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Shipping: A Real-World Asset-Class… But Complex!

Shipping: A Real-World Asset-Class… But Complex!

Authored by Bill Blain via MorningPorridge.com,

“I am leaving the sea. I shall walk…

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Shipping: A Real-World Asset-Class... But Complex!

Authored by Bill Blain via MorningPorridge.com,

“I am leaving the sea. I shall walk inland with an oar on my shoulder. When someone asks what it is – there I shall bide.”

The ongoing pain in crashing financial asset markets demonstrates the need to diversify portfolios and decorrelated returns. Shipping is one such asset; returns have been boosted by scarcity as a result of the pandemic – the question is: can these returns be maintained?

Yesterday I promised I would look more closely at diversified non-financial assets. This morning I’ve going to start with Shipping… but let me caveat it’s a complex and expert-led market. While Shipping has massive investment potential – recent results from shipping funds have been stellar – I am not a shipping expert. Talk to shipping professionals before you risk anything in the sector.

Writing about subjects I don’t fully comprehend raises a credibility risk – but it’s worth highlighting Shipping and some other areas for the opportunities they present in terms of uncorrelated returns. One way to skip the looming crisis in financial assets will be to differentiate portfolios away from listed stocks and shares – and look to buy the real world; what we call alternative assets.

And, after yesterday’s miserable day in markets, these uncertain times means it’s absolutely necessary for investors to look outside their conventional comfort zones to generate returns. Wearing my day-job hat, I am Head of Alternative Assets at Shard Capital, so feel free to contact me on email (bill.blain@shardcapital.com) to ask questions – and who knows, I may have just the deal for you! (Sorry – qualified professional investors only!)

I remain convinced global stocks and shares are massively overpriced relative to the prospects for the global economy. That’s not just because of the deepening new Covid lockdown crisis in China (which threatens a catastrophic repeat of 2020-21 supply chain breakdowns), energy & food inflation, the Ukraine war, but also unravelling the consequences of 12 years of Monetary experimentation and cheap liquidity distorting markets.

Judging from the talk of capitulation trades I’m hearing, or more miserable tech results to come (Peloton this week), I’m not the only person thinking the crash, bang, wallop “moment” approaches.

For instance, there was a fantastic quote in Grants Interest Rate Observer last night about how DoorDash posted a 35% jump in revenues to $1.46 bln, but still didn’t make a profit – it now carries a $1.7 bln cumulative net loss. Grants’ quoted the former head of Dominos pizza: “In 60 years, we’ve never made a dollar delivering a pizza. We make money on the product, but we don’t make any money on the delivery. So, we’re just not sure how others do it.”

Which is why you should stay away from modern companies who don’t understand why successful companies never did it that way… DoorDash, and many others, will be remembered for inventing the Square Wheel…

Back to Shipping…

Shipping is an enormously complex sector. You need to understand what all the different classes of boats do, how their demand patterns work, to understand how the supply of new and old ships will affect prices, while overlaying everything with an understanding of global trade to work out likely returns. And even then, you will be swimming in an investment pool of players who will know far more than you…

Yet, the numbers are enticing. The returns from owning ships have gone skywards – charter rates have risen dramatically, ship values have trebled in some cases, and even the older ships are commanding high resale values. Funds set up to manage vessels have done exceptionally well.

Be warned: shipping can get very messy. In the past it’s been an easy way to lose money quickly – and always there will be some very clever Greeks just waiting to scoop up the bargains. Typically, it’s a boom/bust industry – every time the global economy booms there is a shipping shortage, new vessels are ordered leading a glut of capacity just as the next downturn starts.

But, shipping is absolutely critical to making the global economy function. Take a look at the crisis in supply chains…

Two of most interesting leading indicators of how the global economy is really performing are the Shanghai Export Container Freight Index and the Baltic Dry Index. The first measures the all-important freight rate and volume of Containers being sent from China around the globe, while the Baltic Dry measures the flow and price of transporting raw materials. I’ve been watching the Baltic since I was a tiny wee banker back in the 1980s.

Since May 2000 – when global trade began to anticipate Covid recovery – the Shanghai leapt from a low of 836 to peak in January this year at 5094. Now the container index has fallen to 4163 – suggesting, perhaps, that global container costs are beginning to moderate. The Baltic Dry spiked from a May 2020 Covid low of 350 to over 5500 in Oct 2021 as the global economy re-opened – it fell below 1500 earlier this year but has recovered to 2831 reflecting slowdown in China.

