It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, July 22, 2024
RIP
Towboat Capsizes on Houston Ship Channel, Killing One Crewmember
Houston Ship Channel (file image courtesy Port of Houston)
On Friday, a small towboat capsized and sank in the Houston Ship Channel, killing one crewmember.
At about 1400 hours on Friday afternoon, the 55-foot towboat Miss Peggy capsized at a position near the Lynchburg Ferry crossing on the Houston Ship Channel, prompting a large multi-agency response. Several Good Samaritan boats were near the scene and quickly rescued four survivors from the water.
One crewmember remained missing, and the U.S. Coast Guard coordinated a search together with the Harris County Sheriff's Department and the Houston Police. Law enforcement divers helped with a subsurface search effort.
After a wide-ranging SAR operation spanning more than 30 hours, the deceased crewmember's body was recovered. The operation transitioned to salvaging the towboat.
"I'd like to thank the good Samaritans that sprang into action . . . when the incident happened. They're really the lifesavers that get the credit for saving those four mariners," Coast Guard Commander Michael Cortese told local media.
The vessel was successfully raised to the surface and righted using a large crane barge over the weekend. The cause of the casualty is under investigation, but early indications from AIS data and bystander accounts suggest that the Miss Peggy was being overtaken by a 63,000 dwt merchant bulker at the time of the casualty, and may have been involved in a collision. As of Monday, the merchant vessel in question remained moored at a coal terminal in Houston.
Miss Peggy is a 55-foot inland towboat built in 1976. Her current operator is a fleeting and shift boat company on the Houston Ship Channel.
Damen Cuts First Steel on Four Full Electric Ferries for BC Ferries
Damen Shipyards Group has celebrated a milestone moment for maritime sustainability at its Romanian yard, Damen Shipyards Galati. On 16 July, the yard cut first steel on the first two of four, fully electric Island Class Ferries that it is building for Canada-based BC Ferries. The ferries will be the first fully electric vessels to operate in the company’s fleet.
Operating with battery packs with the capacity to supply the power train with 2,000 kilowatt-hour of electricity, the vessels will carry up to 47 vehicles and 390 passengers.
Complete maritime solution As a complete maritime solutions provider, Damen will also supply BC Ferries with the required charging towers. The ferries will recharge efficiently during (dis)embarkation of passengers, using renewable electricity.
The vessels are based on Damen’s double-ended RoRo 8113 E3 model. The design features Damen’s in-house quality label E3, standing for Environmentally Friendly, Efficient in Operation and Economically Viable.
Growing Damen ferry fleet The commonality of the design offers BC Ferries a number of advantages. Amongst these is the increasing standardisation and interoperability of the fleet, which makes deployment and training of crew more efficient. The ferries will take the number of Damen vessels in the BC Ferries fleet to ten. Representing BC Ferries at the steel cutting ceremony were Project Program Manager David Tolman and Executive Director Shipbuilding Ed Hooper, who said, “These vessels represent a significant advancement in our fleet renewal efforts, aligning with our strategic vision for operational excellence and sustainability. The start of construction brings us one step closer to realising the benefits these vessels will bring to our customers and the communities that rely on us to get them where they need to go.”
Mark Vermeulen, Damen’s Managing Director Offshore & Specialised Vessels, said, “We are thankful for the trust that BC ferries has shown to Damen with this new contract for another four vessels. Damen has already built six vessels with hybrid propulsion for BC ferries. This project with full electric vessels is a step towards zero emissions ferries for the future – an achievement aligned with the sustainability goals of both BC Ferries and Damen.”
Superior travel experience BC Ferries is committed to delivering a superior travel experience while upholding its responsibility to the environment. The organisation is supporting British Columbia’s CleanBC goals and aims to reduce emissions by 10,000 tons of CO2 equivalent by 2030. Damen has set itself the goal to become the most sustainable maritime solutions provider.
The ferries will operate services connecting Nanaimo with Gabriola Island, and Campbell River with Quadra Island. They are scheduled to commence operations by 2027.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
Washington State Ferries New Partnership for Hybrid-Electric Vessels
Washington State Ferries has a new partner coming aboard for its journey to zero emissions by 2050, contracting with marine technology electrification experts ABB to support the design and construction of five new hybrid-electric, 160-auto-capacity ferries.
