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Janet Yellen Had Breakfast With Ivanka Trump On July 17, Fed Schedule Reveals

September 11, 2017 Tyler Durden 0

Fed Chair Janet Yellen had a breakfast meeting with Donald Trump’s daughter, Ivanka, on Monday, July 17 from 8am to 9am, at the U.S. central bank, according to Fed public schedules, posted earlier this month on the Fed website. Bloomberg first reported the encounter.

Eight days after the one-hour meeting in a private dining room at the Fed, on July 25 Trump told the Wall Street Journal that Yellen was “in the running, absolutely,” for a second term as chair. “I like her; I like her demeanor. I think she’s done a good job,” he said. “I’d like to see rates stay low. She’s historically been a low-interest-rate person” the president added about the Fed chairman.

The Fed chair often meets with administration officials and members of Congress. But as the LA Times notes, a sit-down with a member of the First Family is highly unusual for the chief of the nation’s independent central bank.

The breakfast came as Yellen’s four-year term is set to expire in February. She has not said publicly if she is interested in a second term but Trump has said he is considering renominating her.

Ivanka Trump is an unpaid assistant to the president and a key advisor. She has advocated for women’s issues, such as paid family leave and an expanded child tax credit. On June 5, Ivanka Trump tweeted an excerpt of a speech Yellen gave a month earlier at Brown University in which she said: “Too many women struggle to combine aspirations for work and family.” Ivanka Trump’s office didn’t immediately respond to a request for comment.

Ivanka Trump and Yellen had breakfast in a room in the Fed’s beaux arts Marriner S. Eccles Building, where Yellen frequently dines with guests. In July, Yellen also had breakfast there twice with Treasury Secretary Steven T. Mnuchin. She also had lunch there in July with Gary Cohn, the White House’s top economic advisor and a possible rival for the Fed chairmanship.

A Fed spokeswoman declined to comment Monday on what was discussed at the breakfast or who requested it. A White House spokesman also did not provide details.

As of today, according to the PredictIt online market, Yellen is back on top in the ranking of who the “market” sees as most likely Fed Chair on February 4, in other words, Yellen is expected to remain in her position.

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Who’s Going To Eat The Losses?

September 11, 2017 Tyler Durden 0

Authored by Chris Martenson via PeakProsperity.com,

Unsustainable.

Many more people need to understand what that word really means, and how it applies to pretty much everything in the current human living arrangement. Especially the so-called ‘developed’ nations.

Here’s the dictionary definition:

Let’s take these three definitions one at a time.

First: our entire economic model, which dependent on borrowing at a faster rate than income (GDP) grows, is something that simply cannot be maintained at its current rate or level. Check.

 

Second: depleting species, soils and aquifers are all wildly unsustainable practices that are accelerating. Check.

 

Last (and most glaring of all): the world’s leadership (and we use that term very loosely) continues to insist on adhering to the indefensible idea that infinite growth on a finite planet is possible  Checkmate.

Said another way, the daily comforting stories we are told about how all of this somehow makes sense are just a load of nonsense. Each is entirely unsupportable by the evidence, facts and data.

What happens when a culture’s dominant narratives are not just unsatisfactory, but entirely unworkable? 

Well, for one thing, the younger generations that are being asked (goaded?) to step into an increasingly flawed future begin to resist. Which is completely understandable. They have nothing to gain if the status quo continues.

At the same time, the older generations mostly just settle into a stubborn insistence that everything will be fine if everyone will just do more of precisely what got us into the mess in the first place. Younger people should step up to make sure Medicare/Social Security/pensions remain fully funded, and buy the financial assets and homes of downsizing seniors at top dollar. The boomers have everything to lose if the status quo changes.

Why do I bother to tell you all this?  Why have I spent the last ten years of my life trying to alert the public of risks they keep telling me make them uncomfortable?  Because I care. Because I hope to help a few people preserve their hard-earned wealth. Possibly even save a few lives with this information. And, ultimately, to help people lead lives filled with greater connection, aliveness and joy.

The key to all of these better outcomes is having a clear-eyed view of “what is”, and then being able to predict “what’s next”. Which means that understanding is the first step. Informed action follows from that.

