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Rabo: “We Have Just Seen One Key Step Forward… And More Back”

Rabo: "We Have Just Seen One Key Step Forward… And More Back"

By Michael Every of Rabobank
A step forward – and more backwards
In the real,…

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This article was originally published by Zero Hedge

Rabo: “We Have Just Seen One Key Step Forward… And More Back”

By Michael Every of Rabobank

A step forward – and more backwards

In the real, not the financial economy, we have just seen one key step forward – and more back.

In particular, the crisis at the port of LA/Long Beach, on the verge of truly metastasizing, has finally seen shipping containers allowed to be stacked higher than usual to provide more storage in the limited areas available. Will this help? Yes! Is it enough? No! LA/LB still has a record backlog, with more containers arriving every day; every US logistics node from there on is also logjammed; alternative smaller ports are constrained by a lack of workers and trucks; and global carriers are opting to skip larger ports, such as Boston (perhaps for good reasons, but it certainly ensures shipping rates stay sky high).

China also reports Covid is spreading again in 11 provinces, despite being largely closed off to the outside world, and is imposing limits to intra-province travel. This will not only hit an already-slowing economy, but global supply chains too. Yes, that might ease congestion in US ports again temporarily, as did recent Chinese power-cuts. However, it will only do so because goods aren’t flowing, not because they are. It’s not just a US issue either. Recall the warning here about China’s cessation of exports of magnesium, and the likely knock-on effects on European industry? Politico is now flagging EU leaders signal alarm over Chinese magnesium crunch. Add other goods, and industries, to that list, perhaps.

On the virus front, despite official pre-Budget denials, there are also health-expert warnings and cynical chatter about the UK needing another Covid lockdown – although naturally not until 30,000 people have mingled at the COP26 in Glasgow next month. Parts of the EU are also seeing soaring Covid case numbers.

Europe can also worry about the La Nina pattern emerging in the Pacific, presaging what could be a colder than normal winter for the Northern Hemisphere, which already-tight energy markets did not want to see. As Politico also notes: ‘The EU’s impotent rage at Putin’s gas games: Access to Russian gas is splitting the European Union.’ But it’s not just gas doing so. The UK still rejects the European Court of Justice (ECJ) having a role in Northern Ireland, and the Polish government is also brawling over the ECJ vs. sovereignty: the Polish PM says the EU is making demands “with a gun to our head,” and risks starting a “third world war” if EU funds are withheld. In support, Hungary’s Justice Minister has tweeted: “We remember the Hungarian freedom fighters who faced Soviet tanks on the streets of Budapest. We said no to the Soviet Empire & we say no to the #imperial ambitions of #Brussels.” Recall EU countries are talking about a joint foreign policy and army: if things get worse, intra-EU enmity will start to look as bitter as that between California and Texas!

Is it a surprise Treasury Secretary Yellen now says inflation will stay high until H2 2022? But why is she talking about inflation again? The person who should be doing that, for now, Fed Chair Powell, just stated despite all of the inflation risks, it would still be “premature” to raise rates. As an aside, following the Fed’s recent decision to ban market trading by senior officials, it turns out the ECB’s own disclosures for last year show 13 of the 25 members of the Governing Council picked their own funds, stocks and bonds – in some cases including government bonds the ECB is buying under its stimulus programmes, or shares in companies whose debt it buys. Again, how very American of Europe.

So the inflation outlook is now clear: high, for around a year – and then we will see, depending on supply chains. Yet the growth outlook is far from positive. Bloomberg had a long read called ‘Chinese Economy Risks Deeper Slowdown Than Markets Realise.’ (Well, some of us did.) Beijing has also announced, contrary to the Wall Street Journal, that it *will* proceed with pilot property tax schemes over the next five years. The Global Times explains: “…there is no turning back…It will not begin with tigerish energy and peter out towards the end, or leave the matter unsettled…it is best to treat the prospect of property tax with a calm mind [because] people with more houses have enjoyed more public services provided by the country and society, so they should contribute more tax…there is no need to wait until house prices fall off a cliff due to the levying of property tax. I can say with certainty that such a scenario will never happen. Our country will not allow such a situation to occur, and will not introduce radical tax reforms that could lead to the “collapse” of the housing market.”

So the tax rate will be very, very low: in which case, it won’t provide much revenue for cash-strapped government. And in the background, Evergrande is putting out pictures of the projects it is still finishing, just as another developer looks like it is to default on a 12.85% US dollar note due today. Consider the profit margins the firm must have been expecting to have borrowed at that rate; imagine the margins Beijing would prefer under ‘common prosperity’ to allow for more affordable housing.

