MDW Backstory: November 2021

Tuesday, November 30, 2021

Apple MacBook Air -- 2022 -- November 30, 2021

MacBook Air: look for revolutionary design changes, new features second half of calendar year 2022. The only ports will be USB-C ports. Best feature of these connectors: rotationally symmetrical. Finally.

Southwest Gas -- Tender Offer -- November 30, 2021

A reader informs me that Carl Icahn is offering $75 / share of Southwest Gas.

SWX is currently trading at $65.

iPads And Automobile Dashboards -- November 30, 2021

I suggested (predicted) this years ago -- I'll see if I can find the post.

Link here to MacRumors.

Mercedes Benz Electric Truck Update -- November 30, 2021

From an undisclosed Daimler-Benz truck manufacturing location:

Monday, November 29, 2021

EVs: Nissan Announces $18 Billion Electrification Plan -- November 29, 2021

The Nissan Leaf was the first modern mass market electric car launched in the US a decade ago. Data points:

$18 billion through 2030
23 electrified models that includes hybrids and 15 all-electric vehicles

Thursday, November 25, 2021

The SPR Release

November 25, 2021:

refiners operating at 86% operating capacity; not because shortage of oil; plenty of oil
released oil will be delivered to / sold to China / India
why did price of oil go up? reasons:

oil released was heavy, sour oil
US refiners need light oil to balance heavy, sour oil to refine
if refiners take that heavy, sour crude they will need more WTI (light oil) / Brent (also light oil) to balance the heavy, sour oil that was released (that needs to be fact-checked; I haven't seen source for "wrong kind of oil" -- accurate or simply a meme?)
other possibility for price increase, at least for oil company equity (stocks)? algorithms

November 25, 2021: the SPR release, where we stand --

$5 / bbl gift to Big Oil; backwardation; it's a swap; oil companies replace expensive oil (which they get for free "today") which cheaper oil in the future
takes a minimum of thirteen days to get this new oil to refineries so will have no effect on refiners until well after Thanksgiving;
refiners currently operating at 86% capacity; already a glut of oil;
most oil released from SPR will be delivered to / sold to China and India
the big question is why did the price of oil "recover" immediately after the release announced
I think it has to do with the algorithm(s)

Tuesday, November 23, 2021

CDC Error With Spreadsheet -- November 23, 2021

Something screwy is going on. The CDC seems to rarely make errors in their spreadsheet at this link. I've never been able to "catch" the errors.

But today, very, very clear.

A screenshot of my data clearly shows that "fully vaccinated" as reported by the CDC is in error. My hunch is that the number for November 23, 2021, should have been 196,973,992 and not 195,973,992, as reported by the CDC. We'll see tomorrow if the error is corrected.

This is the screen shot of the CDC spreadsheet of "at least one dose":

This is the screen shot of the CDC spreadsheet of "fully vaccinated":

US To Release Two Billion Gallons Of Crude Oil From The SPR -- November 23, 2021

A reader asked how long would 50 million bbls of crude oil -- the amount released from the SPR -- would last.

My quick reply:

Global demand is 100 million bbls per day.

I believe the SPR has been drawing down at 18 million bbls / day, so the 50 million-bbl release was only 38 million bbls more than usual.

US daily oil consumption: about 20 million bbls/ day.

I believe the US exports about 3 million bbls of oil / day.

The SPR can release no more than 4.4 million barrels per day. It takes at least 13 days from a presidential decision for the first oil to enter the U.S. market, according to the Energy Department.

I'll have to add these numbers to my post on this subject today.

So, starting two weeks from today, the SPR can release 4 million bopd. 50/4 = and over two weeks will exhaust the 50 million bbls.

The refiners have "x" amount of capacity. For the past year or so, they have been operating well below capacity. They are operating at about 87% of their maximum capacity. If push came to shove, the refiners could get to 94% fairly quickly; that report comes out every Wednesday and I track it every week. The refiners' data will be the most important thing to watch.

https://themilliondollarway.blogspot.com/2021/11/counterintuitive-november-23-2021.html
4 million bbls / day released; consumption + export = 23 million bbls of oil daily.

4 / 23 = 17%.