Mind The Gap

In the US, through selfish over-consumption, the baby boomer generation has screwed the prospects for following generations. It’s now doing everything to deny and defend its extraordinarily self-serving and short-sighted decisions, and delay the repercussions for as long as possible.

For the record, I seriously doubt the current younger generations would have behaved any differently were we to teleport them back in time  The boomers came of age when net energy from oil was still climbing and that ‘taught’ them about ‘how the world worked.’  When you have abundant resources, especially high net energy oil, you can pretty much do anything you want.

But today?

Not so much. A BIG fallacy of the past is that wars lead to rapid economic expansion afterwards. A more correct version of this is that the destruction of war leads to rapid recovery and rebuilding ONLY IF you also have access to abundant high net energy oil. If you don’t, wars only lead to destroyed economies.

Think of it this way: an 18-year-old who injures his knee has the resources of youth to help them recover completely. But an 80-year-old? Not so much.

This fallacy of thinking that we can just have another nice major war (North Korea?), or a few major hurricanes (Harvey, Irma and counting…), and then not only recover, but return better than ever is a dangerous delusion to hold. It’s no different than our 80-year-old thinking that taking up downhill skateboarding would be a safe and sensible thing to do. 

Self-deception is a process of denying or rationalizing away the relevance, significance, or importance of opposing evidence and logical argument. Self-deception involves convincing oneself of a truth (or lack of truth) so that one does not reveal any self-knowledge of the deception.

(Source)

The inter-generational resentment mentioned above is growing ever more extreme and it’s creating a significant social (and soon political) disturbance that will prove to be utterly disappointing for all. Already we see the signs in failing pensions having to cut benefits, young people opting out of such bulwarks of cultural stability as car ownership, marriage and having children.

If the DNC hadn’t straight up stolen the primary from Bernie Sanders, it’s quite possible that he’d have handily won the US presidential election and we’d already be feeling the effects of the political power of the next generation.

In this view, Trump is nothing more than the first (but not final) reflection of boomer denial backfiring badly. The sclerotic remnants of the past held fast and tried to jam Hillary down the throats of a very unenthusiastic electorate that long ago concluded that business-as-usual is literally a vision without a future. And so Hillary was rejected and Trump, the only alternative left standing, got the victory.

Who’s Going To Eat The Losses?

The US economic data to back up this decidedly dim view of things could not possibly be more robust and unassailable.

If we were allowed just one chart, just a single piece of data to back up this assertion, it would be this one:

The oft-cited and worried over ‘US federal debt’ of some $20 trillion is the lowest dark-blue shaded area on that chart .It’s not even 10% of the predicament the country faces

No country has ever dug out from under a debt + liability load anywhere close to that amount. It’s just too big a hole to climb out of.

With GDP growth stubbornly anemic for going on 12 years now, and no fresh sources of high net energy to fund future GDP growth, we can say this very simply about the promises our politicians are soothingly singing to us:

Any thought that these promises will be kept is delusional.

They won’t be kept because they can’t be kept. It’s really no more complicated than that.

Only one question matters when presented with a chart like this: Who’s going to eat the losses?

The keepers of the status quo, such as Hillary and Trump and their cozy relationships with Goldman-Sachs, et al., want the answer to be ‘the taxpayers’ (and not ‘the banks’). But they’d never publicly admit to that. So they pretend that losses will never matter, and instead promise perpetual prosperity for all.

So people, companies, communities and the entire nation of the United States makes plans and investments as if the above chart didn’t even exist.

This is no different than our 80-year-old refusing to draft a will because he simply can’t face the reality that one day he’ll need one. Such denial and self-delusion make a terrible strategy to live by.

The fact that you live in a world where the leaders of most countries are engaging in willful denial does not mean you have to be a victim to the consequences of their irrational delusion.

This is why having a clear-eyed view of the data, knowing your history, and forecasting the most likely outcomes are critical for positioning yourself for safety.

Those who do this empirically realize that the global economy is far more likely to contract, possibly viciously, before it expands. Given this, today’s global equity prices and non-investment grade bonds are absolutely mis-priced for such an outcome — instead they’re practically priced for perfection, and thus due for a major correction.

Last week we issued a report warning of the multiplying number of important indicators signaling a coming market correction and economic recession.

