Looking Backwards …
LB #1
We begin this week with less than jolly news for the Christmas season as it appears that the stimulus cash has burned its way through the economy and companies are grasping for ideas. Sean O’Kane writes for Tech Crunch, “Struggling EV startup Canoo says it has furloughed 82 employees and is idling its factory in Oklahoma while it grasps for the capital needed to survive. The company claims it is in “advanced discussions with various capital sources” to raise emergency funding.” As we have discussed at length, the name of the game is raising funding. That’s been their business. Lots of companies in the EV space, green space, the American space need funding or they will be no more. It seems that this EV company has not gotten any more financing and what happens when there is no profit and no more financing, the doors get closed.
Kirsten Korosec writes for Tech Crunch telling the same story in a different industry, “Lilium, once a darling in the nascent industry of electric aircraft that raised more than $1 billion before going public, has ceased operations and laid off about 1,000 workers after efforts to gain financing and exit insolvency failed. The publication Gründerszene was the first to report the layoffs. Lilium co-founder Patrick Nathen confirmed on LinkedIn that the 10-year-old company had stopped operating.
“After 10 years and 10 months, it is a sad fact that Lilium has ceased operations. The company that Daniel, Sebastian, Matthias and I founded can no longer pursue our shared belief in more environmentally friendly aviation. This is heartbreaking and the timing feels painfully ironic,” wrote Nathen.
The layoffs cover the bulk of the company’s workforce and come a few days after about 200 workers were let go, according to a regulatory filing on December 16. ”
$1 billion lost. $1 billion lost chasing the idea of environmentally friendly aviation, whatever that is.
The rundown of cash isn’t limited to just the EV space. The RV space is being affected. Remember the good old days after the Corona sickness when everyone was buying an RV with their “stimmie” money and hitting the open road where they could socially distance, virtual signal, and overwhelm the national park system. WSBT news out of Indiana are reporting the Forest River is laying off 160 workers. They manufacture RVs and this follows 83 layoffs earlier this year.
The economy is creaking to a halt in front of our eyes. When the falsely manufactured data gets revised, we will see just how bad it truly is. As we discussed, the Philly Fed has Q2 job losses not gains then watching these companies lay off workers or go out of business completely makes much more sense.
LB #2
A company that doesn’t make profit but is still an ongoing enterprise is not as rare as it once was. There has been so much available financing that raising money has been a business. The definition of a zombie company is a company that doesn’t make enough profit to pay their interest expense meaning the cash burn is higher than an unprofitable company in general. The problem with higher interest rates is that interest expense becomes higher and higher as well. That makes companies less and less profitable. When these unprofitable companies finally go broke that frees up their workers to go contribute somewhere else. The market has spoken, go to a place that does make profit. This from ZeroHedge, “While small-cap stocks have been on an impressive run this year, the share of unprofitable companies is considerably high, at 42% of firms in the Russell 2000—up from 14% two decades ago. Like mid-cap stocks, they have underperformed large-caps since 2014, but increasing investor risk appetite may drive an upswing looking ahead.” I don’t know why risk appetite is anxious to get in this space but having 3 times as many unprofitable companies in an index is hardly the sign of a strong economy.
LB #3
The plan for building a strong economy is being put into place by those in Washington. It starts with taking back the Panama Canal. No, I am not making that up. Donald Trump is talking about seizing the property of another country. This is similar to what Joe Biden did to the Russian foreign reserve assets. Here is what Trump posted on Truth Social via ZeroHedge, “ “The fees being charged by Panama are ridiculous, especially knowing the extraordinary generosity that has been bestowed to Panama by the US,” Trump wrote. “This complete ‘rip-off’ of our Country will immediately stop. “The Panama Canal is considered a VITAL National Asset for the United States, due to its critical role to America’s Economy and National Security” Trump wrote adding that “if the principles, both moral and legal, of this magnanimous gesture of giving are not followed , then we will demand that the Panama Canal be returned to us, in full, and without question.”
He ended by warning ” the Officials of Panama, please be guided accordingly! ” He wasn’t done, he then posted a flag on a ship on a canal with the caption “Welcome to the United States Canal.”
So let me get this straight, Trump is going to pull a Putin in Ukraine in Latin America and this is a good thing? At least in Putin’s case the Ukrainians were attacking Russian people, not allowing the use of their language or religion, and it came on two decades of European encroachment east towards the Russian border. What the hell has Panama done to the US, charged a fee to use their property? We might need to start watching out for signs of Trump Bidening before our very eyes. It isn’t just presidential candidates that suffer from this but lots of people that are in their late seventies and early 80s.
