Experts predicted a wheat shortage after Russia invaded Ukraine. Why didn't it happen?



Michelle Cheng
Thu, February 23, 2023 

When Russia invaded Ukraine in February of last year, experts at various outlets warned shipments of wheat could be cut off, which could spur shortages of the grain. The shortages would then lead to higher prices for pantry staples, from flour to pasta to bread. Together, Russia and Ukraine export more than a quarter of the world’s wheat.

Most wheat is imported by countries with limited production capabilities, and the largest growth markets for wheat imports are North and sub-Saharan Africa, the Middle East, and Southeast Asia, according to the US Department of Agriculture (USDA).

But the prediction of a global wheat shortage did not come to full fruition. Ukraine harvested 20 million tons of wheat last year, which was about 25% below the average level. The decline in wheat exports from Ukraine was balanced out by an increase in production elsewhere, said Monika Tothova, an economist at the United Nations Food and Agriculture Organization (FAO). The total wheat production in 2022 increased globally due to higher exports from countries like Canada and Russia, which had a few years of above-average production.

In addition, wheat shipments made their way out of Ukraine. Under the July agreement, the resumption of Ukrainian grain exports via the Black Sea allowed the shipments of commercial food exports from three Ukrainian ports. The United Nations (UN) estimates that the parties’ decision in November to extend the agreement contributed to a 2.8% drop in global wheat prices. Negotiations will start this week on extending the agreement.
How the invasion of Ukraine led to fears of a global wheat shortage

When the war broke out, it wasn’t clear how wheat shipments would reach the growth markets, said Tothova. So wheat prices skyrocketed, which creates problems for countries that depend on imports. (In fact, wheat prices were rising even before the war due to pandemic-related supply chain snags and extreme weather.) To date, wheat prices have dropped from their highs but remain elevated. “Globally you do not have shortages, it doesn’t mean, however, that there are no problems on a country level,” she said.

datawrapper-chart-8s04Z

Several of the wheat import-dependent countries, including Congo, Ethiopia, and Sudan, face a hunger crisis. Some countries also have certain economic problems, including experiencing high energy prices (though prices are falling) or having spent a lot of resources on the covid-19 pandemic, said Tothova. At the end of last year, the US dollar strengthened, boosting the cost to these countries of commodities denominated in dollars. These were all factors affecting how much wheat the countries could afford to import, she said.

This year could be a different story. While Ukrainian farmers was able to plant the wheat before last year’s harvest, they don’t have all their usual resources, she said.
How will wheat production fare in the ongoing war?

For one, Ukrainian farmers didn’t have much liquidity, constraining how much farmers spent on inputs, such as fertilizer, said Tothova.

With the lands still contaminated with mines, and rail lines and roads in rough shape, production will still be well below average. The planting of winter wheat for the harvest in July 2023 was 40% below the 2022 level, according to estimates by the UN’s Food and Agriculture Organization (FAO).

Still, wheat producers in Ukraine have gained confidence they will be able to export their product, said Tim Luginsland, Wells Fargo Agri-Food Institute sector manager, in an email. “So they will plant as much as they can.” He added this may be the year the US can increase its wheat exports if the US experiences normal precipitation.
The Russia-Ukraine war’s effect on global food insecurity

The war is one of the many factors contributing to worsening global food insecurity. East Africa, for instance, continues to experience years-long droughts in addition to political instability. Prior to the outbreak of the war in Ukraine, the number of undernourished in 2022 was 733.9 million people, according to FAO estimates. Based on new baseline projections in an environment of higher prices, that number increased by about 10 million, Tothova said. “The international prices, on average, for a number of reasons, including the ripple effects of the war in Ukraine, are making the situation worse,” she said.

“The world is functioning in this very interconnected manner,” she said, pointing to how the war contributed to higher energy prices, which drove up prices globally, which impacted interest rates. But, when it comes to agriculture, the biggest unknown tends to be weather, particularly, as weather events have become more extreme.

Quartz

WAR? WHAT WAR?

Indian PM Modi urges G20 to focus on unsustainable debt


Thu, February 23, 2023 

MUMBAI (Reuters) -The financial viability of many countries is being threatened by unsustainable debt, India's Prime Minister Narendra Modi said on Friday, as he called for the Group of 20 (G20) to focus on the world's most vulnerable citizens.

Trust in international financial institutions has eroded, partly because the lenders had been slow to reform themselves, Modi said in a video message at the beginning of a two-day meeting of G20 finance ministers and central bank governors.

"Food and energy security have become major concerns across the world. Even the financial viability of many countries is threatened by unsustainable debt levels," Modi said.

The meeting at a hill resort on the outskirts of the tech hub of Bengaluru is the first major event of India's G20 presidency and coincided with the first anniversary of Russia's invasion of Ukraine, which Modi alluded to.

"We are also witnessing rising geo-political tensions in different parts of the world. There are disruptions in global supply chains. Many societies are suffering due to rising prices," Modi said in his address to delegates.

India's presidency of the bloc comes as neighbouring South Asian countries Sri Lanka, Bangladesh and Pakistan have been seeking bailouts from the International Monetary Fund (IMF) due to an economic slowdown caused by the COVID-19 pandemic and the Ukraine conflict.

Reuters reported last week that India is drafting a proposal for G20 countries to help debtor nations by asking lenders, including China, the world's largest sovereign creditor, to take a large haircut, or accept losses, on loans.

(Reporting by Swati Bhat and Shilpa Jamkhandikar; editing by Sudipto Ganguly, Robert Birsel)

Modi urges G20 finance leaders to focus on 'most vulnerable'


 Indian Prime Minister Narendra Modi addresses media on the opening day of the Parliament's budget session, in New Delhi, India, Jan. 31, 2023. Policymakers of the Group of 20 leading economies should focus on helping the world's most vulnerable people, Prime Minister Narendra Modi said Friday, Feb. 24, 2023 as top-level financial talks kicked off in the Indian technology hub of Bengaluru.

