand. "I may not have as much life experience as many of you. And I didn't live the war fighting in the mountains like many of you did," she began. But, she continued, she did know that all of El Salvador's civil rights victories, including democracy itself, were the product of struggles on the street. She too had camped outside Mariona, and she had learned that viral malicious rumors appeared on social media as part of an attempt to silence families. A meeting of the Bajo Lempa families on June 17, 2022.Fred Ramos for Insider"If the state is going to kill my brother, it will do so whether or not I speak out. If it will incarcerate me – the same is true," she reasoned. "No one else will defend him but us." Finally, there was simply the value of the truth: "The president wants to make this country look like a wonderland, like everything is Surf City," she said – but the world needed to know what was really happening in El Salvador.  The group ultimately decided that Glenda was right: it was time to take the streets. And just as each Bajo Lempa family had discovered that they were not alone when they found the group, now they saw there were hundreds of families around the country who, like them, were ready to march in San Salvador. They began regularly joining the others in the capital to protest and speak to the media, while continuing their habeas corpus petitions. Just before Christmas, the families of the Bajo Lempa packed a bridge on a main thoroughfare and demanded their loved ones be freed. For now, the Bukele administration remains unmoved. The group is now planning to sue their government in an international human rights court.One day last summer, before anyone comprehended how long this would last, Roxana told me something that multiple women in the Bajo Lempa echoed: Since her children were detained, she has been dreaming of them. In one dream, she was sitting at home in the dark, and one of her three sons walked through the front door. He paused in the threshold. She thought it was Cristian, the only one who has not yet been taken. But when he stepped out of the shadow, she saw that it was Javier, her youngest. He was dressed just as he had been on April 27, the night the police hauled him away. She called to him – and then the dream ended. "As a mother," she said, "you wake up to a nightmare."This reporting was supported by the International Women's Media Foundation's Howard G. Buffett Fund for Women Journalists.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 27th, 2022

Perfect Storm Arrives: "Massive Wave" Of Car Repossessions And Loan Defaults To Trigger Auto Market Disaster, Cripple US Economy

Perfect Storm Arrives: "Massive Wave" Of Car Repossessions And Loan Defaults To Trigger Auto Market Disaster, Cripple US Economy For almost a year now, we have been dutifully tracking several key datasets within the auto sector to find the critical inflection point in this perhaps most leading of economic indicators which will presage not only a crushing auto loan crisis, but also signal the arrival of a full-blown recession, one which even the NBER won't be able to ignore, as the US consumers are once again tapped out. We believe that moment has now arrived. But first, for those readers who are unfamiliar with the space, we urge you to read some of our recent articles on the topic of car prices - which alongside housing, has been the biggest driver of inflation in the past 18 months - and more specifically how these are funded my the US middle class, i.e., car loans, and last but not least, the interest rate paid for said loans. Here are a few places to start: Are We Headed For An "Auto Loan Crisis" As Delinquencies Begin To Rise? - July 7 A Flood Of Repossessed Vehicles Poised To Hit The Used-Car Market - July 25 American Drivers Go Deeper Into Debt As Inflation Pushes Car Loans To Record Highs - Aug 29 Credit Card Rates Just Hit A Record As The Average Car Loan Rises To Fresh All Time High - Oct 9 New-Car Loan-Rates Set To Hit 14-Year High As Affordability Crisis Worsens - Nov 3 So while the big picture is clear - Americans are using ever more debt to fund record new car prices - fast-forwarding to today, we have observed two ominous new developments: the latest consumer credit report from the Fed revealed a dramatic spike in the amount of new car loans, which increased by more than $2,000 in one quarter, from just over $38,000 (a record), to $40,155 (a new record). Now this shouldn't come as a shock: a simple reason why new car loans have hit record highs is simply because new car prices have also soared to all time highs, as the next chart shows. Here we will ignore for the time being cause and effect, or "chicken or egg" questions - i.e., whether record new car prices are the result of easy record credit, or whether record new car loans are simply tracking the explosive surge in car prices, and instead focus on something even more ominous: the explosion in the average interest rate on a new 60 month auto loans: according to Bankrate, as of Dec 16, the number is just over 6.50%, almost doubling since the start of the year, and the highest in 12 years. It is this surge in nominal auto debt as well as the unprecedented spike in new auto loan rates, that we believe has finally pushed the US car sector to the infamous Wile Coyote point of no return. Consider the following: according to various recent financial analysts, a growing number of consumers are falling behind on their car payments - a trend which will only accelerate - in a sign of the strain soaring car prices and prolonged inflation are having on household budgets. As NBC reports, whereas repossessions tumbled at the start of the pandemic when Americans got a boost from stimulus checks and lenders were more willing to accommodate those behind on their payments, in recent months, the number of people behind on their car payments has been approaching prepandemic levels, and for the lowest-income consumers, the rate of loan defaults is now exceeding where it was in 2019, according to a recent report from Fitch. Naturally, with the economy set to slump into a Fed-induced recession, the trend will only get much worse into 2023 with economists expecting unemployment to rise, inflation to remain relatively high (at least until the economy crashes) and household savings - already at record lows - set to dwindle. At the same time, a growing number of consumers are having to stretch their budgets to afford a vehicle; the average monthly payment for a new car is up 26% since 2019 to $718 a month, and nearly one in six new car buyers is spending more than $1,000 a month on vehicles. Other costs associated with owning a car have also shot up, including insurance, gas and repairs. “These repossessions are occurring on people who could afford that $500 or $600 a month payment two years ago, but now everything else in their life is more expensive,” said Ivan Drury, director of insights at car buying website Edmunds. “That’s where we’re starting to see the repossessions happen because it’s just everything else starting to pin you down.” The silver lining is that while the US auto sector faces unmitigated disaster in 2023, for those in the repossession business, it’s been difficult to keep up. Jeremy Cross, the president of International Recovery Systems in Pennsylvania, said he can’t find enough repo men to meet the demand or space to hold all the cars his company has been tasked with repossessing. With the holidays approaching, he’s been particularly busy as people prioritize spending elsewhere, and he’s expecting business to keep up throughout next year and 2024. Repo man Todd O'Connor raises a car for towing in Oneida, N.Y., on Oct. 12 “Right now, it’s really the perfect storm,” said Cross. “Over the last two years, vehicle prices were inflated because there was no new car supply, people were still buying like crazy because they had a lot of stay-at-home cash, they had inflated credit scores, so it was like a recipe for disaster.” Ironically, at the same time, the number of repossession companies has shrunk by 30% as many firms closed up shop and the workers found jobs in other industries when repossessions tumbled during 2020, Cross said. Now, he told NBC, lenders are paying him premiums to repossess their cars first in anticipation of a continued increase in loan defaults (read: plunging prices). “The volume is picking up, and the remaining companies that are still performing repossessions are very busy,” Cross said. “The overall numbers are still not prepandemic numbers, but we will see a big change coming in ‘23 and ‘24 that I think the lenders are starting to recognize because they are offering financial incentives that they never had to do in the past. They’re jockeying for position knowing that there’s only a certain amount of bandwidth available.” Predictably, the coming auto crisis is an issue that’s raised concern among officials at the Consumer Financial Protection Bureau, who say they are seeing troubling signs in the auto market, particularly among so-called subprime borrowers, who have below-average credit scores, and those with loans taken out in 2021 and 2022 when auto prices were particularly high. Yes: that 2008 deja vu feeling is back front and center....and so are the defaults. “Loans taken out in those years are performing worse than prior years just because those consumers had to finance cars once the supply chains were jammed and the prices started to go up,” said Ryan Kelly, acting auto finance program manager for the CFPB. “Those consumers got hit with inflation twice. First, when they had to finance a car after the prices went up, and then when they had to put gas in the car after the Russia-Ukraine conflict started. So there’s just a lot of consumer stress.” What happens next? Well, as the economy continues to deteriorate in 2023, the number of those falling behind on their car payments will continue to rise, even as consumers tend to give priority to their car payment ahead of most bills because of the importance a car plays in getting to work or potentially providing shelter, industry analysts said. For now, the rate of defaults and repossessions isn’t expected to reach 2008 and 2009 levels, when there was a spike caused by the financial crisis. The percentage of auto loans that were 30 days delinquent was at 2.2% in the third quarter compared with 2.35% delinquent over the same period in 2019, according to data from Experian. By contrast, just over 4% of auto loans went into default in 2009. However, that could quickly change once the 2023 economy unleashes the final whammy of mass layoffs (which have already slammed the tech sector). “We’re expecting it to continue to increase and maybe even breach prepandemic levels because of the macroeconomic headwinds of higher interest rates, higher cost of borrowing and expectations for unemployment to continue to increase,” said Margaret Rowe, the lead auto analyst at Fitch. “I think our expectation is that we’re going to continue to see it go up, but it’s just been so low that even going up isn’t like what we saw in the Great Financial Crisis.” Some, like Cox Automotive, remain optimistic: their analysts (who just may be a little conflicted) forecast that while loan defaults and repossessions will increase from their pandemic lows, long-term through 2025 they predict overall defaults and repossessions will remain at or below historic norms. Still, the financial squeeze has been particularly difficult for lower-income consumers looking for budget vehicles, which have been particularly hard to find. While in the past, those car buyers would have purchased a used car for $7,000 to $15,000 they are now having to spend $20,000 to $25,000 for the same type of vehicle. Among dealers that cater to subprime and deep subprime consumers, the average listing price on their cars has almost doubled since the beginning of the pandemic, according to the CFPB. “That near prime and subprime group of consumers, they’re getting hit very, very hard by inflation. That group of people did not have much disposable income. They had to finance a more expensive car and then they got hit with prices going up overall. There’s just a lot of stress,” said Kelly. Ally Financial, which has a significant share of loans to subprime borrowers, said in its October earnings report that it expects delinquencies to increase to as much as 3.8% compared with 3.1% in 2019. That estimate will prove to be overly optimistic. Another risk to car buyers’ finances is the growing length of auto loans, many of which now exceed seven years. While those longer term loans can lower the monthly payments amid higher prices, consumers risk paying off the loan much more slowly than the car is depreciating, leaving them underwater if they need to sell the vehicle. It can also mean higher interest costs over the life of the loan on top of already inflated vehicle prices. And speaking of interest rates, they have not been this high since 2009 and will stay at their current levels until the Fed finally pivots. As NBC notes, "for consumers, there is unlikely to be any relief over the next year. Interest rates are expected to remain high for those needing to borrow to buy a vehicle, and Covid-related plant closures and material shortages are continuing to ripple through the car manufacturing supply chain, limiting the number of new vehicles." “I dare think what happens to people who are signing up for new loans today,” said Drury. “It’s not going to be better when we see these payments so high.” But wait, there's more. As twitter's CarDealershipGuy - who claims to be an anonymous auto-industry CEO and whose analysis has been featured in places like the NY Post and who frequently Tweets about the state of the auto market - laid out a long thread on Thursday, all of the above may end up being an overly optimistic assessment of the perfect storm that's about to hit the auto sector: "This morning I discovered something *extremely* alarming happening in the car market, specifically in auto lending. I'm now convinced that there is a massive wave of car repossessions coming in 2023," he wrote. Recapping much of what we said above, he noted that over the past 2 years, many people took out exorbitant loans on cars and while car values were inflated (and still are) but many people simply had no choice and bought an overpriced a car. Then, echoing the Fitch assessment, he notes how those buyers are underwater: "Car valuations are now plummeting. Some cars have declined in value as much as 30% y/y. And these same people that took out these big loans are now 'underwater'. Basically, they owe banks more on these cars than they are worth. And the banks are well-aware of this." The punchline is his personal experience from late last week. "This morning, one of our General Managers opened up DealerTrack — a portal that dealers use to communicate with auto lenders — and highlighted something very concerning. 9 of our lending partners have started WAIVING 'open auto stipulations' for consumers." What this means, he explained, is that once consumers are stuck with a vehicle they paid too much for, they can't trade it in without putting some money up front to cover the difference of what is owed on it versus what it is worth. At that point, he notes, "Dealer can't sell consumer a car, Consumer can't buy a car, And, you guessed it, lender can't finance a car!" The lender then knows that most consumers are stuck and waives the open auto stipulation - meaning they allow the consumer to buy the new car with a second loan knowing they already have a first one. But the lender does it because they know that the buyer will default on the old, other car. Cue default avalanche: "This is NOT normal. But it's the only way lenders can finance cars and dealers can put cars on the road. And the implications of this will be tons of repossessions," the CEO wrote. He concluded: "I've been a doubter, but after what I saw this morning, I'm now FULLY convinced that a wave of car repossessions will hit in early/mid 2023. If lenders are willing to backstab each other in order to put more loans on the road, we're in trouble." Here is a snapshot of his entire thread: This morning I discovered something *extremely* alarming happening in the car market, specifically in auto lending. I'm now convinced that there is a massive wave of car repossessions coming in 2023. Here's what I discovered (and what no one knows): Background: Over the past 2 years, many people took out exorbitant loans on cars. Car values were inflated (and frankly, still are to some extent). But many people simply had no choice and bought an overpriced a car. Well... Car valuations are now plummeting. Some cars have declined in value as much as 30% y/y.  And these same people that took out these big loans are now "underwater". Basically, they owe banks more on these cars than they are worth. And the banks are well-aware of this... But there is no easy solution. You can't just put the genie back in the bottle. This brings me to what happened this morning: Every Friday I conduct a team meeting to recap our week. This morning, one of our General Managers opened up DealerTrack — a portal that dealers use to communicate with auto lenders — and highlighted something very concerning: 9 of our lending partners have started WAIVING "open auto stipulations" for consumers. Wait, wtf does that even mean? Let me explain using a simple, hypothetical scenario: 1) Consumer takes out an auto loan in 2020/2021 on an overvalued car 2) 2022 comes around and that overvalued car is now rapidly declining in value 3) With the car declining in value, consumer now owes more on the car than it is worth 4) Consumer no longer wants the car. Maybe they outgrew it. Or maybe it keeps breaking. So consumer wants to trade it in. 5) But dealer can't trade the car in because the consumer owes WAY too much on it. So dealer asks consumer for lots of money down to cover the difference. 6) But of course, the consumer doesn't have $1,000s to cover the difference between what they owe on the car and what it's worth. And here comes the perfect storm... 7) Dealer can't sell consumer a car, Consumer can't buy a car, And, you guessed it, lender can't finance a car! Everybody loses! Oh no. So what happens next? 8) Lender knows that most consumers are stuck in this situation, and does the following: WAIVES THE OPEN AUTO STIPULATION. Meaning, the lender lets the consumer buy the car KNOWING that they already have an open auto loan with another bank! Why the f*ck would they do this? Surely the lender knows that consumers that take out a 2nd auto loan are MUCH riskier and have a MUCH high risk of default? Right? RIGHT? Yes, but the lender does it because they know that the consumer will default on the other car !!!! Dog eat dog style. Let me be clear: This is NOT normal. But it's the only way lenders can finance cars and dealers can put cars on the road. And the implications of this will be tons of repossessions. I've been a doubter, but after what I saw this morning, I'm now FULLY convinced that a wave of car repossessions will hit in early/mid 2023. If lenders are willing to backstab each other in order to put more loans on the road, we're in trouble. This will not end pretty. What does this mean in simple terms: well, besides the imminent devastation across the auto sector, including a surge in defaults and car repossessions, we are about to witness a historic collapse in car prices. In fact, in a subsequent tweet, the CarDealershipGuy noted the plunge in prices at troubled used-car dealer Carvana which will be the first domino to fall and be forced to liquidate much if not all of its inventory to stay afloat: These are all retail-ready cars being advertised to other dealers - likely at a big loss. (h/t RayMF for submission) pic.twitter.com/f8xb2oSnyU — CarDealershipGuy (@GuyDealership) December 17, 2022 Translation: just as soaring car prices were the leading indicator for red-hot, runaway inflation in 2021 and 2022 (followed by housing, food, goods and finally services) so the plunge in car prices - first used, then new - is the canary in the recessionary coal mine of deflation that will send all prices - cars, houses, and everything else - sharply lower in the coming months. Tyler Durden Sat, 12/17/2022 - 18:30.....»»

Category: worldSource: nytDec 17th, 2022

Auto Roundup: GM"s EV Push in China & F"s Massive Recall Hog the Limelight

General Motors (GM) is set to accelerate the rollout of EVs in China. Close peer Ford (F) issues recall for 634K SUVs over malfunctioning fuel injectors. Last week, the European Automobile Manufacturers Association released data for commercial car registrations for October and the first 10 months of 2022. The European Union (EU) commercial vehicle market contracted 8.9% last month, representing the 16th straight month of decline. While sales of trucks and buses improved from the year-ago month, van sales suffered a huge blow. Registrations in France, Italy and Germany dwindled 5.3%, 3.9% and 12.4%, respectively. Meanwhile, Spain recorded a 1.2% increase in registrations. For the first 10 months of 2022, commercial vehicle registrations in the EU declined 16.8% to 1.3 million units. Registrations in all the major EU markets fell, with Spain witnessing the sharpest decline of 21%. Sales in France, Germany and Italy fell 19.1%, 15.4% and 10.4%, respectively, year over year.On the news front, electric vehicle (EV) king Tesla TSLA and Ford F grabbed attention as they issued massive recalls. While Fordwill recall 634,000 SUVs over malfunctioning fuel injectors, Tesla is recalling more than 80,000 cars in China over software and seatbelt issues.Meanwhile, as legacy automakers are ramping up their electrification strides, General Motors GM and Mazda Motor Corporation MZDAY made headlines. Last week, General Motors outlined its plans and shared its progress toward the global vision of zero crashes, zero emissions and zero congestion at the GM China Tech Day 2022 in Shanghai. With stringent environmental regulations and changing customer preferences creating a demand wave for battery-powered cars, Mazda pledged close to $11 billion to electrify its portfolio.BYD Co. BYDDY also features in last week’s top stories as the company struck a deal with Finland-based Nobina to supply e-buses. BYDDY is enthusiastic about the new deal as it will cement its existing cooperation with Nobina. The China-based automaker is committed to driving sustainability and steering toward a green journey. BYDDY currently sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks Rank #1 stocks here.Last Week’s Top StoriesFord issued a recall of more than 634,000 SUVs worldwide on the grounds of a cracked fuel injector that can cause fuel spillage or vapor leakage onto a hot engine leading to fires. The recall covers Bronco Sport and Escape SUVs from 2020 through 2023 model years equipped with three 1.5-liter cylinder engines.Ford received 20 incidents of fires, including three that ignited nearby structures. The company also stated that it has four reports of fires that were caused less than five minutes after the engines were turned off. Apart from these, the automaker has four injury claims not concerning burns and 43 legal claims attributed to the problem.Ford is yet to come up with repairs, and once they are made available, owners will need to schedule service with a preferred dealer. Owners will be notified by letters starting Dec 19.General Motors announced the plan to roll out more than 15 Ultium-based models in China by 2025. It also emphasized its focus on developing more connected and intelligent electric vehicles. The company is expediting the introduction of Ultium-empowered EVs in China to move toward an all-electric future.The all-electric Cadillac Lyriq SUV started customer deliveries in September. Following that, a wide range of Ultium-based models across brands, segments and body styles was prepared for rollout in China. The Cadillac Celestiq showcased will be the first product brought in by the Durant Guild, GM’s new lifestyle platform. Also, the first Ultium-based Buick model will be launched in China later this year.The Chevrolet FNR-XE concept made its debut on Tech Day 2022. It harps on GM’s vision of a more sustainable and greener future.GM has also been putting in efforts to deploy automated driving technologies in China and aims to bolster it by introducing an enhanced version of the Super Cruise driver assistance system.Mazda announced an investment of $10.6 billion to electrify its lineup of vehicles by 2030. It forecasts EVs to account for 25-40% of its total sales by the beginning of the next decade. Its previous EV sales estimate was roughly 25% of sales by 2030.As part of a three-phase plan, MZDAY would introduce battery-EV models in the second half of phase 2, which is sometime between 2025 and 2027. It intends to do a full-scale launch of all-electric vehicles between 2028 and 2030. The company has targeted about 4.5 trillion yen in net sales for the business year ending March 2026. This marks a significant jump of about 45% from the financial year ending March 2022. Mazda’s collaboration with its main suppliers, such as Hiroshima Aluminum Industry, Imasen Electric, Ondo Corporation and HIROTEC Corporation, augurs well for the long-term growth of the company as well as the industry. Mazda’s efforts in procuring and securing batteries to expedite its electrification initiatives are noteworthy.BYD announced that it has inked another deal with public transport operator Nobina to supply 64 of its electric buses. The vehicles are scheduled for delivery in the second quarter of 2023 and will be put into operation in southwestern Norway. The operator has been relying on e-buses from the China-based manufacturer for some time and is growing the fleet. The recent order includes 40 units of 12-meter electric buses 24 units of 15-meter e-buses.Both vehicle models are equipped with electric heating management systems. The infrastructure, known as the Battery Thermal Management System, ensures reliability in extreme weather conditions and makes the vehicles suited for the varying Norwegian weather. Moreover, the buses are equipped with the new generation of lithium iron phosphate batteries and integrated controller assembly systems that enhance safety and endurance. Notably, BYD currently has more than 650 electric buses that are in operation, or on order, across the Nordics, together covering 55 million kilometers.Tesla is recalling more than 80,000 EVs in China. The automaker has decided to recall a total of 67,698 imported Model S and Model X vehicles produced between Sep 25, 2013 and Nov 21, 2020, according to China’s State Administration for Market Regulation. The recall is due to a software issue that hinders the battery management system of the cars. The software on these vehicles will be upgraded free of cost.In the second such development, Tesla is recalling 2,736 imported Model 3 vehicles produced between Jan 12, 2019 and Nov 22, 2019 as well as 10,127 of the China-produced version of the car. The decision was arrived at due to malfunctioning seatbelts. Even though Tesla is still the undisputed leader in the EV space, recalls have been quite frequent.  Price PerformanceThe following table shows the price movement of some of the major auto players over the last week and six-month period.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will keep a tab on U.S. vehicle sales data for November. Also, stay tuned for the usual news updates in the space. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Mazda Motor Corporation (MZDAY): Free Stock Analysis Report Byd Co., Ltd. (BYDDY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksNov 30th, 2022

Deja Vu All Over Again: China"s Auto Industry Is Once Again Shuttering Some Operations Due To Lockdowns

Deja Vu All Over Again: China's Auto Industry Is Once Again Shuttering Some Operations Due To Lockdowns Just when the automobile industry thought it was out of the clutches of the Covid-induced supply chain SNAFU that had taken place over the last several years, it looks as though China's strict Covid policy threatens to pull them back in again.  "At least three major automakers" are once again shuttering production, according to a new report from Bloomberg this week. Honda has shut down operations in Wuhan for the time being due to "limitations around movement" in the area, the report says. The company also suspended operations at a lawnmower engine plant in Chongqing. Yamaha has also been hit by the new Covid lockdowns, partially suspending operations at a motorcycle plant in Chongqing. Bloomberg reports that 8,721 new COVID-19 cases were reported in the area on Monday this week.  VW also halted production at a joint venture plant that it has with China FAW Group on Monday of this week, the report continues. Volkswagen is attributing the shutdown to a shortage of components. It has also shut down two of five production lines at its factory in Changchun and has no date for resuming operations. Nissan, Mazda and Mitsubishi told Bloomberg that their operations had not been affected.  Recall, just last week we published on how China's Covid restrictions were actually tightening when the country's market had assumed they were easing.  We published: "More than a week after Beijing fine-tuned its Covid Zero strategy, local governments are struggling to balance the need to control the pandemic while also limit the economic damage. Shijiazhuang, a closely-watched city that had experimented with a version of “living with the virus,” has reversed course, suspending schools and asking residents to stay at home for five days. As infections multiplied, subway rides in some big cities such as Beijing, Guangzhou and Chongqing have tumbled. The result is that Goldman Sachs’s Effective Lockdown Index has increased in recent weeks, despite Beijing’s new order to reduce the need for mass testing and citywide shutdowns."   Tyler Durden Tue, 11/29/2022 - 23:05.....»»