Both indexes correlate to inflation – which is hardly surprising as they are leading indicators of global trade. The fact both are weaker than their peaks might suggest moderating inflation and increasing recessionary conditions. Both are probably better indications of the real economy than stocks. I find it fascinating how the Baltic Dry basically flatlined through the last decade of excessively low interest rates and a raging bull equity market, reflecting the utter detachment of the financial asset universe from the reality of a very slow stuttering real economy.

When I try to understand why shipping values have risen so much since 2020… it’s complex. It’s all been about blockages as the economy reopened. The price of shipping basically depends on the availability of ships. I am told the global fleet of handy-size freighters is over 5000 vessels, but there only 5-6 actually available for charter at present!

I came across an interesting example of cost “friction” while looking at shipping. When freight costs are so high, it infers demand must be high, therefore it’s an inflationary signal – people willing to pay more to get goods.

However, the current energy/oil shock means the price of bunker fuel is pretty much at an all time high. As a result, ships are slowing down. Slow steaming requires considerably less fuel – it’s called the “cube-rule”: slow a boat by half, and it will use 1/8th the fuel it would at full speed.  In the past there has been a pretty close correlation between the speed of boats and the cost of freight. When its high, ships slow.

But… things are never that simple. Slowing a boat down means it takes longer to sail from A-B. That means it costs more to hire a ship as the rental is a daily charge – and charter rates have risen between 20-35%. This is where friction comes in; shipping costs have become a compromise between rising demand, the higher cost of fuel and crew, plus the rising costs of hiring ships.

That is great news for ship owners. First it means they get paid more because their boats earn a higher rental on longer voyages. Second, its reckoned for every 1 knot (a knot is the speed of boats, its not quite the same as miles per hour) global shipping slows, about 6% of the global fleet is taken out as not available – meaning slower ships mean fewer ships for hire, further pushing up charter rates. Shipping earns more, but goods reach markets slower, thus generating inflation!

The next problem is global ports. From Shanghai, Long Beach and Harwich global ports were swamped by the post-Covid reopening. This was exacerbated by shortage of lorry drivers, stevedores, and now renewed lockdowns in China. While Western Ports are full of empty containers, there are practically no empty TEUs (Twenty Foot Equivalent Units) anywhere in Asia. The result is massive delays unloading vessels. About 20% of the Global Shipping container fleet is currently queued waiting for entry to the big ports – again creating scarcity and pushing up charter prices.

All of which is great news for the owners of smaller Handysize vessels – we’re even seeing smaller bulk carriers carrying containers to smaller ports (many have their own cranes on board). It’s not particularly efficient, but it solves the immediate transport crisis.

There are other problems – about 3% of the global merchant marine is Russian flagged, but Russian sailors make up 10% of the 2 million odd global merchant sailors. Following the pandemic its clear many sailors have retired or have given up – many were effectively trapped on board for the duration of the crisis. There is a massive shortage of crew and officers building – by 2025 we could be short over 90,000 officers, particularly in engineering – a long term problem for the whole global economy.

The question for investors is this: will the current global supply chain problems which have driven up shipping prices ease, and mean prices, and therefore returns, continue to drive results? Perhaps, but the problems will be solved in the medium term. Its not necessarily bad for shipping – in many shipping classes the ships are getting older and less efficient, and new fuel and environmental regulations mean they need replaced.

The numbers are all out there.. but this is where you need the expert advice on which shipping types are likely to prove most valuable. I’ll be very happy to assist. For instance, I am reliably informed not to buy container ships, but handysize bulkers… and maybe some tankers…

Tyler Durden Thu, 05/12/2022 - 03:30

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Coronavirus may be linked to cases of severe hepatitis in children

A chain of events possibly triggered by unrecognized infection with the SARS-CoV-2 coronavirus could be causing the mysterious cases of severe hepatitis…

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Coronavirus may be linked to cases of severe hepatitis in children

By

(Reuters) – The following is a summary of some recent studies on COVID-19. They include research that warrants further study to corroborate the findings and that has yet to be certified by peer review.

SARS-CoV-2 could be at root of mysterious hepatitis in kids

A chain of events possibly triggered by unrecognized infection with the SARS-CoV-2 coronavirus could be causing the mysterious cases of severe hepatitis reported in hundreds of young children around the world, researchers suggest.

Children with COVID-19 are at significantly increased risk for liver dysfunction afterward, according to a report posted on Saturday on medRxiv ahead of peer review. But most of the children with acute hepatitis – which is generally rare in that age group – do not report a previous SARS-CoV-2 infection. Instead, the majority have been found to be infected with an adenovirus called 41F, which is not known to attack the liver. It is possible that the affected children, many of whom are too young to be vaccinated, may have had mild or asymptomatic COVID infections that went unnoticed, a separate team of researchers suggest in The Lancet Gastroenterology & Hepatology. If that were true, they theorize, then lingering particles of the coronavirus in the gastrointestinal tract in these children could be priming the immune system to over-react to adenovirus-41F with high amounts of inflammatory proteins that ultimately damage the liver.

