Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
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Energy
The Case for Energy Optimism by Alex Turnbull (Syncretia)
A contrarian case that not only is the worst of the energy shock stemming from the Russian invasion behind us, but that other supply problems related to the energy transition are unlikely to be truly persistent. [Link]
Dozens of LNG-laden ships queue off Europe’s coasts unable to unload by Marwa Rashad and Belén Carreño (Reuters)
Dozens of giant ships filled with super-cooled natural gas are waiting for unloading in Europe, where regassification capacity is tight and storage is rapidly filling ahead of the peak demand period this winter. [Link]
BBC prepares secret scripts for possible use in winter blackouts by Severin Carrell and Jim Waterson (The Guardian)
Ahead of a winter where the UK is likely to suffer severe electrical grid pressure, the national broadcaster is preparing scripts discussing the energy shortages. [Link]
Axium Infrastructure and Canadian Solar’s Subsidiaries Recurrent Energy and CSI Energy Storage Announce Operation of World’s Largest Single Phase Energy Storage Project (Seeking Alpha/PR Newswire)
The world’s largest grid-scale storage project is now operating in California, with enough capacity to power tens of thousands of homes. The project will allow the grid to bridge electricity between peak production mid-day and peak demand in the evening. [Link]
Central Banks
Tug of War That Markets Fear Is Central Banks Versus Governments by Ben Holland and Liz Capo McCormick (Yahoo!/Bloomberg)
Central banks are rapidly raising rates to flight inflation even as fiscal authorities loosen policy in order to soften the blow of higher costs for critical standard of living goods, creating a push and pull that stands in stark contrast to the lockstep monetary and fiscal policy of the pandemic era. [Link]
British U-Turn Shows Central Banks Still Rule (and That’s Not Always Good) by Jon Sindreu (WSJ)
The Bank of England refused to provide more runway for the new Conservative Prime Minister’s fiscal plans, illustrating the power central banks still have over governments. [Link; paywall]
Big Narratives
We Will See the Return of Capital Investment on a Massive Scale by Mark Dittli (The Market)
Market strategist Russell Napier, who long believed in a disinflationary global cycle, is worried that a capital investment boom that will eventually lead to stagflation. [Link]
Active Trading
As Covid Hit, Washington Officials Traded Stocks With Exquisite Timing by Rebecca Ballhaus, Joe Palazzolo, Brody Mullins, Chad Day, and John West (WSJ)
Privy to all sorts of non-public information, civil servants across the government busily traded as markets fell and rose, delivering some impressive calls. [Link; paywall]
Day Traders Go Back to Their Day Jobs as Stock Market Swoons by Peter Rudegeair and Gunjan Banerji (WSJ)
The massive stock market craze in the wake of COVID is not continuing, as the bear market pushes active day traders out of their brokerage accounts and back into the labor force. [Link; paywall]
Demographics
The COVID-19 Baby Bump: The Unexpected Increase In U.S. Fertility Rates In Response To The Pandmeic by Martha J. Bailey, Janet Currie, and Hannes Schwandt (NBER)
Birth rates plunged during the pandemic, with a bottoming out 9 months after the onset of COVID. But fertility then took off, with the first sustained sequential increase in years for the US, especially among US born women. [Link; 38 page PDF]
College Enrollment Declines Again Though Online Schools, HBCUs See Increases by Douglas Belkin (WSJ)
Over the past three years college enrollment has plunged, with 1.5mm fewer students than pre-pandemic. Enrollment was already falling before the pandemic, but declines appear to have accelerated in its wake. [Link; paywall]
Work From Home and The Office Real Estate Apocalypse (NBER)
This working paper estimates the pandemic reduced the value of NYC office buildings by 45% and the shift towards working from home would push NYC office asset prices to a level roughly 40% lower than pre-pandemic. [Link; 77 page PDF]
Greenback Woes
How the surging U.S. dollar is making it almost impossible to afford anything in countries around the world by Paul Wiseman, Kelvin Chan, Samy Magdy, and Ayse Wieting (Fortune/AP)
A soaring dollar is crushing currencies around the world, exacerbating the already-severe cost of living shock that was brought on by the invasion of Ukraine. [Link]
Supply Chains
Ikea hikes prices by up to 80% blaming ‘surging’ transport and material costs by Sam Courtney-Guy (Metro)
Prices at Ikea in the UK are going up dramatically in response to the collapsing pound, soaring transport costs, and high inflation for raw materials. [Link]
Freight Operators’ Peak Shipping Season Is Crumbling by Paul Berger and Paul Page (WSJ)
Cancelled shipments of imports, low inventories, and slower shipping through-put mean the busy season for trucking lines across the country is coming in much slower than expected. [Link]
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Have a great weekend!