ABB will select and integrate the technology that will power the new vessels, from the engine and batteries to the propellers. They will design a complete propulsion system, oversee the timely delivery of equipment, and offer expertise in equipment installation and commissioning.
In late May, WSF invited shipyards across the country to bid on construction for the five new ferries. The contract award to one or potentially two shipbuilders is expected in early 2025, with delivery of the first two vessels expected in 2028.
“Big picture, this contract with ABB is about rebuilding our fleet and restoring reliable service to our customers,” said Matt von Ruden, WSF system electrification program administrator. “ABB’s specialized knowledge and expertise helps reduce risk and ensure performance in the design, construction and delivery of our new hybrid-electric ferries.”
ABB will also play a critical role in training WSF’s crews on the operation and maintenance of these new systems.
“This partnership highlights our shared vision for sustainability and our dedication to pioneering advanced technologies that drive the industry forward,” said Drew Orvieto, VP of Sales, Americas at ABB Marine & Ports. “We look forward to supporting WSF in their mission to provide cleaner, more efficient ferry services for the communities they serve.”
WSF leading change in the maritime industry WSF is the largest ferry system in the U.S. and the biggest contributor of greenhouse gas emissions among Washington state agencies, burning 19 million gallons of diesel fuel to transport tens of millions of passengers every year. Electrifying the ferry system will drastically reduce greenhouse gas emissions and prepare Washington for a changing climate. The electrification program will:
Retrofit six current diesel ferries to hybrid electric.
Build 16 new hybrid vessels.
Retire 13 diesel ferries.
Add charging power to 16 terminals.
While WSF is one of the first and largest ferry systems in the U.S. to electrify ferries, ferry operators throughout northern Europe have converted more than 70 ferries to hybrid-electric power since 2015.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
NUKES AT SEA
ABS and KRISO to Advance SMR-Powered Vessels and Power Generation Platforms
Representatives from ABS and KRISO at a recent team meeting in Busan.
ABS will provide analysis of applicable regulatory guidelines and international standards for the design of SMR-powered ships.
KRISO will develop core technologies for SMR-powered ships, including conceptual designs for the vessel and propulsion systems as well as the development of a framework for integrated ship, nuclear power safety analysis. In addition, KRISO will design a floating SMR power generation platform, a nuclear power plant on the sea, along with a commercialization model that can supply stable power to island areas in the future.
“ABS is taking a leading role in the support of nuclear power projects in the maritime industry through our knowledge of international regulations and development of Class-related related safety requirements. We are proud to apply our experience to these research projects with KRISO. With the increased focus on zero-carbon emissions, modern nuclear technologies offer the potential for decarbonization in many areas of the sector,” said Patrick Ryan, ABS Senior Vice President and Chief Technology Officer.
“Through this joint research with ABS, we will lead the development of future eco-friendly marine technology and establish global standards for the commercialization of SMRs in the marine sector and will lead the global market for nuclear-powered ships in the future,” said Keyyong Hong, President of KRISO.
Learn more about ABS research regarding nuclear applications in the maritime industry here.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
Woodside Grows US Market Buying Tellurian and Proposed Driftwood Terminal
Driftwood has the potential become a major U.S. exporter (Tellurian)
Woodside Energy Group, Australia’s largest oil and gas producer, is moving forward with its long-held growth plans reporting it has agreed to buy the U.S.-based Tellurian in a deal that values the company at approximately $1.2 billion. Tellurian is fully permitted and in an advanced stage of pre-FID development for the Driftwood LNG export project to be located near Lake Charles, Louisiana.
The companies announced today that Woodside has agreed to an all-cash price of approximately $900 million, or $1 per share, for Tellurian’s common stock. It represents a 75 percent premium on the share price with Tellurian highlighting it provides an immediate, significant return for investors versus the risks and costs associated with the development project. For Woodside, which has been seeking a big growth opportunity, it expands the company’s size and places it in a strong position in the U.S. market.
“The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” said Woodside CEO Meg O’Neill. “It adds a scalable US LNG development opportunity to our existing approximately 10 Mtpa of equity LNG in Australia. Having a complementary U.S. position would allow us to better serve customers globally and capture further marketing optimization opportunities across both the Atlantic and Pacific Basins.”
