This week’s in charts
VW is catching up with Tesla
On one hand it's easy to argue that Tesla is miles ahead, shipping more than double the number of all-electric vehicles that VW Group managed in 2021. On the other hand, you could argue that VW Group's 453k deliveries in 2021 is close to Tesla's 500k effort from 2020, suggesting that the German giant is only 12-15 months behind Tesla's pace, despite starting late.
Source: Chartr
Russia and Ukraine : key suppliers of various metals
Goldman Sachs: “A survey of our equity analysts reveals that imports of car parts from Russia and Ukraine have dropped, with some European automakers already cutting production. Our equity analysts estimate that ongoing disruptions could depress monthly auto production in the affected plants by nearly 60k vehicles (around 25% of their monthly production) in March. In addition, car producers with assembly plants in Russia, such as Hyundai and Renault, have already stopped local production reducing the global supply of autos.
According to our commodity analysts, a stop in palladium exports alone may lead to a 10% hit to global auto production for 2 years based on potential production losses in the region and global inventories."
Inflation is shrinking your products
Do consumers notice when their everyday products get smaller? Often, they don’t and companies are taking advantage by reducing the amount of product they sell while keeping prices the same. Shrinking product sizes to pad profits is not a new tactic but it grows in popularity during periods of shortages and inflation. Some consumers are noticing and documenting their shrinking groceries on the shrinkflation subreddit.
Even with today’s release of US inflation figures from the Bureau of Labor Statistics showing prices increased 7.9% in the last 12 months, consumers may not realize they’re paying more for some of their regular purchases because companies are reducing sizes while keeping prices the same
Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales
Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.
The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.
China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency. The Saudis are also considering including yuan-denominated futures contracts, known as the petroyuan, in the pricing model of Saudi Arabian Oil Co., known as Aramco.
It would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars. The majority of global oil sales—around 80%—are done in dollars, and the Saudis have traded oil exclusively in dollars since 1974, in a deal with the Nixon administration that included security guarantees for the kingdom.
China introduced yuan-priced oil contracts in 2018 as part of its efforts to make its currency tradable across the world, but they haven’t made a dent in the dollar’s dominance of the oil market. For China, using dollars has become a hazard highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to the Ukraine invasion.
China has stepped up its courtship of the Saudi kingdom. In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new city. Saudi Arabia has invited Chinese President Xi Jinping to visit later this year.
The Secretive Company That Might End Privacy as We Know It
Until recently, Hoan Ton-That’s greatest hits included an obscure iPhone game and an app that let people put Donald Trump’s distinctive yellow hair on their own photos.
Then Mr. Ton-That — an Australian techie and onetime model — did something momentous: He invented a tool that could end your ability to walk down the street anonymously, and provided it to hundreds of law enforcement agencies, ranging from local cops in Florida to the F.B.I. and the Department of Homeland Security.
His tiny company, Clearview AI, devised a groundbreaking facial recognition app. You take a picture of a person, upload it and get to see public photos of that person, along with links to where those photos appeared. The system — whose backbone is a database of more than three billion images that Clearview claims to have scraped from Facebook, YouTube, Venmo and millions of other websites — goes far beyond anything ever constructed by the United States government or Silicon Valley giants.
Federal and state law enforcement officers said that while they had only limited knowledge of how Clearview works and who is behind it, they had used its app to help solve shoplifting, identity theft, credit card fraud, murder, and child sexual exploitation cases.
But without public scrutiny, more than 600 law enforcement agencies have started using Clearview in the past year, according to the company, which declined to provide a list. The computer code underlying its app, analyzed by The New York Times, includes programming language to pair it with augmented-reality glasses; users would potentially be able to identify every person they saw. The tool could identify activists at a protest or an attractive stranger on the subway, revealing not just their names but where they lived, what they did and whom they knew.
And it’s not just law enforcement: Clearview has also licensed the app to at least a handful of companies for security purposes.