Category: blogSource: zerohedgeNov 30th, 2022

How small-town Maine embraced a family that fled the Taliban

In fall 2021, an Afghan family was resettled in Maine. This is the story of how they rebuilt their lives, and the community that welcomed them. Omid, left, and Nasir walk on a path winding through farm fields near their homes in Cape Elizabeth, Maine.Jodi Hilton for InsiderIn the fall of 2021, a family from Afghanistan was resettled in Cape Elizabeth, Maine. This is the story of how they rebuilt their lives, the community that welcomed them, and a friendship that bridged two cultures.CAPE ELIZABETH, Maine — Last November, at about midnight, Omid was lying in bed in his new home in Cape Elizabeth, Maine — exhausted, but unable to sleep. He texted Nasir Shir, his old friend from Afghanistan who lived down the street. Was Nasir awake, and was he up for a walk?Nasir was awake; he often stays up late to talk to friends and relatives in Afghanistan, nine and a half hours ahead. On this night, and on many nights during Omid's first few months in Maine, Nasir was soon at his door. The two men set off. Under the night sky, they passed driveways with basketball hoops, porches with American flags, and the occasional boat parked in someone's yard.Omid and Nasir had met in 2004 on the site of an international development project in Kabul. At that point, Nasir had been living in the US for 20 years, but his work in geographic information systems took him all over the world, and sometimes back to Afghanistan, for international development contracts. Omid, 14 years younger, was an IT specialist.A deep friendship began, and the two stayed close. When Nasir's family would pass through Kabul, Omid would host them. "Anyone who travels to Afghanistan goes to his house," Nasir told me. "He's the ticket agent, the hotel, and the food place." Omid got to know Nasir's extended family — "cousins, uncles, aunts, everybody." The two men share a similar sense of humor and laughter comes easily when they're together.When the Taliban regained control of Afghanistan weeks before the planned US withdrawal, Omid fled with his wife and their four young children.Nasir urged them to come to Cape Elizabeth. "I warned him about the cold weather, and that there are not many Muslims there," Nasir said. He also talked up its virtues. "I said: 'If you want to make money, don't come to Maine. But if you want to raise your family, come to Maine.'"But it wasn't just Nasir who welcomed Omid. The whole town had. In the weeks before Omid's family arrived, an army of neighbors had rolled up their sleeves to help get the house ready, dropping by at odd hours to scrape up subfloors, install a new kitchen, mount cheerful decor, and plant flowers.Omid felt immense gratitude toward everyone who had helped his family. "I will never stop appreciating them," he told me. But the transition to his new life in Maine was still hard — even with all the goodwill in the world.  Omid's family arrived in Maine just before Halloween in 2021 and recently celebrated one year in Maine.Jodi Hilton for InsiderKabul The call came in the afternoon. It was August 27, 2021. Twelve days earlier, Kabul had fallen to the Taliban. Now, Omid was being told to gather his family and head to the airport immediately. For days, Omid had lived with a constant feeling of dread. He worried that the Taliban government would target him as a collaborator for his work on US and United Nations-backed development projects. In case he was killed in a blast and no loved ones could be called upon to carry out the Muslim funeral ritual of ghusl, in which the body of the dead is washed before it is laid to rest, he took care to wash himself every day. In 2018, Omid had applied for a Special Immigrant Visa, which was still in process. (Editor's Note: We are using a pseudonym for Omid and his family members.) Omid and his wife, Palwasha, hurriedly filled a suitcase with clothing for their four children. They grabbed diapers and a swaddle for the youngest, Safa, who was just a month old. From the roof of his apartment building, Omid could see Kabul's international airport, where thousands of people had been lining up but most were denied entry. Just the day before, a suicide bombing had killed nearly 200 people. Omid was still not sure that he would be leaving Afghanistan that day. Everyone wanted to leave, but not everyone was able to. "No one wants to leave their country," Omid would tell me later. "All your friends, your family members, your culture, your language. But the thing that you are missing is security. For the sake of your children, you know you should leave everything and get out of that hell."At the airport, Omid's family was ushered through a gate. Others tried to use the moment to scramble through, and a cloud of tear gas exploded around them. Inside, Omid was told he wouldn't be able to board the plane with a suitcase. "I left everything there in the airport," he told me. "But at the time, it was important for me to save my life, not my clothes."Wearing bracelets with barcodes wrapped around their wrists, the family was led onto an airplane bound for Doha, Qatar. As the plane took off, Safa, the baby, was still red in the face from the tear gas.In all, 124,000 Afghans were evacuated in the final two weeks before the US withdrawal, which was timed to coincide with the 20th anniversary of 9/11, and more would follow. Of the 76,000 who were resettled in the US, most went to Texas, California, and Virginia — places with established Afghan American communities. But evacuees ended up in nearly every state.For Omid and his family, that final destination would be Maine — the whitest (91%), oldest (the median age is just shy of 45), and most rural (60% of Mainers live in rural areas) state in the US. How that happened is the story of a community that banded together to welcome a family of strangers, and a friendship that has bridged two cultures. The Portland Head Light is Maine's oldest lighthouse and an iconic tourist destination.Jodi Hilton for InsiderFriends in need Back in Cape Elizabeth during those tense days in August 2021, Nasir's phone was ringing off the hook as friends and former colleagues in Afghanistan desperately sought help getting out. He and Omid were speaking every day. On one call, Nasir could hear gunfire in the background and Omid, alone in his family's apartment, seemed to be in a state of shock.  Nasir also left Afghanistan as a refugee, during the Soviet-Afghan war, and had come to Portland, Maine, in 1984 when he was 13. Nasir's sister, Shukria, who's six years younger, recalled learning English by watching Bob Ross' painting shows and "Sesame Street."Both she and Nasir received full scholarships to attend Waynflete, a highly-regarded private school in Portland. While the school was mostly white, they had classmates from Cambodia and Laos. Nasir and others were encouraged to share stories about their immigrant experiences, and he said he developed pride in his background and an appreciation for the value of listening to one another. said the school encouraged him to take pride in his background. "Back then, the state was new with refugees," Nasir told me. "There were hardly any Muslims, never mind any Afghans." Halal meat wasn't widely available, and Nasir remembers going with his grandfather to local farms to help slaughter lambs, and then packing the meat into bags to store in the freezer.  There is a saying in Maine that people who are not born there or do not come from a long lineage of Mainers are from "away." In some communities in Maine, families have lived there for so many generations that roads and bodies of water are named after them. If you tell people the town you grew up in, and they are familiar with it, they might know your whole family, and all of your neighbors too. In the 1800s, Irish and French Canadian immigrants started arriving in Maine. In the early  1900s, House Island, off the coast of Portland, was used to process overflows of new arrivals to the United States and became known as "Ellis Island of the North." Immigrants and refugees from Cambodia, Vietnam, and Laos came in the mid-to late 1970s and a Somali community began emerging in the early 2000s in Lewiston. According to the Portland Press Herald newspaper, around 250 Afghans were in Maine before the Taliban's takeover of the country.   Nasir considers himself a true Mainer because it's the place he keeps coming back to. "For most people, any place where they spend their childhood is home. I spent my childhood from 13 on, here, so it's home," he said. "I went to Dubai, Pakistan, traveled the world, but I still chose to come back." Nasir and his wife, Nazia, made their home in Cape Elizabeth, nearby Portland, in the late 1990s, and it's here where they're raising their five children, who range in age from 11 to 25. Once a farming and fishing village, the town of 9,500 people now has a reputation for excellent schools. A few miles away from the multimillion-dollar homes that hug the inlet of Casco Bay, Nasir's neighborhood is dense with suburban homes on relatively small lots. Shukria lives nearby. His two brothers live across the street.Cape Elizabeth is both rural and residential. Ocean House Farm is located near the town's center.Jodi Hilton for InsiderKettle Cove is one of several beaches popular with locals.Jodi Hilton for InsiderAfter the 9/11 attacks, as American troops began deploying to Afghanistan, Muslims in the area were sometimes harassed or intimidated. Nasir, then in his early 30s, was involved in a local mosque and active on local boards, and he started being asked to speak at churches and other community gatherings. People wanted to know about the Taliban, and they had questions about Islam. "It's human nature to fear what you don't know," Nasir told me. The outreach seemed to come naturally to Nasir, Shukria told me. He was patient and knowledgeable — and not one to easily take offense, even when he had every right to. Instead, on the occasions through the years when someone would make a comment that was either subtly or outright rude or derogatory, his responses would be gracious and respectful, and he'd often offer to have more conversations.Nasir's calm approach "takes an unbelievable amount of self-control," said Denney Morton, Nasir's former teacher who's now a friend. "It also," Morton continued, "takes a person who believes that the future is going to be worth putting up with that kind of stuff."Nasir's mission is "to make this country live up to what it says it's going to be," Morton said. "He does it all the time — and he does it with laughter, and joy, and inviting people over to his house."In 2016, after Donald Trump's election, Nasir's daughter Haleema remembers hearing, "Now that we have a new president, all the Muslims will be deported." Nasir's son, who was born in Maine, was told to "go back" to where he came from. Maine's governor at the time, Paul LePage, who coined himself "Trump before Trump," was regularly called out for racist statements. In 2016, he sent a letter to President Barack Obama saying that Maine would no longer participate in resettling refugees. (LePage, who left office because of term limits, challenged his successor, Gov. Janet Mills, in this year's election but lost by a wide margin.)Nasir's response, again, was outreach. He got involved in local politics and won a seat on the school board in 2017. And he and Nazia often invited dozens of locals from the Cape Elizabeth area to their home to break the Ramadan fast with a big meal. By opening their home and sharing their lives with their Cape Elizabeth neighbors, Nasir and Nazia, and his sister Shukria, created a model of community-building for others in town to emulate — "not at Nasir levels, but in some way," said Jim Sparks, a friend who's worked with Nasir on community projects. "He's brought a warmth and generosity and large-heartedness that's pretty contagious," Sparks said. As it happened, Nasir was about to lean on that community as he prepared to welcome Omid and his family to Cape Elizabeth. Unlike his own arrival to the US, Nasir wanted his old friend to "start from the top."'Would others help me, even if they didn't know me?'Two miles away from Nasir's home in Cape Elizabeth, Emily Mavodones was also watching the news from Afghanistan. A video showing desperate people clinging to an airplane as it took off from Kabul International Airport had left her shaken. "What would I do to protect my family, my children?" she asked herself. "Would others help me, even if they didn't know me?"Emily found Nasir's name and contact information in a local paper. They had met once at a kid's birthday party, and she later learned that they had other passing connections: Her father-in-law had gone to school with Nasir and her mother had worked with him. "Our words were in parallel," she told me.Even as she reached out, Emily wasn't exactly sure what helping out could mean. A mom of three kids, she had volunteered here and there at a soup kitchen and she'd donated blood to the Red Cross. But she had never been involved in a long-term humanitarian effort.Nasir replied, hastily, with links to the USCIS website for sponsoring Afghans. Between the $575 application fee and the pledge to support the person financially, at least initially, Emily quickly realized it was too big a commitment for her family. She let it drop.Several weeks later, Nasir had caught his breath. Omid's family was out of Afghanistan. Catholic Charities, the local refugee-resettlement organization in Maine, was working with Omid's family to help them resettle. Nasir expected his friend to arrive in the next few weeks. Nasir circled back to everyone who had reached out to him earlier. For one thing, Omid's family would need a place to live.Emily Mavodones, who was part of the team who helped prepare a home for Omid and his family, holds Safa, the youngest of Omid and Palwasha's four children.Jodi Hilton for InsiderAs an Afghan evacuee, Omid would be given some financial assistance to help pay for housing. A two-story structure, a few doors down from Nasir, seemed like a good choice. It was one of several properties that Nasir owned in the area. When he bought it, it had most recently been used as a dentist's office, which meant there was no kitchen, and there was a large sink in almost every room.Nasir often rented out his properties to refugees and asylum seekers, or families from the area who qualified for Section 8 or General Assistance housing. It was reliable income, and Nasir saw it as a way to help newcomers who often lack the up-front cash or the credit and employment history that many landlords required. He'd bought this house a year earlier, with the idea that a local Congolese family would move in. During the Black Lives Matter protests of 2020, their son had given a speech that had moved Nasir, and he had gotten to know them a bit. But the home still needed a lot of work to function as a residential space. After a while, the family had gone someplace else.Now, with Omid heading to Maine, finishing the house was urgent.Emily offered to set up a GoFundMe page to help pay for renovations, and donations poured in — at final count, $12,890 from 142 people.Haleema, now in her early 20s, and Shukria set up a Google doc with a wish list of items. Packages started arriving at the house — mixing bowls, a pressure cooker, mortar and pestle, a bunk bed, a vacuum, clothing, diapers, toys, a crib."It was amazing how many people reached out to us," Shukria told me. "I think people were ready to help. You know, there were things being talked about." Specifically, she said, "We were talking about racism, we were talking about prejudice."What Shukria was referring to was how the residents of Cape Elizabeth had spent the past few years in a period of intense reflection. Trump-era policies, like the "Muslim ban," and then the Black Lives Matter movement had challenged them to talk openly about what kind of community they wanted to be, what their values were, and how to translate their values into action.Along with a handful of other volunteers, Nasir had helped form the Cape Diversity Coalition, which drew up a resolution saying Cape Elizabeth was welcoming to all. The school board passed it quickly. The town council took a bit longer — there was concern that the resolution was political and therefore not appropriate for the nonpartisan body — but, ultimately, it passed it too. A "global competency" goal was set for Cape Elizabeth students to be "personally responsible, aware, empathetic, and engaged local and global citizens."Perhaps this was why, when Nasir presented his neighbors with an urgent need, he had found a ready audience. Volunteers showed up to the house mostly in the early evening after work. They pulled up old flooring, installed new appliances, and painted walls. Some knew their way around a construction site, and others didn't.Nasir and Emily shared the code to enter the building so volunteers could come and go when it suited them. A to-do list was posted at the entrance, with items to be crossed off."He provided a vehicle for community members for stepping up and helping," Susana Measelle Hubbs, who served on the school board and the Cape Diversity Coalition, said of Nasir. "And I think everyone who did was so appreciative of that opportunity." "He walks the talk," she added. One Sunday afternoon, Barbara Leen stopped by. An immigration lawyer, she had been fielding calls all week about getting people out of Afghanistan. She found Nasir at the house and, when she asked what he needed, he pointed to one of the bedrooms and said with a shrug, "Well, it's a nasty job, but you can scrape up the subfloor."Friends Barbara Leen, an immigration lawyer (left) and Emily Mavodones, holding daughter Thea, are among those who helped get the house ready for Omid and his family.Jodi Hilton for InsiderFor the next few hours, Leen went to work scraping up a rubbery substance so a new floor could be laid down. Afterward, when Nasir learned about Leen's day job, he laughed. "I'm not sure scraping subfloors is exactly what I need you for," he said.As the house neared completion, Nasir gave me a tour: "This is where the reception was, this is where the laboratory was, this is where you got your teeth drilled." A drawing of the Cape Elizabeth lighthouse, the Portland Head Light — Maine's oldest — was hung on the wall, beside wooden letters that spelled out HOME. In the front yard, Emily had dug up some evergreen bushes that blocked light from entering the downstairs windows and replaced them with junipers, dogwoods, and irises. From a refugee camp in Virginia, Omid and his family awaited the paperwork to move, then a COVID-19 quarantine, and then a second quarantine after a measles case was identified in their camp.Omid still had no idea about the house, or what was awaiting them in Cape Elizabeth. Nasir had decided it would all be a surprise.Art on one of the walls in Omid's home.Jodi Hilton for InsiderWelcomeOmid arrived in Maine wearing a loose pair of sweatpants and a phone charger fashioned into a belt. The family had almost nothing of their own. They would spend their first night in a hotel, and Nasir promised to pick them up the next day and drive them to a welcome party at his sister's house.The next morning, they all pulled up in front of the old dentist's office.Some 20 members of Nasir's extended family were standing out front. Emily was there too, along with her family. Pink, blue, and yellow balloons bobbed around them, and, inside, streamers dangled from the kitchen ceiling.Nasir led them into the house and showed Omid his new bedroom. "This is your house," he said, as he handed Omid a ring of keys.After a pause, Omid placed his hand over his heart, several times. Omid hugged Nasir, burying his head in his friend's shoulder. Both of them were in tears. They stood there, holding each other for a long time.A sense of belongingWithin two days of their arrival, Omid's two older children, 7-year-old Aref and 6-year-old Farzan, were attending elementary school in Cape Elizabeth. They had been set up with a social worker, a teacher for English as a Second Language, and a translation app. The younger kids, Karimah, 3, and Safa, the baby, stayed home with their mom.Omid worried that his kids had been scarred by their experience at the camps. No one had much of anything, and everyone competed for the clothing and toys that were doled out. "For the first three weeks when we arrived, my kids were completely wild," Omid told me.Nasir, perhaps playing the role of the advocate he wished he'd had when he first arrived in Portland as a refugee kid, met with the school's staff to explain what the children had experienced in the refugee camps. "Please don't judge them — they are really good kids," Nasir said.Omid holds his house keys.Jodi Hilton for InsiderSoon, though, Omid said with relief, things started to feel normal again. Nasir, just a few doors down, was happy to explain playdates, sleepovers, and other ins and outs of raising kids in the US. Emily would occasionally drop by to see how they were settling in. Privately, though, Omid was struggling. He was looking for a job, but nothing had come through yet. In these early days, while he waited to get an American driver's license, he relied mostly on donated Uber rides, a gift from someone in the Cape Elizabeth community. He missed being able to hop in his own car and make spontaneous trips with his wife and kids.For Nasir, the Maine countryside reminded him of the village in the north of Afghanistan where he was born — lots of trees and farmland, and quiet, which he liked. But Omid's life in Afghanistan had been in Kabul, a city of 4.6 million people when he was last there — more than three times the population of Maine. The city required constant vigilance. Driving around town meant navigating the security barriers that had been laid down to deter suicide car bombings. But it was home.In Afghanistan, Omid and his friends believed in seizing the day. They would make plans to go out for billiards and kebabs on a moment's notice. He couldn't adjust to the highly scheduled culture in which he now found himself. When people would suggest doing something days or weeks in the future, Omid would sometimes think to himself: "Who knows that you'll be alive then? Enjoy yourself!"Beyond Nasir and his extended family, neither Omid nor his wife, Palwasha, had found friends they could really talk to. Omid was also losing touch with his community from back home; it felt almost too painful to reach out. Friends of his had ended up in Turkey, England, Uzbekistan, and Pakistan, and others were back in Afghanistan. "My friends say, 'Now you have reached America, and you forgot everything.'" In fact, he'd found that staying in touch had made him miss them too much. Better to focus on the present, Omid thought. "What I am doing, and I'm sure what Palwasha is doing, is all for our kids," Omid told me. "We say to each other, and ourselves, that we lived in Afghanistan, we lived enough. So now, whatever it is, it is for our kids."It was at about this time when Omid and Nasir began taking their midnight walks. On those chilly, quiet nights, Omid could confide in his old friend.One night, during that first autumn, rain was falling, and Omid suggested — absurdly — that they go for a drive to check on one of Nasir's rental properties. Nasir gamely went along with it, understanding that his friend needed the company and the distraction. "Nasir was kind to me," Omid said, recalling the moment. Sometimes, Nasir told me, he'd forget that Omid was "freshly from Afghanistan," and that some of the things he observed in Omid were only natural. "You're fearful of people, you don't trust people easily'... I'm trying to tell him, 'This is America, you have freedom. Don't be fearful.'" "It will take a while for him to feel a sense of belonging," Nasir told me. Safa balances on Omid's palm.Jodi Hilton for InsiderEmily Mavodones, right, visits with Omid, left and Nasir at Omid's home, formerly a dentist's office.Jodi Hilton for InsiderOmid serves tea, nuts and dried fruits to Nasir, who on weekends and special occasions likes to wear Afghan clothes.Jodi Hilton for InsiderNasir, left, plays basketball with one of Omid's sons.Jodi Hilton for InsiderOn a crisp sunny day that first fall, the yellow leaves resplendent against a clear blue sky, Nasir was again playing host, as he and Emily welcomed guests to Omid's front yard for an official welcome party. Nasir's extended family prepared baklava and other treats. A local radio station was there, as well as Anne Carney, a Maine state senator. Neighbors stood about, holding cups of apple cider and cans of seltzer.Nasir climbed to the top of a chair and beamed down at the crowd. Wearing a vest over a long white tunic and loose pants, he joked that he looked the part of a traditional Afghan, while Omid, dressed in a navy-blue fleece and jeans, easily passed for an American. Omid stood beside him, looking slightly uncomfortable, as Nasir told the story of Omid's journey."I don't have words for Nasir," Omid told me later. "Thank is a small word. I love him, simply," Nasir tells him that, if he is trying to repay him, Omid is "in the wrong friendship."The length of your blanketOn a Friday afternoon in late July of this year, Omid's two older kids — Aref and Farzan — were hurtling through the house and yard, switching happily from game to game. Aref was demonstrating his karate kick. Farzan had taken a blue marker to their whiteboard. "Look what I'm drawing, a ghost!" he said. Then he lined up the dry-erase markers, red, green, and black. "It's the flag of Afghanistan," he said.By now, the boys spoke nearly perfect English. Omid told me that Farzan, in particular, preferred English. Palwasha is teaching their kids how to read and write in Pashto. She's also teaching Nasir's kids; they were all born in the US, and it's their first time taking lessons.  Later, as the boys looped around on their bikes, a neighbor from across the street came over with three zucchini from his garden. "We had extra," he said. His family is from Ukraine, and the blue-and-yellow Ukrainian flag hangs in his doorway. While the kids were living very much in the moment, the adults were still finding that more difficult. They are the keepers of too many memories, and too much hinged on their decisions.The house in Cape Elizabeth.Jodi Hilton for InsiderIt's not as if you can just snap your fingers and transform your life, Omid told me. But the family's progress in Cape Elizabeth was evident.After the welcome party, a neighbor had connected Omid with an IT job in Portland. He started in December, once he'd received his Social Security number. It was a contract role, from afternoon to evening, but it allowed Omid to support the family. In early January, Omid got his driver's license and started leasing a black Highlander. "It gave me the power to get out of the house," he said. So far, the family had made two big trips — to Virginia, nine hours away, and to Boston. On both trips, they delighted in time spent with Afghan Americans. Palwasha struck up a conversation with a woman from Pakistan, and the two women have stayed in touch. "Here, you will not find any Afghans, to at least talk with and share your feelings," Omid told me.Still, the progress could feel halting, and Omid was still seeking a permanent legal status for his family. Omid had an unexpected surgery in the spring and took a leave from his IT job; he'd been doing food-delivery service for extra income while he planned his next steps. Eventually, Omid would like to save up for a house, and start a business. He'd like to find work that feels challenging. He was accustomed, previously, to a comfortable life. Now, he worries that he will not be able to keep up with the wealth he sees around him, and that his kids will feel bad about it. He quoted an Afghan proverb that says you should wear the blanket that is your size, not the size of others; otherwise your feet will hang out the end and get cold. "Stretch your feet to the length of your blanket," the proverb says.  Palwasha, meanwhile, had been studying to get her driver's license. "We're having a lot of problems with the driving stuff, so she can at least come out of the house," Omid explained. "In Afghanistan, ladies drive, but it is not common. People there, if they see a lady driving, they tease her. 'Hey, you don't have a husband? Do you want a husband?'" He looked over at his wife. "She is my power. She is my advisor," he said. "She seems quiet, but she is not."Their neighbors have been a gift, they said. One of them, they refer to as "uncle." At various times, neighbors have dropped by to help fix the kids' bikes, lent Omid protective gear for his ears and eyes when he was spotted using a weed wacker without them, and inviting them over to pizza dinner. Together, they play basketball in one another's driveways and celebrate birthdays. "It's nice to look out the windows and see kids out there, and hear laughter," one of their neighbors told me.On a recent evening, the power had gone out while Omid was out delivering food. The neighbors came by with flashlights and games and kept the kids company until Omid got home. In the dark, Palwasha brought out a big tray of fruit. It was a cold evening, and they all sat together, huddled under a quilt to stay warm.The family visited an apple orchard in nearby Falmouth.Jodi Hilton for Insider'We had a beautiful life'Omid took a seat next to Palwasha on the couch, as Safa wiggled between their laps. Omid held up his laptop and they flipped through photos, starting with their wedding.Theirs had been an arranged marriage. It was held in Kabul, where they're both from, and 1,000 guests were there to celebrate. The two grew animated as they pointed out relatives and friends and memories from their former life. In one photo, Omid wore a shiny gray suit. Palwasha had picked it out for him. "I had about 20 suits while I was living in Afghanistan," Omid said. "And I left it all behind." He paused. "I'm the guy who never went to the office with jeans."Omid clicked on a photo of their apartment in Kabul. It had high ceilings, and they had painted every room a different color — pink, maroon, light gray, and white. "If you get bored in one room, you go to the next room, and your mind will be changed," Omid said. "We loved these colors." After Omid's family escaped Kabul, members of his extended family came by to collect some of their more precious items, and gave other things away. The apartment is no longer theirs. Omid pointed to the living-room rug, with its bold flowers, and said he had paid about $3,000 for it. "I was fond of this stuff," he said. "We had a beautiful life." Then, a photo of Omid in his office, at his last job in Afghanistan. "It was a big project," he said. "I miss it."They paused over a family photo from the day they left. Omid stiffened on the coach and the room went still. The portal had closed, and the mood, broken.They'd taken the picture to send to the US Marines at the airport so that they would be recognized. No one was smiling; they all looked straight at the camera, except for Safa, who stared up at the sky.Transported back to the present, Omid stood up and stepped away from the couch.Carnival They'd had a late lunch — creamy shola rice — so no one was hungry. Omid and Palwasha suggested an outing.They climbed into the Highlander, and the voice of Ahmad Zahir, singing in Dari, came on from the speakers. Palwasha relaxed into her seat. Aref's voice came from behind her: "I love family time."Crossing the Casco Bay Bridge, Omid drives into Portland. One of his first priorities upon arriving in Maine was to get his U.S. driver’s license and acquire a car.Jodi Hilton for InsiderThey drove a bit, and then Omid pulled up to the Old Orchard Beach carnival. Spotting the lit-up Ferris wheel and roller coaster, the boys jumped up and down, as their mother carefully transferred Safa, already fast asleep, to a stroller.Once inside, they passed an arcade, which Omid said reminded him of the video-game arcade they liked in Kabul. He bought a bundle of tickets, and Palwasha and the boys headed over to the Matterhorn and then the Pirate's Ship, snapping selfies as the boys shrieked with delight. Karimah, too little for most of the rides, poked her head through a cutout of a lobster's body and a Southwestern-themed scene called "Tortilla sunrise."The family reunited at the carousel. "It smells like the ocean," Aref murmured as his horse glided up and down a gold pole.Before too long, Karimah had claimed Safa's stroller, and Palwasha was carrying the baby. Requests for ice cream were met with gentle reminders that they had ice cream at home.They climbed back into the Highlander, content and sleepy. Omid took out his phone. "Siri, take me home," he said. "Siri, take me home."Read the original article on Business Insider.....»»