Work on the Driftwood site began in March 2022 with Bechtel Energy executing the Engineering, Procurement, and Construction (EPC) contract to begin construction of phase one. The target was to reach the final investment decision with the project coming online by 2026 or 2027. Tellurian encountered challenges launching a strategic repositioning in December 2023 with new management.
The advantage for Woodside is the project is fully permitted and not subject to the current hold on future licenses launched during the review of the industry under the Biden administration. If the project completes all its future expansion efforts it would be able to export nearly 28 tonnes per annum (mtpa) which would nearly triple Woodside’s current capacity. Based on 2023 figures, Driftwood could become six percent of the global export market.
Work is progressing on the site preparations for phase one of Driftwood, which would include two LNG plants with an export capacity of up to 11 Mtpa. The second phase calls for a further 5.5 Mtpa. Woodside reports it expects to close the acquisition in the fourth quarter and is targeting readiness for the FID for phase 1 of Driftwood in the first quarter of 2025.
Woodside says it looks to leverage its existing strong relationships with Bechtel, which is also leading the company’s Pluto Train 2 project in Australia as well as Baker Hughes and Chart. Woodside’s strong position in the market analysts said would also strengthen Driftwood and address market concerns about the project. Driftwood unlike other U.S. projects was proposing long-term contracts linked to the Asian and European spot price for LNG. That raised concern about volatility and some large potential customers including India’s Shell and Vitol did not make deals with Driftwood.
Woodside is already a majority owner of an oil and gas field located about 120 miles off the coast of Louisiana. The company has declared its intention to invest $5 billion in new energy projects over the next five to six years.
Offshore Charging System for Service Vessels Tested at Belgian Wind Farm
Parkwind was able to recharge a vessel attacked to its offshore substation (Parkwind)
Parkwind, a developer of offshore wind farms owned by Japan’s JERA, completed the first test of an offshore charging station that supplies power from the wind farm to service vessels. The technology which is being developed by several companies holds the promise to permit crew and maintenance vessels to operate using renewable energy coming from the wind farm.
Proponents of the concept highlight it will make possible the use of electric powered emission-free vessels to support the wind farms. One of the current challenges is that as wind farms move further offshore they are beyond the storage capacity of current batteries to safely operate the vessels.
The system which was developed by UK-based MJR Power & Automation, was tested at the Nobelwind wind farm located approximately 30 miles from shore in the Belgian North Sea. The wind farm has been in operation since 2017 and consists of 50 turbines.
The charging system was transported to the offshore substation aboard one of the CTVs and lifted in modules using the substation crane. Within two days, it was assembled, hooked up, and commissioned on the substation. The setup was successfully tested, achieving the first transfer of power to a CTV from a fully operational and producing offshore wind farm.
“This is a game changer for our maintenance vessels, which can now access green energy direct from our wind turbines as they carry out their work,” said Kristof Verlinden, Head of O&M at Parkwind. "The trial proved the system can transfer electricity from a wind farm to the vessels safely without any disruption to the farm.”
Parkwind points to the ease of use of the system which has an automatic coupling and uncoupling process. It allows ships to connect to the charging cable and stay in place while charging, despite sea currents.
MJR carried out all electrical and mechanical interface engineering to install the system on the substation. Parkwind provided offshore logistics, offshore installation, testing support, and the electrical power interface.
The system is designed for both CTV charging up to 2MW and SOV charging up to 8MW. It can also be used for supplying offshore power to other conventional offshore vessels on standby, also reducing their emissions from diesel generators.
MJR says it will now incorporate the lessons learned from the trials into the first commercial offshore charging system delivery scheduled for Q1 2025.
New York Launches Next Wind Solicitation as Work Begins on Sunrise Wind
Orsted completed South Fork Wind this year and now will start its second New York project (Orsted)
New York officials used the ceremony marking the start of construction for the next offshore wind farm, Ørsted’s Sunrise Wind, as the opportunity to also officially open the state’s fifth wind solicitation. They called the developments the latest mileposts in the state’s renewable energy strategy.