Building on that data is next week’s webinar featuring Grant Williams and Lance Roberts who will be presenting their latest indicators, analysis and forecasts at the Dangerous Markets webinar on September 13th — where they will take ample questions live from the audience. For more information on the webinar, click here.

Stormy Outlook

In Part 2: How To Deal With Our Dangerous Markets And Failing Future, we explain why the fall from today’s market highs will be so painful, and where today’s concerned investor can look when seeking safe haven for their capital.

We have the world’s central banking cartel for our situation, who have — for the third time in less than 20 years — blown a gigantic bubble.  Or rather, have blown a nested set of bubbles (stocks, bonds, housing), each of which will help accelerate the popping the others when the time comes.

As with a developing hurricane, the time to prepare yourself for these eventualities is well before they actual manifest.  Once they’ve arrived, your ability to respond and react will be hampered by the fact that your efforts will be accompanied by those of thousand and millions of other people. Don’t be one of the panicked herd. Take prudent action today.

Click here to read the report (free executive summary, enrollment required for full access)

 

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“Could’ve Been Worse”-Weekend Sparks Buying-Panic Sending Stocks To Record Highs

September 11, 2017 Tyler Durden 0

The last month has seen “Fire & Fury” threats, Gary Cohn resignation concerns, North Korean missiles over Japan, Hurricane Harvey, North Korean Hydrogen Bomb tests, and now Hurricane Irma… and stocks are higher…

 

All the worries are gone for stocks…

 

But bullion and bonds remain the biggest gainers since Trump’s “Fire & Fury” threat… (note that the S&P just scrambled green)

 

As stocks soared today – because no missiles were fired and, hey, only 6 million people in Florida are without power…

 

Huge opening gap then stocks pretty much went nowhere… almost like some all-knowing hand wanted to prove that everything was awesome before the market particpants had a chance to decide... “Standard 1% Rally on everything”

S&P biggest rally since April, closes at a record high.

VIX was dumped today also to make sure stocks rallied amid total chaos. Notably, implied vol is at its lowest premium to realized vol since October….

 

Banks were the biggest gainers…

 

All thanks to a big huge short-squeeze at the open…

 

Insurers give a perfect example of the relief as they soared above Harvey highs…

 

FANG Stocks best day since July 17th (Netflix earnings rip)…

 

Treasury yields rose on the day, but still remain lower post-Korea’s H-Bomb test…

 

With 10Y stalling at pre-payrolls levels…

 

The Dollar Index to Thursday’s ISM levels…

 

Helped by a collapse in JPY… This is the biggest spike in USDJPy in 8 months!

 

Just like after Harvey’s brief tumble (and remember that occurred as Korea flew missiles over Japan), Kuroda came to the rescue…

 

And as USDJPY surged, so Gold dumped…

 

WTI bounced on chatter about renewed extension of OPEC cuts but while it rebounded, RBOB ended lower on demand concerns…

 

Finally, because the world did not end, the odds of a December rate hike soared today…

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Investor Apathy: Crashes (& Valuations) Matter After All

September 11, 2017 Tyler Durden 0

Authored by Lance Roberts via RealInvestmentAdvice.com,

Recently, Ryan Vlastelica penned a column suggesting investors should simply be “apathetic” when it comes to their money.

“Apathy doesn’t sound like a sensible investment philosophy, but it may be one of the most successful approaches a person can employ to grow wealth.”

Listen. I get it.

You can’t beat the market, so just “buy and hold.”

Over a long enough period, I agree, you will make money.

But, simply making money is not the point of investing.

We invest to ensure our current “hard earned savings” adjust over time to provide the same purchasing power parity in the future. If we “lose” capital along the way, we extend the time horizon required to reach our goals.

Crashes Matter A Lot

Ryan makes his case for “apathy” by quoting Barry Ritholtz who stated:

“If you don’t want to invest in equities because you fear a market crash, then you should never be in equities, because equities always crash.”

While Barry is absolutely correct in his statement, investing is never an “all or none” proposition. Being an investor is about understanding the “risk to reward” relationship of placing capital into the financial markets.

There is no “great investor” in history, not even Warren Buffett, who is apathetic about investing. It is also why every great investor has one simple rule in common:

“Buy low, Sell high.” 

Why? Because it is the ONLY manner in which you truly create wealth.  As Ryan notes:

“Ritholtz stressed that investors should diversify, in part to mitigate their concerns about portfolio volatility, but added that the best buying opportunities were when things looked the worst.”