Category: dealsSource: nytNov 18th, 2022

Futures Reverse Sharp Early Losses To Trade Near Session Highs Ahead Of Midterms

Futures Reverse Sharp Early Losses To Trade Near Session Highs Ahead Of Midterms This morning's price action has a whiff of what happened two weeks ago when a relentless barrage of bad earnings reports by tech giants propelled stocks higher during the latest bear market meltup, amid speculation the worst news is priced in. Well, after last week's FOMC mauling, risk has once again started to meltup following Friday's stark divergence between the "good" payrolls number and "catastrophic" employment data, sending stocks sharply higher and the dollar sliding. And while some may have expected the selling to return after Sunday's latest cut to high end iPhone 14 shipping forecasts, which Apple blamed on China but which appears to have been driven as much by a decline in demand and sent AAPL shares down 2%, this morning US stock futures have reversed earlier losses of more than 1% and looking to extend Friday’s rebound, as investor attention turns to the latest inflation report and the midterm elections later this week. At 7:30am ET, contracts on the Nasdaq 100 were up 0.4% after earlier sliding as much as 1.3% as Chinese officials reiterated their intention to “unswervingly” stick to a Covid Zero approach; S&P 500 futures also reversed early declines to rise 0.4%. The benchmark had snapped a four-day slump on Friday following a mixed jobs report. The dollar reversed earlier gains; while Monday’s partial gains in Treasuries were underpinned by a 4-basis point drop in the 10-year yield. The two-year rate, more sensitive to monetary policy, remained higher around the 4.68% level. Among individual movers in premarket trading, Facebook parent Meta (which really should change its name back already) rose following a report that it is planning to start cutting thousands of jobs this week, about a week after we said it should do that immediately. In a normal world METHA would announce 20% layoffs after the close — zerohedge (@zerohedge) October 27, 2022 As noted above, Apple dropped after the company reduced the outlook for shipments of its latest premium iPhone due to China lockdowns. Chinese stocks listed in the US are on track to extend their rally to a fifth day even even though health authorities repeated their strict adherence to the country’s Covid Zero policies. Alibaba rose 1.3% in premarket trading, JD.com +1.4%, Baidu +2.1%, Li Auto +3.1%, XPeng +5.1%. Here are the other notable premarket movers: Peabody Energy shares rise as much a 6% in premarket trading, after the US coal miner and Australia’s Coronado Global Resources ended merger talks. Activision Blizzard shares fall 0.8% in US premarket trading after a NY Post report that Microsoft’s takeover of the entertainment software firm was facing heightened scrutiny from regulators, with some Activision insiders fretting that the transaction could crumble. Redfin shares slide 8% as Oppenheimer cut the real estate brokerage to underperform, saying its core business model is “fundamentally flawed,” and putting a street-low $1.30 PT on the stock. Keep an eye on Estee Lauder (EL US) as the stock was downgraded to hold from buy at Berenberg, which also cuts its price target, saying the cosmetics maker lacks visibility on a potential recovery. Keep an eye on Ruth’s Hospitality after the stock was downgraded to market perform from strong buy at Raymond James, with the broker expecting higher inflation to limit earnings per share growth in 2023. As BBG notes, US equities have tried to recover in the fourth quarter after slumping this year as investors wagered that signs of peaking in inflation would allow the Federal Reserve to slow the pace of rate hikes. The next clue will come on Thursday, with October’s consumer price index report expected to show a slight cooling in prices from the previous month. "Markets are essentially in a struggle between people who argue the Fed has hiked rates too much and should pivot and the other group that says inflation needs to be fought harder and the Fed needs to hike more," said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. Victoria Scholar of Interactive Investor, agreed, saying she expects stock volatility to continue as markets face “an eclectic mix of drivers,” including the midterm elections on Tuesday. Morgan Stanley's in house permabear Mike Wilson turned even more bullish on Monday saying investors should stay bullish on equities ahead of the midterms. Polls pointing to Republicans winning at least one chamber of Congress provide a potential catalyst for lower bond yields and higher equity prices, which would be enough to keep the bear-market rally going, they said. Meanwhile, the permabulls at JPMorgan said the same thing they have said since Jan 1 - buy the dip because a potential peak in bond yields and “very downbeat” sentiment may support stocks. The bout of optimism outweighs, for the moment, the Federal Reserve’s resolute campaign against price surges, signs of stress in US corporate performance and China’s announcement it will “unswervingly” adhere to current Covid Zero policy.  But corporate earnings are casting a dampener on sentiment as margins reel from the impact of high inflation. Goldman Sachs Group Inc. strategists lowered their S&P 500 profit estimates for each year until 2024, saying margin contraction in the third quarter signals more pain ahead. European stocks and US futures pare earlier declines as dollar extends declines beyond Friday’s lows. Euro Stoxx 50 rises 0.5%. Travel, miners and autos are the strongest performing sectors in Europe. DAX outperforms peers, adding 0.7%, FTSE 100 is flat, underperforming peers. Here are some of the biggest European movers today: Telecom Italia rises as much as 8.2% to its highest intraday level since mid August following a report that Vivendi, the biggest shareholder in the phone operator, is open to discussions with the Italian government on creating a single land-line phone network. Ryanair shares rise as much as 4.9% as the low-cost airline flagged strong bookings through next summer, shrugging off impact from a potential recession in Europe. PostNL rises as much as 5.4% after the company notes that 4Q will be its strongest quarter, as it takes mitigating actions amid a macroeconomic environment that has deteriorated. Flutter Entertainment shares rise as much as 5.4% in Dublin after an arbitrator told Fox Corp. that exercising its option to acquire an 18.6% stake in sports-betting giant FanDuel, which is majority owned by Flutter, would cost it at least $3.72b. GSK falls as much as 3.3% after its antibody blood cancer drug Blenrep failed its confirmatory phase 3 trial. Citi says the news is likely to result in the drug being taken off the market in the US and the EU, expressing “minimal” expectations for commercial success going ahead. Novozymes falls as much as 3.3% as Credit Suisse flags lower earnings and peer multiples for the world’s largest maker of industrial enzymes. UniCredit shares declined as much as 4.2% following a FT report on Nov. 6 that the ECB had clashed with the Italian lender over its distribution plans and its Russia presence. Shares were 3% down in early trading Monday, the worst performer on the Stoxx 600 Banks Index. Kingfisher falls as much as 3.6% as it was cut to neutral from outperform and PT trimmed to 247p from 305p at Credit Suisse on macro risks facing the DIY retailer. Earlier in the session, Asia stocks climbed as traders snapped up Chinese stocks in hopes of an eventual reopening and as US bond yields slipped. The MSCI Asia Pacific Index advanced as much as 1.8% to the highest in a month, led by materials and technology stocks. China’s tech shares extended their rally from Friday, which was spurred by reported progress in efforts to prevent the delisting of Chinese companies from US bourses.  Hong Kong topped gains in the region even though Chinese officials stuck to their Covid Zero approach over the weekend, as investors said extreme pessimism had already been priced into Greater China markets. Most gauges across Asia also advanced after 10-year Treasury yields edged lower. Supporting sentiment, the dollar slipped after a bigger-than-expected increase in the US unemployment rate spurred hope the Federal Reserve may eventually slow the pace of rate hikes. Vietnam’s shares, however, fell to their lowest in two years. Japanese stocks climbed, as strong corporate earnings boosted investor sentiment while the market continued to look for clues on when the Federal Reserve’s monetary tightening may subside. The Topix rose 1% to close at 1,934.09, while the Nikkei advanced 1.2% to 27,527.64. Keyence Corp. contributed the most to the Topix Index gain, increasing 1.9%. Out of 2,165 stocks in the index, 1,520 rose and 558 fell, while 87 were unchanged. “Overall there there are more upward revisions,” said Mamoru Shimode, chief strategist at Resona Asset Management, regarding recent earnings reports. “The market is still looking six months to a year ahead, so the focus is gradually shifting” to results for the next fiscal year. Australian stocks also extended gains with the S&P/ASX 200 index rising 0.6% to close at 6,933.70, extending gains for a second session, boosted by an advance in mining and energy shares.  The mining sector climbed to the highest in a month, after tracking Friday’s gains in commodity prices as US jobs data, a softer dollar and China reopening hopes boosted materials last week. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,290.34. Investors will focus on whether the subtle relaxation of China’s Covid Zero policy will gather momentum in the coming weeks, Saxo Capital Markets strategists wrote in a note. “This will be key not just for mainland and HK markets, but also for commodity markets.” Last week’s rally in Chinese shares, the biggest in years, helped lift Asia’s equity benchmark by more than 6% from an October trough. Whether that trend will continue depends on China’s tone on lockdowns and vaccinations. Investors will also keep an eye on US inflation data expected on Thursday In FX, the Bloomberg Dollar Spot Index swung to a 0.3% loss after earlier rising by as much as 0.5%, as the greenback fell against most of its Group-of-10 peers. NZD and AUD are the weakest performers in G-10 FX, SEK and GBP outperform. The euro rose above parity before paring gains. European bond yields were mostly lower as pricing for central major bank hikes were pared. Bund yields fell by up to 3bps while Italian yields fell by up to 5bps The pound led G-10 gains after erasing earlier losses against the dollar. Gilt yields fell on the belly of the curve. The BOE is set to sell medium-maturity gilts held under its asset purchase facility later Monday. UK house prices fell at the sharpest pace in almost two years as rising mortgage rates and a gloomy outlook for the economy depressed demand The New Zealand and Australian dollars pared losses after earlier dropping by more than 1% in a possible reflection of disappointment over the prospects of China easing its Covid-Zero stance The yen pared losses as the the dollar lost traction in early European trading In rates, Treasuries are mixed with the curve flatter into early US session as front-end cheapens led by losses in front-end of the German curve. Stocks rally and dollar extends Friday’s slide. 10-year yields are around 4.13%, richer by ~3bp on the day, outperforming bunds and gilts by 1bp and 4bp in the sector; long-end gains flatten 2s10s by 4bp, 5s30s by 3bp. Dollar issuance slate empty so far; desks expect $25b to $30b of new debt this week, front- loaded ahead of CPI and Friday’s market close for US Veterans Day. Bunds, gilts and USTs 10-year yields all decline about 1 basis point as bonds pare losses. Peripheral spreads tighten to Germany with 10y BTP/Bund narrowing 3.1bps to 213.4bps. In commodities, WTI trades within Friday’s range, falling 0.6% to near $92; WTI and Brent futures have trimmed losses seen in wake of China sticking to its COVID policy over the weekend. Kuwait appointed Ahmed Jaber al-Aydan as the new CEO of Kuwait Oil Company and Wadha al-Khateeb as CEO of Kuwait National Petroleum Company, while new leaders were also appointed for Kuwait Integrated Petroleum Industries Company and other state companies in the energy sector, according to Reuters. Kuwait's KPC aims to export its first oil product cargo from its 615k Al Zour refinery by mid-November, according to Reuters sources. Spot gold reversed earlier losses and climbed back above USD 1,675/oz after printing a base at around USD 1,665/oz earlier today. Base metals have also trimmed earlier losses amid the improvement in risk appetite and decline in the Buck, with 3M LME copper re-eyeing USD 8,000/t to the upside after forfeiting the level overnight. Bitcoin is under modest pressure though pivots the mid-point of a sub-USD 1/k range which itself is a similar magnitude above the USD 20k mark. Market Snapshot S&P 500 futures up 0.3% to 3,788.25 STOXX Europe 600 up 0.4% to 418.47 MXAP up 1.7% to 142.45 MXAPJ up 1.8% to 459.88 Nikkei up 1.2% to 27,527.64 Topix up 1.0% to 1,934.09 Hang Seng Index up 2.7% to 16,595.91 Shanghai Composite up 0.2% to 3,077.82 Sensex up 0.3% to 61,153.50 Australia S&P/ASX 200 up 0.6% to 6,933.71 Kospi up 1.0% to 2,371.79 German 10Y yield down 0.7% to 2.28% Euro up 0.3% to $0.9986 Brent Futures down 0.3% to $98.24/bbl Gold spot down 0.2% to $1,679.09 U.S. Dollar Index down 0.35% to 110.49 Top Overnight News from Bloomberg The Federal Reserve “hasn’t accomplished anything” in loosening the US labor market even after four consecutive 75-basis-point hikes, former New York Fed President Bill Dudley said The ECB should keep raising interest rates, even at a reduced pace, until inflation excluding energy and food prices starts to ease, Governing Council member Francois Villeroy de Galhau said Chancellor Jeremy Hunt is drawing up plans for tax increases and public spending cuts worth up to £54bn a year to fill the black hole in the UK public finances, according to allies of Britain’s chancellor, the FT reported European households are paying more than ever for their electricity and natural gas, even as governments spend billions to shield consumers from the energy crisis China’s total debt as a percentage of gross domestic product climbed to new record high of 272.1% in the third quarter, surpassing the previous record of 271% just a quarter ago, data compiled by Bloomberg showed The BOJ can end up holding more than 100% of benchmark debt as its ownership doesn’t fall even when it sells the securities to market participants using repurchase agreements President Joe Biden’s national security adviser and senior Kremlin aides have held private talks in recent months to reduce the risk of a broader conflict over Ukraine, the Wall Street Journal reported. A peace settlement wasn’t a goal of the discussions, according to the report APAC stocks mostly gained as investors continued to pile on the reopening bets despite China 'unswervingly' maintaining its COVID approach, while the region also shrugged off disappointing Chinese trade data. ASX 200 was higher as strength in the commodity-related and consumer sectors atoned for the weakness in tech and financials with the latter not helped by Westpac’s earnings which showed a decline in cash profit and revenue. Nikkei 225 strengthened from the open and climbed above the 27,500 level with the index unfazed by the weak earnings releases from the likes of Sharp and SoftBank Corp. Hang Seng and Shanghai Comp recovered from opening losses in which the Hong Kong benchmark briefly surged by more than 3% amid strength in property names and a continued tech rally, while the mainland index was less decisive amid disappointing Chinese trade data and after China stuck to its strict COVID policy, as well as reported its largest number of daily infections in 6 months. A more detailed look at global markets courtesy of Newsquawk China health commission spokesman said China will not waver in preventing a COVID rebound and in the dynamic clearing of cases as soon as they emerge, while it did not make adjustments to anti-COVID protocols and a China disease control official said they are to guide localities to continue strengthening COVID vaccination of the elderly. Furthermore, a Peking University infectious disease expert said the current prevention strategy is still able to control COVID despite the high transmissibility of variants and asymptomatic carriers, although an Education Ministry official noted that it is necessary to prevent excessive epidemic prevention and not add extra layers of measures, according to Reuters. Beijing City is set to improve COVID rules for people entering the city, but vows to stick to COVID-Zero policy, according to a Beijing Official cited by Bloomberg. Haizhu district of Guangzhou, China is to extend COVID restrictionsuntil November 11th, via Bloomberg.   China’s Zhengzhou city is taking steps to improve the precision of epidemic control measures after being criticised for a one size fits all approach and the city government apologised for the problems in the latest COVID fight, while it vowed to implement social management and control measures in a precise manner to avoid simply locking down communities. China's new daily COVID-19 cases were rose to the highest in six months with the country reporting 5,436 new cases on Sunday, according to Bloomberg. PBoC Deputy Governor Fan Yifei, who is a key driver of the digital yuan transition, was detained for investigation and is suspected of serious violations of discipline and law, according to SCMP. Japan’s government releases a statement on the US inflation Reduction Act in which it stated that the requirement of EV tax credits is not consistent with the US and Japanese governments’ shared policy to work with allies and like-minded partners to build resilient supply chains. Japan added that if the IRA would be implemented as it is to provide discriminatory incentives, it is possible that Japanese automakers will hesitate to make further investments towards the electrification of vehicles, according to Reuters. Japan is reportedly to fund its extra budget with bond issuance of JPY 22.9tln, via Bloomberg citing documents. Top Asian News Major bourses in Europe kicked off the session with mild losses across the board but the downside faded within the first hour of trade. Sectors are mostly firmer and have experienced a turnaround since the cash open – with defensives now largely towards the bottom of the bunch. US equity futures have also moved into the green after posting mild losses overnight and in the run-up to the European cash open. IATA September update: Total Traffic +57% YY; International Traffic +122% YY. All markets reported strong growth, led by APAC. Top European News UK PM Sunak and Chancellor Hunt are to announce a stealth tax raid on pensions later this month, according to The Telegraph. It was also reported the Chancellor is set to outline GBP 60bln in tax and spending cuts with early drafts of the autumn statement containing plans for up to GBP 35bln of spending cuts and GBP up to GBP 25bln on tax increases, according to The Guardian. UK PM Sunak warned that people cannot expect the state to “fix every problem” and vowed to regain the trust of voters by being honest about the scale of the economic difficulties ahead, according to The Times. UK PM Sunak is reportedly under pressure regarding bullying claims concerning one of his closest political allies with the opposition Labour party calling for an independent investigation of allegations of bullying by Sir Gavin Williamson who was appointed as Minister of State without Portfolio last month, according to FT. UK stamp duty in Q3 rose to a record high of GBP 3.6bln although property market analysts warned the trend will reverse as house prices decline, according to FT. UK steel industry warned that it needs state aid to survive a green transition with two large producers calling for the government to match the support offered to suppliers across Europe, according to FT. Traders have pointed to a squeeze in the “repo” market and short-dated gilts, according to The Times and The Telegraph. ECB and UniCredit (UCG IM) are reported to clash regarding capital plans and Russia presence with tensions building amid the Italian lender's aggressive strategy to overhaul lending operations, according to FT. Germany is to allocate EUR 83.3bln or 42% of a major protection scheme that was launched in October to finance a cap on gas and power prices next year, according to Reuters. ECB's Villeroy said shouldn't stop rate hikes as long as underlying inflation has not clearly peaked, adds we are not far from the neutral rate, beyond which the hiking pace could be more flexible and slower, according to Irish Times. FX DXY has faded significantly from an initial rebound to 111.28 highs; however, this was shortlived amid renewed China/COVID reopening chatter, in its wake the DXY has slipped to a 110.33 low. Despite this, performance for peers is fairly mixed with APAC FX lagging and European FX benefitting from the USD moves. At the top-end, Cable has moved to within circa. 30pips of the 1.15 mark with EUR similarly bid, though has failed to sustain brief momentum above parity. Antipodeans, CAD and JPY are modestly pressured/narrowly mixed against the USD, and have been fairly choppy within 0.6404-77, 1.3466 to 1.3554 & 147.57-146.58 parameters for the AUD, CAD & JPY respectively. Fixed Income Core counterparts have spent the morning under pressure amid the increasingly constructive risk tone; however, this has eased and USTs are now essentially unchanged. In the EZ, Bunds have seemingly derived encouragement from the 136.00 handle holding and have since breached 137.00. Gilts have been the slim outperformer; however, as the clock ticks down to the latest QT operation in the medium-term, this has eased to near unchanged around 101.30 Commodities WTI and Brent futures have trimmed losses seen in wake of China sticking to its COVID policy over the weekend. Kuwait appointed Ahmed Jaber al-Aydan as the new CEO of Kuwait Oil Company and Wadha al-Khateeb as CEO of Kuwait National Petroleum Company, while new leaders were also appointed for Kuwait Integrated Petroleum Industries Company and other state companies in the energy sector, according to Reuters. Kuwait's KPC aims to export its first oil product cargo from its 615k Al Zour refinery by mid-November, according to Reuters sources. Spot gold reversed earlier losses and climbed back above USD 1,675/oz after printing a base at around USD 1,665/oz earlier today. Base metals have also trimmed earlier losses amid the improvement in risk appetite and decline in the Buck, with 3M LME copper re-eyeing USD 8,000/t to the upside after forfeiting the level overnight. Geopolitical Ukrainian President Zelensky said Russian forces are suffering serious losses in the east and Russia is readying new attacks on Ukrainian infrastructure, particularly energy, according to Reuters. There were also separate reports that Zelensky said Iran lied about sending a limited number of drones to Russia and he noted that Kyiv forces were shooting down at least 10 of them daily. Ukrainian authorities in Kyiv have begun planning for a complete blackout which would require the evacuation of 3mln residents and are establishing 1,000 heating centres although it was noted that the situation was currently manageable, according to NYT. Ukrainian forces damaged the Russian-held Nova Kakhova dam in a HIMARS strike, according to an emergency services representative cited by TASS. US National Security Adviser Sullivan held confidential discussions with Russian counterparts in recent months in an effort to reduce the risk of a broader conflict over Ukraine and to warn about the use of nuclear or other weapons of mass destruction, according to WSJ. On this, the Kremlin declined to comment. China's President Xi to visit Saudi Arabia before end-2022, via WSJ; tentatively scheduled for the second week of December. US Event Calendar 15:00: Sept. Consumer Credit, est. $30b, prior $32.2b Central Banks 15:40: Fed’s Collins and Mester Speak at Women in Economics... 18:00: Fed’s Barkin Speaks at Event on Inflation DB's Jim Reid concludes the overnight wrap The warm weather here in Europe continues to be great news for energy storage preservation across the continent. However, there has been one big causality. Me! Over the weekend I had horrible hay fever. I've no idea what caused it, but I couldn't stop sneezing in a manner only consistent with an allergy. I usually get it bad from late January to April but this is the first time ever in November. If anyone has had similar experiences, please let me know so we can swap notes and solutions/remedies. As I splutter into a new week, it feels odd to say that US mid-terms (tomorrow) might be more important than US CPI (Thursday), so I won’t! However, history suggests the mid-terms are a big influence on markets as they always seem to rally once mid-terms (or Presidential elections) are out the way. Although regular readers should be in little doubt that my base case is that 2023 is going to be a bad year for the global economy and risk, in every 12-month period post mid-terms over the last century, the equity market has always gone up with the inflexion point being immediately after mid-terms. While I think the US recession of 2023 will overpower that historical track record, Tuesday being out the way could be a catalyst for a more positive short-term period. So a big moment. Before we preview these two events in more detail, elsewhere in the US this week the highlight will probably be the University of Michigan survey out on Friday with the latest inflation expectations series. It’s a light week for data outside of that. There is plenty of Fed speak so see that in our day-by-day calendar at the end as usual. You’ll also see from that that Lagarde speaks today. Other important data releases in other parts of the globe will feature trade balances for key global economies as well as CPI and PPI data for China (Wednesday). Here in Europe, GDP from the UK (Friday) and industrial production data from Germany (today) will be in focus. In earnings, Berkshire Hathaway, Disney, Occidental, adidas and BioNTech will be among the companies reporting. Elsewhere, COP27 kicked off yesterday so we’ll likely see plenty of headlines from that. Asian equity markets are rallying this morning following the broadly positive cues from global markets on Friday. Across the region, the Hang Seng (+3.42%) is outperforming, after quickly reversing its morning losses, followed by the Nikkei (+1.32%) and the KOSPI (+1.00%). Elsewhere, mainland Chinese equities are gaining traction with the Shanghai Composite (+0.46%) and the CSI (+0.49%) both in the green after trading broadly lower in early trade as Chinese health officials indicated that it would stick to its strict zero-Covid policy (more below). In overnight trading, US stock futures are slightly lower with contracts on the S&P 500 (-0.17%) and NASDAQ 100 (-0.25%) both dipping. Early morning data showed that China exports as well as imports unexpectedly contracted simultaneously for the first time since May 2020 as elevated inflation and rising interest rates hurt global demand. Outbound shipments declined (-0.3% y/y) in October (v/s +4.5% expected) after a +5.7% increase in September while inbound shipments fell (-0.7% y/y) following a +0.3% gain in the previous month. Meanwhile, the overall trade surplus slightly widened to +$85.15 billion (v/s +$84.74 billion in September, but missing a forecast of $95.97 billion). Over the weekend, the Chinese government reiterated that they would stick "unswervingly" to their ‘zero-tolerance Covid’ strategy, following several days of speculation to the contrary. Staying on China, Apple has warned that it is anticipating lower shipments of its high-end iPhone 14 models with customers experiencing longer wait times because of Covid-19 restrictions at its primary assembly plant in Zhengzhou, thus dampening the company’s sales outlook for the year-end holiday season. There also seems to be a softer demand element to it too. Lastly, on overnight stories, the WSJ has reported that the US national security advisor has been having secret talks with senior Kremlin officials in recent months to try to ensure that the conflict doesn't move up to the next level. There is no suggestion that a route to peace has been discussed but it shows there are high level diplomatic discussions though. Onto more details of this week now. Looking first at tomorrow’s midterms, our economists' base case is that Republicans will take the House but Democrats will maintain their slim majority in the Senate, although the latter is a close call. It is highly unlikely that either party will achieve a two-thirds majority in Congress, thus effectively maintaining President Biden's veto power. Currently, FiveThirtyEight's model gives the Republicans a 54% chance of winning the Senate and 82% for the House. Their chance of winning both is 53%. See our economist’s midterms preview here. They will be hosting a zoom webinar on Wednesday to review the results and implications for the economic outlook. To register please click here. With regards to US CPI on Thursday, our economists believe energy will boost the headline (DB forecast at +0.62% vs. +0.39% previously. Consensus +0.6%). Last month core surprised on the upside (+0.6% MoM, vs +0.4% consensus) so this month’s reading will get the most focus (DB at +0.46% vs. +0.58% previously. Consensus +0.5%). In terms of YoY, DB expect headline to dip -0.2pp and core -0.1pp to 8.0% (consensus 7.9%) and 6.5%, respectively. In terms of corporate earnings, there will be a couple of corporate heavyweights reporting this week even with around 85% of the S&P 500 index having now released Q3 results. The highlights are likely Disney and Occidental (tomorrow) but we also have Activision Blizzard, Lyft (today) and Roblox (Wednesday) in tech and BioNTech (today), adidas (Wednesday), AstraZeneca (Thursday) and SoftBank (Friday) elsewhere. Recapping last week now and the dovish pivot trade pivoted one way and the other across the week but ultimately Powell’s FOMC press conference put the hawks back in the ascendency. Treasury yields moved higher and a fresh round of curve flattening materialised. 2yr Treasury yields gained +24.4bps over the week (-5.5bps Friday) while 10yr yields climbed +14.6bps (+1.2bps Friday). Adding evidence to Chair Powell’s main arguments, the employment situation report out of the US on Friday painted a still robust picture of the US labour market, where +261k jobs were added (vs. +193k expected), while average hourly earnings ticked up to +0.4% (vs. +0.3%). Labour force participation tightened, dropping to 62.2% (vs. 62.3%), while unemployment actually increased slightly to a still-tight 3.7% (vs. 3.6%). Elsewhere, the BoE painted a much more dovish outlook as they hiked 75bps, which led to a much different curve shape, as 2yr gilt yields fell -19.1bps (-2.5bps Friday) and 10yr yields were 'only' +5.9bps higher (+1.6bps Friday). The bund curve split the difference between the US and UK moves and moved in parallel, with 2yrs climbing +18.9bps (+4.3bps Friday) and 10yrs +19.2bps higher (+5.0bps Friday). The pivot unwind trade showed up in equity prices, too, where the S&P 500 tumbled -3.34% (+1.36% Friday) and the tech-heavy NASDAQ bore the brunt of a hawkish Chair by falling -5.65% (+1.28% Friday). European equities, meanwhile, managed to finish up over the week, with the STOXX 600 gaining +1.51% (+1.81% Friday) and the DAX +1.63% higher (+2.51% Friday). As you can see, a lot of those gains took place on Friday following headlines that China was considering easing its Covid restrictions, potentially unleashing a major engine of global growth. In turn, Brent crude oil prices also rallied hard to finish the week +3.11% (+4.12% Friday). Over the week, the Shanghai Composite climbed +5.31%, with the Hang Seng +8.73%. Tyler Durden Mon, 11/07/2022 - 08:09.....»»