The fifth round launched today, July 17, with proposals due by September 9. State officials did not declare a specific target but it presents an opportunity to restart several projects that were canceled when they decided to cancel the third-round solicitation. Three projects, Attentive Energy One for 1.4 GW to be developed by TotalEnergies, Rise Light & Power, and Corio Generation; Community Offshore Wind for 1.3 GW to be developed by RWE Offshore Renewables and National Grid Ventures; and Excelsior Wind for 1.3 GW to be developed by Vineyard Offshore, were selected before the round was canceled with the state citing GE’s decision not to proceed with larger turbines.
Companies submitting to the next round will have till October to set their price proposals. The state tentatively plans to announce the selected projects in November and expects to execute contracts by the first quarter of 2025.
The fourth round was used to permit projects including Sunrise Wind to resent its price agreements. Sunrise was reselected and completed a new contract with NYSERDA at $146 per MWh for 25 years.
Today, the project marked its official start of construction after in June receiving its final federal approvals. Work began for the onshore power transmission network nearly a year ago. The company said when it received federal approval in June that expected to ramp up offshore construction later this year with the project expected to be in operation in 2026. It will consist of approximately 84 wind turbines.
“Today’s shovels in the ground, paired with the launch of New York’s fifth offshore wind solicitation, marks yet another step forward in advancing offshore wind in New York State, and realizing the potential of this powerhouse industry in accelerating the State’s energy transition and growing our economy.,” said Doreen Harris, President and CEO of New York State Energy Research and Development Authority (NYSERDA) which oversees the new industry.
Sunrise Wind is being cited as New York’s largest offshore wind project and building on the momentum of Southfork Wind which began full operation earlier this year. Sunrise Wind will be located approximately 30 miles east of Montauk, New York. When completed it will have a generating capacity of 924 MW, which is equivalent to power for approximately 600,000 homes. New York Governor Kathy Hochul highlighted that its development represents an investment of more than $700 million.
Ørsted completed the acquisition of the project in July buying the 50 percent share from its former partner Eversource. The final price was $152 million reduced from a previous estimate of $230 million due to lower actual capex spending so far in 2024. Ørsted assumed full ownership, which had been conditional on completing the NYSERDA agreement and it took the final investment decision for the project in March.
The original lease was awarded 11 years ago in July 2013 in the beginning stages of the U.S. offshore wind industry. Sunrise closely follows the launch of Empire Wind being developed by Equinor. Work for the first phase of this project began in June to support Empire Wind 1 which will be 810 MW and with its second phase has the potential for more than 2 GW.
SS United States Asks Court for More Time as Search for Pier Continues
The 72-year-old liner needs to find a new berth after being ordered evicted from its Philadelphia berth (SS United States Conservancy)
Faced with a deadline now just 55 days away, the SS United States Conservancy filed an appeal with the District Court in Pennsylvania to delay the order to move the long-retired liner. The court set a deadline of September 12 for the ship to vacate the pier in downtown Philadelphia that it has called home for the past 28 years.
“While we are doing everything possible to meet the court’s deadline, some factors are beyond the Conservancy’s control,” said Conservancy President Susan Gibbs announcing the new court petition. “Factors including this year’s intense Atlantic hurricane season forecast and the extensive technical preparations associated with the ship’s tow require some additional time to safely implement.”
The Conservancy, which has owned the vessel since 2011, reports it has been actively exploring potential temporary docks in the Philadelphia area and along the East Coast. It is also engaging in targeted outreach to federal and state officials, regional port authorities, maritime associations, and the U.S. Navy for help in identifying suitable and available berths.
In a separate update posted online, they said that so far, the efforts have failed to identify an alternative berth. They report speaking with the Navy and private operators at the Philadelphia Navy Yard and Newport News Shipbuilding, both of which do not have available spaces for a liner measuring 990 feet in length and a draft between 21 and 28 feet. They explored possibly berthing near the battleship New Jersey in Camden, New Jersey, or working with the Maritime Administration to anchor in the James River Reserve Fleet, but the size of the liner excludes those options.
Another possibility is New York City, but they report Governor Kathy Hochul of New York “would not engage and open the doors to redevelopment along Manhattan’s west side.” Similarly, outreach to the Executive Director of the Maryland Port Administration has not yet received a response. Further locations such as Long Beach, California are considered impractical due to the cost and distance to tow the vessel.
They report that they are currently exploring additional opportunities in Charleston, Savannah, and various ports in Florida, among other locations. They are also responding to suggestions from supporters and are open to other locations to avoid the alternative of selling the ship for scrap or reefing.