The problem with being “apathetic” should be obvious. If you never sold high, then where will the capital come from to “buy low?”

Think about your personal situation.

  • If you have a big cash pile at the moment, then you aren’t investing and are “missing out,” according to Ryan. 
  • If you don’t have a big cash pile, then where would you come up with the cash to buy “when things looked their worst?”

Yes, that’s the problem with “buy and hold” and “dollar cost averaging” which will become much more apparent momentarily.

Crashes matter, and they matter a lot.

Let’s set up a quick example to prove the point.

Bob is 35-years old, earns $75,000 a year, saves 10% of his gross salary each year and wants to have the same income in retirement that he currently has today. In our forecast, we will assume the market returns 7% each year and we will use 2.1% for inflation (long-term median) for planning purposes.

In 30 years, Bob’s equivalent income requirement will roughly be $137,000 annually.

So, starting with a $100,000 investment, he gets committed to saving $7500 each year into his index fund and sits back to watch it grow into a whopping $1.46 million nest egg at retirement.

See, absolutely nothing to worry about. Right?

Not so fast.

This is where problem number one arises for the vast majority of Americans. Given the economic drag of the 3-D’s (Debt, Demographics & Deflation) currently in progress, which will span the next 30-years, long-term interest rates will remain low. Therefore, if we assume that a portfolio can deliver an income of 3% annually, the assets required by Bob to fulfill his retirement needs will be roughly $4.6 Million.

(Yes, I have excluded social security, pensions, etc. – this is for illustrative purposes only.)

The roughly $3-million shortfall will force Bob to reconsider his income requirements for retirement.

The second problem is that “crashes” matter and they matter a lot. The chart below is a $100,000 investment plus $7500 per year compounding at 7% annually versus actual market returns. I have taken historical returns from 2009 to present (giving Bob the benefit of front-loaded returns at the start of his journey) and then projected forward using a normal standard deviation for market returns.

The important point is to denote the shortfall between what is “promised to happen” versus what “really happens” to your money when crashes occur. The “sequence of returns” is critical to the long-term success of your investment outcomes.

Bob’s $1.5 million projected retirement goal comes up short by $500k. This only compounds the shortfall between what is actually required to create an inflation adjusted income stream at retirement.

This is specifically why there are more “baby boomers” in the workforce today than ever before in history.

“So, stop blaming “baby boomers” for not retiring – they simply can’t afford to.” 

Yes, Valuations Matter Also

As I noted last week in “The Rule Of 20”

“Importantly, it is not just the length of the market and economic expansion that is important to consider. As I explained just recently, the ‘full market cycle’ will complete itself in due time to the detriment of those who fail to heed history, valuations, and psychology.

 

There are two halves of every market cycle. 

While valuations should NEVER be used as a means to manage a portfolio in the “short-term,” valuations have everything to do with how you invest long-term. 

As I have shown many times previously (most recently here), the level of valuations at the start of the investing period are determinant of future returns. The chart below makes this extremely simple to understand. The chart shows the composite of total real compound returns over the subsequent 30-year period when valuations were either less than 10x earnings, or greater than 20x. I have then used those composites for Bob’s potential outcomes given valuations are currently greater than 20x on a trailing reported basis.

(Starting investment of $100,000 with $7500 annual savings)

Again, the outcome for Bob’s financial future comes up meaningfully short.

A Fix For Bob’s Financial Insecurity

Ryan quoted Barry again:

“It isn’t the market crashes that get investors, it’s the high blood pressure. They trade excessively and their investment philosophies are all over the place. They do things they shouldn’t, then stick with it when they shouldn’t. They flip from one style to the other. They’re overconfident. They make emotional decisions.”

Ryan, Barry and I can all agree on that point.

Psychology makes up fully 50% of the reason investors underperform over time. But notice, the other 50% relates to lack of capital to invest. (See this) Again, where is that capital going to come from to “buy low?”

These biases come in all shapes, forms, and varieties from herding, to loss aversion, to recency bias. They are all the biggest contributors to investing mistakes over time.

These biases are specifically why the greatest investors in history have all had a very specific set of rules they followed to invest capital and, most importantly, manage the risk of loss.  (Here’s a list)

Here’s what you won’t find on that list. “Be apathetic.”