Category: dealsSource: nytNov 7th, 2022

60 thoughtful gift card gifts they will actually appreciate

Gift cards are a great solution for those notoriously hard-to-shop-for people. Here are some of our favorites for everyone on your list. When you buy through our links, Insider may earn an affiliate commission. Learn more.Anthropologie/Warby ParkerGift cards are the kinds of presents that can seem obvious or unimaginative, a step up from cutting a check and stuffing it into a card. But hear us out: They're actually incredibly useful and can even be personal — if you put a little thought into them.A good place to start is by thinking of what your giftee could really use right now. Did they just move to a new home or apartment? Get them a card to buy kitchen essentials or home decor. Are they starting a new job or internship? Money for work-appropriate clothes could go a long way. Have they been going through a rough patch or need a little help taking a break? You can go in on a gift card that helps them travel, splurge on scented candles, or snag some snacks.To help, we bunched up all the gift cards below into different categories, so you can jump right to what you think your gift recipient would want the most. Oh, and psst: Digital gift cards and subscriptions just happen to make excellent last-minute gifts if you're in a pinch.General/Big retailersHome and KitchenClothes and AccessoriesBeauty and SkincareFood and DrinksTravelHobbies and EntertainmentGeneral / Big retailersScott Olson/Getty ImagesAmazonAmazonAmazon Gift Card, from $10, available at AmazonAn Amazon gift card is a more polite version of giving them cash. They can buy pretty much anything they've had on their wish list, whether it's new and exciting tech or completely utilitarian home basics. You can also buy it in a gift card box.Uncommon GoodsUncommon GoodsUncommon Goods Gift Card, from $5 at Uncommon GoodsUncommon Goods is one of our favorite retailers for truly unique gifts, but if you'd rather let the giftee pick out something themselves, this gift card can be a fun, thoughtful gift.Best BuyBest BuyBest Buy Gift Card, from $15, available at Best BuyGift them a gift card for all conceivable forms of tech, home appliances, and more. TargetTargetTarget Gift Card, from $5, available at TargetEspecially perfect for anyone moving to a new dorm or apartment, a Target gift card gives them access to everything from home essentials and decor to clothes and pantry staples.AnthropologieAnthropologieAnthropologie Gift Card, from $25, available at AnthropologieAnthropologie is one of those high-quality retailers your giftee can really appreciate a gift card for. They can use the money for gorgeous new clothes, stunning home decor, and even dresses and accessories via BHLDN, the brand's wedding section.EtsyEtsyEtsy Gift Card, from $25, available at EtsyFrom jewelry to clothing and home decor, the online marketplace surely has something unique that'll fit the bill for them.Lowe'sLowe'sLowe's Gift Card, from $50, available at AmazonDepending on the recipient and how much they enjoy their home-improvement tasks, this may be the most exciting gift they receive during the holidays.NordstromNordstromNordstrom Gift Card, from $5, available at NordstromIf you want to get them a sweater you know they'll love, let them pick it out themselves.Macy'sMacy'sMacy's Gift Card, from $10, available at Macy'sFor anyone in need of a new wardrobe or even furniture, a Macy's gift card gives them access to seemingly endless clothes and accessories.Home and KitchenJustin Sullivan/Getty ImagesParachuteParachuteParachute Gift Card, from $50, available at ParachuteParachute makes some of our favorite bathrobes, and is also a great spot to shop for furniture and home goods. A gift card can help them splurge on whatever decor or self-care items they need.Williams SonomaJustin Sullivan/Getty ImagesWilliams Sonoma Gift Card, from $25, available at Williams SonomaParticularly great for home cooks and committed bakers, a Williams Sonoma gift card can go towards sturdy cookware, adorable baking supplies, and other quality essentials and accessories for their kitchen.The SillThe SillThe Sill Digital Gift Card, from $25, available at The SillThe Sill is a great resource for plants in sleek, trendy containers. If you're not sure what plant they'd want or what their plant maintenance level is, a gift card leaves it up to them to choose.OtherlandOtherlandOtherland Gift Card, from $25, available at Otherland If they love candles but you're not sure of what scents they like, they can choose their own at Otherland.Read our review of Otherland here.JungalowJungalowJungalow Gift Card, from $10, available at JungalowChoose from a variety of holiday-themed cards so they can browse colorful, bohemian housewares before finding their dream gift.BrooklinenBrooklinenBrooklinen Gift Card, from $50, available at BrooklinenBrooklinen makes the best high-end sheets at some of the best prices on the internet. Have a gift card delivered digitally or in a gift card box. They can choose from sheets made from linen, cashmere, and more. The company's weighted comforter is the top pick in our buying guide.FramebridgeFramebridgeFramebridge Gift Card, from $25, available at FramebridgeLet them custom frame one of their best memories. It's something they'll probably never shell out for on their own, but they'll love having it around the house.BarkBoxBarkBoxBarkBox Gift Card, from $36, available at BarkBoxFor the dog people, the best gift may just be gifts for their pup. Barkbox will send them a box of toys and treats every month. Another good option for pet owners is a Petco gift card — if you think they (or their pet) may like picking out their own toys.Clothes and AccessoriesEverlaneOutdoor VoicesOutdoor VoicesOutdoor Voices Gift Card, from $25, available at Outdoor VoicesOutdoor Voices is home to lots of fashion-forward athletic apparel, from the famed exercise dress to skorts and leggings.   CatbirdCatbirdCatbird Gift Card, from $25, available at CatbirdJewelry can be tough, but it doesn't have to be. If they're a Catbird fan, there's no chance you can fail here.Warby ParkerWarby ParkerWarby Parker Gift Card, from $25, available at Warby ParkerIf they're in need of trendy new eyewear, a Warby Parker gift card will help them find the best frames for them, especially with the brand's famed at-home try-on service.REIREIREI Gift Card, from $10, available at REIWhether you're outfitting them for their next hike or an afternoon spent in a ski lodge, you get to ensure they'll be able to get exactly the make and model of the boot or sweater they want for the trip. BonobosBonobosBonobos Gift Card, from $25, available at BonobosShirts, socks, jeans — whatever it is, there's room in their wardrobe for something from Bonobos. Read our review of Bonobos' impressively affordable stretch chinos.MadewellMadewellMadewell Gift Card, from $25, available at MadewellMadewell is home to bestselling denim, clothing, shoes, and accessories, making this gift card a great gift for anyone in need of some new apparel.ZapposZapposZappos Gift Card, from $10, available at ZapposZappos is the home of pretty much every type of shoe imaginable, and a gift card can go towards the sneakers, boots, sandals, or loafers they've been eyeing for a while.OrvisOrvisOrvis Gift Card, from $25, available at OrvisWhether it's for your parents' ski cabin, your best friend's dog, or your fly-fishing uncle, Orvis has just about everyone covered.AdidasAdidasAdidas Gift Card, from $10, available at AdidasGive them a new pair of sneakers, some new athletic gear, or cool athleisure with a gift card that lets them pick out their favorite pieces. Adidas has physical gift cards, e-gift cards, and a bulk gift card offer if you're looking to buy cards for a big group.MejuriMejuriMejuri Gift Card, from $25, available at MejuriMejuri is one of our favorite retailers when it comes to durable, sleek, quality jewelry. A gift card can help them pick out everything from everyday gold hoops to dainty rings to add to their collection.NikeNikeNike Gift Card, from $25, available at NikeNike also lets you pick from a swath of gift card designs, including team themes for the Lakers and Knicks. PatagoniaPatagonia FacebookPatagonia Gift Card, from $10, available at PatagoniaWhatever they spend this on, you can be sure they'll get something great that'll last them for years. EverlaneEverlane/FacebookEverlane Gift Card, from $25, available at EverlaneEverlane is a favorite retail startup that is especially loved for its $120 cashmere sweaters. You can find our favorite Everlane pieces here. AllbirdsAllbirds/InstagramAllbirds Gift Card, from $25, available at AllbirdsAllbirds makes the world's most comfortable shoes from sustainable materials like merino wool, eucalyptus leaves, and foam made from sugar cane. They're especially popular in New York City and Silicon Valley.L.L.BeanL.L.BeanL.L.Bean Gift Card, from $5, available at L.L.BeanGift cards for apparel are particularly useful since you may not know imperative details like shoe size. If you know they love a brand or have been pining after their own Bean boots, this is a nice way to make it happen without tipping them off. J.CrewJCrew InstagramJ.Crew Gift Card, from $25, available at J.Crew For the basics, J.Crew has some of the best quality and style for the price. It also has frequent sales, meaning they may get more value out of their gift card.Beauty and SkincareAmanda Krause/InsiderUltaUlta Beauty appeared to send an insensitive email about a Kate Spade product on Sunday.Jeff Greenberg/Getty ImagesUlta Gift Card, from $10, available at UltaWhen it comes to beauty products, Ulta will 1000% have them covered. They can use their gift card on everything from skincare essentials to makeup sets.GlossierGlossierGlossier Gift Card, from $15, available at GlossierFor beauty enthusiasts, it's hard to top a Glossier gift card, which they can use on the brand's bestselling skincare and makeup products.SephoraSephoraSephora Gift Card, from $10, available at SephoraThey already have their personal beauty favorites. With this gift card, they won't have to use their precious Sephora points on that new lipstick or foundation.Food and DrinksGoldbellyGoldbellyGoldbellyGoldbelly Gift Card, from $25, available at GoldbellyIf they can't make it home this year, there's a good chance Goldbelly can bring their local favorite to them. A New York pastrami sandwich? A Chicago dog? You can find almost anything from the most cherished delicacies of their hometown, city, or region.StarbucksStarbucksStarbucks Gift Card, from $25, available at AmazonYou may not be there every morning, but this is one of the easier ways to buy them a hot cup of coffee each day. There's also a gift card for Dunkin', if that's their preferred caffeine source.Daily HarvestDaily HarvestDaily Harvest Gift Card, from $50, available at Daily HarvestDaily Harvest is a healthy-eating startup that sends delicious, nutritious meals and smoothies pre-packed in cups that take as little as 30 seconds to make. A chef and nutritionist design recipes, and all cups are under $10. Find a full review here. MOUTHMouthMOUTH Gift Card, from $25, available at MOUTHMOUTH sends delicious small-batch, indie food products to help small businesses grow and make it more convenient for the average person to discover the best new goods. HelloFreshHelloFreshHelloFresh Gift Card, from $75, available at Hello FreshHelloFresh is a meal kit delivery service that drops off fresh ingredients for delicious home-cooked meals. It makes week-time prep easier, and it helps amateur and experienced cooks conveniently expand their repertoire. FirstleafConnie Chen/InsiderFirstleaf Gift Card, from $25, available at FirsleafFirstleaf is a wine subscription service that delivers wines from top vineyards around the world for only $15 per bottle. Let them explore great wine without worrying about the expense. Plus, its introductory box of three wines is only $15, and it sets the wheels in motion for the service to learn more about your tastes and preferences as they evolve.TravelIf you're looking for a cozy, private, homey stay on the island, opt for an Airbnb.Michelle Mishina for InsiderUber or Uber EatsUberUber Gift Card, from $25, available at AmazonMost people won't have too much trouble putting Uber credit to good use, whether they're going out or ordering in.Hotels.comHotels.comHotels.com Gift Card, from $10, available at Hotels.comA perfect open-ended gift for any traveler, Hotels.com gift cards come in denominations ranging from $10 to $2,000, and they can go just about anywhere.AirbnbAirbnbAirbnb Gift Card, from $50, available at Airbnb and ZolaLet them select the location and the company, but you'll foot the bill for their next great adventure. Delta or Southwest airlinesDeltaDelta Gift Card, from $50, available at Best Buy and TargetSouthwest Gift Card, from $50, available at Best Buy, Target, or AmazonAirline gift cards are perfect for frequent travelers (and even better for family members who see trips home as opportunities to score more miles on their go-to airline). It's also easier than booking a trip for them yourself.If they prefer train travel, there's also an Amtrak gift card. Hobbies and entertainmentMasterClassGoogle PlayAmazonGoogle Play Gift Card, from $25, available at AmazonFrom movies to audiobooks to TV shows, your loved one has many options with a Google Play gift card.MasterClassMasterclass websiteMasterclassMasterClass Gift Membership, from $15/month, available at MasterClassWhile more of a gift membership per se, an annual membership to MasterClass still functions like a gift card because they'll get unlimited access to hundreds of celebrity and expert-led online courses, effectively choosing how they want to use their yearly subscription. You can read more about MasterClass's offerings here.ClassPassClassPassClassPass Gift Subscription, from $10, available at ClassPassIf they're someone who enjoys fitness (or is still figuring out what workouts they like), money put towards a ClassPass subscription can help them try out the service. A monthly membership lets them sample boutique fitness classes in their area and can even include self-care appointments with spas or nail salons.GameStopGamestopGameStop Gift Card, from $25, available at Gamestop They're a gamer, but you don't know which console or games they have. Rest assured that a gift card will have you covered.BookshopBookshopBookshop Gift Card, from $10, available at BookshopIf they happen to be big book lovers, a Bookshop gift card is a simple and appreciated gift. As a bonus, every purchase on the site gives back to local bookstores.Disney PlusAlyssa Powell/Business InsiderDisney Plus 1-Year Gift Subscription, $79.99, available at Disney PlusIf they've been wanting to watch "Loki" or the "Luca," gift them a year's worth of entertainment with a Disney Plus subscription. For $79.99, they can access thousands of titles from Disney, Pixar, Marvel, "Star Wars," National Geographic, and 20th Century Studios. Here's everything to know about the streaming platform. SpotifySpotify/FacebookSpotify Gift Card, from $10, available at TargetThey probably already have a Spotify account, but this gets them ad-free access. A Spotify gift card lets you fund the next few months of a platform they love and use multiple times per day. AudibleAudible Premium Plus gives you access to a huge library of titles with extra perks.Jakub Porzycki/NurPhoto via Getty ImagesAudible Gift Subscription, from $15/month, available at AudibleWhile technically a subscription and not a card, this service gives your giftee credits to pick out whichever audiobooks they want (1 credit = 1 book). It's particularly great for people who love to read but find themselves pressed for time — they can use this to read on the go.NetflixNetflixNetflix Gift Card, from $30, available at Target and Best BuyPair it with a bottle of wine, popcorn, and some warm and fuzzy socks for a perfect night spent at home. HuluHuluHulu Gift Card, from $25, available at Target and Best BuyGift them a Hulu gift card so they can watch all their favorites from under a pile of blankets. XboxXboxXbox Gift Card, from $10, available at Amazon, Target, and Best BuyThey can spend it on the latest games and entertainment like movies, TV, music, apps, and more. PlayStationPlayStation DualShock 4 ControllerBI GraphicsPlayStation Gift Card, from $10, available at AmazonWith this gift card, they can download the latest games and add-ons, watch movies, and more from their PlayStation 4. SlingSling TVSling Gift Card, from $25, available at Best BuyStarting at $35 per month, users get access to more than 30 of the best channels, like CNN, ESPN, AMC, Disney, and the Food Network.Donations to Global Giving and CharityChoiceCharityChoiceGlobal Giving or CharityChoice Gift Card, from $50, available at ZolaThis is an easy way to empower someone to give to a charity close to their heart. You designate the amount and general category of charities, and they can decide where the funds go.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 21st, 2022

Auto Roundup: General Motors (GM) & Ford (F) Make a Splash With Key Updates

General Motors (GM) and Ford (F) offer important updates on their electrification strides and self-driving technologies to keep up with the changing dynamics of the auto industry. Last week, Detroit’s auto show was held after a 3-year hiatus due to the COVID-19 pandemic. However, this time it was a less glitzy affair with fewer model debuts and lower attendance. Among some of the key reveals were the 2023 Jeep Wrangler Willys 4xe, 2024 Chevy Blazer EV, 2023 Chrysler 300C, 2024 Chevy Equinox EV and 2024 Ford Mustang.Meanwhile, the European Automobile Manufacturers Association (“ACEA”) released data for passenger car registrations for July and August 2022. The European Union (EU) passenger vehicle market contracted 10.4% in July but rebounded in August to witness year-over-year growth of 4.4%. With that, the EU passenger market snapped 13 straight months of decline. For the first eight months of 2022, passenger car volumes declined 11.9% year over year to 6 million units. Most of the countries in the EU witnessed a drop in registrations, including four key markets, during the said timeframe. Registrations in Italy, Germany, Spain and France witnessed a yearly decline of 18.4%, 9.8%, 9.4% and 13.8%, respectively.Another highlight of last week was President Biden’s approval of the first round of funding for the creation of a nationwide electric vehicle (EV) charging infrastructure. With this first set of approvals, $900 million will be granted to build EV chargers across 53,000 miles of highway across 35 states. This is part of Biden’s bipartisan infrastructure package that includes $7.5 billion to establish a network of 500,000 EV charging stations across the country by 2030.On the news front, General Motors GM announced a deal with Lear and laid out investment plans for its Marion Stamping plant to boost its EV game. GM’s close peer Ford F made the headlines as it’s actively progressing toward driverless technologies. Improvements in its ADAS technology to incorporate updates in BlueCruise and ActiveGlide would help improve safety.Meanwhile, automotive equipment provider Magna International MGA invested in Yulu Bikes and sees it as a vital step in its contribution toward a sustainable e-mobility future. Italian-American carmaker Stellantis STLA struck a deal with UAW members to end a three-day strike at the Indiana plant. Finally, EV giant Tesla TSLA had to put its expansion plan of the Berlin Gigafactory on the back burner as the local municipal committee dismissed the approval.Inside the HeadlinesGeneral Motors struck a deal with Lear, per which the latter will supply electrification technologies for the U.S. auto giant’s Ultium EV platform. The technologies that would be provided by Lear include battery disconnect units, intercell connect boards and wire harnesses. The financial terms of the deal have been under wraps. With Ultium Drive playing a pivotal role in GM’s EV ambitions, the latest agreement with Lear for the supply of e-mobility technologies for its hardware platform bodes well.In another important announcement, General Motors is set to invest $491 million at its Marion Stamping plant. This is to prepare the facility for manufacturing steel and aluminum stamped parts for future vehicles, including electric cars made at various GM assembly plants. The proposed investment will be used to buy and install two new press lines and complete press and die upgrades and renovations. It will also construct a 6,000-square-foot addition. The investment marks plant development and will rev up GM’s electrification progress as the demand for EVs reaches unprecedented levels. Meanwhile, General Motors’ autonomous self-driving technology unit, Cruise, announced that it intends to expand its driverless ride service to Phoenix, AZ, and Austin, TX, in the next three months. The company noted that its operations in Arizona and Texas will initially be on a small scale but it aims to churn out revenues. Presently GM’s Cruise offers a wide range of robotaxi services in San Francisco. Riding on the successful launch in San Francisco, Cruise set its mind on expanding to new cities. Even though the adoption and execution of AV technology have been slow, Cruise looks optimistic and aims to generate $1 billion in revenues by 2025.Ford is set to introduce the hands-free highway driving feature in its 2023 Ford Mustang Mach-E and 2023 Lincoln Corsair SUVs. These models’ Advanced Driver Assistance Systems (ADAS) will be updated with BlueCruise 1.2 and Lincoln ActiveGlide 1.2, the latest versions of the manufacturer’s sans driver feature. The ability to change lanes, stay within lane markings and adjust the pace around curves, all driverless, will be the major additions. The driver can activate hands-free lane change with a mere signal tap. The feature will also offer suggestions to change lanes in slow-moving traffic.Another feature known as in-lane repositioning will be a highlight. This feature keeps the vehicle centered in its lane and shifts its position within the lane away from other vehicles to leave as much distance possible between it and the other vehicle. Meanwhile, the predictive speed assist feature will slow down the vehicle when it’s driving autonomously and can sense when a tight bend approaches. Ford’s ActiveGlide and BlueCruise features will use cameras and sensors in addition to lidar-mapping for hands-free driving on a stretch of more than 130,000 miles of dedicated highways in North America.Magna announced its $77-million investment in Yulu Bikes, India’s largest technology-driven electrified shared mobility provider. Magna’s investment marks its entry into the rapidly-growing micro-mobility market. The deal leverages Magna’s expertise in design, engineering and manufacturing, and Yulu’s market strength in India and its software know-how. Magna will function as the exclusive battery-swapping provider for Yulu’s customers and support the buildup of the infrastructure required for millions of swaps per week.Magna will own a stake and hold a seat on the board of the India-based company. The two companies will establish a new battery-swapping entity. The new Battery-as-a-Service (BaaS) entity will be known as Yulu Energy. It will create a nationwide battery charging and swapping infrastructure, likely reducing the upfront cost of buying EVs and expediting the transition to electric mobility in India.Stellantis announced that United Auto Worker union members who had gone on strike on Sep 10 at its casting plant in Indiana rejoined work after a ratifying deal was made between the parties.More than 1,000 UAW members went on strike on Sep 10 at the plant because the company had deprived them of the basic health and safety needs that a workplace should offer. They alleged that the company refused to repair and replace the plant’s air conditioning and heating systems to secure in-house production.Last week, the two sides parties announced an agreement and the strike was withdrawn after UAW Local 1166 workers voted to ratify the agreement. A prolonged strike at the largest casting facility would have led to a production hiatus, causing the rapid shutdown of Stellantis’ operations and a decline in profits.Tesla has to hold back on its expansion plan of the Berlin Gigafactory. The EV king had intended to increase the factory by one-third and expand the nearly 750-acre factory site by another 250 acres to develop a freight depot, besides other factory parts.However, it seems that the expansion plan is enmeshed in bureaucracy as the municipal council of Grünheide, the city near Berlin where the Gigafactory is located, has indefinitely delayed the vote on the planned expansion.The reasons for the delay are not quite clear, although the ripple effects of the ongoing Ukraine-Russia conflict may be hinted at. Russia has drastically cut down gas supplies to Europe in general and Germany in particular. Tesla’s intensive development plans call for a heavy requirement of energy. In light of a volatile market situation, Germany is likely acting cautiously in approving the expansion plan.TSLA carries a Zacks Rank #2 (Buy), currently.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Price PerformanceThe following table shows the price movement of some of the major auto players over the last week and six-month period.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will keep a tab on July and August 2022 commercial vehicle registrations to be released by the European Automobile Manufacturers Association soon.  Also, stay tuned for any updates on how automakers will tackle the semiconductor shortage and make changes in their business operations. FREE Report: The Metaverse is Exploding! Don’t You Want to Cash In? Rising gas prices. The war in Ukraine. America's recession. Inflation. It's no wonder why the metaverse is so popular and growing every day. Becoming Spider Man and fighting Darth Vader is infinitely more appealing than spending over $5 per gallon at the pump. And that appeal is why the metaverse can provide such massive gains for investors. But do you know where to look? Do you know which metaverse stocks to buy and which to avoid? In a new FREE report from Zacks' leading stock specialist, we reveal how you could profit from the internet’s next evolution. Even though the popularity of the metaverse is spreading like wildfire, investors like you can still get in on the ground floor and cash in. Don't miss your chance to get your piece of this innovative $30 trillion opportunity - FREE.>>Yes, I want to know the top metaverse stocks for 2022>>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 Ford Motor Company (F): Free Stock Analysis Report Magna International Inc. (MGA): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Stellantis N.V. (STLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 20th, 2022