 (AP Photo/Manish Swarup, File) 


SIBI ARASU
Thu, February 23, 2023 

BENGALURU, India (AP) — Policymakers of the Group of 20 leading economies should focus on helping the world's most vulnerable people, Prime Minister Narendra Modi said Friday as top-level financial talks kicked off in the Indian technology hub of Bengaluru.

“You represent the leadership of global finance and economy at a time when the world is facing serious economic difficulties," Modi said in a video address to the finance ministers, central bank governors and other leaders attending the meetings, which wrap up Saturday.

“It is up to you, the custodians of the leading economies and market systems ... to bring back stability, confidence and growth to the global economy," he said.

As countries deal with slew of challenges in the aftermath of the pandemic, including unsustainable debt, conflict, inflation and eroding trust in international financial institutions, Modi said, “I urge you to focus on the most vulnerable people in the world."

The meetings in Bengaluru are due to touch on a wide range of issues including digital currencies and payments, reform of institutions like the World Bank, climate change and financial inclusion.

Multiple meetings between various leaders were also scheduled, including talks between U.S. and British officials and meetings of India’s finance minister, Nirmala Sitharaman, with her counterparts from France and Brazil.

As is usually the case, broader issues such as the war in Ukraine are overshadowing the talks.

On Thursday, U.S. Treasury Secretary Janet Yellen reaffirmed she would push for stronger sanctions against Russia for its invasion of Ukraine and better enforcement of restrictions meant to hinder Moscow's war effort.

The G-20 meetings offer a chance for leaders to consider how to coordinate their policies: many central banks including the U.S. Federal Reserve have been raising interest rates sharply to try to rein in decades-high inflation brought on by various factors including the war and rebounding demand for travel, goods and services following the COVID-19 pandemic.

With increases in income lagging far behind, rising costs for food, housing, fuel and fertilizer impose huge burdens, especially on the poor and in developing nations, where debt burdens have surged both at the national and household levels.

As the G-20 host this year, India is taking the opportunity to showcase its ascent as an economic power.

Modi suggested the gathering could “draw hope from the vibrant Indian economy," which is forecast to grow at a more than 6% annual pace this year, making it one of the fastest growing in the world. He also pointed to the country’s digital payments technology as a model to be emulated.

North Korean media blames U.S., allies for Ukraine war ahead of invasion anniversary


Aftermath of a Russian military strike in Stepnohirsk

Thu, February 23, 2023
By Josh Smith

SEOUL (Reuters) - North Korean state media marked the first anniversary of Russia's invasion of Ukraine by blaming the crisis on NATO and calling America's involvement a "trail to self-destruction."

In a commentary carried by state news agency KCNA on Thursday on the eve of the Feb. 24 anniversary, international affairs critic Kim Yoo-chul said the conflict in Ukraine is the "inevitable product of coercion and hegemony" by the United States and its allies.

The Ukraine war, the biggest land conflict in Europe since World War Two, has displaced millions, left Ukrainian cities, towns and villages in ruins and disrupted the global economy.

North Korea has forged closed ties to Russia since the war began, publicly supporting Moscow in statements as well as at the United Nations.

"If Ukraine had not blindly taken part in the U.S. policy of anti-Russian confrontation, if it had abandoned the dirty demons of the United States and promoted reconciliation and unity with its neighbours, the situation would not have reached the point where it is as bad as it is now," Kim wrote.

"The current situation in Ukraine once again proves that there can be no peace in the world at any time unless the United States' policy of force, tyranny, and greedy aggression... is ended."

The Kremlin says it regards NATO, which could soon expand to include Sweden and Finland, as an existential threat to Russia.

The United States has accused North Korea of providing weapons to Russia, which both Moscow and Pyongyang have denied.

GOOD FOR HER

Transgender disc golf athlete sues after being told she cannot compete in California event


Professional Disc Golf Association

Sam Stanton
Thu, February 23, 2023 at 11:11 AM MST·3 min read

A leading transgender disc golf athlete is suing the Professional Disc Golf Association, alleging that the group is preventing her from participating in a Stockton competition in May and seeking an injunction to prevent the group from doing business in California “as long as it continues to violate the rights of Plaintiff and other transgender women.”

The lawsuit, filed Wednesday in Sacramento federal court on behalf of disc golf athlete Natalie Ryan, says the new policy violates California’s Unruh Civil Rights Act against discrimination and has caused her to suffer “shame, humiliation, mental suffering, shock, embarrassment, intimidation” and other injuries.

At issue is a new policy adopted by the disc golf association and co-defendant Disc Golf Pro Tour that the lawsuit says requires any transgender woman “to have undergone gender-affirming treatment before the age of 12 years-old in order to compete in the female professional open divisions of its elite events.”

Ryan, a Virginia woman who has competed as a woman since March 2019 and is currently the 9th-ranked player on the disc golf tour, says in the lawsuit that she was notified in a Feb. 7 email that she was ineligible to compete.

“Plaintiff has felt like a female since birth and in January of 2018 had gender-affirming surgery,” according to the lawsuit, filed by Laguna Beach attorney Brian Sciacca. “Plaintiff is recognized under California law as a woman.”

The new policy was adopted in November after Ryan had competed as a woman in 60 PDGA-sanctioned events, the lawsuit says. The disc golf’s player information page for Ryan says she has 21 career wins and has earned $41,662 in prizes.

The disc golf association, headquartered in Appling, Georgia, declined to comment Thursday on pending litigation.

But the lawsuit likely did not come as a surprise.

Ryan launched a Gofundme effort in December aiming to raise $20,000 to help her with legal costs for her lawsuit and, as of Thursday, the account had raised $12,795.

Competition by transgender athletes has sparked protests and petition drives nationwide by groups insisting some athletes have an unfair advantage, and the issue has spilled over into political campaigns.