A firefighter from the Marins-Pompiers of Marseille (Marseille Naval Fire Battalion) administers a nasal swab to a child at a testing site for coronavirus disease (COVID-19) in Marseille, France, September 17, 2020. REUTERS/Eric Gaillard

“We suggest that children with acute hepatitis be investigated for SARS-CoV-2 persistence in stool” and for other signals that the liver damage is happening because the spike protein of the coronavirus is a “superantigen” that over-sensitizes the immune system, they said.

Face-down position unhelpful for awake patients

For hospitalized COVID-19 patients who are breathing on their own but with supplemental oxygen, lying face down might not help prevent them from eventually needing mechanical ventilation, according to a new study.

In the study, 400 patients were randomly assigned to usual care or to standard care plus intermittently lying on their stomach, a position known to improve the course of illness in sedated patients on mechanical ventilators. Over the next 30 days, 34.1% in the prone-positioning group and 40.5% in the usual-care group needed to be intubated and put on a ventilator, a difference that was not statistically significant. There might have been a reduction in the risk for intubation with prone positioning among some of the patients, researchers said on Monday in JAMA, but they could not confirm it statistically from their data. The average duration of prone positioning per day was roughly five hours, less than the target of eight to 10 hours per day.

“Long hours of awake prone positioning are challenging and highly influenced by patient comfort and preference,” the researchers said. “The most common reason for interruption of prone positioning was patient request, which might have been related to overall subjective improvement or related to discomfort from prone positioning.”

Click for a Reuters graphic on vaccines in development.

Reporting by Nancy Lapid and Megan Brooks; Editing by Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

 

Reuters source:

https://www.reuters.com/business/healthcare-pharmaceuticals/coronavirus-may-be-linked-cases-severe-hepatitis-children-2022-05-16

 

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The Battle For Control Of Your Mind

The Battle For Control Of Your Mind

Authored by Aaron Kheriaty via The Brownstone Institute

In his classic dystopian novel 1984, George…

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The Battle For Control Of Your Mind

Authored by Aaron Kheriaty via The Brownstone Institute

In his classic dystopian novel 1984, George Orwell famously wrote, “If you want a picture of the future, imagine a boot stamping on a human face—for ever.” This striking image served as a potent symbol for totalitarianism in the 20th Century. But as Caylan Ford recently observed, with the advent of digital health passports in the emerging biomedical security state, the new symbol of totalitarian repression is “not a boot, but an algorithm in the cloud: emotionless, impervious to appeal, silently shaping the biomass.”

These new digital surveillance and control mechanisms will be no less oppressive for being virtual rather than physical. Contact tracing apps, for example, have proliferated with at least 120 different apps in used in 71 different states, and 60 other digital contact-tracing measures have been used across 38 countries. There is currently no evidence that contact tracing apps or other methods of digital surveillance have helped to slow the spread of covid; but as with so many of our pandemic policies, this does not seem to have deterred their use.

Other advanced technologies were deployed in what one writer has called, with a nod to Orwell, “the stomp reflex,” to describe governments’ propensity to abuse emergency powers. Twenty-two countries used surveillance drones to monitor their populations for covid rule-breakers, others deployed facial recognition technologies, twenty-eight countries used internet censorship and thirteen countries resorted to internet shutdowns to manage populations during covid. A total of thirty-two countries have used militaries or military ordnances to enforce rules, which has included casualties. In Angola, for example, police shot and killed several citizens while imposing a lockdown.

Orwell explored the power of language to shape our thinking, including the power of sloppy or degraded language to distort thought. He articulated these concerns not only in his novels Animal Farm and 1984 but in his classic essay, “Politics and the English Language,” where he argues that “if thought corrupts language, language can also corrupt thought.”

The totalitarian regime depicted in 1984 requires citizens to communicate in Newspeak, a carefully controlled language of simplified grammar and restricted vocabulary designed to limit the individual’s ability to think or articulate subversive concepts such as personal identity, self-expression, and free will. With this bastardization of language, complete thoughts are reduced to simple terms conveying only simplistic meaning.  

Newspeak eliminates the possibility of nuance, rendering impossible consideration and communication of shades of meaning. The Party also intends with Newspeak’s short words to make speech physically automatic and thereby make speech largely unconscious, which further diminishes the possibility of genuinely critical thought.