Transcript: Albert Wenger

     The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in… Read More The post Transcript: Albert Wenger appeared first on The Big Picture.      The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, what can I say, I have yet another extra special guest, Albert Wenger, managing partner at Union Square Ventures. He has a fascinating background in technology and software, and is interested in all sorts of interesting things, ranging from climate change to humanism, to the huge transitions that humans have gone through as a species and what it means to society, investing, scarcity and just the quality of life that we will enjoy as a species. I found this conversation to be really intriguing. If you’re interested in venture capital, in technology, in how to think about early stage investing, well, strap yourself in, this is a great one. With no further ado, my conversation with Union Square Ventures’ Albert Wenger. You have quite a fascinating history. Let’s delve into that, starting with your background. You won a national German competition in computer science in high school. Tell us about that and where that led you. ALBERT WENGER, MANAGING DIRECTOR, UNION SQUARE VENTURES: Well, I fell in love with computers very early on when I was a young teenager. And my parents were super indulgent of this at a time when that was very unusual, and they bought me an early Apple II computer, one of the earliest Apple IIs to be sold in Europe, actually. And I’ve stuck with that, my entire life. I’ve studied computer science as an undergrad and as a graduate student. And I’ve been investing in a lot of computer companies over the years. So it’s been a central to what I do and who I am. RITHOLTZ: So let’s talk about the timing of school. You graduate Harvard in 1990, with an Economics and Computer Science degree, perfect for the explosion of the Internet; a PhD from MIT and Information Technology in ‘96. So when you were leaving school, were you interested in the Internet, or was it more hardware and software? WENGER: No. The web was really exploding while I was at MIT. And I actually finished my PhD in ’99, but I started a company in late ‘96, early ‘97. And I was kind of doing the company and the thesis at the same time, which wasn’t great for either, and also wasn’t great for our marriage. We kind of managed to get through that. But I was really fascinated with the web from when I first discovered it, which was in a computer lab at MIT where I’m trying to do my stats homework. So — RITHOLTZ: So let’s talk a little bit about some of the other companies you either founded or run, the most famous is probably del.icio.us, which ended up getting picked up by Yahoo. Tell us a little bit about — WENGER: It was an early Web 2.0 darling, Joshua Schachter had started. He was working at Morgan Stanley actually full time. He had started this as a side project. And it was kind of this idea that you would share your bookmarks with others, because bookmarks were kind of an indication of something that was actually interesting on the Internet. And Joshua added tags to that, and so you could browse things by tags. And at that time, Union Square Ventures’ Fred and Brad had started the firm, they had just raised the first fund. I had just finished another project I was been working on. And they were like, “Hey, we’re talking to this guy, Joshua, what do you think?” So I met up with Joshua, and they wound up investing, and I wound up to become the president. RITHOLTZ: So you’re president of del.icio.us, you see it through in order to be acquired by Yahoo in the early 2000s. Tell us a little bit about that experience. WENGER: The del.icio.us team was tiny. It was sub 10 people, basically. RITHOLTZ: Wow. WENGER: And it was a very rapidly growing service. I made myself sufficiently unpopular during the acquisition because I insisted on certain things, I’m like, “We’re not doing this. We’re not doing this. We’re not doing this.” At they at the end, they were like, “We want all of you except for this Wenger guy. We don’t want him,” which was perfect for me, mind you, because I didn’t want to relocate out to the West Coast. So I got to just take my marbles and start making angel investments. RITHOLTZ: So is that what led you to Etsy and Tumblr was the del.icio.us acquisition? WENGER: Yeah, exactly. I had a little bit of money and I met Rob Kalin, the founder of Etsy. He had just come back from the West Coast. He had tried to raise money on the West Coast, was unsuccessful with that. And so I wrote an angel check here, and then I brought Union Square Ventures in as the first Series A investor. RITHOLTZ: Is that what led to your transition from entrepreneur to venture capital? WENGER: Well, I was basically hanging out at the USV offices after the sale of del.icio.us and — RITHOLTZ: Just because you had no place else to go. WENGER: Because I knew both Brad and Fred really well, and so it was kind of a natural thing to do. I did these angel investments. I led the Union Square Ventures investment in Etsy, I became a venture partner for that, and then became a GP in the 2008 fund. RITHOLTZ: So Etsy, also Tumblr was another one. And if memory serves, were they acquired by Yahoo? WENGER: They were also acquired by Yahoo. Yes. RITHOLTZ: Okay. So you’re working at a contact list. What was that experience like now not as a president, but as an outside investor? WENGER: It was a very, very lucky landing for Tumblr, because Yahoo really was the only bidder and they were bidding against themselves, but they didn’t really know that. RITHOLTZ: So what eventually led you to say, “You know, I think I could do this venture stuff full time. Let me hang my hat at Union Square Ventures and focus solely on something else.” WENGER: Yeah, that had really been my goal since my own first startup in ’96, ‘97, which was a company called W3Health that ultimately failed. From that experience, I realized that I really loved startups, but then I was never going to be good operator, but I thought I could maybe be a decent investor. RITHOLTZ: Let me make a digression here, and since you’re in front of me, I have to ask this question. So I deal with traders, investors, fund managers, economists down the list, there is no group of people that seem to be prouder of their failures than venture capitalists. Why is that? WENGER: Because it’s an integral part of the business. And if you can’t deal with failure, you can’t be a VOICE, because many of the startups you invest in fail. RITHOLTZ: Statistically, that’s your expectation? WENGER: Yes, absolutely. RITHOLTZ: So it just seems like the healthiest way to think about what is unavoidable, yet so many people within the world of finance, kind of dance around it, try not to deal with it. There’s a little bit of denial. It’s almost like an object of pride, “Look, here are all the companies we invested in that didn’t make it. Look, here are all the great companies we passed on.” It’s almost like a point of pride, this sort of self-awareness. WENGER: Well, it’s also important too, how the venture capital model works overall, right? So the most you can ever lose in venture capital is the amount of equity you’ve put in. RITHOLTZ: Right. WENGER: But the upside is nearly limitless. I mean, it’s what Nassim Taleb calls convex tinkering, right? It’s the perfect example of that. You take many small, relatively small positions, and any one of them can become very, very large. But you also learn a lot from the things that don’t work. You know, sometimes you learn a lot more from that than you learn from the ones that do succeed. RITHOLTZ: Sure. You tend to learn more from losers than winners usually. And then I have to ask the same question, so Union Square Ventures, by definition Union Square is here in New York City. What’s it like being a venture investor on this side of the country, as opposed to what seems to be, you know, the gravitational black hole of venture out in Silicon Valley in California? WENGER: Well, first of all, it’s no longer that. So you know, Sequoia just opened a New York City office. Andreessen Horowitz has people on the ground here. So New York City is now, today, one of the epicenters. When we started, that wasn’t the case. When we started, people were like, “Oh, there’s been no tech company in New York City. There’s been no IPO.” Of course, you know, we were involved with two of the major IPOs. We led the Series A in Etsy. I also led the Series A — we — Union Square Ventures led the Series A in MongoDB, the big New York City-based success story. So it was incredibly healthy, though, because we were never caught up in the “Oh my God FOMO” of we have to have one of these and one of those, and everybody else is investing in the sector. It was always a “Let’s form our own thesis. Let’s figure out what we believe, and then let’s find companies that fit with that.” And we’ve always been extremely competitive in winning deals in the West Coast. In Twilio, I led the Series A, for Union Square Ventures, and there was a, you know, San Francisco-based company. So — RITHOLTZ: Last question on this topic, how different is venture in New York versus California, or is there really no big difference? WENGER: There used to be a noticeable difference between East Coast and West Coast. Today, I think that’s completely erased. RITHOLTZ: Quite interesting. So let’s talk about the thesis-driven venture capital firm, which is how USV describes itself. Tell us what these theses are and how do they drive your investment? WENGER: Yeah. So there’s been an evolution over time. I would say, you know, what we call Thesis 1.0 was that we invest in large networks of engaged users, differentiated by user experience, and those were investments like Twitter and Tumblr. And then we started to focus on companies that had less obvious network effects, so more data behind the scenes, companies like Sift, for example. And then we added to our thesis sort of infrastructure, and infrastructure investments included Twilio and MongoDB, Cloudflare. Stripe. There’s a whole bunch of infrastructure investments, infrastructures for building digital businesses. Our current iteration, what we call Thesis 3.0 is about broadening access to knowledge, capital and well-being by leveraging existing networks and protocols, and building trusted brands. And each part of that thesis actually means something very concrete. So let me just pick one of them, building trusted brands. For us, a lot today is about is your business model fundamentally aligned with your customer or not? The advertising model, as we have learned is not aligned with customers’ interests, right? If you’re YouTube, you want to serve the most engaging video so that you can show more ads. You don’t want to serve the most appropriate video, right? But if you have a subscription model, let’s say like Netflix, you want to show something that somebody actually really truly deeply is going to relate to, so that they stay as subscriber long term. So each part of this thesis means something and we use the sort of high level thesis to then look for very concrete things. So for example, I said broadening access to capital, so we’ve done a lot in lending, like, how can we do better underwriting, better, cheaper, faster loans, for instance, to small businesses, investment, like a company like Funding Circle, or to individuals, like a company like Upgrade, in a way that actually helps people, so where you’re not dragging them into like a debt hole, but you’re actually helping them build up their credit score while you’re giving them — extending their credit. RITHOLTZ: So 3.0 sounds a lot like World After Capital, I’m hearing some very similar themes. WENGER: Absolutely. There’s a strong relationship between some of the ideas in the book and some of the ideas that inform our investing. RITHOLTZ: We’ll circle back to the book in a little bit. Let’s talk about a couple of companies you invested in because I’m picking up a theme there, Meatable, Terra, Living Carbon, Marvel Fusion, Legendary Food, climate sustainability impact investing. WENGER: Yeah. So those are all personal investments, not Union Square Ventures investments. But I made those investments in the run up to us forming a climate thesis, and now a Climate Fund. So those are all investments that go back a few years, when I sort of became really interested in what kind of opportunities come out of the climate crisis. The climate crisis, if we don’t get on top of it, none of the other stuff will matter. None of the money we’ve made will matter. It’s so big. It’s so much bigger than COVID, for example, in ways that I think people still don’t appreciate. And so I made some personal investments first, and then we started talking to our LPs about it. And then during COVID, we raised the first Climate Fund, $160 million Climate Fund. We’re almost done investing that. And so the climate thesis is very simple. We want to invest in companies that either reduce emissions, draw down existing emissions, or help with adaptation. So I’ll give an example of an adaptation investment. We invested in a company out of Australia called FloodMapp. And what they do is they predict where things are going to flood. They also measure the actual flooding. Floods are one of the biggest problems coming out of the climate crisis, and they’re here today. This is not some future problem. And mega floods in Pakistan, a third of Pakistan is underwater as we speak. I don’t think people understand how horrific the devastation there is. RITHOLTZ: It’s the other side of the droughts that are everywhere. It’s what’s dry gets drier, what’s wet gets wetter. WENGER: Absolutely. Talking about emissions reductions, we’ve made investments, for example, in our first ever investment in Africa, in a company called Shift EV. What Shift EV does is it takes existing delivery vans and retrofits them in a space of a couple of hours, from internal combustion engine to electric. RITHOLTZ: A couple of hours? WENGER: A couple of hours. Yes. RITHOLTZ: Because if you want to take an old 911 and convert it to EV, it will take you about a year, assuming if you can get on the list. It’s that backed up for that shift itself. WENGER: So they have completely industrialized this process. RITHOLTZ: That’s amazing. WENGER: You drive a minivan in and a couple of hours later, drives out as an EV. RITHOLTZ: Wow. What do they do with the internal combustion engine and — WENGER: That’s a great question. I need to ask Ellie what they do with that. I don’t know. RITHOLTZ: I mean, it seems like that’s a lot of hardware to just throw away. WENGER: I don’t know. Great question. RITHOLTZ: Really interesting. WENGER: And then I’ll talk about one of the drawdown investments. We’ve invested in a company called Brilliant Planet out of the U.K. What they do is they build ponds in the desert and they pump seawater in, and then they grow algae very, very rapidly, continues algae bloom, and it takes a huge amount of carbon out of the atmosphere. RITHOLTZ: Algae in ponds — WENGER: In the desert. RITHOLTZ: — can move the needle? WENGER: Yes. Absolutely. RITHOLTZ: That’s quite fascinating. Two questions come out of this, one is structural and one is fund based. Let’s do the fund one first. So John Doerr had a climate fund started about 10 years ago at Kleiner Perkins. Some people have said it kind of lagged other similar era venture funds. Was he just early? How do you look at this in terms of not just having a positive impact on the planet but generating a return on investment? WENGER: Yeah. The early green tech funds, they were too early in one sense. But in another sense, they were actually crucial to our having a shot at overcoming the climate crisis. Because if it hadn’t been for the investments, we wouldn’t have gotten on the cost curve, for instance, for solar PV, right? So the reason we have really cheap PV today, the reason we have really relatively cheap batteries today is because of some of the investments that were made back there. And there’s this pattern in the world where every big technological shift starts with a bubble, right? RITHOLTZ: Right. WENGER: So when we had ships, we had the South Sea bubble, right? And when we had railroads, we had the railroad bubble. There was an automotive bubble. There was dot-com bubble, multiple bubbles in crypto. There was a green tech bubble. But, now, it’s a decade-plus later and all the things that they were rightly concerned about are all coming true. And we are now reaping some of the benefit, but we’re also now building on — we’re sort of standing on the shoulders of giants, as it were. RITHOLTZ: And to clarify, I believe that fund doubled over 7 or 10 years, not like it was a sinkhole, but compared to what it could have done, had that money been invested elsewhere, it might have seen better returns. But it wasn’t — I don’t want to make it sound like it was total loss. So the second question is, you’re making seed investments, how does that work if you want to bring one of those seeds to your firm, to Union Square Ventures? And from a public market, that sounds like it’s a compliance and conflict nightmare. You guys approach it differently. WENGER: In our LPA, we can write checks up to $100,000. So we can’t make massive investments in startups. So all of the companies you mentioned have a sub $100,000 investment. And then the only one where I’ve invested more is Marvel Fusion. We can invest more once the fund has passed on something. So if the fund says we’re not doing this, then we can invest. RITHOLTZ: Got it. Interesting. So along those lines, there are some venture firms that don’t really seem to care a lot about valuations and others seem to focus on a little bit. How do you fall in that spectrum? Is valuation significant, or is it, hey, we’re going to make 100 investments and if two or three workout, the valuations are irrelevant? WENGER: No, we’ve definitely always been disciplined on valuation, and we’ve let a number of things go. Sometimes we let them go and they do great, like, “Well, we could have made money if we had invested.” And sometimes you’re very happy at that. Our approach is we’ve always kept our fund sizes small, so we don’t need to be in everything that’s out there. Our latest funds are — our core fund is $250 million. So these aren’t big funds in the scheme of things when you have other firms that raised $3 billion. $8 billion, $15 billion per fund. And as a result, if we think the price is too high, we can just find something else. RITHOLTZ: So let’s talk a little bit about some of those bigger funds, and I guess we’ll hold Softbank off to the side because that was really aberrational. But do you end up when you have lots of $10 billion and $20 billion venture funds, with too much capital chasing to a few good deals? How does this impact the whole ecosystem that’s out there? WENGER: Largely, it’s great for us because we’re early stage investors. So it means there’s lots of money to come in and fund later rounds of the companies we’ve invested in. So we haven’t really spent much of our time worrying about it. And then every once in a while, these firms go. We’re going to go really early and some of them do spread money early. But we find, because we’re thesis-driven and because we are opinionated, on deals that we’re really interested in, we can win those deals. Sometimes they’ll take a small check from somebody else along for the ride, but they know that we work with early stage companies that we roll our sleeves up, that we’re involved, and that we have a thesis. And you know, we take the approach we’d rather disagree with the founder and then not invest than sort of like — be like, “Oh, well, whatever it is you want to do.” Like, we have a thesis as to why we think this is interesting. Let’s talk about this. If it’s aligned, great. And obviously things may change after we’ve invested. We’re not like stubborn, you know. But let’s talk about why we are excited. And if that aligns with you, that’s great. If it doesn’t, let’s go separate ways, right? So we take a kind of — I call it a high alpha approach investing. We’d rather have really upfront conversations about what we like and don’t like than sort of get married as it were. And actually, it’s harder to get rid of VC than it is to get a divorce. So like we think it’s good to have these conversations up front, right? RITHOLTZ: What about follow-up rounds, or some firms that will do a seed round, and then participate in an A or B round? Is that something that Union Square does? WENGER: Well, we reserve a lot of funds for follow-on, and we have a very sort of, I think, sophisticated reserves methodology that we’ve honed over many funds cycles now, where we actually built kind of a Monte Carlo analysis of the portfolio to see how much money we think we need to keep in reserve. But eventually, when the valuations get too high, the rounds get too large, we don’t follow on. We have a separate vehicle called the Opportunity Fund, where we sometimes write bigger checks into late-stage rounds in some of our portfolio companies, but not always. RITHOLTZ: So let’s talk a little bit about this book, “The World After Capital,” starting with what is technological nonlinearity? I liked that phrase. WENGER: The basic idea is that every once in a while in humanity’s history, we invent things that radically change what we, as society, have as a binding constraint on us. So let me make that very concrete. For hundreds of thousands of years, our ancestors were foragers. They were hunter-gatherers. They would go out and find things, and eat berries and kill little squirrels. And then roughly 10,000 years ago, we had a bunch of inventions. We figured out that you could plant seeds, that you could irrigate them, that you could domesticate animals, that you could use the dung from the animals too as a fertilizer. We figured all those things out and we got agriculture. And the constraint shifted from how much food can you find to how much land — arable land do you have. And when that constraint shifted, we changed just about everything, about how humanity lives. Like, we went from being migratory to being sedentary. We went from very flat tribal societies to very hierarchical agrarian societies. We went from being, clearly, like polygamous, polyamorous, whatever you want to call it, to being monogamous-ish. We went from having religions where, you know, everything was a spirit, a tree, a rock, everything had a spirit, and then we went from that to theistic religions where there was some different number of gods. Then fast forward to a couple 100 years ago, we had sort of the enlightenment. With the enlightenment, we had sort of big scientific breakthroughs and we figured out how to dig up stuff out of the ground and burn it and create energy, and make heat and electricity and all those things. And the constraint of it again shifted from, you know, how much land do you have to how much physical capital can you create? How many machines can you build? How many buildings, roads, railroads, et cetera? RITHOLTZ: That’s really interesting. WENGER: And we changed everything yet again. And so now the point of the book is, guess what? We have to change everything yet again, because capitalism, this is why the book is called “The World After Capital,” capital is no longer the binding constraint. Instead, it’s human attention. RITHOLTZ: Human attention, so that’s the third great shift is. So we went from agricultural scarcity to having enough food. WENGER: We went from forager to agrarian, so from food scarcity to land scarcity, then we went from land scarcity to capital scarcity. And now, we’re going from capital scarcity to attentional scarcity. RITHOLTZ: Capital is no longer scarce. So now attention is the new scarcity, which there’s a line in the book that really caught my eye, attention is time plus intentionality. Explain that. WENGER: Yeah. So speed just tells you how fast you’re going. Velocity tells you how fast you’re going towards something, towards some destination. RITHOLTZ: Speed plus direction. WENGER: Speed plus direction is velocity. And the same is true for attention. Time just tells you how much time has elapsed, you know, two hours. Attention is what was your mind and your body doing during those two hours. Were you, you know, just scrolling Twitter, or were you like working on a solution to the climate crisis? RITHOLTZ: So you say something about these transitions that really jarred me. Previous transitions like agriculture emerged over thousands of years and was incredibly violent. Industrial Age lasted over hundreds of years, and also involved lots of violence and bloody revolutions, and two World Wars, which raises the obvious question, what sort of violence is the next transition based on attention scarcity potentially going to involve? WENGER: Well, at the moment, the leading candidate is the climate crisis. We have known about it for literally hundreds of years, actually, and we have refused to do enough about it. And so now, we have entered the state where we’re getting extreme heat events. We’re getting extreme drought events. The food supply is definitely in question. Something that we have taken for granted for many years now. We’ve taken for granted that you can go to the store and buy food. Unless we really course correct very hard, very dramatically, and by dramatically, I mean, the level of government activation that we had in World War II. In World War II, we spend roughly 50% of GDP on the war effort. We need to spend roughly 50% of GDP on the climate crisis for several years sustained in order to actually avert it. RITHOLTZ: So that suggests that you don’t think there’s going to be some technological magic bullet going to appear out of nowhere? WENGER: Well, if you look at World War II, the government went to Ford and said, “We need you to build airplanes, not cars.” And actually, there’s a chart in my book that shows that output of cars dropped. We need to get to a similar point where we’ll say there’s certain things we’re just not going to do for a while because we need to do these other things. There are great technologies. We don’t need to invent some magic bullet that doesn’t exist. We just need to build a lot of what we already know how to build. Like, we need to build a lot of nuclear power plants. We need to build a lot of these ponds in the desert that can draw down carbon. There’s 1001 different things that we need to build. We just need to take our physical capital and point it at that. And when you do that at that scale, incredible things become possible. So, during World War II, Ford Motor Company built a plant, it was called the Willow Run facility. And in Willow Run, they built the B-17 Liberator bomber. Now, that’s a four-engine bomber, with lots of gun turrets to defend against fires. At peak production, they finished — they finished one of these every hour. RITHOLTZ: Amazing. WENGER: They finished a complete airplane every hour. And my point is once we decide to take our attention, and allocate our attention to what the real problem is, we can redirect our physical capital. We have plenty of physical capital. People say, “Oh, you can’t build nuclear power plants fast enough.” That’s if you built them in peacetime mode. If you built them in wartime mode, you could build them very rapidly. RITHOLTZ: So when you say this requires a substantial commitment of capital, let’s put a dollar amount on that. Are you talking — WENGER: Half of GDP. I’m saying half of GDP. RITHOLTZ: So you’re saying $10 trillion? WENGER: Yeah. RITHOLTZ: Just in the U.S. alone? WENGER: Yeah. RITHOLTZ: Now, we just passed a climate bill, arguably, that was a couple of billion dollars, $100 billion maybe over 10 years. And it was like pulling teeth, it was a miracle it just managed to skate through. And that’s a fraction of a trillion dollars. How you’re going to get 10x or 100x? Do things have to get much worse before they get much better? WENGER: Yeah. I mean, there’s a book about the climate crisis called “Ministry for the Future,” by Kim Stanley Robinson. And the book starts with a devastating heat event in India, where tens of millions of people die. I don’t know what it takes. But I can tell you, it’s only going to get worse, it’s going to get a lot worse. And at some point, hopefully, people — enough people will wake up and say, “No, no, we really actually have to get into a wartime footing. RITHOLTZ: So up till now, a huge swath of the population has been asked my grandkids problems, what wakes them up? Is that sort of events? I mean, you see what’s happening in California. You see what’s going on in lots of the United States with droughts. It seems like people are starting to pay attention. WENGER: Oh, absolutely. Yale does an incredible survey of climate attitudes. And it is very clear that even in the U.S., which has been lagging on this, a significant majority of people believe that the climate crisis is real, that is caused by humans, and the government should do something about it. So I actually believe this is going from a kind of a losing proposition for politicians to a winning proposition. And I think politicians need to be much more into it. Most of them still aren’t willing to acknowledge the full extent of this crisis. And the physics of this crisis are extraordinary. So because of all the CO2 we’ve put in the atmosphere, the amount of heat that we’re now trapping that used to radiate out into space, do you know how much heat it is? It is four Hiroshima-sized nuclear bombs every second. RITHOLTZ: It’s insane. I read that in your book and I was like, no, no, he must mean every week. Every second? WENGER: Every second. Now, imagine for a moment you had alien spaceships above Earth, throwing four Hiroshima-sized nuclear bombs into our atmosphere every second. RITHOLTZ: That would put us on a wartime footing? WENGER: And what will we do? Yeah. We would drop everything, right? We would be like, “They’re trying to kill us. We have to get rid of them.” I mean, we made a movie about it called Independence