Disc golf essentially is played like golf using a Frisbee or other plastic flying disc aimed at a target such as a metal basket. 

There are at least five courses in the Sacramento area.

Ryan wrote on her Gofundme page that her success stems from the fact that “I have always been and will always remain an incredibly dedicated athlete.”

“I have participated in sports since I was 7, and I played disc golf for five years at the time of writing this; if I had an advantage in this sport, my stats and my play would be better,” Ryan wrote. “The reality is that I’m not all that great, but I’m good enough to win and that alone scared people into believing I was some monster.

“Some of my fellow competitors decided they wouldn’t work on their games and improve themselves but instead tear me down because my game was complete.”

Pope nationalizes Vatican assets, property in new reform


Pope Francis arrives for his weekly general audience in the Pope Paul VI hall at the Vatican, Wednesday, Feb. 22, 2023. 

(AP Photo/Andrew Medichini) 

Thu, February 23, 2023

ROME (AP) — Pope Francis has essentially nationalized all assets and property owned by Vatican departments and affiliated institutions, declaring them to be sovereign patrimony owned by the Holy See and not any individual or office.

The action outlined in a new law published Thursday marks Francis' latest initiative to centralize Vatican assets so they can be managed properly, following years of mismanagement that led to huge losses and, prosecutors allege, criminal wrongdoing.

Francis previously stripped the Vatican’s secretariat of state of its 600 billion-euro ($635 billion) portfolio and ordered the assets transferred to the Vatican’s patrimony office following a scandal involving a 350 million-euro investment in a London property.

Vatican prosecutors have charged 10 people, including a cardinal, of defrauding the Holy See of tens of millions of euros through the London venture.

The new law makes clear that the Holy See owns any asset, security or property owned or acquired by a Vatican office or affiliated institution. This “ecclesiastic public property” is “entrusted” to individual departments to use but is destined for the universal needs of the church to fulfill its mission, the law states.

In previous stages of Francis’ financial reforms, the Vatican ordered all Vatican offices to submit to standardized annual budgeting and accounting measures. Individual offices, or congregations, were allowed to operate in financial silos before then.

The pope also centralized and overhauled the Vatican's investment strategy to ban speculative investments and to prioritize prudent investing in industries that promote the common good.

ICYMI

Why are fossil fuels bad for the environment? 

Here's what they are and how they impact our environment.



Clare Mulroy, USA TODAY
Thu, February 23, 2023 

Over two-thirds of American adults believe the U.S. should be taking steps to become carbon neutral by 2050, a 2022 Pew Research study found.

The United States is operating on a 10-year timeline to reduce greenhouse gas pollution by 50-52%. By 2035, the Biden administration’s goal is to create a power sector free of carbon pollution and to reach net zero emissions before or by 2050.

Carbon neutrality means balancing carbon dioxide by releasing no more into the atmosphere than is removed. Net zero means cutting greenhouse gas emissions as close to zero as possible.

Here’s why the world is moving away from fossil fuels:

Why are fossil fuels bad?

When fossil fuels are burned to produce energy for electricity, heat and transportation, they release greenhouse gases like carbon dioxide, which traps heat in the atmosphere.

This increased heat causes the surface temperature of the Earth to rise, which gives way to extreme weather, biodiversity loss, worsened health and rising sea levels, to give a few examples.

Nearly three-fourths of human-caused emissions over the past two decades came from burning fossil fuels, the Department of Energy reports.

Burning fossil fuels also emits harmful pollutants like sulfur dioxide, ozone, nitrogen oxides and soot, which can cause health problems like asthma, bronchitis and lung cancer.

Taking an 'aggressive' step: Hawaii is closing its only coal power plant

Climate change's impact on children: Black and Hispanic children suffer more from asthma

What are fossil fuels?

Fossil fuels are extracted from decomposed plant and animal matter. This fossilized material turns into coal, oil and natural gas. According to National Geographic, coal is found in sedimentary rock deposits, oil comes from a solid material between layers of sedimentary rock and natural gas is found in pockets above oil deposits.

These fossil fuels contain carbon and hydrogen and, when burned, release energy that is used to light up the world with electricity, heat homes and businesses, fuel industrial processes and power vehicles.

Fossil fuels are a nonrenewable resource because they formed during the Prehistoric Period.   THIS IS QUESTIONABLE SEE ABIOTIC OIL

Why do we still use fossil fuel?

Fossil fuels produce cheap and reliable energy. They supply about 80% of the world’s energy, the Environmental Energy Study Institute reports. Almost half of the U.S.’ energy-related CO2 emissions come from oil, with 36% coming from natural gas and another 19% from coal.

Fossil fuels came into widespread use in the industrial era, and not having to rely on burning biomass for energy allowed for innovation. Oil became the most popular energy source because it was efficient in powering the transportation industry. Fossil fuels have a greater energy density, which means a smaller volume of them are needed to get the job done, the Brookings Institution reports.

Fossil fuels are known for their reliability because they're not dependent on certain weather conditions to be burned. They’ve been heavily subsidized by the government because of how ingrained they are in global energy practices, so they remain at a low cost, according to SolarReviews.

What would happen if we stopped using fossil fuels?

According to the National Aeronautics and Space Administration, the carbon dioxide released from burning fossil fuels stays in the atmosphere for anywhere between 300 to 1,000 years.

Moving away from the fossil fuel industry would mean shifting to renewable energy like solar, wind, ocean and geothermal energy, as well as hydropower. Renewable energy comes from natural sources and is constantly replenished.

Still, ending the use of fossil fuels use will not remove the CO2 and greenhouse gas emissions already in our atmosphere.

Carbon removal was introduced as one method to combat this – it's a process that removes carbon dioxide from the atmosphere and stores it in trees, plants, soil, rocks or the ocean. According to the World Resource Institute, using a combination of natural strategies and high-tech strategies "would provide the most cumulative carbon removal at the lowest risk." This could be tree restoration, soil management, direct air capture, mineralization, ocean-based carbon removal, enhanced root crops or bioenergy with carbon capture and storage.