So, what’s Bob to do?

There is NO argument Bob needs to save and invest in order to reach his retirement goal and sustain his income in retirement. 

A simple solution can be designed using a well-known growth stock mutual fund and intermediate bond fund. The management method is simple. When the S&P index is above the 12-month moving average, you are 100% invested in the growth mutual fund. When the S&P index is below the 12-month moving average you are 100% invested in the bond mutual fund. I have compared the outcome to just “buy and holding” and “dollar cost averaging” into JUST the growth stock mutual fund.

For Bob, the difference is between meeting his retirement goals or not.

Over the next 10-years, given where current valuation levels reside, forward returns are going to be substantially lower than they have been over the last 10-years. This doesn’t mean there won’t be some “rippin’” bull markets during that time, there will also be some corrections along the way.

Just remember:

“Getting Back To Even Does Not Equal Making Money.” 

Planning To Win

With valuations elevated, the economic cycle very long in the tooth, and the 3-D’s applying downward pressure to future economic growth rates, investors, along with Bob, need to consider the following carefully.

  • Expectations for future returns and withdrawal rates should be downwardly adjusted.
  • The potential for front-loaded returns going forward is unlikely.
  • The impact of taxation must be considered in the planned withdrawal rate.
  • Future inflation expectations must be carefully considered.
  • Drawdowns from portfolios during declining market environments accelerate the principal bleed. Plans should be made during rising market years to harbor capital for reduced portfolio withdrawals during adverse market conditions.
  • The yield chase over the last 8-years, and low interest rate environment, has created an extremely risky environment for retirement income planning. Caution is advised.
  • Expectations for compounded annual rates of returns should be dismissed in lieu of plans for variable rates of future returns.

Chasing an arbitrary index that is 100% invested in the equity market requires you to take on far more risk that you most likely want. Two massive bear markets over the last decade have left many individuals further away from retirement than they ever imagined. Furthermore, all investors lost something far more valuable than money – the TIME that was needed to reach their retirement goals.

Investing for retirement, no matter what age you are, should be done conservatively and cautiously with the goal of outpacing inflation over time. This doesn’t mean that you should never invest in the stock market, it just means that your portfolio should be constructed to deliver a rate of return sufficient to meet your long-term goals with as little risk as possible.

Don’t be apathetic about your money. 

There should be no one more concerned about YOUR money than you, and if you aren’t taking an active interest in your money – why should anyone else?

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97-Year-Old Law May Be The Cause Of Higher Gas Prices

September 11, 2017 William Murray 0

It’s become typical for gas prices to spike before and after major hurricane landfalls. The national average gasoline price jumped more than 30 cents per-gallon in the week following Hurricane Harvey and Hurricane Irma could produce acute supply shortages for Florida and much of the Southeast for the rest of September. At first, the reasons for these spikes seem fairly straightforward. A disproportionate percentage of the nation’s refining capacity is located along the Texas and Louisiana Gulf Coast, while a just-in-time fuel inventory system…

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Downtown Charleston Under Water: Irma Flash Flood Emergency Declared

September 11, 2017 Tyler Durden 0

While Hurricane Irma, which was reclassified as a tropical storm early Monday, spared Miami from a “worst case” scenario, the former hurricane saved some of its worst storm surge impacts for northeast Florida, coastal Georgia, and South Carolina.

A record water surge flooded downtown Jacksonville, leading the National Weather Service to issue a flash flood emergency as the water level rose sharply. Hours of strong winds blowing the ocean inland, and preventing water from the St. Johns River from escaping back into the ocean worsened the flood situation. The flooding, while predicted, is reportedly some of the worst the city has seen. Despite being weaker than Hurricane Matthew was when it passed by the city in 2016, Tropical Storm Irma helped push a greater amount of water onshore, and it struck right at the time of high tide. This caused the city to see its highest storm surge flooding on record.

Another look at flooded Downtown Jacksonville. ???? This is at the corner of Market and Confederate St. pic.twitter.com/qvmr6e1gUG

— Erica Bennett (@EricaANjax) September 11, 2017

Meanwhile, a flash flood emergency was issued for Charleston County in South Carolina, which includes the city of Charleston, as as widespread flooding driven by Tropical Storm Irma engulfs the city.  The ocean in Charleston reached its third-highest level, coming up short of the surge seen in Hurricane Hugo in 1989. 