Day. RITHOLTZ: Four nuclear bombs every second? WENGER: Yeah. RITHOLTZ: And it’s just — WENGER: Of every minute of every hour of every day, it’s a mind-boggling amount of heat. RITHOLTZ: So there’s a couple of other things in the book I wanted to touch on. You mentioned alien visitors. We’ll hold off on the Fermi paradox discussion because nobody wants to hear me babble about that. But one of the things I thought was kind of interesting is the transition of the nature of scarcity. You’re right, it changes the way we measure human effort. It makes it more difficult, and we need increasingly more sophisticated ways of providing incentives to sustain unnecessary level of effort. Flash that out a little more. WENGER: So if you think of hunter-gatherers, right, I mean, you can see the results of effort immediately. RITHOLTZ: Right. WENGER: Like, you go to the forest, you either come back with something or not. RITHOLTZ: Right. WENGER: So it’s very easy to create incentives. Like, if you don’t find something, go back hunting and come back with something. RITHOLTZ: Or you’ll go hungry. Right. WENGER: When you go to agriculture, you have these, you need to see, you need to take care of it, and you don’t know how big a harvest you’re going to get. So you need a little more sophisticated incentive, and a lot of those incentives were often provided by a religion. Religion is sort of saying you have to apply yourself to this backbreaking work. This is the work of the Lord, et cetera. And then when we went over to capital, now it gets even more complicated because you might not see results of some effort for many, many years. I actually think when I say more sophisticated incentives, in the book, I talked a lot about just freeing up humans to pursue their interests, to make it so that you can freely allocate attention. And I’m always very inspired by mathematics. Like, you can’t get rich as a working mathematician, basically. I mean, yes, if you wind up going to Wall Street, you can. But if you actually keep working as a mathematician, that’s not a — you know, there’s also no patents. And you know, the only thing math works on recognition by peers, and there’s some prizes. There’s like the famous Fields Medal, and there’s some other prizes. And yet, the amount of math that’s been produced over the last, you know, few decades is just mind-blowing extraordinary. And I believe we need to bring that type of model to many, many more parts of the economy and parts of activity. So in a way, what all of “The World After Capital” is about is how can we shrink all the explicitly incentivized economic activity, where there’s an explicit, okay, you go to work and you get paid a wage kind of thing. And here’s a market transaction, how can we shrink that and make room for things that are super, super important, but cannot have prices, cannot be economically incentivized? Let me give concrete examples of that. Obviously, we’ve talked about the climate crisis. But let’s talk about death from above. Like, every million years or so, the earth gets hit by something very large out of space. That’s very, very bad when it happens. But there’s no market for allocating resources to that. There’s no supply and demand for it. So we, as humanity, need to decide that this is a real problem and we ought to be working on it. RITHOLTZ: Now, aren’t we tracking various large observed asteroids and doing some stuff? WENGER: We are, but the amount of effort we’re putting into this relative to the size of the problem is minuscule. The number of people who sort of truly globally work full time on this is a tiny fraction of the people we actually should have. And we’re also not working sufficiently on like what will we do if we detected one that’s clearly headed for us, right? RITHOLTZ: Well, you send Bruce Willis up and — WENGER: Exactly. Yes. RITHOLTZ: — he takes it, right? WENGER: Yeah, he does. RITHOLTZ: I mean, it’s not unknown. We know the regular major extinction events. There’s a real interesting theory that as the sun goes around the galaxy and passes over and above the galactic plane, that affects the asteroid belt and — WENGER: The famous Oort cloud is where a lot of these objects — yeah. RITHOLTZ: Right, which is full 360 around the — WENGER: Yes. So we know all of this. And here’s the interesting thing. When we went from the agrarian age to the industrial age, we didn’t get rid of agriculture. This agriculture today, right, we all eat food that’s grown in agriculture. But what we did is we shrunk how much human attention is required to do agriculture, and we took it from being like 80% of human attention to like sub 10%. RITHOLTZ: It’s less than 2% in United States. It’s tiny. WENGER: So what I want to do is, let’s do the same with the rest of the economic sphere. I’m not an anti-capitalist. I’m not a degrowth. Person. I’m not suggesting we should get rid of markets. I’m just saying we should compress market-based activity from absorbing much of human attention to absorbing maybe 30% of human attention, and we should free the rest up to work on these incredibly important thing. Some of them are threats, and some of them are opportunities, right, opportunity to cure cancer, opportunity to create incredible wildlife habitats, restore those wildlife habitats, opportunity to travel to space. I mean, all these opportunities that we’re not paying attention to because they’re not — again, they’re not really market price based and can’t be market price based. There’s just no prices for them. RITHOLTZ: So the conclusion of the book had a list of action goals, which was not what I was expecting in a book on venture capital and “The World After Capital;” mindfulness, climate crisis, democracy, decentralization, improving learning, and humanism. Address whichever those you feel like. WENGER: Well, these are all core components of how to have a — hopefully, a transition that’s not a violent transition, right? These are all about how could we get out of the industrial age into the knowledge age without some cataclysmic event, without a world war, without killing billions of people through the climate crisis, right? They’re also all components of what a knowledge age society might look like. Right? So let’s talk about mindfulness for a second. We’re constantly assaulted with new information now. You know, our brains evolved in an environment where when you saw a cat, there was an actual cat. Now, there’s an infinity of cat pictures. So if you don’t work on how you — how much you are in control of your mind, external sources will control your mind. So mindfulness, which is a much abused word, but it has become much more important in a world where we’re constantly assaulted by information flows, right? Let’s talk about humanism for a moment. Humanism is about recognizing that humans are the prime movers on this planet. We are the ones who have brought about the climate crisis. We are the ones who put a theory to solve it, or wind up getting wiped out by it. And it’s about this idea that, you know, with great power comes great responsibility. And so, we are responsible for the whales, not the whales for us. There is — at the moment, because we’re in this transition period already, and because things are going so poorly for so many people in this transition, there’s no a flight back to religion, there’s a flight to populism. And a big part of the book is about, no, there is a secular alternative way of thinking about society that embraces science, that embraces progress, that embraces humans and all types of humans, and that recognizes that we are first and foremost human, and only secondarily are we American, or Russian, or male or female or something else. You know, these are all secondarily. But primarily, we’re humans, and humans are fundamentally different from all the other species on the planet. RITHOLTZ: Quite fascinating. So let’s talk about the current state of the world for venture capitalists. We’ve seen valuations come way down for public companies. They’re pretty reasonably priced these days, about 16 times for the S&P 500. That’s historically, more or less, average. Where do you see the state of the world in early stage valuations? How are they holding up? A year ago, late stage valuations had gone just bonkers. Tell us a little bit about what’s going on today. WENGER: The correction always, basically, is a trickle-down type of correction. It happens very rapidly in the public markets. Then you still get some high-priced private rounds that either were in the works, or they have a lot of structure. In the later stage markets, you know, there’s a headline number. But then nobody talks about all the war in coverage that’s behind the scenes. And then the early stage valuations tend to sort of lag behind all of that. But we’re seeing early stage valuations come down. And as a firm, we’ve always been disciplined on valuations. So we just let a lot of things go where we just thought it was — RITHOLTZ: Are they down off the peak, or are they cheap and attractive? WENGER: The down of the peak, whether they’re cheap or attractive, I think, you know, time will tell. But we are back in a situation where, you know, there are seed deals getting done that’s below $10 million, certainly below $20 million, and you know, seed rounds that have a reasonable size. So you know, for a while we were seeing these $10 million, $20 million, $30 million seed rounds. RITHOLTZ: It sounds pricey. WENGER: Yeah. And that’s not happening anymore. But at Union Square Ventures, we’ve also always tried to basically be at the next era, at the next thesis and evolve our thesis before everybody else gets there. And once everybody else gets there, try and evolve our thesis. And so, for example, in the Climate Fund, we’ve made any number of reasonably priced investments, very reasonably priced. RITHOLTZ: So I always assumed it was tied to the public markets. But sometimes you just don’t realize, when you have a good couple of years in a row in the public markets, like we saw in the 2010, pretty much straight up through 2021, you see that impact and what people are looking for, what sort of deals get done, and valuations generally. WENGER: I always find it relatively surprising how much private early stage valuations are tied to public markets because our holding — RITHOLTZ: That’s the exit, right? WENGER: But our holding periods are 5, 8, 10 years. And so, like, what’s the current public — RITHOLTZ: Right. WENGER: And so there’s a couple of different explanations. One, obviously, is just investor sentiment, right? RITHOLTZ: Right. WENGER: You know, when investors are like bearish because of what they’re seeing in the public markets, they take a bearish attitude towards their own investing. We try — at Union Square Ventures, we try to have a pretty steady pace as one way of contracting our own sort of — you know, whatever our own emotions may be about the public markets. There is, however, another effect that sometimes is underestimated, which is that the people who give money into venture funds, so these are pension funds and endowments, and so forth, they have a certain whip from the public markets, because when they’re feeling flashed on the public markets then their private allocation, you know, as a percentage of their overall portfolio, they have a certain target in mind. Then when the public markets come down a lot, all of a sudden, they’re overallocated, so they want to pull back. So there is a mechanism by which the current public markets transmit into the private markets. There’s a real financial mechanism. There’s a psychological mechanism and a real financial mechanism by which some transmission, some contagion basically happens from the public market into private market. But it doesn’t make very much sense. Like, if people were sort of more cognizant of both that emotional reaction and this mechanism, they’d be like, “Well, yeah, but innovation is happening at some pace. In some area, there’s some innovation and we should be funding that innovation.” RITHOLTZ: So I’m just making notes, investors are irrational. WENGER: Deep and profound insight right here. RITHOLTZ: Right. There you go. WENGER: You’ve never heard this one before. RITHOLTZ: So to put that into a little context, 2020, 2021, very founder-friendly deals. Now, it seems like a little more investor-friendly, a fair assessment or not quite there yet? WENGER: Well, when it comes to founder-friendly versus investor-friendly, there’s a lot more to deal than valuation. There’s all the other terms. And while I believe we will see a correction on valuation that’s pretty significant, I don’t think we’re going to go back to where venture capital was 20 or 30 years ago, that had all these super draconian terms. Certainly, even at the early stage, even at the early stage, there were all these like — there were redemption provisions in the early stage deals. I don’t think that’s going to come back. We are not fans of structure in latest stage deals. Like, just to give a good example, when I was still on the board of Twilio, Twilio had the option of doing a totally clean, no structure round and call it $1,000,000,001. In a highly structured round with like — you know, we’re going to have a full ratchet into an IPO at a $1,000,000,005. And I was — you know, some of the other investors at the table really wanted the $1,000,000,005 number because it’s a big headline number. And I talked to Jeff and I said, “It doesn’t make any sense.” RITHOLTZ: Right. WENGER: You don’t actually know what your deal is until many years. Like, just take the deal where you know what the deal is today and you know what the deal is a year from now, and two years from now, because it’s not going to change based on circumstances. RITHOLTZ: Right. WENGER: And so Jeff took the clean deal, and that enabled Twilio to go public when the IPO window reopened. Whereas at the $1,000,000,005 deal, they wouldn’t have been able to go public. And that worked incredibly well for Twilio to become a public company. RITHOLTZ: Really interesting. So since we’re comparing early stage investments to the public world, lately, everybody has been looking at different sectors the past year. Energy has done well, technology not so much. Within venture, do you see that same sort of segmentation, different sectors have different — WENGER: Well, we were basically the first sort of venture firm to have a dedicated climate fund. And now, many of the venture firms are following suit, either adding a climate pocket to their existing funds, or a climate thesis or, you know, some people call it sustainability fund. Ours is very focused on climate. So for instance, we don’t deal with water waste. It’s strictly about atmospheric carbon. So there’s a lot money rotating into that sector. There’s still healthy sort of activity around Web3. So you know, Web3, there’s still — RITHOLTZ: Crypto, blockchain, all that? WENGER: Yeah. There’s still healthy sort of activity. I do think that certain kind of software companies that had found it very easy to raise money, I think they’re finding it a lot harder, just because people have looked at it and said, “Wow, I think we’ve reached some stage of normalization in this market.” You know, like, not everything in this market is going to be a $50 billion outcome. There’s going to be many, much smaller outcomes, and so we need to adjust accordingly. And also, many of these markets had just too many companies raised venture capital doing basically more or less the same thing. RITHOLTZ: So it was easy to raise money for a fund today, a little more challenging, even if you’re a pretty decent sized VC with a 10, 20-year history. Are they having difficulty going back to their clients saying, “Hey, we’re doing another billion dollars?” WENGER: You know, I think that we will only see a year from now, or two years from now. There were a lot of funds that have put out a lot of money very, very rapidly, and we’ll see just how big the hangover is. But we won’t know that for some time. RITHOLTZ: So some of the folks who give advice to founders like Chamath and Jason, and the crew with the All-In Podcast, they’ve been talking about — preaching really about cutting costs and reducing your burn rate, and get ready for a tough year or two. How do you see this environment? Is that good advice, or do you really have to, you know, go all out and get more funding as opposed to trying to make a more modest burn rate last longer? WENGER: There’s very little one size fits all advice that makes sense. RITHOLTZ: Fair. WENGER: Nonetheless, we held a call early this year for all of our portfolio companies. And we said this really is a big adjustment and it’s not a one or two months’ blip. This is a long-term adjustment. And it was great because we had some CEOs in our portfolio who had managed through the implosion of dot-com bubble, and they spoke about just how difficult the funding environment can get. So generally speaking, we did a lot in ’21 because we saw this coming. To me, the biggest sign of the bubble really was — that we really were reaching the tail end, was all these incubation efforts that were being raised. And I knew this because I had raised money into an incubator in ‘99, towards the end of the dot-com bubble. And I think when investors think, “Oh, I don’t even need the entrepreneur, I can just start the company myself,” that’s kind of when you know that it’s gotten too easy, right? And that’s not going to lie. So in ‘21, we took a lot of liquidity. We sold a lot of things that we were able to sell. And we told all of our portfolio companies to raise money. And so — RITHOLTZ: Last year, this is — WENGER: ‘21. Yeah. Well, it’s best to do things before. RITHOLTZ: Sure. Sure. WENGER: Right? So as a result, we have very few companies in our portfolio that need to raise. We have some, but we have very few. And then, you know, at the beginning of this year, we told everybody who had raised successfully, “You got to make this money lasts much longer than you thought when you raised it.” And so, yes, absolutely. You know, companies were operating with very inefficient growth. Because it was easy to fund inefficient growth, you could be burning $1 million, $2 million, $3 million, $4 million a month. And you know, if you were growing 405%, 50%, 60%, that was good enough. That’s not going to be the case. So you’re either growing very fast, or you have something very compelling, in which case you can raise money, or you are growing, you know, 20%, 30%, but you are growing very, very efficiently, right? So being in the sort of 50% growth, but you’re super inefficient, that’s going to be a really tough place to be. RITHOLTZ: All right, so before I get to my favorite questions, I have two questions I’ve been sitting on sort of from the book and some from your blog continuations that I want to hear where you go with this. And the first one is a quote from the book, “Malthus could not foresee the scientific breakthrough that enabled the Industrial Revolution.” I think you let him off the hook a little too easy. It’s just an abject failure of imagination. And you are in the imagination business. The Malthusians, weren’t these folks just unable to imagine any sort of progress or technological development? WENGER: Well, we have had more progress and more technological development than people were able to imagine. I think, conversely, we’re now in the opposite trap. We can’t imagine that things could get really, really bad. We can’t imagine that the climate crisis could disrupt our food supply to the point where billion people starved. We simply can’t wrap our head around this idea. So I think we’re in the opposite trap at the moment. We’ve been so used to the success of progress, and we’ve so neglected the engines that produce progress, that I think we’re in the opposite trap at the moment. RITHOLTZ: What are the other engines? Is it early stage investing from governments when the project has a 10 and 20-year ROI that the private sector won’t do it? WENGER: It’s foundational research. We’ve not had a true breakthrough in science since quantum mechanics. It’s a hundred years ago. So general relativity and quantum mechanics are hundred years ago. Now, we’ve made some progress in biology. Biology, we’ve had some really good progress. But you know — RITHOLTZ: You’re talking fundamental science not technology. WENGER: Fundamental science. RITHOLTZ: Like, I immediately think of semiconductors was a giant — WENGER: Oh, no, incredible progress. But fundamental science, we’ve not had a true big unlock in a hundred years. Now, I think when we talk about engine of progress, this is also how hard is it to start a business? How many regulations do you have to comply with? How expensive is it to comply with those regulations? We’re also talking about — we’re still subsidizing oil and gas globally, to the tune of trillions of dollars. RITHOLTZ: Yes. Yes. WENGER: Subsidizing oil and gas, it’s crazy. RITHOLTZ: Which by the way, helps to explain why so many people have an incentive to either question the impact, the source or the reality of climate change. WENGER: Yes. RITHOLTZ: There’s forces that work there. WENGER: And so, I believe we’re in this sort of opposite trap today. And you know, people like to make fun of Greta Thunberg. But young kids, young activists understand the severity of the climate crisis in a way — RITHOLTZ: Right. WENGER: — in a way that most adults don’t seem to be willing to accept. RITHOLTZ: Right. I don’t think climate change is going to impact my life. You know, I’m 60. I’m going to run out the clock. WENGER: You’re not. RITHOLTZ: Someone your age — WENGER: The reality is you’re not. You’re not going to escape. You and I are not going to escape this. It’s here, it’s now and it’s only going to get worse. RITHOLTZ: I don’t doubt that for a second, but — WENGER: And here’s the thing, I think — RITHOLTZ: I challenge — WENGER: We could live in this amazing, incredible future. Like, wouldn’t you rather live in a city that has mostly electric or all electric cars in it? Like, the air would be so much better. Wouldn’t you rather live in a world that has huge — like, think of all the Midwest, instead of growing corn to feed cows — RITHOLTZ: Right. WENGER: — super inefficient. If we can grow the meat of the cows in the vast instead, we could have like incredible forests. We could have incredible wildlife areas. Like, we could have this amazing, incredible future. We could have energy reserve. If we build more nuclear power, electricity could basically be almost free. So we have this amazing thing we can go. Instead, we’re headed for this complete disaster and we’re mostly like, “eh.” RITHOLTZ: I think that’s a fair assessment. I think you definitely have that. And I certainly see people my generation, absolutely think it’s not going to impact them or minimum impact, it’s really the grandkids’ problem. WENGER: Yeah. And it’s just — that’s totally, utterly wrong. RITHOLTZ: All right, one other curveball I have to ask you about, which involves Yuval Noah Harari, who says in Sapiens, “All value systems are based on equally valid, subjective narratives, and humans have no privileged position as a species.” You say he’s wrong. Explain. WENGER: Not just wrong, it’s completely dangerous because it opens the door to absolute moral relativism. It’s sort of like, well, if you believe that, then, you know, the ISIS narrative is just as valid, you know, and I just think that’s wrong. And I do think there’s an objective thing, which is humans have knowledge. And by knowledge, I mean, I can read a book today that somebody else wrote in some other part of the world a thousand years ago, right? No other species on the planet has this. I mean, other species have amazing things about them, but none of them has knowledge. And that puts us in a privileged position. By the way, privilege comes with obligation. That’s usually what it used to mean. Today, we think of privilege just it lets you do whatever you want. But it used to mean that you had real obligations, right? And I believe because we have the power of knowledge, we have real obligations to other species. Other species don’t have much of an obligation to us, but we have an obligation to them. RITHOLTZ: And the interesting thing about what you said is not only does no other species have the ability to access anything, anybody has written, anytime in history, pretty much this is the first generation that had access in that way, across — pretty much across the whole board. WENGER: Well, this is the amazing thing about digital technology, right? We could use it to make all the world’s knowledge accessible to everybody in the world. And great things could come from that, right? So there’s some people like Elon Musk and others who are like, “Oh, my God, the population is going to, you know, decrease a lot and that will be bad.” I’m like, no, we have 8 billion people at the moment, peak population. The present trajectory might be 11 billion, although if we don’t get on top of the climate crisis, it will decrease actually rapidly. But we’re making such poor use of it. Why? Because so many people don’t have access to knowledge, don’t have a shot. I always love the story of Ramanujan, the famous mathematician, who used to send a letter to Hardy. And Hardy was like, “We should bring this guy over to England and he would have been a very productive mathematician.” There are Einsteins, and Ramanujans, and Elinor Ostrom, and Marie Curies all around the world today, and we’re not giving them — so we’re vastly undertapping human potential. And we can use digital technology to change that and to give everybody access. And that’s one of the things, one of the great opportunities that we have in this transition to the knowledge age. RITHOLTZ: Quite, quite fascinating. So let me jump to my favorite questions that I ask all of my guests, starting with, tell us what kept you entertained over the past couple of years. What have you been watching or listening to? WENGER: I really don’t watch much. At the moment, the only thing I watch with any kind of regularity Sabine Hossenfelder’s YouTube series called Science Without the Gobbledygook. RITHOLTZ: I’ll take a look at that. I’m a giant fan of YouTube Premium, and I’m always astonished that people I know who are YouTube junkies won’t spring for the 8 bucks a month to pull out commercials and distractions. But YouTube is just an endless rabbit hole. WENGER: Well, YouTube is an example of the best and the worst of the Internet all in one place, right? There’s so much amazing knowledge like Sabine’s videos, Veritasium. I mean, you could learn almost anything from how to fix your dishwasher to how — you know, the theory of general relativity works. At the same time, YouTube is also this place where tons of people, you know, become radicalized or redpilled, or whatever it is, because the algorithm — the algorithm has the wrong objective function, right? Its objective function is engagement. It’s not lifting people up. RITHOLTZ: Tell us about some of your mentors who helped shape your career. WENGER: I was super, super fortunate when I was an early teenager. We talked about this, when I first fell in love with computers. I lived in a relatively small village in Germany. And there was one computer science student there who was maybe 10 years older than I was. And he just spent time with me, and he gave me his books, and he gave me his floppy disks with software, and he helped me sort of understand all this. And I’m forever grateful to (Anstur Guenther), wherever you are in the world. RITHOLTZ: That’s really interesting. Have you spoken to him anytime recently? WENGER: No, because I haven’t been able to find him. Basically, he seems to have disappeared. RITHOLTZ: Well, if you’re listening, reach out to Albert. Tell us — we mentioned a number of books. Tell us about some of your favorite and what you’re reading right now. WENGER: Favorites, I would say David Deutsch, “The Beginning of Infinity” is definitely one of my favorites. RITHOLTZ: I just ordered that because of you. WENGER: I’m reading at the moment, a book by Ada Palmer called “Perhaps the Stars.” It’s the fourth book in a series called the Terra Ignota Series. She’s a professor at the University of Chicago. RITHOLTZ: What sort of advice would you give to a recent college grad who is interested in a career in either entrepreneurship or venture capital? WENGER: Develop a mindfulness practice, you know, whatever works for you, whether that’s yoga, running, for me, it’s conscious breathing. I just think it’s such a superpower not to get hijacked by your emotions. It’s a true superpower. And the more humans can cultivate it, the more we can achieve. RITHOLTZ: That’s really, really intriguing. And our final question, what do you know about the world of venture today that you wish you knew 30 or so years ago when you were first getting started? WENGER: There will always be another bubble. RITHOLTZ: There will always be another bubble. That’s amazing. Just human nature can’t be avoided. WENGER: It can’t be avoided. RITHOLTZ: And what should we do in anticipation of during and after bubbles? WENGER: We should acknowledge that they will come, that they’re part of how we operate, that you can make money before, during and after. RITHOLTZ: There you go. Really, really fascinating stuff. We have been speaking with Albert Wenger. He is managing partner at Union Square Ventures. If you enjoy this conversation, well, be sure to check out any of our previous 400 or so discussions we’ve had over the past eight years. You can find those at iTunes, Spotify, or wherever you get your favorite podcasts from. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reading list at ritholtz.com. Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Sarah Livesey is my audio engineer. Sean Russo is my head of Research. Paris Wald is my producer. Atika Valbrun is our project manager. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Albert Wenger appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureSep 20th, 2022