"Even with rapid investment in emission reductions, the United States could need to remove about 2 gigatons of CO2 per year by midcentury to reach net-zero — that's about 30% of U.S. 2019 greenhouse gas emissions," WRI writes.

New UN report: World is 'heading in the wrong direction' on climate change

What is storm surge?: Explaining a hurricane's deadliest and most destructive threat
Dig deeper

DEFINITIONS: Is climate change the same thing as global warming? Definitions explained.


CAUSES: Why scientists say humans are to blame.


EFFECTS: What are the effects of climate change? How they disrupt our daily life, fuel disasters.

This article originally appeared on USA TODAY: Why is fossil fuel bad? What it is and how it impacts our environment.

China says U.S. refused to share information on downed Chinese balloon




Fri, February 24, 2023 

BEIJING (Reuters) - China's foreign ministry said on Friday that the United States had refused to reply to a Chinese request for information on the balloon that it had shot downed off the coast of South Carolina earlier this month.

The Chinese balloon, which Beijing denies was a government spy vessel, spent a week flying over the United States and Canada before President Joe Biden ordered it to be shot down. The episode strained further ties between Washington and Beijing, leading America's top diplomat to postpone a trip to China.

"The United States, from the recovery of the (balloon) remains to the analysis of the (balloon) debris, has completely acted on its own and in a surreptitious manner," the foreign ministry's spokesperson Wang Wenbin told a regular briefing.

"China early on through protected consular channels clearly demanded the United States notify (China) on the progress (of recovery of the balloon), but the United States refused to respond."

Wang's comments were made in response to a question about an ongoing U.S. investigation into the balloon.

China said that the alleged spy balloon is a civilian airship used for meteorological purposes, and that it was accidentally blown off course into U.S. airspace.

The United States has said a Federal Bureau of Investigation Laboratory in Virginia is analysing debris from the balloon for "counterintelligence exploitation."

Both the State Department and the Pentagon have said they had reached out to their Chinese counterparts after the suspected spy balloon was shot down on Feb. 4, in an attempt to keep lines of communication open.

The Chinese defence ministry later said it declined a proposed phone call with the Pentagon because the United States had not created the "appropriate atmosphere".

(Reporting by Eduardo Baptista; Editing by Simon Cameron-Moore)

How much money did India save in a year by buying Russian fuel?

Niharika Sharma
Fri, February 24, 2023 

Image: Stringer India (Reuters)

The West-led sanctions on Russia’s oil trade following the Ukraine invasion benefited India the most. In less than a year, the country has saved an estimated $4 billion (30,000 crore rupees) by importing Russian crude oil.

The amount is possibly much higher. For instance, in May 2022, supplies from Russia were priced at $16 cheaper than the average Indian imported crude oil barrel of $110. By then, Russia had already reduced $30 on every barrel sold to India, Quartz had reported.

India has subsequently bought Russian oil well below the $60-a-barrel cap imposed by the West.

“For some deals this month, the price for Urals (Russia’s flagship crude) in Indian ports, including insurance and delivery by ship, has fallen to around minus $12-$15 per barrel versus a monthly average of dated Brent, down from a discount of $5-$8 per barrel in October and $10-$11 in November,” Reuters reported on Dec. 14, 2022, citing unnamed sources.
India is among Russia’s topmost buyer

Russia changed the target market for its oil supplies to Asia after the US and Europe Union imposed sanctions after its invasion of Ukraine. Till then, Europe was its largest market.

Having ignored the West’s concerns, India now plays a significant role in keeping Russia’s oil balance sheet afloat. The country depends on imports to meet 85% of its petroleum needs. Private players like Reliance Industries and Nayara Energy account for more than half of its total inbound shipments.

This year, Indian refiners cumulatively imported around 1.3 million barrels every day during January 1-15. Private firms accounted for 60% of this, energy intelligence firm Vortexa estimated.
datawrapper-chart-KlTTP

Russia’s increasing oil share in the Indian market

By June 2022, Russia’s share in India’s oil imports bucket had risen from a mere 1% in February 2022—before the Ukraine war—to 18%. Soon after, Russia became India’s second-largest crude oil supplier after Iraq.

The constant lowering of prices compelled Iraq also to follow suit, although that didn’t stop Russia from becoming India’s top supplier.

India stood its ground in the face of criticism from the West over this association.

“Russia has been a steady and time-tested partner. Any objective evaluation of our relationship over many decades would confirm that it has actually served both our countries very, very well,” foreign minister S Jaishankar said in Russia in November 2022, confirming a continuance of policy.

Quartz

Crypto Regulatory Initiatives Show SEC’s Dominance Among US Regulators: JPMorgan

Will Canny
Thu, February 23, 2023 

Jesse Hamilton


Join the most important conversation in crypto and web3! Secure your seat today

Recent regulatory initiatives have shown the Securities and Exchange Commission’s (SEC) dominant position in the U.S. in regulating the digital assets space, JPMorgan (JPM) said in a research report last week.

Its actions have also shown the SEC’s bias in viewing most crypto, with maybe bitcoin (BTC) as the only exception, as securities, the report said. It noted that SEC Chair Gary Gensler started pushing back against implementing special rules for the crypto industry in September, arguing that most cryptocurrencies should be classed as securities and thus be regulated under existing securities laws.

“Given the above it should not come as a surprise that the SEC looks at the offering of a staking service as being similar to offering any other type of security,” the note said. This opens the way for other firms offering staking services to have to be registered as a securities platform with the SEC, the report added.

The bank predicted more regulatory actions on stablecoin issuers, custody and protection of investors’ digital assets, and on the unbundling of broker/trader/lending/clearing/custody activities.