In the novel, character Syme discusses his editorial work on the latest edition of the Newspeak Dictionary:

By 2050—earlier, probably—all real knowledge of Oldspeak [standard English] will have disappeared. The whole literature of the past will have been destroyed. Chaucer, Shakespeare, Milton, Byron—they’ll exist only in Newspeak versions, not merely changed into something different, but actually contradictory of what they used to be. Even the literature of The Party will change. Even the slogans will change. How could you have a slogan like Freedom is Slavery when the concept of freedom has been abolished? The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking—not needing to think. Orthodoxy is unconsciousness.

Several terms of disparagement were repeatedly deployed during the pandemic, phrases whose only function was to halt the possibility of critical thought. These included, among others, ‘covid denier,’ ‘anti-vax,’ and ‘conspiracy theorist’. Some commentators will doubtless mischaracterize this book, and particularly this chapter, using these and similar terms—ready-made shortcuts that save critics the trouble of reading the book or critically engaging my evidence or arguments.

A brief comment on each of these may be helpful in illustrating how they function.

The first term, ‘covid denier,’ requires little attention. Those who sling this charge at any critic of our pandemic response recklessly equate covid with the Holocaust, which suggests that antisemitism continues to infect discourse on both the right and the left. We need not detain ourselves with more commentary on this phrase.

The epithet ‘anti-vax,’ deployed to characterize anyone who raises questions about the mass vaccination campaign or the safety and efficacy of covid vaccines, functions similarly as a conversation stopper rather than an accurately descriptive label. When people ask me whether I am anti-vax for challenging vaccine mandates I can only respond that the question makes about as much sense to me as the question, “Dr. Kheriaty, are you ‘pro-medication’ or ‘anti-medication’?” The answer is obviously contingent and nuanced: which medication, for which patient or patient population, under what circumstances, and for what indications? There is clearly no such thing as a medication, or a vaccine for that matter, that’s always good for everyone in every circumstance and all the time.

Regarding the term “conspiracy theorist,” Agamben notes that its indiscriminate deployment “demonstrates a surprising historical ignorance.” For anyone familiar with history knows that the stories historians recount retrace and reconstruct the actions of individuals, groups, and factions working in common purpose to achieve their goals using all available means. He mentions three examples from among thousands in the historical record.

In 415 B.C. Alcibiades deployed his influence and money to convince the Athenians to embark on an expedition to Sicily, a venture that turned out disastrously and marked the end of Athenian supremacy. In retaliation, Alcibiades enemies hired false witnesses and conspired against him to condemn him to death. In 1799 Napoleon Bonaparte violated his oath of fidelity to the Republic’s Constitution, overthrowing the directory in a coup, assumed full powers, and ending the Revolution. Days prior, he had met with co-conspirators to fine-tune their strategy against the anticipated opposition of the Council of Five Hundred.

Closer to our own day, he mentions the March on Rome by 25,000 Italian fascists in October 1922. Leading up to this even, Mussolini prepared the march with three collaborators, initiated contacts with the Prime Minister and powerful figures from the business world (some even maintain that Mussolini secretly met with the King to explore possible allegiances). The fascists rehearsed their occupation of Rome by a military occupation of Ancona two months prior.

Countless other examples, from the murder of Julius Caesar to the Bolshevik revolution, will occur to any student of history. In all these cases, individuals gathering in groups or parties to strategize goals and tactics, anticipate obstacles, then act resolutely to achieve their aims. Agamben acknowledges that this does not mean it is always necessary to aver to ‘conspiracies’ to explain historical events. “But anyone who labelled a historical who tried to reconstruct in detail the plots that triggered such events as a ‘conspiracy theorist’ would most definitely be demonstrating their own ignorance, if not idiocy.”

Anyone who mentioned “The Great Reset” in 2019 was accused of buying into a conspiracy theory—that is, until World Economic Forum founder and executive chairman Klaus Schwab published a book in 2020 laying out the WEF agenda with the helpful title,Covid-19: The Great Reset. Following new revelations about the lab leak hypothesis, U.S. funding of gain-of-function research at the Wuhan Institute of Virology, vaccine safety issues willfully suppressed, and coordinated media censorship and government smear campaigns against dissident voices, it seems the only difference between a conspiracy theory and credible news was about six months.

*  *  *

Originally posted at 'Human Flourishing' Substack.

Tyler Durden Mon, 05/16/2022 - 23:45

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World-first study reveals why people with COPD are more susceptible to COVID-19

Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive…

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Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive pulmonary disease (COPD) are at higher risk of developing severe COVID-19.