My hunch: the US refiners won't be able to handle all this oil; even if they could, the US demand is not there and oil companies are not going to sell gasoline at a loss. If Biden doesn't ban oil exports, my hunch most of this oil will be shipped to and bought by China.

From twitter after this debacle:

Bloomberg: much of this oil will end up in China and India.
We can drill to refill, I suppose.
It wasn't even a release; it was a swap. And because of types of oil involved, prices will be driven up.
Brandon released the wrong kind of oil.
No export restrictions; one-third or more will be exported to China.

Why Natural Immunity May Not Prevent Another Covid-19 Infection -- November 23, 2021

Readers have sent me the link to this headline / story and asked where the science is to explain this?

Why "natural immunity" doesn't protect you as well as the Covid vaccines?

The article actually explains it:

degree of immunity from a very, very mild disease may be inadequate for future exposure; and,
the issue of variants

But I think there may be more. This is a very interesting virus. It seems with every study we are learning more about the virus.

This is not the first virus in which natural immunity doesn't prevent against future disease.

Exhibit A: chickenpox.

This is well known. A simple search of the internet will provide the answer:

Once you've had chickenpox, it's likely you'll stay immune for life. This means you're unlikely to catch the infection again and won't spread it to others. It's possible to get chickenpox again, usually if your first infection was very mild.

So, the science is there.

But, in fact, there's more.

Even if "immune" from chickenpox, you can "get it again." Just in a different form.

"Everyone" in the US has had chickenpox (varicella) and "everyone" has natural immunity to chickenpox.

But yet, it is recommended that "seniors" get the chickenpox / varicella / shingles Zostavax vaccine.

So, if "everyone" in the US has natural immunity against chickenpox, why are seniors told to get the "chickenpox" vaccine?

It's related to neurology.

Hold that thought.

With regard to Covid-19 what is the most distinguishing (and unusual) feature about the disease caused by Covid?

I'll stop here and let folks see if they can connect the dots.

Counterintutiive -- November 23, 2021

Brandon announced today, Tuesday, that he would release oil from the SPR. It's probably not "legal" but we will see how it plays out.

The "elizabethwarrens" of the world hoped for two things:

the price of gasoline would fall; and,
profits of the oil companies would fall.

We'll see how far the price of gasoline drops.

But surprise, surprise: shares in oil companies are all up today. Does that surprise you?

CVX: up 1.16%
XOM: up 0.8%
Shell: up 0.5%
BP: up 1.31%
COP: up 1.4%

Pre-market, after the SPR release announcement.

It seems counterintuitive.

Can it be explained if it seem counterintuitive? Yes.

If, all things being equal, investors/analysts value oil companies more (share prices of oil companies increase) with the announcement of a release of crude oil from the SPR, how can this be?

Thoughts?

Two thoughts, one macroeconomic, as it were, and the second, a misunderstanding of how the SPR works.

Macroeconomic:

remove all the politics and just get back to keeping it simple: US presidents don't do things that aren't rational [don't get me started]
how could this be rational?
what is the SPR for?
for those periods of time when demand greatly exceeds supply
[break, break: who needed the release of crude oil from the SPR the most?]
when one removes all the politics and talk of virtual signaling, opening the SPR means one thing: demand is severely greater than supply, and unlike the old days, OPEC+ is either unwilling or unable to increase production;
analysts see the release of crude oil from the SPR as Brandon trying to get ahead of the debacle that the supple/demand imbalance could lead to this next spring;

Misunderstanding of the SPR:

this is most interesting;
if this is correct, it tells me that Brandon and team do not understand "oil" [or the SPR] at all;
withdrawal from the SPR is a "swap." It's not a direct dollar trade; companies do not pay for oil they "take" from the SPR; they are simply required to "replace" the amount of oil they take with like amount sometime in the future
oil companies have contracts with their customers (their shippers and their refiners)
if they can get oil for free (from the SPR), holy mackerel, short term their profits surge; they can cut back on their own drilling, and their own shipping (generally the SPR caverns are closer to the refineries) and replace with oil from the SPR;
okay. But if that's right, won't their profits be adversely impacted when they have to replace that crude oil sometime in the future
two things: analysts don't think that far ahead; they're looking at profits now (the current six months)
but this is where it gets really, really interesting. Even though it's a swap, the fact is we are in a period of backwardation: oil prices are now higher than they are expected to be in the future -- that's a fact, Jack -- we're in a period of backwardation -- though many in the industry see the demand/supply imbalance worsening in the future -- but right now, the numbers tell us we are in a period of backwardation;
backwardation means oil companies are taking out "more expensive" oil now from the SPR and will be replacing it with "less expensive" oil in the future.