“Relocating a 990-foot-long ocean liner is a complex and costly process. We are simply asking for a reasonable extension to ensure the Conservancy can investigate all suitable and available locations and prepare the ship to leave its current pier safely,” they write on social media. They have asked the court to extend the deadline to December 5, 2024.
The charity has also launched an urgent fund-raising effort to pay anticipated costs for the potential move. As of last week, they reported that over 650 donors from around the world have responded. They announced having raised more than $100,000 toward a $500,000 goal, with multiple other fund-raising efforts underway.
The ss United States, which entered service in 1952, took the title of the faster passenger ship to cross the Atlantic to England and France and is considered an engineering marvel. She operated for just 17 years before being retired and after being owned by the U.S. government passed through various private owners each proposing different uses for the ship. The Conservancy has been promoting a concept to redevelop the ship, which was stripped of its interior fittings many years ago, into a hotel and multi-purpose static attraction. The hope was to return her to New York’s Hudson River or to find an alternative permanent location. The Conservancy offered to donate the ship as part of the development project.
Harland & Wolff CEO Leaves, Advisors Hired as UK Turns Down Bailout
Harland & Wolff is seeking to refinance its debt (file photo)
Famed shipbuilding Harland & Wolff is reported to be in a financial crisis after the new Labor government of the UK officially notified the company it will not proceed with a proposed loan guaranty program to refinance the company. The failure to win the needed support triggered a series of events as the company said it engaged Rothschild & Co. to “assess strategic options for the group.”
John Wood the Chief Executive Officer of the company is officially being reported to taking a “leave of absence,” effective immediately. The Financial Times reports the executive who led the revival of the company after buying the Belfast shipyard out of administration in 2019 texted his resignation last night to the board. The newspaper says it was a condition of future financing from the current lenders.
A restructuring expert, Russell Downs, is set to become the Interim Executive Chairman of the group. He has 30 years of experience working at PwC. The company said he will “seek to complete a recapitalization intended to give the company a sustainable financial footing into the medium and long term.”
Harland & Wolff had applied last year to the then Conservative government for loan guarantees for a £200 million ($258 million) package to replace the current £89 million ($115 million) financing coming due in December 2024 from U.S.-based Riverstone Credit Management. The package was awaiting ministerial approval when the Conservative government launched the recent elections, although it is believed the government was already leaning toward turning down the application.
The Financial Times said the company reworked the application, something Harland & Wolff denied. Earlier this week they said talks were still underway with the government while emphasizing the progress made at reestablishing the business. Under Wood’s leadership, the energy infrastructure firm InfraStrata acquired the Belfast yard and later three in Scotland.
In its unaudited 2023 financial statements, the group reported £87 million ($112 million) in revenues and was decreasing its losses. The company is making significant investments ahead of its involvement in a Royal Navy auxiliary shipbuilding project due to launch in 2025. Its 2023 audit however was delayed due to discussions with accountants over revenue recognition issues and that caused trading in its stock to be suspended in July.
"I am very pleased to take on this role after a challenging period for the group as it transitions from one leadership team to another and deals with the increasing speculation over its future,” commented Russell Downs. “I will be working tirelessly in consultation with employees, management, customers, suppliers, unions, government agencies, and other stakeholder groups in the coming weeks."
Harland & Wolff said it is in “expedited discussions” with Riverstone to secure alternative debt facilities to support the near-term working capital needs of the group. In addition, the company said it is in “active dialogue” with key stakeholders including the UK Government around existing and future contracts.
The company also said that another executive, Alan Fort, who has a “long record in performance improvement,” would join the board as a non-executive director. He holds a similar position at steelmaker Celsa UK. The Spanish group underwent a financial reorganization in 2023.
Kamala Harris, trailblazer eying America’s last glass ceiling
For years Kamala Harris faced criticism that she was not up to the job of being a heartbeat away from the presidency. Now, she finds herself feted by Democrats as their best hope to stop Donald Trump’s comeback.
Despite blazing a trail as the first woman, Black and South Asian vice president in US history, the 59-year-old Democrat long struggled with approval ratings as bad or worse than President Joe Biden’s.
The last 12 months, however, have revealed a transformed Harris.