Futures, Bitcoin Crater As Yields And Dollar Surge

Futures, Bitcoin Crater As Yields And Dollar Surge After a dismal week for risk assets, which saw equities drop the most since June 17, global markets and US equity futures are tumbling in another extremely illiquid session (Japan and UK are both closed, the latter for the state funeral of QE2) as the realization sparked by Fedex that the world is in a global recession, is starting to finally seep through. Add to that Wednesday's 75bps rate hike by the Fed (which however is more than priced in by now) as well as the previously discussed start of the buyback blackout period, and CTAs and pensions becoming forced sellers with investor sentiment that can at best be described as pervasive record doom and gloom, and it becomes clear why this week could be an even bigger bloodbath for stocks. And sure enough, Nasdaq contracts have tumbled 1.2% as S&P futures are down 1.0%... ...the dollar is back into record territory, with rumors of a new imminent plaza accord growing louder by the day... ... 10Y yields are just shy of 3.50%, hitting a new post-2011 high this morning... ... which in turn is hammering European and Asian markets, as oil plunges in response to the fresh highs in the dollar. In permarket trading, tech shares are lower and poised to extend last week’s decline, as investors expect the Fed to deliver a 75bps rate hike when it meets on Wednesday, putting pressure on pricier growth stocks. Tesla (TSLA US) -1.4%, Google (GOOGL US) -1.2%. Here are some other notable premarket movers: Marathon Digital (MARA US) plunged as much as 8.4% in premarket trading on Monday alongside other cryptocurrency- related stocks, after Bitcoin dropped toward the lowest level since 2020 on monetary tightening concerns. US-listed Chinese stocks edged lower in premarket trading Monday after Chinese stocks listed in Hong Kong dropped, putting them on track to enter bear-market territory. Alibaba (BABA US) -1.5%, Nio (NIO US) -1.6%. FOXO Technologies (FOXO US) surges in premarket trading after tumbling 52% on its debut on Friday via its combination with special purpose acquisition company Delwinds Insurance Acquisition Corp. Take-Two Interactive Software Inc. (TTWO US) falls 6.5% in US premarket trading Monday after a hacker published pre-release footage from development of Grand Theft Auto VI, its most anticipated video game. In addition to the startling FedEx warning which sent the stock crashing by the most on record, investors also face potential volatility from policy decisions this week by the Bank of England, the Bank of Japan and a host of other central banks. The British pound sank to its weakest level against the dollar since 1985 on Friday and the yen remains under pressure, though it has backed off from just below the key 145 level versus the dollar. “The aggressive tightening of policy in the coming 4-6 months, not just in the US but globally, increases the risk of a recession next year,” said Maria Landeborn, a senior strategist at Danske Bank A/S. “We expect uncertainty will remain high surrounding inflation, rates and the overall economy, which is negative for market sentiment and risk assets.” With the Fed poised to hike 75bps (and perhaps even 100bps) and keep rising until it hits 4.50%, top Wall Street strategists see mounting risks for US earnings and equity valuations. Both Morgan Stanley’s Michael J. Wilson and Goldman Sachs Group Inc.’s David J. Kostin said headwinds to profitability are building, highlighting tighter monetary policy and pressure on company margins. In Europe, the Stoxx 50 fell 0.9% with Spain' IBEX outperforming, dropping just 0.3%, CAC 40 lags, dropping 1.1%. Energy, financial services and real estate are the worst performing sectors. Rate-sensitive European real estate shares are among the worst-performing in Europe in Monday trading, with the region’s equity market dropping further after seeing the biggest weekly decline in three months, as investors await a Federal Reserve monetary policy meeting this week.  Here are some of the biggest European movers today: Porsche Automobil Holding advances; Volkswagen AG said it’s looking to raise as much as EU9.4 billion from the IPO of its sports-car maker in what could be Europe’s largest listing in more than a decade European energy stocks fall, making them the worst-performing sector in Europe on Monday, as oil prices dipped, erasing earlier gains, with the Stoxx 600 Energy index declining 1.8% European real estate shares are among the worst- performing in Europe in Monday trading, with the region’s equity market dropping as investors await a Federal Reserve monetary policy meeting this week TF1 and M6 slumped after the French TV companies called off a planned combination because of objections from the country’s antitrust regulator; also today, Oddo cut TF1 to neutral Valneva falls as much as 16% after the French vaccines maker said it will terminate a Covid-19 vaccine collaboration with IDT Biologika, agreeing to pay as much as EU36.2 million in cash. Earlier in the session, Asian equities fell, poised for a fifth session of decline, as the dollar strengthened ahead of the Federal Reserve’s meeting this week. The MSCI Asia Pacific ex-Japan index erased early gains and fell as much as 0.8%, dragged by consumer discretionary and tech shares. Benchmarks in Hong Kong and South Korea were among the worst performers in the region. Japan’s market was shut for a holiday. The dollar’s gains put pressure on regional currencies, and stocks tumbled in the Philippines, Malaysia and Vietnam. Traders are watching the Federal Open Market Committee’s interest-rate decision on Wednesday for signals on further policy tightening, pricing in a 75-basis-point hike. The Hang Seng China Enterprises Index fell more than 1%, taking its losses from a June 28 peak to just short of 20%, which will mark the start of a bear market. Mainland China stocks traded little changed Monday as megacity Chengdu exited a lockdown. MSCI’s broadest Asia Pacific stock gauge has clocked five consecutive weeks of losses as investors factor in higher US interest rates and a strong dollar. Optimism over any easing of China’s Covid-Zero stance after the party congress in October is also waning. “Unless the Fed is done with rate hikes, the US dollar bull market is not over yet,” Lim Say Boon, chief investment strategist at CGS-CIMB Securities wrote in a note. In Australia, The t&P/ASX 200 index fell 0.3% to close at 6,719.90, the lowest since July 19, dragged by losses in health care and energy shares.  In New Zealand, the S&P/NZX 50 index fell 0.4% to 11,531.99. The nation’s economic outlook is sound, despite increasing domestic and international turbulence, S&P said in a statement Stocks in India snapped three days of declines, helped by a rally in consumer and auto firms on expectations of a boost in demand during the upcoming festive season. The S&P BSE Sensex rose 0.5% to 59,141.23 in Mumbai, while the NSE Nifty 50 Index also gained by a similar magnitude. Out of 30 shares in the Sensex index, 20 rose and 10 fell. A gauge of fast-moving consumer-goods makers was the best performer among 19 sectoral sub-indexes compiled by BSE Ltd. Most stocks across Asia declined ahead of key rate decisions by various central banks, including the US Federal Reserve. A higher-than-expected inflation in the US has raised expectations of another 75-basis-point hike when Fed policymakers meet on Wednesday. Housing Development Finance Corp contributed the most to the Sensex’s gains, increasing 1.5%.  In rates, Treasuries re-opened with yields cheaper by up to 5.5bp across front end of the curve in a bear flattening move. Into the weakness 10-year yields top at 3.506% and cheapest levels since June 2011. Cash market was closed overnight as UK observes a day of mourning for Queen Elizabeth II and Japan is out on holiday. Treasury yields 3.5bp to 5.5bp cheaper across the curve with long end outperforming slightly, flattening 2s10s, 5s30s spreads by 0.5bp and 1bp on the day. IG dollar issuance slate empty so far; up to $20b expected for the week with Monday and Tuesday potentially busy ahead of Wednesday FOMC. Latest CFTC positioning data shows hedge fund net short in two-year note futures, biggest since June 2021. Bund yields climb some 3bps across the curve. Australia’s bonds rose for the first time in four days. Yields fell 3-5bps across the curve. In FX, the dollar strengthens against all FX majors; euro trades below parity while cable trades at around 1.13/USD and the yen slides near 143.43/USD. UK observes a day of mourning for Queen Elizabeth II. Some more details: The Bloomberg Dollar Spot Index advanced 0.3% as the greenback strengthened against all Group-of-10 peers. Risk-sensitive Scandinavian and Antipodean currencies were the worst performers. Treasury futures eased, sending yields a few basis points higher The euro gave up an Asia session gain to drop for the first time in four days, yet momentum in options is less bearish across all tenors compared to a week ago. German bonds inched lower, with yields rising 3-4 bps, ahead of ECB speakers today The Swiss franc and the yen held up best against wide dollar gains. Hedge funds ramped up bearish yen bets to a three-month high on expectations Japan would languish in a world where developed market peers are racing to hike interest rates The yuan fell even as the People’s Bank of China fixed the currency at 6.9396 per dollar, 647 pips stronger than the average estimate in a Bloomberg survey of analysts and traders, the widest difference on record since Bloomberg started the survey in 2018 In commodities, WTI drifts 1.3% lower to trade near $83.98. Oil futures have resumed the sell-off, in part amid the cautious risk tone/firmer Dollar. Nord Stream AG says it cannot confirm nominations for the Nord Stream 1 gas pipeline on Monday. Kuwait produces more than 2.8mln bpd and has plans to increase oil output whenever the market needs it, while Kuwait currently produces 650mln cubic feet of gas per day and plans to raise it to 1bln cubic feet, according to Kuwaiti Petroleum Corporation’s CEO, cited by Reuters. Spot gold falls roughly $10 to trade near $1,665/oz. European natural gas futures fall again to their lowest level in almost two months. Bitcoin extends decline to $18k-level as broad crypto selloff continues. Bitcoin remained under pressure sub-USD 18,500. Ethereum extended on losses under USD 1,300. It's a busy week on the macro front, but Monday will be quiet with just the September NAHB housing market index on deck in the US. We also get the Eurozone July construction output, Canada August industrial product and raw materials prices. Market Snapshot S&P 500 futures down 0.8% to 3,861.00 STOXX Europe 600 down 0.7% MXAP down 0.5% to 149.48 MXAPJ down 0.6% to 487.97 Nikkei down 1.1% to 27,567.65 Topix down 0.6% to 1,938.56 Hang Seng Index down 1.0% to 18,565.97 Shanghai Composite down 0.3% to 3,115.60 Sensex up 0.6% to 59,203.12 Australia S&P/ASX 200 down 0.3% to 6,719.92 Kospi down 1.1% to 2,355.66 German 10Y yield up 3 bps to 1.78% Euro down 0.4% to $0.9978 Brent futures down 0.9% to $90.53/bbl Gold spot down 0.7% to $1,663.72 U.S. Dollar Index up 0.3% to 110.05 Top Overnight News from Bloomberg Federal Reserve officials are on track to raise interest rates by 75 basis points for the third consecutive meeting this week and signal they’re heading above 4% and will then go on hold Investors bracing for another jumbo Federal Reserve interest-rate hike are focused on a few key trades: betting on deeper inversion in the US yield curve, further losses in stocks and a stronger dollar The risk of a euro-area recession has reached its highest level since July 2020 as concerns grow that a winter energy squeeze will cause a slump in economic activity. Economists polled by Bloomberg now put the probability of two straight quarters of contraction at 80% in the next 12 months, up from 60% in a previous survey European Central Bank interest rates will need to rise a lot more to get inflation under control, Bundesbank President Joachim Nagel said over the weekend The Chinese megacity of Chengdu exited its lockdown on Monday, with 21 million people allowed to leave their homes and resume most aspects of normal life for the first time since Sept. 1, provided they’re tested regularly for Covid-19 A more detailed look at global markets courtesy of Newsquawk APAC stocks were mostly subdued with the region lacking firm direction amid holiday-quietened conditions and with participants cautious ahead of this week’s slew of central bank policy decisions including from the FOMC, BoE and BoJ. ASX 200 was indecisive after gains in the mining industry were offset by underperformance in tech and defensives, with risk appetite also contained amid further calls for the RBA to hike by 50bps next month. Nikkei 225 was closed due to a domestic holiday. Hang Seng and Shanghai Comp declined with the Hong Kong benchmark pressured by losses in tech and pharmaceuticals, while the mainland was also subdued despite the cities of Chengdu and Dalian lifting lockdowns and the PBoC conducting 14-day reverse repos for the first time since January at a lower rate. Nonetheless, the injection was likely due to the upcoming National Day holidays and the rate cut was not much of a surprise after a similar cut in the 7-day reverse repo rate last month, while geopolitical concerns also lingered following comments from US President Biden that US forces would defend Taiwan in the event of a Chinese invasion. Top Asian News China’s Chengdu lifted the lockdown for the entire city and Dalian will also lift the citywide lockdown effective this Monday, according to Bloomberg. China NDRC is seeking to promote an acceleration of the recovery in domestic consumption and speed up the injection of funds to start project construction ASAP. NDRC said the foundation of the economic recovery is still weak despite positive changes in main economic indicators and that external environment for utilising foreign capital is increasingly complex and severe, while it added there remains some factors affecting foreign investment confidence. UBS cut its China 2022 GDP growth forecast to 2.7% from 3.0% due to a weak Q3 recovery, according to Bloomberg. China’s Global Times stated that economists urged US regulators to serve market fairness and not let their work be trained with political factors as they are about to begin reviewing audit files of Chinese companies. US tsunami warning system issued a tsunami threat in Taiwan on Sunday morning following a magnitude 7.2 earthquake. Japan’s weather agency issued a special typhoon warning for the Kagoshima prefecture in southern Japan on Saturday, according to Reuters. It was later reported that the typhoon made landfall and millions were told to evacuate homes, according to FT. The subdued tone seen across a holiday-thinned APAC session reverberated into Europe, with UK markets closed due to the funeral of Queen Elizabeth II. European cash bourses are lower across the board but off worst levels. European sectors are mostly lower with no overarching theme. US equity futures are softer in tandem with their European counterparts with relatively broad-based losses seen across the main December contracts. Top European News UK PM Truss will conduct a bilateral meeting with US President Biden at the UN General Assembly on Wednesday instead of meeting in Downing Street on Sunday, according to a statement cited by Reuters. UK PM Truss agreed with Irish PM Martin that an opportunity exists for the UK and the EU for a negotiated Brexit resolution to the Northern Ireland protocol, according to RTE. UK PM Truss’s chief of staff Fullbrook said he is cooperating with the FBI regarding an investigation into a Conservative Party donor charged with illegally providing campaign donations to a former Puerto Rico governor, although Fullbrook denied any wrongdoing, according to FT. ECB’s Lane said there will probably be several more rate hikes this year and early next year, while he noted signs that inflation will come down but not just yet and said that a recession cannot be ruled out, according to Reuters. ECB’s Nagel said the ECB are ‘a good way off’ from where rates should be and rates will need to rise a lot more to get inflation under control, although is confident that inflation rates will fall after a tough winter, according to Bloomberg. EU is set to withhold EUR 7.5bln of funding from Hungary due to rule of law violations regarding corruption in awarding public contracts, according to FT. EU may ask companies to expand or repurpose production lines, according to European Commission emergency powers to avert supply crisis Geopolitics US President Biden warned Russian President Putin against changing the face of the war by using tactical nuclear or chemical weapons in Ukraine, while he also stated that Ukraine is not losing the war and is making progress in some areas, according to an interview on CBS’s 60 Minutes. Furthermore, President Biden said he warned Chinese President Xi of an investment chill and that it would be a gigantic mistake if China violates sanctions on Russia but noted that there has been no indication that Beijing has provided weapons to Moscow for its invasion of Ukraine. US Joint Chief of Staff chairman General Milley said during a visit to a military base in Poland that it is still unclear how Russia will react to the battlefield setbacks in Ukraine and now is the time for increased vigilance and preparedness, according to Reuters. IAEA said one of the Zaporizhzhia nuclear power plant’s regular external power lines has been repaired and the plant is receiving electricity directly from the national grid, while it added that although there has not been any recent shelling at or near the plant, it continues to occur in the wider area, according to Reuters. Russia and China have agreed on further cooperating on defence with a focus on joint exercises, according to Interfax cited Russian Security Council. US President Biden said US forces would defend Taiwan in the event of a Chinese invasion, according to Reuters. Taiwan said China continued its military activities around the island and that it detected 20 Chinese aircraft and 5 Chinese ships operating around Taiwan on Saturday, according to Reuters. FX The Dollar regrouped and regained a bid on a combination of technical and positional factors; DXY topped 110.00 but remains shy of Friday's best. EUR/USD retreated back under parity, GBP/USD under 1.1400 from a 1.1442 peak. USD/JPY grinds upwards and briefly topped 143.50, whilst antipodeans are the G10 laggards. Fixed Income Bonds have extended to the downside after waning from best levels earlier or overnight. Bunds are off a deeper 142.43 Eurex trough and the US 10-year T-note is nearer the base of its 114-12+/114-25+ range. Commodities WTI and Brent futures have resumed the sell-off, in part amid the cautious risk tone/firmer Dollar. Nord Stream AG says it cannot confirm nominations for the Nord Stream 1 gas pipeline on Monday. Kuwait produces more than 2.8mln bpd and has plans to increase oil output whenever the market needs it, while Kuwait currently produces 650mln cubic feet of gas per day and plans to raise it to 1bln cubic feet, according to Kuwaiti Petroleum Corporation’s CEO, cited by Reuters. Spot gold has been under pressure as the Dollar gained traction, whilst CME copper is softer amid the risk tone Chinese copper tycoon He Jinbi’s Maike Metals International is reportedly suffering a liquidity crisis that threatens his empire which handles one of every four tons of copper imported into China, according to Bloomberg. US Event Calendar 10:00: Sept. NAHB Housing Market Index, est. 47, prior 49 DB's Jim Reid concludes the overnight wrap A packed week will kick off with a quiet, solemn, start, as the UK is closed for the Queen’s funeral. Japan is also out on holiday. Looking forward, the postponed BoE meeting will nudge its way into an already packed central bank meeting schedule which includes the BoJ, SNB, Riksbank, Norgesbank, and of course, the Fed. Suffice to say, monetary policy will be in focus this week. On the Fed, market pricing glided toward Matt Luzzetti’s expectations (full FOMC preview here) that the Fed will deliver a 75bp hike next week, having decayed from last week’s peaks after the stronger than expected CPI data. Much closer to consensus PPI and University of Michigan inflation expectations data helped bring pricing back from the peaks, let alone no press reports seemingly confirming pricing one way or another (finishing the week at 79.8bps priced). Regardless, some premium of a 100bp move will probably stay priced in for Wednesday, either on the off chance of some late blackout-period guidance. Beyond the rate move itself, the new SEP should show unemployment ticking higher, moving farther from a soft-landing forecast. Luzzetti and co. expect the dots will show unemployment ratcheting to 4.5%. The September FOMC also adds another year to the SEP, so we will get figures for 2025, showing how steep a hiking cycle, how deep any recession, and how quick the subsequent recovery policymakers are expecting if their preferred policy path is realized. On the BoE, our economists expect (full preview here) the MPC to vote for a second consecutive 50bp hike, albeit along divisive lines, with dissents favouring both a 25bp and a 75bp move likely surfacing. On the balance sheet, the MPC should confirm the start of gilt sales from later on this month, totaling GBP 10bn per quarter. Our economists expect the BoE’s terminal rate will be 4%, reached in May of next year, which is a 150bp upgrade over their old forecast. The Bank of Japan also meets, where our economist expects (full preview here) the BoJ to remain the DM outlier by maintaining an easy policy stance, while agreeing to end their special pandemic funds-supplying operation as scheduled at the end of the month. The policy divergence will continue to weigh on a yen which is around its weakest levels versus the dollar since the early 90s, but our economists do not expect that augurs intervention, as fundamentals are driving the weakening and reduce the chance any intervention is effective. Geopolitical risks will remain in focus, where the Ukraine war is most front-and-center. Elsewhere, a few conflagrations have broken out in former USSR states which individually may not be macro moving events, but are something to keep an eye on if symptomatic of something broader. Finally, an ever-looming potential issue, President Biden said in an interview with 60 minutes that the US would defend Taiwan if invaded, even as he downplayed the claim as not official US policy. Overnight in Asia equity markets are trading in negative territory at the start of the week after the US equities ended in the red on Friday. The Kospi (-0.98%) is the largest underperformer across the region followed by the Hang Seng (-0.88%). Over in mainland China, the Shanghai Composite (-0.22%) is trading lower while the CSI (-0.11%) is swinging between gains and losses. Elsewhere, as mentioned, markets in Japan are closed for a holiday with no trading in Treasuries until the US session. In overnight trading, US stock futures are pointing to further losses with contracts on the S&P 500 (-0.27%) and NASDAQ 100 (-0.50%) both edging lower. A quick recap of last week, which was a reliable microcosm of the major macro stories over the year, namely the war in Ukraine and the central bank battle over inflation. Ukraine’s successful counter-offensive stoked some optimism early in the week, optimism which faded from risk assets (along with the tightening in global policy paths, more below) as the pathway to peace and an end to the war were not any clearer. That was ossified on Friday with President Putin giving a press conference where he warned about escalating the conflict in so many words. Global equity indices retreated over the week, with the STOXX 600 down -2.89% (-1.58% Friday), the DAX -2.65% lower (-1.66% Friday), and the CAC down -2.17% (-1.31% Friday). Banks proved one bright spot in European equities given the rate selloff, with the Euro Banks index gaining +2.90% despite pulling back -1.88% on Friday. US equities underperformed given the salience of steeper Fed policy post CPI, with the S&P 500 pulling back -4.77% (-0.72% Friday) and the NASDAQ down -5.48% (-0.90% Friday), the worst weekly return for both since mid-June. The EU’s unveiling of measures to curtail energy price pressures, combined with some national-level efforts, drove European natural gas futures -9.82% lower to close the week at EUR 186.75, the first time they’ve ended a week below EUR 200 since the end of July. For rates, the main event was the above-consensus US CPI data, which saw a repricing of global policy paths steeper, with 2yr Treasuries gaining +31.1bps (+0.3bps Friday) and 2yr Bunds +20.6bps higher (-0.7bps Friday). Curves flattened in both jurisdictions given the harder-landing implications of such a steep policy path, with 10yr Treasuries up +14.0bps (flat Friday) and Bunds up +5.8bps (-1.4bps Friday). It also coincided with terminal rates pricing higher, where the market is expecting fed funds rates to get up just shy of 4.4% in the spring of next year, albeit below our revised in-house call of terminal closer to 5%. Tyler Durden Mon, 09/19/2022 - 07:32.....»»

Category: personnelSource: nytSep 19th, 2022

Auto Roundup: Big EV Battery Bets by HMC and TM Draw Most Attention

While Honda (HMC) and LG Energy announce a $4.4 billion investment in a U.S. EV battery plant. Toyota (TM) is set to invest another $2.5 billion in its TBMNC facility. Last week, a number of automakers released their vehicle sales data in the United States for August. Industrywide, sales of light vehicles increased 4.8% in August, marking the first monthly year-over-year gain since summer 2021. While Toyota TM and Honda HMC recorded sales decline, deliveries rose by double-digit percentage points for Ford F, Hyundai and Kia. Per LMC Automotive, the seasonally adjusted annualized rate (SAAR) for August was 13.2 million units. Having said that, the industry is still struggling with low inventory. For the 10th consecutive month, the retail inventory closed below 900,000 vehicles.On the news front, Japanese auto biggies Honda and Toyota announced massive spending plans to spur their battery production game, in another indication of a new wave of investment related to EV battery production that is underway. The battery plants will serve a pivotal role in TM and HMC’s efforts toward a fully electrified future and will help them meet their carbon neutrality targets. Meanwhile, the U.S. legacy automaker Ford issued a recall of more than 277K vehicles in the United States. The vehicles impacted by the recall have a 360-degree camera system. The company is of the opinion that the anti-reflective lens on the cameras can degrade, which can result in a cloudy image.Leading truck engine maker, Cummins CMI demonstrated its commitment to decarbonization as it joined forces with Buhler Industries and Transport Enterprise. Finally, Mercedes-Benz Group AG MBGAF also made noise as it is set to roll out a bunch of new EQ vehicles. The year 2023 may prove to be the year of the EQ as the Germany-based luxury automaker intensively grows its EQ range to aim for zero-combustion as the end goal.Last Week’s Top StoriesHonda and LG Energy announced their plans to invest $4.4 billion to build a new battery production plant in the United States. The location of the factory hasn’t been announced yet. The mass production of lithium battery cells is set to begin by the mid-decade end. The plant aims to have an annual production capacity of approximately 40 GWh. Honda currently does not have an EV offering for the U.S. market but plans to launch an all-electric Prologue SUV in 2024. The company intends to sell only electric vehicles in North America by 2040.In other news, American Honda — a subsidiary of Honda — sold 71,461 vehicles last month. The sales dropped 37.7% year over year. While car sales totaled 21,534 units, truck sales summed 49,927 units. Notably, Accord Hybrid posted the best-ever August sales, which topped 3,000 units. The all-new Acura Integra sales crossed 1,500 units in August, marking the best month since its launch. The company currently carries a Zacks Rank #3 (Hold).Toyota announced that it intends to invest another $2.5 billion in its Toyota Battery Manufacturing North Carolina (TBMNC) facility to enhance the production of battery electric vehicles. In December 2021, Toyota had announced plans to set up a new battery plant in North Carolina worth $1.29 billion to expand its EV efforts. With the latest announcement, TBMNC’s total investment is $3.8 billion. The plant is scheduled to commence production in 2025. Last year, the auto giant earmarked a global investment of nearly $70 billion for electrification efforts. With the current development, it looks like the automaker is quite determined in its mission.In other news, Toyota announced that it sold 169,626 vehicles in the United States in August. Sales declined 9.8% year over year. While sales from the Toyota division contracted 8.1% year over year to 147,873 vehicles, Lexus unit sales declined 20.1% year over year to 21,573 vehicles. The company currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks hereFord recalled 277,040 passenger cars and pickup trucks in the United States on the grounds that there are chances of the rearview camera lens getting cloudy and reducing visibility for the driver. The recall covers certain F-Series trucks, namely F-250, 350 and 450 trucks, and the Lincoln Continental, all belonging to the 2017 through 2020 model years. More than 8,800 warranty reports have cropped up in the United States due to the problem. Dealers have been asked to replace the camera free of cost to owners. Ford will notify owners by letter starting Sep 12.Meanwhile, Ford unveiled its sales report for August.The automaker reported sales of 158,088 new vehicles for the month, marking a 27.3% increase year over year. Sales of the namesake brand totaled 151,695 vehicles, up 27.5%, while Lincoln sales increased 24% to 6,393 vehicles. The Ford Mustang Mach-E August sales volume of 3,120 units shot up 115% year over year. F-Series was featured as America’s best-selling truck, best-selling hybrid truck and best-selling electric truck in the month. The company currently carries a Zacks Rank #3.Cummins signed a letter of intent with Buhler Industries, a leading tractor manufacturer under the Versatile brand. Both companies plan to integrate the Cummins 15-liter hydrogen engines into Versatile’s equipment to drive efforts in de-carbonizing the agriculture market. Hydrogen combustion engines provide a cost-effective zero-carbon fueled solution for high load factor and high utilization applications. The technology brings the benefits of a more-timely solution to reduce carbon emissions without compromising on productivity. The companies’ shared commitment to technology will allow both to leverage each other’s strengths to breed new opportunities.CMI and Transport Enterprise also struck a pact wherein the latter intends to purchase CMI’s 15-L hydrogen internal combustion engines. Transport Enterprise seeks to deploy Cummins’ X15H hydrogen engines into its heavy-duty trucks. Cummins appears enthusiastic about the adoption of hydrogen engines and aims to make carbon-neutral commercial transportation economically feasible for customers. The company currently carries a Zacks Rank #3.Mercedes-Benz announced that it started production of its first battery-electric SUV—the EQS model—for the U.S market. The EQS will be followed by the manufacture of the EQE SUV later this year. The auto magnate has announced a range of EQ lineup of electric vehicles for the U.S. market. Two versions of the EQS sedan have already reached the U.S. market and will soon be followed by two versions of a smaller EQE. In a statement, it shared details of the new versions of EQS and EQE for 2023. The new addition will cover an EQS 450 4MATIC, which will join the current 450+ and 580 4MATIC, as well as a 350 4MATIC version of the EQE, which will join the previously announced 350+ and 500 4MATIC models.Mercedes announced that the 2023 model year will include an AMG version of the EQE sedan, in line with the previously announced AMG EQS. The AMG EQE Sedan has impressive driving dynamics and a powerful high-performance drive battery that uses the latest lithium-ion technology. The entire range of 2023 EQ vehicles will arrive by late 2022. No information on pricing has been released yet, though the SUV is expected to cost more than the EQS 450, priced at $103,360 or the EQS 580, priced at $126,950. The company currently carries a Zacks Rank #2 (Buy).Price PerformanceThe following table shows the price movement of some of the major auto players over the last week and six-month period.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will track China vehicle sales data for August 2022, likely to be released by the China Association of Automobile Manufacturers soon. Also, stay tuned for any updates on how automakers will tackle the semiconductor shortage and make changes in their business operations. Want to Know the #1 Semiconductor Stock for 2022? Few people know how promising the semiconductor market is. Over the last couple of years, disruptions to the supply chain have caused shortages in several industries. The absence of one single semiconductor can stop all operations in certain industries. This year, companies that create and produce this essential material will have incredible pricing power. For a limited time, Zacks is revealing the top semiconductor stock for 2022. You'll find it in our new Special Report, One Semiconductor Stock Stands to Gain the Most. Today, it's yours free with no obligation.>>Give me access to my free special report.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 Ford Motor Company (F): Free Stock Analysis Report Toyota Motor Corporation (TM): Free Stock Analysis Report Cummins Inc. (CMI): Free Stock Analysis Report Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report MercedesBenz Group AG (MBGAF): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 7th, 2022

Auto Roundup: Honda (HMC) Trims Output, Ford (F) Cuts 3K Jobs & More

Amid supply chain disruptions, Honda (HMC) is set to slash 40% production in Japan in early September. Meanwhile, Ford (F) downsizes its workforce by nearly 3,000 as part of its cost-cut efforts. Supply chain disruptions and chip shortages continue to roil the automotive space. Last week, Honda HMC notified its intention to slash output by 40% in Japan in early September. Per reports, the company is also considering shifting its supply chain away from China. Meanwhile,Honda’s closest peer Toyota TM is doubling down on its hybrid bet in India. As India tightens fuel efficiency and emission targets for carmakers, hybrids will help Toyota meet its regulatory requirements as credits earned will offset the production of fossil-fuel vehicles.In another major announcement, U.S. legacy automaker Ford F announced workforce downsizing by almost 3,000 as part of its cost-reduction efforts and restructuring plan that focuses on shifting to an EV-defined future that reduces dependency on labor. Auto parts retailer Advance Auto Parts, Inc. AAP also made it to the headlines as it unveiled its quarterly results and cut its 2022 projections.While Toyota, Honda and Ford carry a Zacks Rank #3 (Hold), Advance Auto holds a Zacks Rank #4 (Sell) now.You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Recap of Last Week’s Major NewsHonda announced its plans to cut production by 40% early next month owing to the chip crisis, logistical challenges and persistent supply chain disruptions. The company’s assembly plant in Saitama prefecture in Japan will slash output by nearly 40%.Two lines at its Suzuka plant will also trim production plans by 30% in early September.The temporary suspension of operations at these factories is set to impact the production of the Vezel sports utility vehicle, the Stepwgn minivan and the Civic compact car.In another development, the Japanese auto giant is considering setting up a separate supply chain outside China to reduce its dependence on the country. It is believed that HMC would maintain its supply chain in China for the domestic market while having another one in parallel. Honda’s supply chain is heavily China-dependent. Last year, almost 40% of Honda’s automobile production took place in China. But the recent resurgence of Covid-led restrictions in China resulted in supply snarls that significantly lowered output for Honda. The company’s global production plunged 54% year over year in April, primarily because of logistical issues. In light of such supply chain snafus, Honda is contemplating diversifying its manufacturing outside China.Toyota announced that it is rebooting its strategy for India by doubling down on a bet that emerging markets will generate demand for hybrids if provided at the right price.Toyota wants more first-time buyers in India to own full hybrids as an initial step toward mass electrification. Gradually, it would bolster local sourcing, and production will be competitive.Toyota’s hybrid Camry sedan performance, since its India debut in 2013, has not been impressive. Sales numbers for the vehicle have remained low partly due to a sticker price that was more than eight times the annual income of a middle-class family in the country.Now, TM is keen to play the game differently with lower-cost hybrids. It intends to bring down the cost of full-hybrid powertrains by manufacturing them domestically in India.Toyota plans to use the clout of its cooperation with partner Suzuki Motor and reap the benefit of the latter’s low-cost engineering know-how and mild hybrid technology. Toyota's first new hybrid to hit India’s roads will be the Urban Cruiser Hyryder, a compact SUV. Its price is expected to be around $25,000, which is less than half the price of the Camry. Suzuki and Toyota together will sell the Hyryder.Advance Auto reported adjusted earnings of $3.74 per share for second-quarter 2022 (ended Jul 16, 2022), up 10% from the year-ago quarter figure. The reported figure was in line with the Zacks Consensus Estimate. The company generated net revenues of $2,665.4 million, falling short of the Zacks Consensus Estimate of $2,748 million but edging up 0.6% from the year-ago reported figure.Discouragingly, Advance Auto has trimmed its 2022 guidance. It estimates full-year net sales in the band of $11-$11.2 billion, down from the previous guided range of $11.2-$11.5 billion. Comparable store sales are now envisioned to decline up to 1% as against the prior forecast of 1-3% growth. Adjusted operating income margin is envisioned in the range of 9.8-10%, down from the prior estimate of 10-10.2%. Adjusted EPS is now forecast between $12.75 and $13.25, down from the previously guided range of $13.30-$13.85. The auto parts retailer now intends to buy back stocks worth $500-$600 million in 2022. It aims to open 125-150 new stores this year.Ford stated its decision to downsize its workforce by 3,000 as part of intensive cost-reduction and restructuring efforts. The move will impact salaried and contract workers. Most of the reduction will be in the United States, Canada and the Ford Business Services operation in India. Of the 3,000 employees, 2,000 are salaried employees and 1,000 are agency personnel.F opined that its focus on the electrification-driven restructuring efforts has necessitated the re-deployment of its resources to become on par with competitors. Many job positions have skills that have become redundant over time. Therefore, it intends to shuffle its workforce to make it more competitive and dynamic.Ford’s hunger to generate revenues through digital software and connected services requires it to streamline its workforce with the people having the right set of skills.Price PerformanceThe following table shows the price movement of some of the major auto players over the last week and six-month period.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will keep a tab on August U.S. vehicle sales. Also, stay tuned for any updates on how automakers will tackle the semiconductor shortage and make changes in their business operations.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 Ford Motor Company (F): Free Stock Analysis Report Toyota Motor Corporation (TM): Free Stock Analysis Report Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report Advance Auto Parts, Inc. (AAP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 29th, 2022

When There’s Talk of Gun Control, Gunmakers Play the Jobs Card. They’re Often Bluffing