Here is another example from ZeroHedge, “Term limits for US politicians on Capitol Hill were clearly on Elon Musk’s mind Saturday night. A post from X user “The Rabbit Hole” showed that the number of members of Congress over 70 has skyrocketed, nearing 25%—as the baby boomer generation clings to power. To which Musk responded “Wow.” Local paper Dallas Express recently launched an investigation into the whereabouts of Republican Congresswoman Kay Granger, who has represented Texas’s 12th Congressional District since 1997. The investigation followed reports that she had been absent from office for months.”
What did I tell you to wish for for Christmas last week, term limits. Our elected representatives are living in assisted living facilities. It has been the White House and if Trump isn’t trolling, it might be the White House again for four more years. What a dumb idea. All of Latin America responded with support of Panama. I am sure the Brics countries are all smiling and asking, if you don’t do what he wants is he going to freeze your assets too? You might want to join our trade organization, buy some gold, and get out of some of your US dollars. If you were trying to look foolish on the global stage you couldn’t have more asinine.
Looking Forwards…
LF#1
As our fearless leader elect threatens our allies in the western hemisphere, the war that isn’t a war yet, continues to slowly burn. This time in Europe. This from ZeroHedge on December 24th, “The plot thickens as officials in Moscow confirm that a Russian cargo ship named “Ursa Major” sank in the Mediterranean Sea between Spain and Algeria following an engine room explosion.
Reuters cited the Russian Foreign Ministry, which said Ursa Major was transiting near the Strait of Gibraltar to the Russian far-eastern port of Vladivostok when the engine room blast occurred. It indicated that 14 of the ship’s 16 crew members had been rescued, with two sailors missing. On Monday, Ukraine’s main intelligence directorate first reported Ursa Major had been sent to Syria to retrieve military weapons after the fall of Bashar al-Assad’s regime earlier this month. It noted an engine room issue occurred.” The next day the reporting continued, “The Russian cargo ship that sank on Tuesday in the Mediterranean Sea following a mysterious explosion in its engine room was described as an “act of terrorism,” according to the vessel’s owner.
Reuters cites the Russian news agency RIA, which reported on Christmas Day that Oboronlogistika, the ship’s owner and a subsidiary of the Russian Defense Ministry’s military construction operations, stated that the cargo ship, named Ursa Major, had been targeted in “a terrorist act.” On Monday, Ukraine’s main intelligence directorate reported the cargo vessel was “sent by Russia to retrieve its weapons and equipment from Syria, broke down off the coast of Portugal due to a malfunction in the fuel pipe of its main engine.”
Later that day of Christmas, this happened via Bloomberg “Russia shot at an Azerbaijan Airlines passenger plane “by accident” on Dec. 25, leading to the aircraft’s crash, Azerbaijani President Ilham Aliyev told state TV on Sunday.
Aliyev spoke to AZTV a day after he had a phone call with Russian President Vladimir Putin, who apologized for the incident without specifically saying that Russia had been at fault. Putin on Saturday told Aliyev that as the plane was trying to land, Grozny, Mozdok and Vladikavkaz were under fire from Ukrainian combat drones, and that Russian air defenses were repelling these attacks, according to a Kremlin readout.”
There are lots of accidents happening and I wish I were through but we have another cable problem.
LF#2
This from Agence-France-Presse in the Guardian, “An undersea power cable linking Finland and Estonia broke down on Wednesday, Finland’s prime minister said, the latest in a series of incidents involving cables and energy pipelines in the Baltic Sea. The Finnish electricity grid’s head of operations, Arto Pahkin, told the public broadcaster Yle that sabotage could not be ruled out. Finland’s prime minister, Petteri Orpo, said the outage had not affected the country’s electricity supplies.
“The authorities remain vigilant even during Christmas and are investigating the situation,” he wrote on X.
Fingrid said current on the EstLink 2 cable sending electricity to Estonia was cut at 12:26pm local time (10:26 GMT). Two telecoms cables in the Baltic linking Sweden and Denmark were also cut last month.”
The next day Bloomberg reported that Finnish authorities boarded the crude oil tanker named Eagle S. after a 658-megawatt Estlink 2 power interconnector and several data cables were disrupted. The Financial Times reports that Finnish authorities are investigating a crude oil tanker named Eagle S. The tanker flies the Cook Islands flag and is reportedly part of Russia’s so-called “dark fleet.”