According to the National Weather Service, the combination of extremely high tides combined with heavy rain has resulted in dangerous flooding throughout the downtown area. Areas from Calhoun Street south to the Battery are severely flooded and travel into the downtown Charleston area is not advised. The flash flood emergency is set to last until 8:15 p.m. Just before 1 p.m. the flooding exceeded levels seen during Hurricane Matthew last year, weather.com meteorologist Christopher Dolce said.

The surge put White Point Garden under water and sent water coursing through downtown Charleston’s historic neighborhoods, the Charleston Post and Courier reports. Residents could be seen wading through hip-deep water; a john boat with four people aboard cruised down South Battery, sending a wake into people’s yards. Flooding was so severe that police in Charleston told people to avoid downtown until floodwaters recede.

A Flash Flood Emergency has been issued for Charleston County. Portions of CHS Peninsula are being closed down. Travel is unadvised! #SCwx

— NWS Charleston, SC (@NWSCharlestonSC) September 11, 2017

According to the National Weather Service, the combination of high tides and heavy rain has resulted in dangerous flooding throughout the downtown area.

In Mount Pleasant, the parking lots on both sides of Shem Creek were underwater, swamping some cars whose owners had the bad luck to park there.  “I’ve never seen anything like it,” Town Administrator Eric DeMoura told the Post and Courier.

The rising water breached dunes at Edisto Beach and several water rescues have already taken place in the area, the National Weather Service reports, as Tropical Storm Irma lashes the Palmetto State.  According to The Associated Press, more than 190,000 customers are without power statewide, including more than 26,000 in the coastal county of Beaufort and more than 46,000 in Charleston.

Charleston County just suspended all emergency services due to @irma. Sustained winds now at 40 mph

— Bo Petersen (@bopete) September 11, 2017

DOWNTOWN CHARLESTON: Flooding, garbage floating, limbs down. Very dangerous road conditions @DanielleLive5 @Live5News pic.twitter.com/ItGaWPHAfY

— Carter Coyle Live 5 (@CarterCoyleWCSC) September 11, 2017

Earlier this week McMaster ordered Hilton Head Island and six of the state’s other barrier islands to evacuate ahead of the storm, according to the Associated Press.  Approximately 44,457 South Carolina residents were affected by the orders, and McMaster told the Post and Courier that “compliance, as far as we can tell, has been good” though the state does not have a current count of how many people ignored the order and remained on the islands.

Videos posted on twitter showed just how significant and dangerous the flash flood is:

South Battery in downtown Charleston #irma #scwx @Live5News pic.twitter.com/90fd9klx6I

— Sydney Ryan (@SydneyLive5) September 11, 2017

Video of flooded White Point Garden in Downtown Charleston. Source: Corey Lemay #chsnews #chswx pic.twitter.com/RC6ATdA6xB

— Live5News (@Live5News) September 11, 2017

WATCH: High winds and severe flooding near Waterfront Park in downtown Charleston, South Carolina

(Via Patrick Spoon) pic.twitter.com/5DZ84KMNff

— NBC News (@NBCNews) September 11, 2017

WATCH: Video shows heavy flooding in downtown Charleston, South Carolina.

(Via Diane Koehler) pic.twitter.com/lSVhLYZrsT

— NBC News (@NBCNews) September 11, 2017

Charleston, South Carolina pic.twitter.com/ZG2o5Nnulj

— Southeast Pics (@SouthEastPics) September 11, 2017

Charleston outside Roper Hospital pic.twitter.com/eAm4p4i2eA

— Guitar mama (@sizzelita) September 11, 2017

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Daimler Hints That Electric-Vehicle Sales Would Collapse Without Subsidies

September 11, 2017 Tyler Durden 0

Automakers in the US and Europe that have dedicated vast resources to developing electric or hybrid vehicles are slowly waking up to an uncomfortable reality: The market for electric vehicles in the West would simply not exist without subsidies.

Even with the generous tax credits and rebates, received more often than not by wealthy buyers who treat their Teslas like expensive playthings, sales of these vehicles have lagged expectations at every turn. And now one German car maker is proving that effective state sponsorship of the EV industry still isn’t enough for auto manufacturers to hit lofty sales targets.