Gunmakers are convincing elected officials they have to choose between gun-control laws and manufacturing jobs and benefiting richly. At first he thought it was an umbrella. But when the shotgun that was pointed at John Seymour went off, hitting him in the back and the wrist, he thought he was going to die in his own barbershop. He fell to the floor and played dead as the gunman shot three of his customers, killing two of them. Then the gunman, a former customer, killed two men in a nearby oil-change shop and holed up in an abandoned restaurant, where he later died in a shootout with police. Nearly 10 years later, Seymour thinks constantly about the shooting. “To this day, anything goes, Bang bang! and I jump. What do you expect? I had a guy die on top of me at my barbershop,” says Seymour, 76, who is known locally as John the barber. “​​We never thought we’d be a mass-murder part of the country.” [time-brightcove not-tgx=”true”] But like just about everyone else in Ilion, N.Y, a small town in New York’s Herkimer County about 80 miles northwest of Albany, Seymour has a soft spot for Remington Arms, the gun manufacturer that has been located here since Eliphalet Remington started making firearms in 1816. Remington’s imposing redbrick factory looms over Main Street. Walk around downtown, past the vape shops, the peeling multifamily homes, and the Remington Federal Credit Union, and you can hear the clinking of steel being cut as the factory churns out orders. Jason Koxvold for TIMEJohn Seymour in his barber shop where he survived a mass shooting nearly a decade ago. People here don’t talk about how Remington’s version of an AR-15—made in Ilion—was used in the Sandy Hook Elementary School shooting less than 200 miles away, or that the company filed for bankruptcy twice between 2018 and 2020, because of financial engineering by the private equity firm that bought the company in 2007. They also don’t talk about how the company regularly threatens to leave New York and move somewhere cheaper, or periodically lays off hundreds of workers, leaving some in limbo for months or years. What they do talk about is Remington’s proud history of making arms for America when the country needed them the most, like during World Wars I and II—when workers had to carpool to the factory because the parking lot couldn’t fit everyone’s cars—and the affinity they have for a company that employed most of their fathers, and their father’s fathers. “They help the little village of Ilion and its 7,500 people,” says Seymour, who when he isn’t plying his trade as a barber moonlights as a wedding and event singer. His father worked at Remington for 43 years, beginning in 1932, and Seymour’s brother and brother-in-law also worked there. “They pay taxes on that building, and we give them a little break on everything.” Remington, on the other hand, has not been very kind to the village of Ilion in recent years. After decades of threatening to relocate to the South, where gun laws are friendlier and labor is cheaper, the company went so far as to move two lines of manufacturing to Alabama in 2014, after that state offered nearly $70 million and factory space rent-free. That endeavor ultimately failed, leaving the Alabama factory shuttered, and some of the equipment moved back to Ilion. When the Remington Outdoor Company filed for bankruptcy in 2020, it owed hundreds of thousands of dollars to local suppliers and utility providers, including the local shoe store, the hardware store, and Ilion’s treasurer, police department, water commission, and the roughly 609 workers it had abruptly laid off without the health care benefits or severance pay promised in their contract. Despite these slights, many Ilion residents remain unfailingly loyal to the company. “I would say that we bleed green—Remington green,” says Frank “Rusty” Brown, who has worked at the factory since 1995 and was one of the workers who protested outside the factory in 40-degree weather in October 2020, after Remington filed for bankruptcy and fired all its Ilion manufacturing workers. “This is our living; it’s how our parents made a living. I’m dedicated to the place.” Remington’s Ilion and Tennessee properties, as well as its long-gun, shotgun, and pistols businesses, were bought out of bankruptcy in 2020 by a company called the Roundhill Group LLC, which now operates Remington through a holding company called RemArms. Roundhill appears to have been created solely to purchase Remington’s assets from its bankruptcy proceedings; Richmond Italia, a paintball entrepreneur who is one of Roundhill’s two partners, said in court filings that he was approached by Ken D’Arcy, a professional race-car driver and manufacturing executive who was appointed CEO of Remington in 2019. D’Arcy suggested that Italia buy Remington’s firearms assets. (The two men knew each other because they had both served as CEOs and then sat on the board of GI Sportz, a paintball company that filed for bankruptcy in October 2020, shortly after Roundhill purchased Remington.) In November 2021, D’Arcy, who is still CEO of Remington, announced that RemArms was moving to LaGrange, Ga. Ilion officials scurried to give RemArms incentives to stay, offering a 50% discount on property taxes, but Remington seemed uninterested in negotiating. Some residents began to imagine a town without Remington; others, like Brown, remained skeptical that the factory would shut down. After all, RemArms had started calling workers like him who’d been laid off in 2020 back to the factory in April 2021 to restart manufacturing, and the company is now negotiating with the United Mine Workers of America, the union representing workers when Remington filed for bankruptcy, to ink a new contract for Ilion. The Roundhill Group did not respond to calls and emails seeking comment for this story. “Remington has been going to move elsewhere since my parents worked there,” says Brown, whose wife, two daughters, and son-in-law still work at the plant. “You hear it so many times over the years, you become numb to it.” Jason Koxvold for TIMEFrank “Rusty” Brown has worked at the Remington Arms factory since 1995. Remington’s hot-and-cold relationship with Ilion is not a rare case among American gunmakers. It may seem reasonable to assume, in light of recent state laws and lawsuits filed against them, that gun companies are under siege, their bottom lines threatened by regulations and shifting public attitudes toward firearms. But today more than ever, gun manufacturers like Remington (now RemArms), Smith & Wesson, and Colt are pulling the strings, convincing elected officials they have to choose between gun-control laws and manufacturing jobs. States in the South and West are offering millions in incentives to gun companies and loosening laws around gun ownership to show their fealty to gun culture, even as gunmakers have raked in $3 billion in profits since the pandemic began. Profits for gunmakers have been strong for the last decade, with both Smith & Wesson and Sturm Ruger & Co., the country’s two biggest gunmakers, surpassing $100 million in profit every year. That’s putting pressure on states like New York to loosen recently passed gun-control laws, to convince manufacturers to stay—even though often those manufacturers are just adding new locations in other states and not actually leaving their original homes. The gunmakers’ leverage makes sense in a country where manufacturing is still seen as the backbone of the country, even though jobs in the sector make up less than 10% of U.S. employment, down from one-quarter of employment half a century ago. Politicians and voters on the right and left often romanticize factory jobs that make products marketed as all-American, such as trucks, tractors, and guns, particularly if they’re set to remain on American soil. (In the case of guns, many buyers don’t want something manufactured in a foreign country where safety standards are perceived to be lower). As America has become more polarized, gun manufacturers have been able to orchestrate complicated political theater, threatening to move factories—and jobs—when gun-control legislation is passed in certain states. They are garnering millions of dollars in incentives from states and local economic development boards rolling out the red carpet to demonstrate their gun-friendly credentials. Despite evidence that giving incentives to factories isn’t a cost-effective way to create jobs, and often they actually lose money—as in the case of electronics maker Foxconn’s deal in Wisconsin—states know that attracting manufacturers is popular with voters. Remington is a master at this game. In 1995, the company announced that it was moving its headquarters to North Carolina, receiving $150,000 from the state to do so. In the end, no manufacturing jobs were moved to the state. Then, after private equity firm Cerberus Capital Management purchased Remington in 2007 and rumors swirled that manufacturing would be moved overseas to save money, the State of New York gave Remington $3 million to expand its Ilion plant, and then $2.5 million more in 2010 to add 100 jobs. Just three years later, in 2013, New York passed sweeping gun-control legislation the SAFE Act, which banned some assault-style weapons, began requiring background checks for nearly all gun sales, and prohibited people who’d committed certain offenses from possessing guns. Ilion politicians used the law’s passage to criticize state Democrats for driving Remington away, and indeed, Remington soon announced that it was being courted by five other states. Six elected officials from the Ilion area pledged assistance should Remington build a new manufacturing plant in the area, warning in a public letter that “the clock is ticking on an inevitable exit by Remington from the state.” Read more: How Gunmakers May Benefit From Mass Shootings In 2014, Remington announced it was moving two production lines to Huntsville, Ala., a decision the company’s CEO George Kollitides blamed on New York gun laws, citing “Alabama’s rich tradition of defending freedom,” as a “major deciding factor” in the move. At the time, a company spokesperson said the move was “a strategic business decision” to consolidate plants. But while the announcement provided a platform for conservatives to lambast New York’s gun laws, the Ilion plant continued to operate with around 1,300 employees. The jobs that moved to Alabama were from other Remington plants in conservative states like Montana, Utah, and North Carolina. Alabama’s play for Remington did not look so smart by 2020, when Remington filed for bankruptcy and owed $12.5 million to Huntsville, because it had not met the hiring numbers it had agreed to in its $70 million incentive deal with the city. The company appeared to be drawing from the same playbook when it announced it was moving its headquarters to LaGrange in 2021. “The decision to locate in Georgia is very simple: the state of Georgia is not only a business-friendly state; it’s a firearms-friendly state,” RemArms CEO Ken D’Arcy said at the time. RemArms secured $6 million in incentives from Georgia, and pledged to build a $100 million research and development center in LaGrange. According to T. Scott Malone, president of the Development Authority of LaGrange, RemArms has set up shop in an 80,000-sq.-ft. temporary facility, and recently started producing its first guns. RemArms specifically attributed its decision to move to a New York law passed in 2021 that would bypass blanket immunity provided to gunmakers under federal law, and make it easier to bring civil lawsuits against gun companies. “Unfortunately, if a law like that is passed in New York State, we would have to reconsider our options for the future and our plans to expand our New York operations,” Italia, the managing partner for Roundhill Group said in an email to Utica’s Times Telegram in July 2021. But the law applies to all gunmakers that sell guns in New York, which would include RemArms wherever it has its plants. But despite all the headlines, the company has told New York stakeholders that it now has no plans to close the Ilion facility. “Nobody’s moving to Georgia—in fact, they’re adding employees here,” says John Piseck, CEO of the Herkimer County Industrial Development Agency, a public-benefit corporation that can offer tax breaks to local businesses. RemArms has called back nearly all of the 609 workers Remington laid off when it filed for bankruptcy in 2020, according to Jamie Rudwall, president of the United Mine Workers of America. He notes that only 300 have actually returned, the rest having either found new jobs or retrained for new careers. Business is good. Because gun sales are soaring in the U.S., and manufacturers need to expand operations to keep up with demand, gunmakers can combine business decisions with lobbying, announcing that they’re opening a new factory in Georgia or North Carolina to meet demand while complaining about gun-control laws elsewhere. Retailers performed 21 million background checks associated with the sale of a firearm in 2020, a 62% increase from 2019, and twice as many as 2010, according to data from the National Instant Criminal Background Check System (NICS) that is used as a rough proxy for gun sales. The figures don’t include background checks for other purposes, like concealed carry permits. For workers like Brown, the constant push and pull is more of a nuisance than a threat to their livelihoods. Brown—whose wife, two daughters, and soon-to-be son-in-law work at the Ilion plant—says the company should know by now that it won’t find workers anywhere as skilled, dedicated, or patient with the company as those in Ilion. “It’s always, ‘We’re going to move to where there’s cheaper labor. We’re going to move to where there’s this law or that law.’ After so many years, you become immune to it,” Brown says. “And then to see them fail miserably in Alabama, it’s like, ‘I told you so.’ ” To this day, both Georgia and New York officials are still pulling for RemArms to bring some more good news to their communities, even though RemArms’ future looks a little shaky. Tax collectors in Alabama are already trying to foreclose on some of Roundhill’s recently purchased assets because they weren’t removed from the state in a timely fashion, according to bankruptcy documents. The firearms economy When Brown was growing up, there were lots of manufacturing jobs in upstate New York, but Remington was the place he wanted to be. “It was so hard to get in there, because it was the greatest job ever,” he says. Both his parents had worked there, so he knew: health care didn’t cost anything; he got a pension and a good wage; and he didn’t have to bother with college. By the time he was laid off in 2020, he was making $26.87 an hour—more if he worked nights or overtime. Brown is one of thousands of people in the U.S. Northeast who make a living manufacturing firearms. The area around western Massachusetts and Connecticut, nicknamed Gun Valley, has been a gunmaking hub since George Washington set up an armory in Springfield, Mass., in the late 18th century to keep weapons out of reach of the British Navy. In 1986, 47% of guns manufactured in the U.S. were made in Connecticut, 24% in Massachusetts, and 12% in New York, according to Jürgen Brauer, the chief economist with nonpartisan research group Small Arms Analytics, who analyzed historical data from the Bureau of Alcohol, Tobacco, and Firearms (ATF). But in recent years, amid rising political polarization, states in the South and West, desperate to attract jobs in the aftermath of the Great Recession, have attempted to lure manufacturers from Gun Valley. Their pitch: gun companies should move to places where people like guns. The sunset of the federal assault-weapons ban in 2004, and subsequent attempts by states to pass laws either loosening or tightening rules on gun ownership, signaled where gunmakers would be welcome. Some states even started to designate official state guns alongside their state flowers and fish. “We’re all here to show our support for the Second Amendment to our neighbors and communities,” Nebraska Governor Pete Ricketts said earlier this year, onstage with five other governors at the trade show of the National Sports Shooting Foundation (NSSF), which now spends more on lobbying than the National Rifle Association. (Around 10,000 guns were made in Nebraska in 2020, less than 1% of all guns made in the U.S.) Jason Koxvold for TIMEJamie Rudwall, president of the United Mine Workers of America. “There’s a trend of companies that have picked up and moved, and it’s really been accelerating as of late,“ says Mark Oliva, managing director of public affairs at the NSSF. The NSSF keeps a running list of gunmakers that it says have migrated from the Northeast to the South, including Kimber, Sturm Ruger & Co., and Beretta. But the NSSF’s list is misleading. Though some gunmakers have picked up and moved their factories south from states like Connecticut, the far more common occurrence is that they move only their headquarters to Southern states, but keep manufacturing in the state in which that factory already exists. Such a move can secure juicy incentives such as tax breaks and free facilities, and generate headlines about liberal states losing manufacturing, while sparing gunmakers the hassle of moving millions of dollars of equipment and hiring and training new workers. Indeed, most of the companies on the NSSF’s list of “gun industry migration” still have manufacturing in the northeast. The devil is in the details. According to Brauer’s analysis of ATF data, by 2020 just 1.42% of guns were made in Connecticut, and less than 1% in New York, while states like Georgia, North Carolina, and South Carolina accounted for 9%, 6%, and 5%, of firearm manufacturing, respectively. The two top states for gunmaking in 2020, according to the data, were Missouri and New Hampshire. However, those figures only show where guns are distributed, rather than manufactured, deceptively counting Smith & Wesson—the biggest producer of guns in 2020—as a Missouri company, even though its guns in 2020 were made in Massachusetts, not Missouri. The company generated headlines in 2017 when it announced it was moving to Missouri, receiving a 50% tax break over 10 years. But at the time, it only moved about 20 jobs from its Massachusetts headquarters. The data shows that Massachusetts made 21% of all firearms in 2015 and just 0.49% in 2020—but that’s because Smith & Wesson established a distribution center in Missouri, not because it moved its manufacturing, Small Arms Analytics’ Brauer says. And in October 2021, Smith & Wesson said it would be relocating its headquarters to Tennessee from Springfield, Mass., its home for 165 years, after a bill was introduced in the Massachusetts legislature that would have banned the manufacture of assault weapons for civilian use. (The bill has gone nowhere.) At the time, Smith & Wesson said it decided to move because “We are under attack.” What it did not make clear was that its manufacturing operations—accounting for about 1,000 jobs—would stay in Springfield, and that what it was moving to Tennessee was assembly and distribution of firearms. One-quarter of the jobs being moved to Tennessee are currently located in Missouri and Connecticut, not Massachusetts. The Missouri warehouse the company had received an incentive for just a few years before would be closed, Smith & Wesson said. The company received $9 million from the state of Tennessee and made a deal with the local economic development agency that gives it a 60% tax break for seven years. Its CEO, Mark Smith, thanked Tennessee’s governor and legislature for their “unwavering support of the 2nd Amendment and for creating a welcoming, business friendly environment.” Smith & Wesson did not respond to requests for comment for this story. Gunmakers are increasingly turning to this playbook. Kahr Arms, which said it was moving out of New York in 2013 because of “stricter gun control,” moved its headquarters to Pennsylvania, which also has relatively strict gun-control laws, and kept its manufacturing in Massachusetts. Meanwhile, Colt, which threatened to move after Connecticut considered gun control laws in 2008 and passed them in 2013, decided to remain and then received a $10 million loan from the state of Connecticut in 2017. Colt made 158,501 guns in Connecticut 2020 and was recently bought by Czech company Česká zbrojovka Group (CZG), which itself received incentives in 2019, including 73 acres of free land by the state of Arkansas to build a gunmaking plant there. That Little Rock, Ark. plant has been put on hold, and the company says it has no plans to move Colt out of state. “Once situated in one state, it is exceedingly rare for a firearms manufacturer to move its entire operation to another state,” says Brauer. His research has found that gunmakers that say they’re leaving a Northeast state because of its gun-control policies usually keep a substantial presence there, and that they leave not because of the political climate but because they can find nonunionized, lower-paid workers in the South—and get millions of dollars in incentives. In 2010, for example, Olin Corp., owner of a Winchester ammunition factory, moved 1,000 jobs from Illinois to Mississippi after union workers in Illinois rejected a contract that would have reduced their pay. And a Remington executive told the New York Times in 2019 that in Ilion, the union “had them by the balls,” one reason the company moved some operations to Alabama from New York. Oliva, of the National Sports Shooting Foundation, says that moving operations is not a decision gunmakers take lightly, but that Smith & Wesson and other companies have to consider “the survival of a business” when states like Massachusetts talk of banning the manufacturing of some assault weapons to anyone but police and the military. The companies keep some manufacturing in the places where they were founded, out of loyalty to workers, he says, but “it is clear that many of these manufacturers are expanding to other states which are more friendly business environments and more friendly to gun rights.” For RemArms worker Brown, one of the ironies of the company’s indicating it will move to a state friendlier to gun owners is that Ilion is a place where people love guns. Ilion residents will offer to show strangers their gun collections, or wax lyrical about their favorite hunting rifle. Ask them about gun-control legislation, and they’ll blame Democrats, or politicians in Albany, for punishing the law-abiding citizens who want to own guns to hunt or to protect themselves. (Herkimer County voted for Donald Trump over Joe Biden in 2020 by a 2-to-1 margin.) Even “barber John” Seymour—still widely recognized locally as a mass-shooting survivor—is skeptical about the effectiveness of gun-control laws. “It’s tough for me to see the stuff that goes on in places like Uvalde,” he says. “But that guy would have gotten a gun no matter what—he was on a mission.” He points to the difficulties of assessing someone’s mental health when deciding whether they should be allowed to purchase a gun. In Seymour’s own case, the man who shot him, Kurt Myers, was mostly known locally as a loner who kept to himself, but authorities never found a motive for why he’d shot six people. It’s laws like New York’s SAFE Act that have most riled people in Ilion. “The climate changes when you say, ‘Big bad Remington is making this big mean gun in the middle of our state,’ ” says Rudwall, the union rep. “Look at the comments these politicians made: they demonize the tool, not the dude that did it.” When Remington threatens to leave, locals often blame state politicians for driving gunmakers out of the state. New York Republican Congresswoman Claudia Tenney has seized on that sentiment, campaigning to overturn the SAFE Act, lambasting former New York Governor Andrew Cuomo for what she has called “failed economic and anti–Second Amendment policies in New York,” and using her positions on guns to shore up her connection with Donald Trump. At a fundraiser Trump held for Tenney in 2018, he warned attendees: “They want to end your Second Amendment and they’re putting a big move on it … Cuomo wants to end your Second Amendment more than anybody.” In 2020, when Remington filed for bankruptcy, Tenney said she’d contacted President Trump and would get the factory reopened, and that it would “eventually employ a workforce significantly larger than the plant’s previous head count.” (It’s unclear whether Trump intervened.) A week later, Tenney was re-elected in one of the most expensive House races in the country, by 109 votes. Jason Koxvold for TIMERemington Arms has told New York stakeholders that it now has no plans to close the Ilion facility. Gunmakers’ threats to leave states in the Northeast have helped to stoke fear among some employees. As soon as renderings of the LaGrange RemArms headquarters started showing up online, Brown says his daughters and other workers on the factory floor began to express concern that they would lose their jobs. The pictures emerged just as the union was in the middle of negotiations with RemArms over wages and benefits, and people around the plant started hinting that the union should take whatever deal it could, says union representative Rudwall. Negotiations are still ongoing. “My daughter says, ‘Daddy, look at this brand-new facility, they’re not going to stay here,’ ” Brown says. “So when Jamie [Rudwall] comes back with a contract, whether they like it or not, they say, ‘Yes,’ because we want to keep working.” There are other jobs in Ilion; in this economy, there are other jobs just about anywhere. They’re just not manufacturing jobs. The county’s largest employer is now Tractor Supply, which is a distribution center. Verizon has a presence in the area, and Amazon is opening a warehouse nearby too. But some of the laid-off Remington workers who missed their chance to go back to the factory say they’d go back if given the opportunity. Allen Harrington worked at the Remington factory in Ilion for eight years. In October 2020, a few months after Remington filed for bankruptcy, the company laid off nearly all of its Ilion workers. Harrington was on the factory floor at the time, until a supervisor came in and said they had to shut everything down, and that everyone was terminated, and that health care, severance, and other benefits would be gone at the end of the month. Harrington eventually found a job making $13 an hour in a warehouse, down from the $25 he had made at Remington. He kicks himself for not going back to school after being laid off, but he felt too old—and he felt sure that the factory would re-open and he could work in manufacturing again. It’s hard to let go. “I loved that job,” Harrington says. “I know it’s uncertain there, but I’d go back in a heartbeat.”.....»»

Category: topSource: timeAug 19th, 2022

Auto Roundup: GM and F"s China Sales Plunge in Q2 Grab Eyeballs

General Motors (GM) and Ford (F) see their Q2 vehicle sales in China plunge to record low levels since the onset of the pandemic in 2020 amid the resurgence of COVID-19-induced curbs and severe supply chain snafus. General Motors GM unveiled weak second-quarter vehicle sales data in China. The results were released less than a week after the legacy automaker issued a warning that its upcoming results would be materially impacted by the severe ongoing supply chain snarls. Close peer Ford F also reported its worst quarterly sales data in China since the onset of COVID-19 lockdowns in 2020. Nonetheless, the company bucked the trend of declining sales in the United States and posted a 1.8% uptick in deliveries in the second quarter of 2022.Houston-based auto retailer Group 1 Automotive GPI exited Brazil and provided an update on its buyback activity. Transmission manufacturer Allison Transmission Holdings ALSN is set to offer propulsion solutions for the U.S. Army’s new M88A3 HERCULES prototype vehicle. The Italian-American carmaker Stellantis STLA made the headlines on trimmed annual production forecast in Italy amid growing supply chain issues.While Group 1 presently sports a Zacks Rank #1 (Strong Buy), Allison carries a Zacks Rank #2 (Buy). Stellantis and General Motors carry a Zacks Rank #3 (Hold) currently. Meanwhile, Ford has a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank stocks here.Last Week’s Top Stories1. General Motors sold 484,200 vehicles in China during the second quarter of 2022. Volumes declined 36% year over year and marked the lowest levels since the first quarter of 2020. Sales recorded double-digit drops at all five GM brands — Buick, Cadillac, Chevrolet, Baojun and Wuling. Overall sales of the Buick brand fell 43.1% to 128,300 units. Chevrolet sales tailed off 36.7% to 40,000 units. Cadillac sales dipped 42.2% to 36,900 units. Sales at SAIC-GM-Wuling — GM’s joint venture responsible for Wuling and Baojun brands — declined 29% percent to 279,000 units, with Wuling brand sales down 22.7% and Baojun sales tanking 78.5%.The resurgence of coronavirus-induced curbs and devasted supply chain systems hurt the sales volume. During the first six months of 2022, General Motors’ sales in China contracted 28.3% to 1,097,600 units. The company’s CFO Paul Jacobson noted the situation in China as “obviously challenging,” citing “some short-term issues that we’ve had to work through.”2. Ford sold 120,000 vehicles in China in the second quarter of 2022, indicating a 22% decline on a yearly basis. This marked the lowest sales in the country since the first quarter of 2020, when the company sold close to 89,000 vehicles. Nonetheless, Ford’s June sales improved with the easing of restrictions, as overall sales totaled more than 50,000 units, up 3% and 38% on a yearly and monthly basis, respectively.Early last week, Ford also reported its US sales data for the quarter under discussion. Ford sold 483,688 vehicles in the United States in the second quarter of 2022, inching up 1.8% year over year. The company exited the second quarter with 297,000 units of gross stock, which was up from about 236,000 in gross stock inventory at the end of May, although many of the new units are in transit.3. Group 1 announced that it concluded the divesture of its operations in Brazil after operating there for nine years. Group 1’s subsidiary GPI SA completed the sale under the share purchase agreement with Original Holdings. UAB Motors Participações — a wholly-owned subsidiary of GPI — was the intervening party. Per the deal, Original acquired all of the issued and equity interests of UAB from Group 1 for BRL 510 million. UAB operated 16 dealerships as of 2021-end and generated BRL 1.7 billion in revenues last year.Group 1 also updated investors regarding its share repurchase activity. Year-to-date, GPI bought back 1,437,729 shares at an average price of $176.74 for a total of $254.1 million, which depicts 8.3% of Group 1's outstanding share count at Jan 1, 2022. The company’s return on equity (ROE) of 38.4% compares favorably with the industry’s 36% as well as the auto sector’s 10.3%, underscoring management's efficiency in rewarding shareholders.4. Stellantis hit a 52-week low last week amid a union report warning that an intensifying semiconductor supply shortage is likely to weigh on Stellantis’ annual production in Italy. The union report by the Italian Federation of Metalworkers (“FIOM”) stated that it expects Stellantis' output during the year to shrink by as much as 220,000 vehicles. Per the union, the projected decrease, led by a tight supply of raw materials and chips fueled by the Russia-Ukraine war and its impacts on European gas supplies, has led to such dire constraints.The FIOM opined that production was already down by 13.7% in the first half of 2022, with the company producing 351,890 vehicles. The output of commercial vehicles, especially, slumped by more than a third. Stellantis' plant in Melfi, accounting for about 38% of all cars produced by the group in Italy, saw a significant fall in the first-half production. Volumes at the site have fallen 17% from the previous year. The Sevel unit is also likely to record a first-half production decline of more than 37%.5. Allison announced that it will provide the X1100 TM-5B propulsion solution for the U.S. Army’s new M88A3 HERCULES (Heavy Equipment Recovery Combat Utility Lift and Evacuation System) prototype vehicle. This initiative is in line with the Army’s continued investments in combat preparedness and fleet modernization. The program underlines Allison’s long-term strategic relationship with the Army. The company’s partnership with the Department of Defense dates back to 1946 to develop propulsion solutions that function in the toughest conditions.Allison is known for engineering and manufacturing reliable and fully customizable propulsion solutions, which reduce customer downtime and increase the ability to accomplish mission objectives. The X1100-5B is a reliable and durable propulsion system based on the renowned Abrams Main Battle Tank drivetrain solution. Also, Allison will provide a new, advanced electronic controls system and new final drive components to meet the needs of the recovery vehicle application.Price PerformanceThe following table shows the price movement of some of the major auto players over the last week and six-month periods.Image Source: Zacks Investment ResearchWhat’s Next in the Auto Space?Industry watchers will keep a tab on June passenger vehicle registrations to be released by the European Automobile Manufacturers Association soon. Also, stay tuned for any updates on how automakers will tackle the semiconductor shortage — aggravated by the Russia-Ukraine war— and make changes in business operations. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>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 Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report Stellantis N.V. (STLA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 11th, 2022