Staying with tax, and after having almost all other avenues closed off by intra-party fighting, the US Build Back Better Act –the White House fiscal plan to stave off a growth slump, even if it also pushes inflation higher– will apparently be funded by “not a wealth tax, but a tax on unrealized capital gains of exceptionally wealthy individuals,” according to Yellen. Which means their assets, i.e., their wealth. So, in the US it is time for curbs on ‘excessive’ income and for the wealthy to give back more to society. Oh, sorry: that’s common prosperity in China. More policy mirroring, as both sides of a growing geoeconomic divide try to deal with the inequality and polarisation that Chimerica globalisation built.

In geopolitics we see mirroring too. On Friday, US President Biden stated on live TV the US would defend Taiwan if it were attacked, a major step away from the US policy of “strategic ambiguity” over this hyper-sensitive topic. The admission, not actually Biden’s first on the topic, was immediately walked back by the White House press office, but it remains to be seen if this was the president ‘mis-speaking’, or if it was deliberate messaging. Either way, Beijing’s response has been furious, with the Global Times calling the present US administration the “most incapable and degenerate in the country’s history.” With the US also pressing ahead with plans to try to allow for Taiwan’s “meaningful” involvement at the UN, tensions over this issue look set to escalate further. Indeed, with all the EU drama over “WW3” and Poland, it’s the Indo-Pacific that is still the epicentre of geopolitical fat tail risks.

So that’s the real economy. The financial economy will just do its own sweet thing today, as usual.

Tyler Durden
Mon, 10/25/2021 – 13:00





Author: Tyler Durden

Economics

Cannabis analytics startup Headset, led by Leafly founders, raises more cash

The news: Cannabis analytics company Headset on Tuesday announced that it raised $8.6 million in funding. That includes $3 million of venture capital from…

Headset co-founders, left to right: CEO Cy Scott, Chief Technology Officer Scott Vickers, and Chief Design Officer Brian Wansolich. (Headset Photos)

The news: Cannabis analytics company Headset on Tuesday announced that it raised $8.6 million in funding. That includes $3 million of venture capital from a round led by Althea, as well as the conversion of $5.6 million of bridge notes issued in August 2020 and this past April.

The Seattle-based company reports having more than 300 customers and 50 employees.

Headset has raised about $23 million, according to GeekWire reporting.

The tech: Headset provides data analytics for the cannabis industry on growers and product manufacturers; retail sales; food, health and beauty products; financial services; and hardware.

The company gathers information on market trends, top selling cannabis strains, market projections for states where recreational marijuana is newly legalized, ruminations on the impacts of inflation, and favored product brands in different regions.

The new funding will help Headset expand its analysis into new legal markets and launch additional services.

(Bigstock Photo)

The founders: Headset was founded in 2015 by CEO Cy Scott, Chief Design Officer Brian Wansolich and CTO Scott Vickers, who all previously co-founded Leafly, an online cannabis marketplace that is going public via a SPAC merger.

The tailwinds: While Washington and Colorado were the first states to legalize recreational marijuana use back in 2012, an additional 16 states plus Washington, D.C. have followed suit. More than a dozen others have approved cannabis for medical use.

When the pandemic forced businesses to close in order slow COVID-19’s spread, marijuana dispensaries in many states were deemed “essential” and allowed to remain open. The New York Times called it “official recognition that for some Americans, cannabis is as necessary as milk and bread.”

The sector: Competition in the cannabis analytics space include BDSA, which according to PitchBook has raised $16.2 million, and Cannabis Big Data. Both are based in Colorado.

There are big dollars flowing into online sales of cannabis. Oregon’s Dutchie has raised more than $600 million while Leafly is valued at nearly $400 million.

There is also continued momentum in delivery. Uber entered the cannabis market just last week, announcing plans to launch a delivery service in Ontario.

The investors: In addition to the private equity investment firm Althea, the VC round included two investors focused on the cannabis sector: Poseidon Investment Management and WGD Capital.

Track all of GeekWire’s in-depth startup coverage: Sign up for the weekly startup email newsletter; check out the GeekWire funding tracker and venture capital directory; and follow our startup news headlines.


Author: Lisa Stiffler

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Economics

WTI Extends Losses After Smaller Than Expected Crude Draw

WTI Extends Losses After Smaller Than Expected Crude Draw

Crude prices puked over 5% today as demand fears over Omicron (jet fuel demand)…

WTI Extends Losses After Smaller Than Expected Crude Draw

Crude prices puked over 5% today as demand fears over Omicron (jet fuel demand) and European case count continued acceleration combined with Fed Chair Powell’s taper tantrum. While tighter monetary policy can be a sign of economic strength, it’s typically bearish for commodities. WTI briefly dropped below $65 a barrel for the first time since August during the session, while the global benchmark Brent also tumbled.

