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Do Declining Imports Signal and Imminent Recession?
Maybe. Maybe not. Some reasons to wonder. As Calculated Risk notes, LA port traffic is down. A decline in port traffic usually signals a downturn in imports….
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Maybe. Maybe not. Some reasons to wonder.
As Calculated Risk notes, LA port traffic is down. A decline in port traffic usually signals a downturn in imports. Figure 1 shows the evolution of these two series before and during the pandemic.
Figure 1: Goods imports in billions Ch.2012$/mo, n.s.a. (blue, left log scale), and containers (TEUs) at LA and Long Beach ports, n.s.a. (tan, log right scale). Real imports calculated deflating by import price deflator obtained from seasonally adjusted series. NBER defined peak-to-trough recession dates shaded gray. Source: Census, Port of LA, Port of Long Beach, NBER, and author’s calculations.
A regression of one series on the other yields an adj-R2 of 0.32, with a slope coefficient (log-log) of 0.32. Each 1% increase in container traffic at LA and Long Beach ports is associated with a 0.3% increase in real goods imports.
Imports are indeed declining as far as we can tell, for data going through December, and if port traffic is any indicator, January (n.s.a.) imports will remain depressed relative to past peak.
Figure 2: Goods imports ex-oil (blue, left log scale), and monthly GDP (red, right log scale), both in billions Ch.2012$ SAAR. Source: BEA/Census and IHS Markit/SP Global.
In fact, imports have fallen more drastically than GDP in the last 3 recessions (and in fact, GDP did not fall in the 2001 recession). In the 2007-09 recession, I noted that the collapse in imports suggested a deep recession was likely (see top right graph in Figure 3 below).
Figure 3: GDP (tan), and imports of goods ex-oil (blue), both in logs, normalized to 0 at NBER peak (red dashed line). Normalization for 2022 assumes peak at 2022Q4. Source: BEA, NBER, and author’s calculations.
Interestingly, the current situation differs from past; non-oil imports have been falling as GDP has risen, in the past two quarters (taking 2022Q4 as peak).
One reason not to think imports predict a recession this time around is the anomalous behavior of goods consumption during the pandemic. Figure 3 shows the goods consumption and imports consumption relative to levels at 2020M02 (NBER defined peak).
Figure 4: Goods imports ex-oil (blue), and consumption of goods (red), both difference from 2020M02, in billions Ch.2012$ SAAR. NBER defined peak-to-trough recession dates shaded gray. Source: BEA, NBER, and author’s calculations.
Imports of goods were high because consumption of goods was high. The deceleration of the latter is then consistent with the depressed (relatively) level of goods imports.
So it might be the case that lower goods imports are signalling a slowdown. Indeed, that is at least part of the story (as can be seen in lower aggregate — goods and services — consumption, which peaked in 2022M10). But the other part of the story is the normalization of consumption patterns, and a reallocation of spending toward services and away from goods.
That being said, consensus is still for recession, in Q1 (IHS Markit/SP Global) or 2023H2 (for others), while GS has taken the likelihood to 35%.
recession pandemic recession gdp oil
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Bitcoin mining can help reduce up to 8% of global emissions: Report
The report highlighted that Bitcoin mining can convert wasted methane emissions into less harmful emissions.
A paper published by the…
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The report highlighted that Bitcoin mining can convert wasted methane emissions into less harmful emissions.
A paper published by the Institute of Risk Management (IRM) concluded that Bitcoin (BTC) has the potential to be a catalyst for a global energy transition.
IRM Energy and Renewables Group members Dylan Campbell and Alexander Larsen published a report titled “Bitcoin and the Energy Transition: From Risk to Opportunity.” The paper argued that while BTC was perceived as a risk because of its energy consumption, it can also catalyze energy transition and lead to new solutions for energy challenges worldwide.
Within the report, the authors also highlighted the important function of energy and the increasing need for reliable, clean and more affordable energy sources. Despite the criticisms of Bitcoin’s energy intensity, the study provided a more balanced view of Bitcoin by showing the potential benefits BTC can bring to the energy industry.
According to the report, Bitcoin mining can reduce global emissions by up to 8% by 2030. This can be done by converting the world’s wasted methane emissions into less harmful emissions. The report cited a theoretical case saying that using captured methane to power Bitcoin mining operations can reduce the amount of methane vented into the atmosphere.
Related: Bitcoin energy pivot achieves what ‘few industries can claim’ — Bloomberg analyst
The paper also presented other opportunities for Bitcoin to contribute to the energy sector. According to the report, Bitcoin can contribute to energy efficiency through electricity grid management by using Bitcoin miners and transferring heat from miners to greenhouses.