To wit, German carmaker Daimler told investors Monday that it would be saving 4 billion euros ($4.8 billion) by 2025 to help offset the lower profitability of electric cars, which it now believes will earn only half the profit margins of traditional IC vehicles. According to Reuters, the company’s Mercedes-Benz brand is preparing to launch its “EQ” electric car, which shares some characteristics of the Mercedes-Benz GLC, a model that sells at a rate of around 1,000 cars a day. Even if the EQ proves popular, Daimler told investors that it expects to take a hit on profits, at least initially.

You heard that right: On top of the generous subsidies that European governments extend to consumers, Daimler is effectively offering a discount on the sticker price as an added enticement to meet its optimistic sales goals.

“In the beginning of the cycle we believe that we will have to face a significantly lower margin, for some vehicles half of the margin of the vehicles they replace,” Frank Lindenberg, Vice President of Finance and Controlling at Mercedes-Benz Cars, said at Daimler’s investor day.

The desire to goose sales isn’t surprising: As some readers may recall, Obama famously predicted that there would be one million electric vehicles on US roads by 2015. To date, electric vehicles in circulation in the US number 500,000. Expectations in Europe have also fallen short.

While many European governments offer electric vehicle owners subsidies through various tax exemptions, the US has since 2010 offered buyers of qualified plug-in electric-drive vehicles a federal tax credit of up to $7,500. These credits are available for the first 200,000 customers of each auto company producing eligible vehicles. To date, Tesla has sold nearly 100,000 vehicles, which would put the company near the halfway point of its 200,000 federal tax credit, according to a report by Edmunds published last spring.

To find confirmation of just how important tax subsidies are to boosting sales of electric vehicles, look no further than a batch of European Automobile Manufacturers Association sales data released back in June…
As we noted at the time, sales of Electrically Chargeable Vehicles (which include plug-in hybrids) in Q1 of 2017 were brisk across much of Europe: they rose by 80% Y/Y in eco-friendly Sweden, 78% in Germany, just over 40% in Belgium and grew by roughly 30% across the European Union.

But there was one notable exception: Sales in Denmark cratered by over 60% for one simple reason: the government phased out taxpayer subsidies.

The Denmark case study is emblematic of where the tech/cost curve for clean energy vehicles currently stands. Despite the lofty aspirations of “green” pioneers, rescuing the planet from fossil fuels is, simply put, economically unfeasible. The data also show why Trump’s recent withdrawal from the Paris Climate Treaty is nothing short of a business-model death threat for Tesla and other OEMs that have ventured into the electric space. As Elon Musk probably knows all too well, the results confirm that “clean-energy vehicles aren’t attractive enough to compete without some form of taxpayer-backed subsidy.”

But costs aside, there’s another reason why – despite Elon’s plans for a more-affordable Tesla – electric vehicles are still years away from widespread adoption: The recharging process remains unrealistically time-intensive. The idea that hundreds of thousands of electric-car users would queue up to spend 30-45 minutes each at a recharging port is ludicrous – imagine if you had to wait that long to grab a burger at McDonald’s? And what if we told you there was a Wendy’s across the street that’d serve you that same burger in under five minutes. Which restaurant would you patronize?

Leaving aside the economic absurdity of electric cars – the least expensive of them cost more than $30,000 (heavily subsidized, the true cost is much higher), we’d wager that most Americans simply don’t have an extra half hour during their morning commute to wait for their car to charge. Hell, even a 15-minute wait would be unacceptable. Perhaps if carmakers could build a battery that could power a car for 600 miles before needing a charge, consumers might find that to be a suitable offset. Until then, spending an amount of time equivalent to watching one episode of the Sopranos waiting for your electric car to charge simply isn’t feasible for most commuters.
 

Read the the Edmunds report in full below:

EV Report April17 by zerohedge on Scribd

 

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Septembergeddon? 27 Major Disasters Have Already Happened So Far This Month

September 11, 2017 Tyler Durden 0

Authored by Michael Snyder via The Economic Collapse blog,
Two major hurricanes, unprecedented earthquake swarms, and wildfires roaring out of control all over the northwest United States – what else will go wrong next?

When I originally pointed…

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