“That ties back to crude oil because if you start to pump the brakes on economic growth, you start to see impact on demand,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Oil traders are also tracking talks this week aimed at reviving Iran’s 2015 nuclear deal with world powers. Success at the negotiations in Vienna could lift sanctions on Iran’s economy, leading to a resumption in official oil flows. The exchanges began positively on Monday, according to a top European diplomat.

However, the next leg one way or the other will likely be decided by this week’s inventory data…

API

  • Crude -747k (-1.66mm exp)

  • Cushing (+1.00mm exp)

  • Gasoline

  • Distillates

Crude stocks fell 747k barrels last week, less than expected…

Source: Bloomberg

After the biggest monthly drop since March 2020, WTI was hovering around $66.75 ahead of the API print and dipped after despite the small crude draw…

Are we about to see gas prices at the pump plunge?

As Bloomberg notes, the oil market is also continuing to weigh the impact of the omicron variant of the Covid-19 virus on demand and what OPEC+ may decide to do in response when the producer group meets later this week. New travel restrictions threaten the rebound in global crude consumption that has underpinned this year’s price rally.

Tyler Durden
Tue, 11/30/2021 – 16:37




Author: Tyler Durden

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Economics

4 Top Stock Trades for Wednesday: Ethereum, XPEV, DLTR, BABA

Stocks were creamed on Friday due to worries over the new Covid variant Omicron. We bounced nicely on Monday, but stocks are back under pressure on Tuesday….

Stocks were creamed on Friday due to worries over the new Covid variant Omicron. We bounced nicely on Monday, but stocks are back under pressure on Tuesday. With that in mind, let’s look at a few top stock trades.

Top Stock Trades for Tomorrow No. 1: Ethereum (ETH-USD)


Click to Enlarge
Source: Chart courtesy of TrendSpider

While Bitcoin (CCC:BTC-USD) isn’t seeing the same kind of rotation today, Ethereum (CCC:ETH-USD) sure is.

In fact, Ethereum is going weekly-up over $4,555. From here, that puts the 161.8% extension and the all-time high in play up near $4,875 to $4,900.

If that does indeed come to fruition, bulls will inevitably turn their attention to the $5,000 level. A breakout over $5,000 puts the $5,500 area in play next, followed by $6,000 to $6,250 zone — where another set of upside extensions sit.

Back below $4,555, and investors will be watching the 10-day and 21-day moving averages.

Below $4,380 has the 50-day and 10-week moving averages on deck, followed by around $4,000.

Top Stock Trades for Tomorrow No. 2: Xpeng (XPEV)

Daily chart of XPEV
Click to Enlarge
Source: Chart courtesy of TrendSpider

Xpeng (NYSE:XPEV) continues to trade incredibly well. And if we look at just this chart, there’s no indication that the market is experiencing any volatility.

The stock is doing a terrific job holding up over the breakout level (blue line) and the 10-day moving average. Now trying for a weekly-up rotation and a move over the 61.8% retracement, bulls are hoping to see Xpeng gain steam over $55.

If it does, that could open the door to the current 2021 high up near $60, then the 78.6% retracement at $63.41.

However, a move below the breakout level and the 10-day moving average could force XPEV stock to rest a bit.

Top Stock Trades for Tomorrow No. 3: Dollar Tree (DLTR)

Top stock trades for DLTRf
Click to Enlarge
Source: Chart courtesy of TrendSpider

Dollar Tree (NASDAQ:DLTR) was a stock I had on my radar early this morning, as the stock was under pressure from a downgrade following a fantastic earnings reaction.

Shares are checking back to the 10-day moving average after its massive run, opening the door for aggressive dip-buyers to get long.

If we get a bounce going, $140 would be the first upside target. Above that, and $143.50 to $145 could be next, followed by the highs near $148.

On the downside, though, failure to find support could put $130 in play, followed by the 21-day moving average.

Top Trades for Tomorrow No. 4: Alibaba (BABA)

Top stock trades for BABA
Click to Enlarge
Source: Chart courtesy of TrendSpider

Last but not least, we have Alibaba (NYSE:BABA), which has been an abysmal performer. 

The stock is working on its fourth quarterly decline in the past five quarters, and the one quarterly gain in that stretch was a paltry 0.02% — and no, that’s not a typo!

Shares have declined in nine of the past 13 months and in the most recent month (November), we’ve seen a 22% haircut to the share price. Alibaba ended November in a monthly-down rotation, taking out the October low.

Amid the recent decline, BABA stock is now below its 2018 low at $138-and-change. If we reclaim it, it could put a reversal in play.

However, a further decline could put the $120 level on deck. With some divergence on the chart, that could set Alibaba stock up for a bounce if we get there. While it won’t always remain the case, bears remain in control at the moment.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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Author: Bret Kenwell

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