Winners, Losers. West Coast Ports, East Coast Ports. European Commodity Traders. Always A Bull Market Somewhere. -- April 8, 2018

So many story lines. Not ready for prime time, but something to think about over Sunday coffee.

We will start with this one. The other day, this was my post at the "daily note" page:

April 2, 2018, T+34: Chinese - US trade war starting to ramp up. Agricultural products? California? Pork? Iowa? Both states overwhelmingly anti-Trump. Probably just coincidental. Tesla shares plummet.

Now another example. Add two more anti-Trump states to California and Iowa. Washington state and Oregon. This article from Reuters:

Escalating tensions between the United States and China have triggered a flurry of U.S. soybean purchases by European buyers, in one of the first signs that trade tariff threats lobbed between the world’s top two economies are disrupting global commodity trade flows.

News of the sales, confirmed by the U.S. Department of Agriculture on Friday, helped to underpin benchmark Chicago Board of Trade soybean prices <0> after U.S. President Donald Trump threatened to slap tariffs on an additional $100 billion of Chinese goods.

The USDA said 458,000 tonnes of U.S. soybeans were sold to undisclosed destinations, which traders and grains analysts said included EU soybean processors such as the Netherlands and Germany.

If the entire volume is confirmed to be going to the European Union, it would be the largest one-off sale to the bloc in more than 15 years.

Traders and analysts said the unusual trade flows were likely to continue in the near term, benefiting U.S. Gulf Coast shippers and likely hurting exporters in the U.S. Pacific Northwest, the No. 2 bulk grain outlet that relies heavily on Chinese demand. 

For the Pacific Northwest ports it's a double or triple whammy. The Pacific Northwest doesn't like seeing coal or oil go through their ports either; they prefer to see oil and coal go through Charleston, South Carolina, or from the ports along the Gulf coast.

Another story line, of course, is this: even if China bans US agricultural products there are plenty of other customers. Again, as stated earlier, in the big scheme of things, the trade imbalance between China and the US is huge, and markedly in China's favor. Imagine an unemployment rate of 8% in the US. Now imagine an unemployment rate of 20% in China. We've talked about this before.

And then, this, of course. China still needs the agricultural products. They have a choice: they can pay the US tariff and continue to ship directly from the US, or they can pay the spot price through a middleman/middle-country. Does one really think that the "largest one-off sale to the EU" is actually destined for Europe? Once the grain is in the cargo ship, it can sail anywhere.

As Jim Cramer likes to say: there's always a bull market somewhere. In this case, it looks like the European commodity traders have found a bull market. Buy "less expensive" grain and soybeans from the US, and re-sell it to the Chinese.

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The Tesla Page

What World Domination Looks Like

Over at twitter. It's a bit of an eye-test, but if you zoom in on the screenshots, I think you can make out the verbiage.

Note: the Tesla bulls often compare Tesla (now) with Apple when it was struggling to compete with Wintel and Microsoft, back in 1984. The Tesla bulls believe that Tesla, a technology company, will eventually do what Apple did.

Among the many, many "wrong" analogies with that picture is this: Wintel/Microsoft had a virtual monopoly. Other than Apple, there was no one competing with Microsoft. Sure, there were other "brands" -- Dell, for example -- but they all sold Wintel/Microsoft products, just packaged/configured/sold/shipped differently. But in the end, it was all Wintel with Apple, maybe getting 2% of the non-commercial /non-business market.

The automotive industry is entirely different. There are dozens of different car makers around the world -- they are not all GM or all Toyota or all Mercedes or Land Rover. And they can all build EVs. BEVs. PHEVs. ICEs. FCVs.

One word: DeLorean.