And with Biden’s endorsement of Harris after stunning the world by dropping his own reelection bid Sunday, she’s suddenly on the cusp of history.
Harris will hope she has done the hard work to earn her full party’s backing in the midst of the crisis.
As the ageing Biden faded over the last year, his “veep” emerged as a force on the campaign trail, pushing for abortion rights and reaching out to core voters, including suburban women and Black men.
With a fondness for the f-bomb and her family nickname of “Momala” going viral, she has also finally started to cut through the noise to voters who previously barely paid attention.
She has also won plaudits in party circles by staying loyal to the 81-year-old president during the last few weeks, even as political vultures circled over his candidacy.
She now is likely to face Trump — a brutal battle against a candidate who defeated Hillary Clinton in her bid become the first female commander in chief in 2016.
The fact that Harris has blamed much of the criticism of her by Republicans on racism and sexism would likely make a win feel even more vindicating for her.
Trump and other Republicans have notably stepped up their attacks on her as Biden’s position weakened and polls showed Harris would fare better against him than Biden.
– ‘Ready to serve’ –
A child of immigrant parents — her father was from Jamaica and her mother from India — Harris grew up in Oakland, California, in an activist household that saw her attend her first rallies in a stroller.
Her focus on rights and justice saw her build an impressive CV, becoming California’s first Black attorney general and the first woman of South Asian heritage elected to the US Senate.
Harris then went up against Biden in the 2020 primaries. In one stinging attack, she criticized him for allegedly opposing the bussing of students to segregated schools.
“There was a little girl in California who was part of the second class to integrate her public schools, and she was bussed to school every day. And that little girl was me,” she said in a barbed attack on her future boss.
But as his running mate, she consolidated the coalition that helped defeat the incumbent Trump in 2020.
Her transition to the White House, however, proved difficult.
Critics said she was underwhelming and gaffe-prone in a job that has been known to flummox many officeholders.
Struggling to carve out a role, she was tasked by Biden with getting to the roots of the illegal migration problem, but fumbled and then got defensive in response to a question during a visit to the Mexican border.
Unusually high staff turnover fed rumors of discontent in the vice presidential office.
And Republicans relentlessly targeted her as being unfit to take over should the worst happen to America’s oldest-ever president, often resorting to stereotypes her supporters branded as sexist and racist.
Harris told the Wall Street Journal in February: “I am ready to serve. There’s no question about that.”
– ‘Momala’ –
Things began to change as the 2024 race got underway.
The Biden campaign repeatedly deployed her to battleground states to hammer home the party’s message on abortion rights, with Harris becoming the first vice president to visit an abortion clinic.
Gradually, she began to draw warm and fired-up crowds.
Some of the outreach was, however, cringe-inducing. Earlier this year, she was mocked after she told chat show host Drew Barrymore her family sometimes called her “Momala,” and Barrymore replied: “We need you to be Momala of the country.”
But voters seemed to be switching on.
A clip of her quoting her mother as often saying “You think you just fell out of a coconut tree?” became a meme, with a rising sense among supporters that now could be her time.
If elected, Harris would break one of the highest glass ceilings left for women in the United States — that of occupying the country’s top office.
Her husband, Douglas Emhoff, would also be breaking new ground, moving from being the current Second Gentleman to the country’s first First Gentleman.
How investors are reacting US President Joe Biden pulling out of the 2024 presidential race Initial reaction is going to be positive for risk: Brandywine
President Joe Biden said Sunday he will not seek reelection and endorsed Vice President Kamala Harris to become the Democratic nominee.Image Credit: AFP
Markets already had plenty to deal with as summer kicks into full gear, from assessing the Federal Reserve's rate-cut path to the heart of earnings season. But 2024's presidential race keeps crowding into the headlines.
A week after an assassination attempt on Republican Donald Trump, President Joe Biden said Sunday he will not seek reelection and endorsed Vice President Kamala Harris to become the Democratic nominee. That adds another variable into equations for how to trade the markets this summer. So far, the reaction has been muted.
US stock futures showed little reaction to the news, with S&P 500 contracts higher by 0.1 per cent as of 6:12 p.m. in New York. The dollar was little changed against major peers. Cboe VIX October futures, whose underlying S&P 500 options encompass the Nov. 5 vote, rose 0.6 per cent at 6:13 p.m. in New York.