It also expects mandated regular disclosure, reporting and auditing of reserves, assets and liabilities across major crypto entities, analysts led by Nikolaos Panigirtzoglou wrote. These regulations will lead to “convergence of the crypto ecosystem towards the traditional financial system over time,” he added.

“Staking business should shift more towards direct staking for institutional investors and more towards decentralized (DeFi staking) alternatives for retail investors,” the note said. DeFi is an umbrella term for a variety of financial applications carried out on a blockchain.

Ether (ETH) will likely see additional selling pressure on Ethereum following the forthcoming Shanghai upgrade, as crypto exchange Kraken has 1.2 million ETH staked on the network, a significant amount of which is owned by its U.S. clients. Adding the 1 million ether from staking rewards that could be withdrawn immediately after the upgrade, the downside risk to ether becomes even more significant, the note added.

Read more: Bernstein: SEC Tightening of Crypto Regulations Is Not an Existential Threat.

Crypto Long & Short: Washington Plays Tennis With Crypto


Glenn Williams, Nick Baker, Jodie Gunzberg
Wed, February 22, 2023 

This week, Glenn Williams Jr. examines what politicians are saying about crypto regulation in Washington, D.C.

Then, Jodie Gunzberg, managing director of CoinDesk Indices, talks about the crypto sectors that continue to thrive despite the regulatory crackdown.
– Nick Baker

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

A Descent Into Partisanship for Digital Assets Won’t Benefit Anyone

I took the time last week to tune into the Senate hearing on cryptocurrencies titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.” Quarterbacked by Democrat Sherrod Brown and Republican Tim Scott, it focused on the need for increased regulation within the digital asset space, punctuated by recent industry collapses.

At times I question the importance of even monitoring these events. It’s getting to the point where if you’ve heard one, you’ve heard them all. One concern, however, is whether the regulation of digital assets is drifting more and more into partisan waters, which I think is negative for all involved.

If the discussion around cryptocurrencies devolves into a scenario where one’s stance can be accurately predicted by which side of the aisle they sit on, it will have sunk to a level of simplistic discourse; a new technology like crypto deserves better than that. For that reason I often find political discussions around crypto as more akin to political theater.

But if you’re going to operate within a sector, it makes sense to have an idea of which way the regulatory winds are blowing. It certainly makes sense to challenge your own ideas with ones that may be counter to your own. I would encourage all to watch it, even at 1.25x speed – which I may or may not have done.

(Highcharts.com)

Chairman Brown’s testimony appeared to target cryptocurrencies in general. The overarching theme from my perspective is that the sector itself is not just vulnerable to fraud, but intrinsically emblematic of it. My guess is that if I sat down with him and discussed cryptocurrencies, it would largely revolve around its usage in criminal activity and the “greater fool theory” – the idea that the only value crypto has to the owner is being able to sell it to a bigger fool in the future at a higher price. It’s worth noting, however, that his testimony concluded with a list of pre-existing financial regulatory methods. Examining where crypto fits within an already existing framework at least implies that a place is seen for it.

Ranking member Scott’s testimony seemed to center around the failure of current regulators, with Securities and Exchange Commission Chairman Gary Gensler singled out specifically. An acknowledgement that financial innovation is an engine for growth was stated, along with an emphasis on the need for existing regulation to be conducted in a timely and appropriate manner. My guess is that if I sat down with him and discussed cryptocurrencies, he’d ask me if I knew where Gary Gensler was.

From there, testimony was provided by Lee Reiners of the Duke Financial Economics Center, Professor Linda Jeng of the Georgetown Institute of International Economic Law and Professor Yesha Yadav of the Vanderbilt University Law School. Each provided their views on cryptocurrencies, discussing the harnessing of innovation, development of a self-regulatory organization (SRO) and the banning of cryptocurrencies outright. I think some of their suggestions warrant consideration, while other suggestions seem openly hostile to the asset class itself.

For example, a focus on clear disclosures by crypto exchanges makes perfect sense to me. A well-informed investor is prone to making decisions based on an underlying idea they believe to be true. It doesn’t guarantee that the idea is right, but at least it’s rooted in something.

The prohibition of the commingling of funds is also something that makes sense. I can’t think of a good reason why customer funds and firm funds shouldn’t be separated. It’s been the case for years within traditional finance, and for good reason.

The creation of self-regulatory organizations (SRO) within crypto rang as a viable option to explore as well. What also stood out is that it was presented as a practical (though not perfect) way to improve the current regulatory framework in short order. SROs exist within traditional finance, so a blueprint for implementing them already exists.

I take issue with the notion that bitcoin being 14 years old means it’s not a “new” asset class. While bitcoin’s genesis block was mined in 2009, a significant amount of trading activity has occurred within the last three to four years.

Moreover, it strikes me as incongruent to state bitcoin’s existence since 2009, but only noting its performance as an asset since 2021. The fall from $69,000 to $21,000 should absolutely be stated. But its rise in price from less than 10 cents to $21,000 since 2009 should be mentioned as well if the objective is to be balanced.

Still, what was most encouraging about the witness testimony is that, agree or disagree, I’m not able to automatically determine their political affiliation based on their recommendations. I don’t know if I can say the same for the people asking the questions, however.

There’s a cadence that is beginning to present itself in these hearings that mirrors that of a tennis match – one where politicians alternate back and forth between pro-crypto and anti-crypto statements, directing the bulk of their questions to whichever witness aligns most with their political party’s’ decided stance.

I sincerely hope that this does not become the norm. Extreme partisanship would be detrimental to all parties involved, because it will likely remove the nuance necessary to allow for technical innovation, while protecting individual investors from bad actors.

Ultimately, investor protection, financial inclusion and innovation are all necessary elements for healthy growth within the digital asset space. As members of the U.S. Congress work to achieve these goals, I hope that they view them more from the lens of individuals than as members of a political party.