I'm sure the analysts and experts will have their own explanations.

By the way, earlier I asked: who needs the release of crude oil from the SPR the most?

Did anyone paying attention?

What's happening this week?

Yes, it's only the busiest airline travel day/week of the year. Already the TSA is reporting record number of passengers being screened. Airline passengers are now at 2019, pre-covid, levels.

Yesterday, CNBC showed a graphic showing the fuel demand surge airlines are facing. The airlines must have a huge, huge lobby in Washington, DC, and they let the politicos know how high fuel prices would impact the American flying consumer. A lot of politicos and their staffers are flying home for the Christmas break.

EV Scorecard Just Went From Three To Four -- November 23, 2021

EV scorecard last week:

Rivian -- Amazon -- Ford -- GlobalFoundries
Lordstown -- Apple -- GM -- silicon M1 chip (GM currently depends on seven chip manufacturers)
Tesla -- chips (?)

EV scorecard now:

Rivian -- Amazon -- Normal, Illinois;
Ford -- GlobalFoundries
Lordstown -- Apple -- GM -- silicon M1 chip (GM currently depends on seven chip manufacturers)
Tesla -- chips (?)

EVs and AVs:

Rivian: with Ford's announcement that it will go its own way, drop Rivian, I will be spending much of the morning updating recent posts;
GlobalFoundries: did Jim Cramer miss one? Certainly sounds like it.

GlobalFoundries is Ford's semiconductor partner and Wall Street's new darling; Barron's;
from the TimesUnion: amid news of Ford partnership, GlobalFoundries stock up 40% since IPO;
news here;

AAPL: why AAPL surged yesterday; discussed on the blog; now Motley Fool confirms, but look at this --

Wedbush Securities analyst Dan Ives estimating that there is a "75%, 80% plus chance" that Apple will build the car that Bloomberg reported on last week. Indeed, the analyst goes so far as to say that "this is a matter of when, not if."
this is basically the same thing that Bloomberg reported last week. But in Wedbush's opinion, Apple's electric, autonomous car might actually arrive as early as 2024, before Bloomberg's reported 2025 arrival date

Monday, November 22, 2021

Covid-19 -- Germany -- November 22, 2021

Link here.

This is fascinating. I don't know the percentage of folks vaccinated in Germany, but certainly a few, but yet look at the surge in cases. This, however, could simply be increased vigilance, increased testing. But even if the number of cases is increased due to those factors, one has to admit, the number of cases is urging.

But let's take the number of cases at about 600,000.

Now, look at number of deaths. Right now, cases are running about 300 / day.

300 / 600,000 = 0.05 percent. That's not one percent; that's not one half of one percent; it's not even one-tenth of one percent. It's one-half of one-tenth of one percent. Yes, I know one can't simply number of deaths reported today by the total number of people currently infected, but there must be some correlation.

And of the three hundred deaths, how many were simply "linked" to the "death," but not necessarily the immediate cause of death.

So, it is what it is.

I don't have a dog in this fight. I no longer care. I'm not even particularly interested. I simply find it fascinating.

How is Sweden doing?

Link here.

With regard to Germany, this headline today, by spring, it will all be ove

Rivian / Ford Break Up; Ford Will Go It Alone -- November 22, 2021

Rivian:

Ford / Rivian break-up; Ford will go it alone; no interest in Rivian partnership;
shares fall as much as 17% today
Rivian: closed down 8%; down $10; closed at $118
continued to fall after hours;
Ford, on the other hand, up almost 6%; up $1 for the day; closed at $20.48
remember:

Rivian closed well above its opening IPO price; close at $100 on November 10
peaked: $172 November 16, 2021
plummeted, November 18, 2021: $123

today: $118; were early investors played?