With Biden's historic move less than four months from the November election, the political turbulence threatens to fuel gyrations on Wall Street, at least in the short term, said market observers. And the so-called Trump Trade recommendation "- good for energy companies, banks and Bitcoin, while bad for electric vehicles and renewables "- may fray, after gaining momentum after Biden's disastrous presidential debate.
Here are some early comments from investors:
Wayne Kaufman, chief market analyst at Phoenix Financial Services
I wish we were having less history. Just last week my team was discussing the market implications of an assassination attempt. Whether the buy the dip people come back amid all this uncertainty is questionable. Valuations have been an issue, AI optimism has done a lot to hold up the market, and we're going into August and September, which have historically been weak months. But in general this has been a historic market.
Julie Biel, portfolio manager and chief market strategist at Kayne Anderson Rudnick
There is now more uncertainty. We just don't have a lot of precedence for a situation with a candidate who did not go through the normal primary process. So we are once again continuing our very long-term love affair with unprecedented times. And while we might feel like we are getting used to everything but business as usual, this is still a very large spoonful of uncertainty to be swallowing.
Matt Maley, Chief Market Strategist at Miller Tabak + Co.
Trump trades such as Bitcoin, energy will start to unwind and some trades that got hit like solar stocks or EVs can bounce back. But it's still a lot of uncertainty and markets don't like that. And we'll see a big spike in volatility between now and Labor Day and through September.
Yung-Yu Ma, chief investment officer at BMO Wealth Management
The Trump trade is likely to take a breather until it becomes clearer who the Democratic nominee will be. In broad terms, this event injects even more political uncertainty into the markets, which is likely to result in some near-term choppiness.
The news also rattled currency and bond markets, while money managers in emerging markets expect some of the early "Trump trades" "- which included ditching some currencies in Asia and Latin America and buying El Salvador bonds "- to be unwound, providing a short term boon to risk assets.
Concern about a strong dollar under a new Trump administration, plus tariffs and a potential landslide win by Republicans have been beginning to weigh on emerging assets, which continue to reel amid the Fed's uncertain time line to lower interest rates.
Jack McIntyre, portfolio manager at Brandywine Global Investment Management
The initial reaction is going to be positive for risk assets, including emerging markets. Democrats could take the house now if things worked out. Markets in general want to see more of that as opposed to a sweep by the Republicans.
News about US President Joe Biden's decision not to seek reelection is displayed on the ticker at Fox News headquarters in New York City on July 21, 2024.Image Credit: AFP
Jennifer Gorgoll, Portfolio Manager at Neuberger Berman LLC
In the near term, the potential for Fed rate cuts will dominate markets, potentially weakening the dollar and leading to stronger commodities and EM currencies. This, combined with a broader risk on bias associated with the Trump trade, sets up markets for a spectacular 2025, and we believe emerging markets may be a key beneficiary of that.
Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities said:
It's not entirely clear what it means for the rates market. In the bond market it could lead more to gridlock. Don't think there is a big trade here in rates as we don't really know how fiscal policy will shake out. The US Treasury market will still focus on supply, balance sheets, and the economic data. We could get some choppy price action but Fed pricing should remain focused on what's already in motion.
Barry Knapp, managing partner at Ironsides Partners
Ultimately the uncertainty has gotten a lot higher. Now, what does this mean for how futures will open? That isn't clear. Bitcoin moved a bit. But we also just had a messy week, which I don't think has much to do with Trump. I think that's more about the economy weakening, and the Fed haltingly moving toward a 50 basis point cut in September. Ultimately there's a lot going on, and this is more uncertainty.
Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors
The immediate impact is to add uncertainty to the Republican sweep narrative that's been taking hold of markets. Beyond that, it's all up in the air until we have more clarity on who the Democratic candidate will be.
Art Hogan, chief market strategist at B. Riley Wealth
President Biden dropping out of the race had already started to get priced into the marketplace. The Trump trade, if there actually is one, is indistinguishable from the fact that small caps are being rotated into because of the potential for lower interest rates. The Fed will likely cut in September. The only thing that stands out in the current Trump trade seems to be a bit of a bump in Bitcoin and the rest of the cryptocurrencies as he is seen as more favourable to that asset class.