– Glenn C. Williams Jr., CMT

Bitcoin, DeFi and Computing Thrive Amid Crypto Crackdown

After bitcoin’s (BTC) best January since 2015, it has retreated because the U.S. Securities and Exchange Commission is cracking down on crypto, and inflation was slightly hotter than expected. Despite these challenges, crypto continues to dramatically outperform traditional asset classes.

The CoinDesk Market Index (CMI), the broad measure of crypto returns, surged 6.5% in February through Feb. 16. Stocks haven’t done nearly as well, with the S&P 500 up only 0.5%. The Bloomberg U.S. Aggregate Bond Index fell 2.2%, while the Bloomberg Commodity Index lost 3.9%.

A key reason why crypto is doing so well: Bitcoin is on a tear because the Ordinals Protocol essentially brings non-fungible tokens (NFT) to that blockchain. “This has demonstrated a new, high-value use case for the longest-running cryptocurrency chain,” CoinDesk Chief Content Officer Michael J. Casey recently wrote.

(CoinDesk Indices. Bloomberg. Data ending 2/16/2023)

The big gain in the CoinDesk Bitcoin Price Index (XBX) shows the enthusiasm. But many other digital assets performed even better. There are 158 total digital assets in the CMI, and 109 of them did better than bitcoin. These outperforming assets were concentrated in the CoinDesk Digital Asset Classification Standard’s (DACS) DeFi and Computing sectors.

Although they make up only 2% and 1.4%, respectively, of the CMI’s weight, their gains stand out. Month to date, Computing is up 23.5%, giving it a gain of 91.5% so far this year. DeFi is up 12.4% in February and nearly 66% in 2023. Computing has been driven by excitement over artificial intelligence (AI), with ChatGPT and Bing dominating the conversation. DeFi is the sector many are looking to for greater security and infrastructure.

Although Computing and DeFi are relatively small by market cap, there are many constituents in each sector: Computing has 23 assets and DeFi has 39. So opportunities for big gains (alpha, for you pros) are plentiful.

(CoinDesk Indices. Data ending 2/16/2023)

However, bitcoin is still in high demand as the most established, largest, most-liquid asset with the longest track record and deepest derivatives market. So, in order to mix bitcoin with some of these potentially high performers, some market participants prefer the CoinDesk Large Cap Select Index (DLCS), which is similar in concept to other market-cap-weighted flagship indexes to measure various asset classes.

Still, the digital asset market is in its early days, so the concentration is high currently with five assets (which are in two sectors) accounting for 70% of the index’s market capitalization. Therefore, some prefer a broader sector exposure through the CoinDesk Market Select Index (CMIS) that spans five sectors with at least five market-cap-weighted assets from each sector.

– Jodie Gunzberg, CFA, managing director of CoinDesk Indices
Takeaways

From CoinDesk’s Nick Baker, here’s some recent news worth reading:

MT. GOX: Once upon a time, in the early days of crypto, there was an exchange called Mt. Gox (which stood for Magic: The Gathering Online eXchange, just to clue you into the vibe). The business collapsed spectacularly because of a 2014 hack. The ensuing bankruptcy process has dragged on and on, but there was important news last week that may signal the end is in sight: The two largest creditors picked the repayment option that could allay fears the restructuring will tank the price of bitcoin (BTC).

CANADIAN CRACKDOWN: Canada is close to boosting requirements on crypto exchanges, putting it toward the front of the pack in terms of tangible action in the aftermath of FTX’s collapse. Surely, it will not be the last to do something, though.

SHANGHAI VOLATILITY: The Ethereum Merge didn’t stir up ETH prices much back in September. But there’s reason to believe that Shanghai, the Ethereum upgrade that will allow staked ETH to be unstaked, could generate volatility.


JUMP CRYPTO: Last week the Securities and Exchange Commission didn’t identify the company that made more than $1 billion from the terraUSD/luna ecosystem before it collapsed. (The unnamed company wasn’t accused of wrongdoing.) But sources told CoinDesk that it’s Jump Crypto, which declined to comment.


BRAGGING: CoinDesk journalists won one of the biggest prizes in journalism, a George Polk Award, for the scoop that led to FTX’s collapse and two explosive followups.

To hear more analysis, click here or here for CoinDesk’s “Markets Daily Crypto Roundup” podcast.

 

Nikola Stock Is Sliding. Sales Disappointed and Deliveries Fell.

By Al Root
Updated Feb. 23, 2023

Electric and hydrogen truck technology company Nikola reported fourth-quarter sales that fell far short of what Wall Street had expected.

Courtesy Nikola

Sales at Nikola NKLA –5.58% fell short of expectations by a mile, sending the stock lower despite data showing the electric and hydrogen truck technology company is still making progress in producing vehicles.

Thursday morning, Nikola (ticker: NKLA) reported an adjusted fourth-quarter loss of 37 cents a share on sales of $6.6 million. Wall Street was looking for a 43-cent loss on sales of about $32 million.

Not only were sales lower than expected, Nikola delivered only 20 of its first commercial product, the Tre battery-electric truck, to dealers in the fourth quarter. In the second quarter, when deliveries began, the figure was 48 vehicles. It was 63 in the third quarter.

Still, Nikola produced 133 Tre trucks in the quarter. That seemed at first to have satisfied investors, lifting the stock in premarket trading, but those gains evaporated. Shares finished down 5.6% at $2.20. The S&P 500SPX +0.53% and Nasdaq CompositeCOMP +0.72% gained about 0.5% and 0.7%, respectively.

Nikola “is mired in a difficult operating environment, presenting the company with a variety of challenges as it works to grow its business,” wrote Battle Road Research analyst Be Rose. He cited improving competition including the Tesla (TSLA) semitruck which recently began shipping. “Additionally, Nikola is in a bit of a bind, as it remains more than a year away from launching the Tre Fuel Cell Electric Vehicle, while its Tre BEV currently on the market lacks robust interest.”

Rose rates the shares at Sell, but doesn’t have a price target for the stock. Overall, about 38% of analysts covering Nikola stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.