“We have shown that while Bitcoin is a consumer of electricity, this does not translate to it being a high emitter of carbon dioxide and other atmospheric pollutants. Bitcoin can be the catalyst to a cleaner, more energy-abundant future for all,” the authors wrote.
Magazine: How to protect your crypto in a volatile market: Bitcoin OGs and experts weigh in
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Green Bubble Burst: US ESG Fund Closures In 2023 Surpass Total Of Previous Three Years
Green Bubble Burst: US ESG Fund Closures In 2023 Surpass Total Of Previous Three Years
For years, green and socially responsible investments,…
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For years, green and socially responsible investments, aka ESG (Environmental, Social, and Governance), have dominated the investing world. However, according to Bloomberg, a seismic shift is underway as BlackRock and other money managers unwound an increasing number of 'green' products amid soaring backlash and investor scrutiny.
Data from Morningstar shows State Street, Columbia Threadneedle Investments, Janus Henderson Group, and Hartford Funds Management Group have unwound more than two dozen ESG funds this year. The latest unwind comes from BlackRock, who told regulators last Friday it plans to close two ESG emerging-market bond funds with total assets of $55 million.
So far this year, the number of ESG funds closing is more than the last three years combined. This trend comes as investors pull money out of these funds as the ESG bubble has likely popped.
We asked this question in early summer: Is The ESG Investing Boom Already Over?
In January, BlackRock's Larry Fink told Bloomberg TV at the World Economic Forum in Davos that ESG investing has been tarnished:
"Let's be clear, the narrative is ugly, the narrative is creating this huge polarization. "
Fink continued:
"We are trying to address the misconceptions. It's hard because it's not business any more, they're doing it in a personal way. And for the first time in my professional career, attacks are now personal. They're trying to demonize the issues."
By June, Fink's BlackRock dropped the term "ESG" following billions of dollars pulled out of its funds by Republican governors, most notably, $2 billion by Florida Gov. Ron DeSantis.
The crux of the issue that Republican lawmakers have with radical ESG funds is that they were trying to impose 'green' initiatives on the corporate level to force change in society, and many of these initiatives would be widely unpopular at the ballot box during elections.
Remember these comments from Fink?
Alyssa Stankiewicz, associate director for sustainability research at Morningstar, told Bloomberg, "We have definitely seen demand drop off in 2022 and 2023."
Also, let's not forget about the 'greenwashing' across ESG industry.
Matt Lawton, T. Rowe Price Group Inc.'s sector portfolio manager in the Fixed Income Division, recently concluded: "It's becoming increasingly difficult to find credible sustainability-linked bonds."
The tide is reversing for Fink: "Backfire: World's Fourth Largest Iron Ore Producer Stops Purchasing Carbon Offsets."
Don't forget this: "McDonald's Scrubs Mentions Of "ESG" From Its Website."
Oops, Mr. Fink.
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Core Scientific seals $77M Bitmain deal for 27K Bitcoin mining rigs
The deal was first finalized in August, with Anchorage as another party agreeing to an equity stake in the bankrupt crypto miner.
Cryptocurrency…
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The deal was first finalized in August, with Anchorage as another party agreeing to an equity stake in the bankrupt crypto miner.
Cryptocurrency mining hardware maker Bitmain and bankrupt crytpto mining firm Core Scientific have agreed on a combination of equity and cash to finalize the deal on the expansion of mining facilities.
The deal between the two mining companies will see Bitmain supply 27,000 Bitcoin (BTC) mining rigs for $23 million in cash along with $53.9 million worth of common stock of the bankrupt firm. Apart from the mining hardware purchase deal, Bitmain and Core Scientific have signed a new hosting arrangement to assist Bitmain's mining operations.
The deal was finalized earlier last month when a court filing highlighted Bitmain’s plan to sell mining hardware in exchange for cash and equity as part of Core Scientific’s restructuring plan. Apart from Bitmain, the restructuring plan also included Anchorage, BlockFi and Mass Mutual Asset Finance. Apart from Anchorage, all other three firms chose a mix of cash and equity options to settle their claims.
Related: Core Scientific appoints Adam Sullivan as CEO amid restructuring process
The expansion and investment plan by Bitmain will come into force by the fourth quarter of this year pending approval from a judge slated for the final quarter. Once approved, the added hardware will potentially add 4.1 exahashes to Core Scinfitic’s hash rate. The two crypto mining focused companies have also agreed to work together to upgrade Bitmain’s last-generation miners hosted at Core Scientific’s data centres to increase the firm's productivity further.
Core Scientific filed for Chapter 11 bankruptcy in December 2022, citing the financial crisis and declining price of Bitcoin as the key reasons behind their decision. The firm started facing trouble in the weeks leading upto its eventual collapse in December owing to the market turmoil.
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