Credit: Centenary Institute

Researchers from the Centenary Institute and the University of Technology Sydney have published the first study showing why people with chronic obstructive pulmonary disease (COPD) are at higher risk of developing severe COVID-19.

The findings, reported in the American Journal of Respiratory and Critical Care Medicine, could lead to the development of new therapeutic interventions that reduce COVID-19 infection in COPD patients.

An inflammatory lung condition, COPD causes airway blockage and makes it difficult to breathe. It affects around 400 million people globally. The increased susceptibility to COVID-19 of COPD patients is still to be fully understood.

In the study, the researchers infected differentiated airway cells from COPD patients and healthy people with SARS-CoV-2 (the virus that causes COVID-19).

The researchers found that the COPD airway cells had 24-fold greater infection with SARS-CoV-2 than the healthy cells.

“We examined the genetic information of infected cells through advanced single cell RNA-sequencing analysis,” said lead author of the study, Dr Matt Johansen, from the Centenary UTS Centre for Inflammation.

“Seven days after SARS-CoV-2 infection, there was a 24-fold increase of viral load in the COPD patient airway cells compared to the cells taken from healthy individuals.”

Significantly, the team found that the infected COPD cells had increased levels of transmembrane protease serine 2 (TMPRSS2) and cathepsin B (CTSB). Both are enzymes that SARS-CoV-2 uses to enter into the host cell.

“These two enzymes are increased in COPD patients and favour greater SARS-CoV-2 infection compared to healthy people. Simply put, easier and increased cell infection makes it far more likely that individuals with COPD will have more severe disease outcomes,” said Dr Johansen.

Other results from the study showed additional reasons for COPD patient susceptibility to severe COVID-19.

Key anti-viral proteins (interferons) that protect against infection were largely blunted in the COPD patient airway cells. This was a likely trigger in causing increased viral production in COPD patients.

Dr Johansen said that infected COPD patient airway cells also had higher levels of pro-inflammatory cytokines, which are linked to more severe COVID-19 and COPD outcomes.

“COPD is an inflammatory disease with patients having increased inflammation at baseline compared to healthy people. It’s highly likely that SARS-CoV-2 exacerbates this existing high inflammation level which leads to even poorer outcomes,” he said.

Initial laboratory drug testing by the researchers, to inhibit the enzymes TMPRSS2 and CTSB, and to target the high inflammation levels, successfully and substantially reduced SARS-CoV-2 viral levels in COPD patient cells, ultimately confirming the study’s results.

“Collectively, these findings have allowed us to understand the mechanisms of increased COVID-19 susceptibility in COPD patients,” said Professor Phil Hansbro, the study’s senior author and Director of the Centenary UTS Centre for Inflammation.

“We believe that new drug treatments targeting relevant enzymes and pro-inflammatory responses in SARS-CoV-2 infection could have excellent therapeutic potential in reducing the severity of COVID-19 in patients with COPD.”

Professor Hansbro said the research was critical with hundreds of millions of people affected by COPD globally and with COVID-19 likely to be around for many years to come.

[ENDS]

Publication:

Increased SARS-CoV-2 Infection, Protease and Inflammatory Responses in COPD Primary Bronchial Epithelial Cells Defined with Single Cell RNA-Sequencing.

https://www.atsjournals.org/doi/10.1164/rccm.202108-1901OC

Images:

Dr Matt Johansen: https://drive.google.com/file/d/1Wc5WxHcS1fSWE68Q7xu8jT53Dki2ZBo4/

 

Professor Phil Hansbro:

https://drive.google.com/file/d/1GaHOyCjXfSb3hsE_bS-g2Cxs81dEhL4G/

 

For all media and interview enquiries, please contact

Tony Crawshaw, Media and Communications Manager, Centenary Institute on 0402 770 403 or email: t.crawshaw@centenary.org.au

 

About the Centenary Institute

The Centenary Institute is a world-leading independent medical research institute, closely affiliated to the University of Sydney and the Royal Prince Alfred Hospital. Our research focuses on three key areas: cancer, inflammation and cardiovascular disease. Our strength lies in uncovering disease mechanisms and applying this knowledge to improve diagnostics and treatments for patients.

For more information about the Centenary Institute, visit centenary.org.au

 

About the University of Technology Sydney (UTS)

The University of Technology Sydney (UTS), located in central Sydney, is one of

Australia’s leading universities of technology. It is known for fusing innovation, creativity

and technology in its teaching and research and for being an industry-focused university.

For more information go to uts.edu.au


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