These are just the latest little parries, little jabs if you will, as the world powers are just testing each other. No one wants an all out fight, but little skirmishes here and there. It reminds me of the sinking of the Lusitania in 1915. The US, which wasn’t in World War I yet was supplying the British with basically a boatload of armaments. Germany had given the warning that they had a blockade against the UK, yet people were outraged when the mighty ship sank taking over 1,000 lives. This is a direct read from the Wikipedia site, “The sinking turned public opinion in many countries against Germany. It also contributed to the American entry into the War two years later; images of the stricken liner were used heavily in US propaganda and military recruiting campaigns.
The contemporary investigations in both the United Kingdom and the United States into the precise causes of the ship’s loss were obstructed by the needs of wartime secrecy and a propaganda campaign to ensure all blame fell upon Germany. At time of her sinking the primarily passenger-carrying vessel had in her hold around 173 tons of war supplies, comprising 4.2 million rounds of rifle ammunition, almost 5,000 shrapnel-filled artillery shell casings and 3,240 brass percussion fuses.”
The Lusitania was more of a right cross than a jab. It was a bit too big to go unnoticed, kind of like Pearl Harbor, or 9/11. I’m awaiting the next item in that series for justification for going to war. I’m sure the propaganda will be as thick as the ocean was that day with lifejackets…
LF#3
I continue to search for reasons for this conflict to push me off my original assumption: always follow the money. Europe has gotten very unproductive since they lost their source of cheap energy. It is becoming a real problem according to Tsvetana Paraskova who writes for oilprice.com, “European countries need to work out ways to lower taxes on electricity to revive the competitiveness of Europe’s energy-intensive industries, Leonhard Birnbaum, president of electricity lobby Eurelectric, told Reuters in an interview published on Monday.
Power prices in the EU are up to three times higher than in the United States, for example, which further erodes the competitiveness of energy-intensive industries including aluminum, steel making, chemicals, and cement production.
Europe is losing and will continue to lose competitiveness and jobs if it doesn’t tackle its high energy costs compared to other regions, Morten Wierod, chief executive of Switzerland-based engineering giant ABB, told Bloomberg last month.”
As we have been saying since the war in Ukraine started and the Nord Stream pipeline was blown up. Europe needs Russia and Russia needs Europe. That doesn’t benefit the United States in any way though. I will tell you what does benefit the US, having a new market for their natural gas. This from ZeroHedge, “Exports from America’s eighth liquefied natural gas facility began this week, highlighted by an LNG carrier departing for Europe. This reinforces the US’ position as the world’s leading LNG exporter and provides tailwinds for President-elect Donald Trump as he urges Europe to increase US energy product purchases in his upcoming second term.
Venture Global, one of the largest US LNG developers, shipped its inaugural cargo of LNG from its Plaquemines export facility in Louisiana via a company-owned carrier named “Venture Bayou.” When the Plaquemines LNG facility becomes fully operational, expected in late 2025 or early 2026 according to Venture Global’s project timeline, it will rank among the world’s largest LNG export plants, further securing the US’ position as the world’s top LNG exporter. This development is pivotal, as US LNG has been offered to Brussels as a replacement for Russian piped NatGas. Venture Global CEO Mike Sabel wrote in a statement: “In just five years, Venture Global has built, produced and launched exports from two large-scale LNG projects which has never been done before in the history of the industry.”
The potential LNG export boom will likely please President-elect Trump, who recently threatened Europe with tariffs unless it increased its purchase of US energy products next year. ”
Well, would you look at that? It reminds me of the Standard Oil days, this from Mansfield Service Partners blog, “It’s hard to believe now, but in the beginning, gasoline was considered a useless byproduct of kerosene production. When fuel supplier Edwin Drake drilled the first crude oil well in Pennsylvania in 1859, his objective was to produce kerosene fuel for lighting.
In fact, it wouldn’t be until the automobile was invented in 1892 that we recognized gasoline as a valuable commodity. Just 28 years later there were 9 million gasoline-powered vehicles on American roads.”
That’s right, when you have a product but no market you need to make a market. American oil drillers have been flaring off natural gas as a byproduct of fracking for over a decade. Natural gas prices have been in a decade-long slump, so we need a new market and with a little geopolitical interventions I give you the old continent of Europe. In the words of Johnny Nash, I can see clearly now.
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 42,992.
The 10-year Treasury bond is at …at 4.63%
The price of Brent Crude is … at $74.17 per barrel.
The price of gold is … at $2,636/oz.
The price of silver is … at $29.97/oz.
I leave you with this from the information superhighway, What sits at the bottom of the sea and twitches? A nervous wreck.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.