For 2023, analysts are projecting a loss of about $1.25 a share on sales of $271 million. They also expect Nikola to use about $450 million in cash in 2023. Nikola finished the year with about $350 million on its balance sheet.

Coming into Thursday trading, Nikola stock was up about 8% year to date, but down about 66% over the past 12 months.

EV maker Nikola's dismal deliveries slam revenue, shares
Thu, February 23, 2023 

U.S. Nikola's logo is pictured at an event held to present CNH's new full-electric and Hydrogen fuel-cell battery trucks in partnership with U.S. Nikola event in Turin

(Reuters) -Nikola Corp missed fourth-quarter revenue targets by a wide margin on Thursday as it delivered far fewer electric trucks than it produced, dragging the company's shares 7% lower in early trading.

The automaker produced 133 trucks and delivered just 20 vehicles to dealerships in the fourth quarter as companies dialed back spending to better cope with rising costs and a looming recession.

In a spot of optimism, however, Nikola outlined plans to boost deliveries and reduce costs in 2023.

It expects to deliver between 250 and 350 Tre battery electric trucks this year, compared with 131 deliveries in 2022, and forecast at least 125 fuel-cell electric truck deliveries in the fourth quarter.

The company also plans to start installation of an automated battery pack assembly line, which it expects will deliver about $105,000 in cost savings in battery modules and packs for each Tre BEV truck by the fourth quarter of the year.

Loss-making U.S. startups such as Nikola and Lordstown Motors Corp have been battling costs associated with ramping up production as they seek to grab a share in the commercial vehicles market.

In its third-quarter results, Nikola had said it would miss its goal of delivering at least 300 semi-trucks in 2022 and declined to issue fresh forecasts. Its stock has slumped about 66% over the past 12 months.

Revenue of $6.6 million for the fourth quarter ended Dec. 31 came in below analysts' estimates of $32.1 million, according to IBES data from Refinitiv.

Net loss widened to $222.1 million from $158.9 million a year earlier.

(Reporting by Akash Sriram in Bengaluru; Editing by Devika Syamnath)

Nikola Announces Additional Hyla Branded Hydrogen Refueling Station In California

Electric-truck maker Lordstown pauses production, deliveries

Thu, February 23, 2023 


(Reuters) -Lordstown Motors Corp will temporarily stop production and deliveries of its pickup truck Endurance, of which it has only made 31 units for sale, the electric-vehicle maker said, citing performance and quality issues with some components.

Shares tumbled 11.8% to $1.08 in early trading on Thursday after the company also said it would voluntarily recall 19 vehicles delivered to customers or being used internally.

Lordstown had set a target to deliver 50 vehicles in 2022 and more in 2023 out of the planned first batch of 500 units when commercial production started in September.

The company did not make it clear when it would resume production and deliveries.

Investor Foxconn, which also manufactures the Endurance trucks, did not immediately respond to a Reuters request for comment.

Vehicles waiting for shipment and in process at the manufacturing plant will also be fixed, the company added.

The EV company said in January it expected production to be slow through its first quarter due to supply chain constraints, particularly with respect to the availability of hub motor components.

(Reporting by Chavi Mehta in Bengaluru; Editing by Sriraj Kalluvila)

Lucid sees disappointing 2023 EV production as orders drop amid weakening demand

Akash Sriram and Abhirup Roy
Wed, February 22, 2023 

 A Lucid Air electric vehicle is displayed in Scottsdale, Arizona

(Reuters) - Lucid Group Inc on Wednesday forecast 2023 production well short of analysts' expectations and reported a major drop in orders during the fourth quarter amid weakening demand, sending the electric carmaker's shares down 11% after hours.

The Newark, California-based company, which was already battling supply chain and logistics issues and struggling to deliver cars, was hit by aggressive price cuts sparked by Tesla Inc that lured consumers away from its luxury cars amid rising interest rates and soaring inflation.

"There's a lot more competition than a year ago ... a lot more EVs becoming available at lower price points than the Lucid Air vehicle," said Garrett Nelson, an analyst at CFRA Research. "There's probably a lot of frustration from customers having to wait for so long to get the vehicles they ordered."

Lucid said it expects to produce 10,000 to 14,000 luxury electric vehicles this year. Analysts on average expected the company to make 21,815 cars, according to Visible Alpha.

The company, backed by Saudi Arabia's sovereign wealth fund, Public Investment Fund, delivered 4,369 cars last year, far below the 7,180 units it produced.

"We've gotten past the major bottlenecks limiting manufacturing, but this had some impact on the demand we generated early on, and this has been exacerbated by the challenging macroeconomic environment," Lucid CEO Peter Rawlinson said on a call with analysts, after the company reported fourth-quarter revenue that missed expectations.

Price cuts by Tesla and Ford Motor Co have made it harder for rivals such as Rivian Automotive Inc and Lucid to grab share in an industry competing for shrinking consumer wallets.

Lucid said it had more than 28,000 orders as of Feb. 21, down 6,000 reservations from the third quarter, after it delivered about 1,900 vehicles and saw cancellations. That was despite Lucid's offering a discount of $7,500 on Feb. 9 for purchases of certain variants of the Air sedan before March 31.

Finance chief Sherry House said Lucid would not publish quarterly reservation numbers going ahead.

This year, the company will focus on improving production and deliveries, and will take a "vigorous and comprehensive" look at driving down operating and manufacturing costs.

House said Lucid would incur capital expenditures of between $1.5 billion and $1.75 billion in 2023. That's a 40% jump from 2022, but well below analysts' expectations of $2.24 billion.

Lucid reported a cash balance of $1.74 billion in the fourth quarter, after raising $1.52 billion in December. At the end of the third quarter, it had $1.26 billion in cash reserves.

Revenue rose to $257.7 million in the quarter ended Dec. 31 from $26.4 million a year earlier. Analysts on average had expected sales of $302.6 million, according to IBES data from Refinitiv.