The Moral Hazard Lessons from Nickel Market Disaster
The tide went out this week in London’s nickel market, and we discovered — in Warren Buffett’s immortal words—who had been swimming naked: a giant Chinese producer that couldn’t meet its margin calls, additional security brokers require when leveraged trades lose money.
Instead of letting the market cleanse itself of this indebted trader, the exchange decided to wade in and save the firm from the consequences of its bets by canceling the trades.
This isn’t just a one-off in an obscure commodity. This is the natural conclusion of a trend that is undermining free markets and creating all the wrong incentives: A growing reluctance by the authorities to let financial groups go bust, even when they aren’t too big to fail.
The problems started on Tuesday morning, when traders on the London Metal Exchange smelled blood and nickel prices almost doubled. China’s Tsingshan Holding faced a $1 billion-or-so margin call that exchange officials feared it couldn’t meet. Rather than let it fail, which would probably have taken down several of the smaller LME brokers that had serviced Tsingshan, LME decided to cancel all that day’s trading, more than 9,000 trades worth about $4 billion
It. Canceled. The. Trades. Not because of a fat-finger error, which exchanges often cancel. Not even because of a rogue algorithm (as regulators claimed in the 2010 flash crash in U.S. stocks). But because someone with too much leverage was going to blow up, with knock-on effects on some members of the exchange.
This week’s fun finds:
Less serious, not investing related, but just as fun. Sometimes we want to share some of our less serious (but still interesting) finds. On any given week, we might show some things unrelated to investing - absorbing articles, notable numbers, or even recommendations from our internal partners.
Your organs may be ageing at different rates
An analysis of hundreds of biological features strengthens the evidence that some organs and body systems can age faster than others. Tracking the biological age of different parts of the body could help doctors predict the onset of disease more accurately.
We already knew that the condition of cells in the body can be interpreted to give someone a biological age that is older or younger than their age measured in years. In other words, cell condition – which varies depending on genetic and lifestyle factors – determines the pace of the ageing process.
Now, work by Brian Kennedy at the National University of Singapore and his colleagues supports the idea that the various organs and systems in the body – such as the cardiovascular or immune system – can age at different rates within the same individual.
“It confirms previous studies that there are diverse ageing rates among organs and systems, and people’s ageing patterns are different,” says Wenyu Zhou at Tempus Labs, a biotechnology company in California. “This further calls
The Joyful, Illiterate Kindergartners of Finland
“The changes to kindergarten make me sick,” a veteran teacher in Arkansas recently admitted to me. “Think about what you did in first grade—that’s what my 5-year-old babies are expected to do.”
A working paper, “Is Kindergarten the New First Grade?,” confirms what many experts have suspected for years: The American kindergarten experience has become much more academic—and at the expense of play. The late psychologist, Bruno Bettelheim, even raised the concern in an article for The Atlantic in 1987.
Researchers at the University of Virginia, led by the education-policy researcher Daphna Bassok, analyzed survey responses from American kindergarten teachers between 1998 and 2010. In the study, the percentage of kindergarten teachers who reported that they agreed (or strongly agreed) that children should learn to read in kindergarten greatly increased from 30 percent in 1998 to 80 percent in 2010.
Bassok and her colleagues found that while time spent on literacy in American kindergarten classrooms went up, time spent on arts, music, and child-selected activities (like station time) significantly dropped.
But Finland—a Nordic nation of 5.5 million people, where I’ve lived and taught fifth and sixth graders over the last two years—appears to be on the other end of the kindergarten spectrum. Finland’s kindergartners spend a sizable chunk of each day playing, not filling out worksheets. Finnish schools have received substantial media attention for years now—largely because of the consistently strong performance of its 15-year-olds on international tests like the PISA.
“[Children] learn so well through play,” Anni-Kaisa Osei Ntiamoah, one of the preschool’s “kindergarten” teachers, who’s in her seventh year in the classroom, told me. “They don’t even realize that they are learning because they’re so interested [in what they’re doing].”