The company's net loss narrowed to $472.6 million, or 28 cents per share, from a loss of $1.05 billion, or 64 cents per share, a year earlier.

Shares of Lucid fell as much 10.6% in extended trading. The stock fell 82% last year after Lucid halved its production forecast due to supply chain issues.

(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Shinjini Ganguli, David Gregorio, Lincoln Feast and Leslie Adler)

Lucid shares drop as EV maker misses 2023 delivery expectations

Rebecca Bellan
Wed, February 22, 2023 


Luxury electric vehicle maker Lucid Motors missed Wall Street estimates for fourth-quarter and full-year 2022 revenue, as well as 2023 production and delivery goals, causing the company's stock price to tumble almost 10% in after-hours trading.

That's a particularly rough outcome for a company that's been battling supply chain issues and has had to slash production targets in the past. Lucid had just been on the up after producing 7,180 vehicles last year, exceeding its own production guidance of 6,000 to 7,000 vehicles. Of those vehicles, 4,369 were delivered in 2022. When the company announced this success last month, shares popped briefly.

On Wednesday, Lucid set 2023 annual production targets of 10,000 to 14,000, which is roughly half of the 20,000 to 22,000 deliveries analysts had expected for the year.

Lucid's revenue also fell short of expectations. In the fourth quarter, the company reported revenue of $257.7 million, which is quite shy of analyst expectations of $302.61 million, per Yahoo Finance data. Analysts had expected $661 million for full-year revenue, but Lucid delivered $608.2 million.

Lucid ended the year with about $4.9 billion in total liquidity, which the company says will fund operations into the first quarter of 2024. That includes $1.7 billion in cash and cash equivalents. However, the company's free cash flow is -$938,403.

Lucid burnt a lot of money in 2022 -- the company's loss from operations in Q4 was $749.7 million and in 2022 was $2.6 billion.

Investors were probably also concerned about the lowered demand for the Lucid Air sedan. Lucid said it has 28,000 preorders for the Air, which is down from the 34,000 it reported in Q3. Similar to Tesla, the company recently announced a $7,500 discount for certain Air sedans to boost sales because the $87,400 car -- and that's just the base price -- doesn't qualify for the $7,500 federal EV tax credit.

Lucid noted that the 28,000 reservation number doesn't include the up to 100,000 vehicles over the next 10 years the government of Saudi Arabia has agreed to buy. The country's Public Investment Fund (PIF) holds about 62% stake in Lucid.

There has been recent speculation that the PIF would buy out the remainder of Lucid and take it private, but Lucid wouldn't confirm or deny the rumors during Wednesday's earnings call. By the way, this is the same fund that had been in talks with Tesla CEO Elon Musk to take Tesla private back in 2018. Lucid also plans to build a factory in the country with a planned annual capacity of 155,000 EVs a year.

"As we look ahead to 2023, we'll continue to focus on strong capital discipline, leaving no stone unturned for every cost optimization," said Sherry House, Lucid's chief financial officer, in a statement. "We're gearing for growth, while simultaneously taking a comprehensive look at reducing costs."

This article has been updated with information revealed during Lucid's earnings call.

Lucid earnings: Stock slides as EV-maker misses on revenue

Pras Subramanian
·Senior Reporter
Wed, February 22, 2023 

Lucid stock is sliding following the EV-maker's huge revenue miss for the quarter on deliveries that fell well short of expectations.

Lucid reported Q4 deliveries of 1,932 vehicles, missing estimates for 2,813. The company's adjusted loss per share, however, was narrower than forecast. In after hours trade on Wednesday, the stock was down as much as 9.5%.

For the quarter, Lucid reported:

Q4 Revenue: $257.7M vs $314.9M (est.)

Q4 Adjusted EPS: ($0.28) vs ($0.40) loss (est.)

Though revenue grew quarter over quarter, it was still a significant miss for the company.

Last month Lucid announced it produced 3,493 vehicles for the quarter and 7,180 for the year, topping its forecast of 6,000-7,000 vehicles for the year, however that forecast had been slashed multiple times last year. Lucid’s original forecast for 2022 had them building 20,000 vehicles for the year.

Lucid Group, Inc. (LCID)  View quote details

Lucid sees Q1 revenue of $600-$640 million, in-line with the ~$620 million estimated by analysts. Lucid also forecasts its 2023 production to be 10,000 to 14,000 vehicles.

"Last year was a challenging year for everyone, yet despite the extraordinary supply chain and logistics challenges, the team persevered with an unrelenting focus on delivering what we believe is the best luxury sedan on the market," said Lucid CEO Peter Rawlinson in a statement.

"Lucid Air is the quintessential luxury sedan, and our goal in 2023 is to amplify our sales and marketing efforts to get this amazing product into the hands of even more customers around the world."

A Lucid Air electric car with built-in Alexa is displayed in an Amazon booth during CES 2023, an annual consumer electronics trade show, in Las Vegas, Nevada, U.S. January 6, 2023. REUTERS/Steve Marcus

Lucid announced it had 28,000 preorders for the Air sedan, down from the 34,000 it reported in Q3 in a sign demand for its cars has waned among some consumers.

Earlier this month, Lucid announced its own $7,500 "credit" for certain Air sedans as a way to boost sales as its sole product doesn’t qualify for the $7,500 federal EV tax credit.

Management may address whether this incentive lifted pre-orders in the past few weeks on its call with investors.

Another big question likely to be addressed on the earnings call is the future of the company’s ownership structure, and its status as a public entity.

Lucid’s stock shot up a month ago on speculation Saudi Arabia’s Public Investment Fund (PIF) would buy out the remainder of the company it doesn’t own and take it private. The PIF’s stake in Lucid sits at approximately 65%.

The Lucid/PIF partnership goes beyond a financial one, however — last year Lucid announced it would be building a factory in Saudi Arabia, with a planned annual capacity of 155,000 EVs a year.

—

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.