Lucid Group (LCID):

drops over 7.4%; sheds over $4/share; closes at $51;

TSLA:

up 1.74%; up almost $20; closed at $1,156.87.

AAPL: Why It Is Surging -- November 22, 2021

Updates

Later, 12:40 p.m. CT: as you go through the long post below, keep these three companies in mind --

Apple, of course

mostly a design, marketing, and retail company
outsources everything else

Foxconn:

as far as I know, Foxconn is joined at Apple's hip, building the actual hardware, the thousands of workers on assembly lines building smart phones and computers

TSMC (Taiwan Manufacturing Semiconductor Company; publicly traded as TSM):

a semiconductor chip foundry, builds things; as far as I know, has exclusive rights to actually build / put together Apple products (smart phone, computers)

what's missing? An automotive factory and an automotive partner. My hunch: the GM factory at Lordstown, Ohio, where GM and Foxconn are involved in a joint venture.

Original Post

Up until early last week, AAPL had been in a trading range between $140 and $150.

AAPL has lagged the general market this past year and has really, really lagged the NASDAQ and the tech sector this past year.

In short, AAPL has been a real disappointment this past year.

The problem is that analysts have difficult valuing this company. Apple never provides guidance, is very, very secretive about future projects, and is often seen as simply a smart phone company.

Anyone paying attention knew that Apple was much more than a smart phone company. But let's agree to disagree that in addition to smart phones, Apple was huge in the computer sector: desktops, laptops, and tablets. Revenue from services has been growing significantly but few analysts seemed to bother with this Apple division.

That all changed a few months ago when Apple announced its M1 chip. This was not an "evolution" in the semiconductor / chip industry; it was a revolution. At that moment, Apple became a "chip" company and needed to be evaluated against such chip companies as Intel, Nvidia, AMD, among many others.

Intel, by the way, has fallen so far that many analysts don't see INTC recovering any time soon. Shares my ride the coattails of other chip companies, but Intel has huge challenges.

The "chip" sector has been on fire this pas year, but AAPL, not seen as a "chip" company did not participate in that rally.

Perhaps a few analysts recognized the importance of the M1 chip but, in general, the market did not.

It's important to know what business a company is in when attempting to place a value on a company.

The market has been preoccupied with supply chain shortages and analysts have warned against a poor holiday quarter predicting that Apple would not be able to deliver as many smartphone as they would without the supply chain problems.

Be that as it may, AAPL meandered along.

Meanwhile, during the past month or so, there has been incredible excitement in the electronic vehicle / autonomous vehicle industry and that sector has literally been on fire. By market cap, Tesla, Rivian, and Lucid have crushed GM, Ford, VW (largest car manufacturer in the world), Toyota, Honda, just to name the "big ones."

Behind the scenes, for several years, there have been stories that Apple was also working on an autonomous vehicle, but that story fell off everyone's radar scope when Apple broke off talks with Kia as an automotive partner, and perhaps others. I've long forgotten which companies have been rumored to be working with Apple.

But that all changed late last week when Bloomberg published a story suggesting that Apple would market / deliver its first autonomous vehicle in calendar year 2025.

Tim Cook, in a CNBC interview last Friday (?) or thereabouts, refused to comment on any future projects with which Apple might be involved.

With the publication of that Bloomberg article AAPL surged and continues to surge today, Monday, November 22, 2021.

It's important to know what business a company is in when attempting to place a value on a company.

If Apple continues to be valued as a smart phone company, its share price will meander in the $150-trading range in the short term.

If valued as a chip company, its share price will appreciate significantly when / if Apple were to license its chip technology. Unlikely to happen.

But, if Apple is valued as a company making autonomous vehicles (AVs) / electric vehicles (EVs), all bets are off. AAPL could reach heights previously unimaginable.

There are three components to delivering AVs / EVs:

chips

design
manufacturing

software
hardware (the car itself)

These could perhaps better divided as:

chips, design
chips, manufacturing
the car itself

Chips, design and manufacturing, two different aspects:

Apple designs chips but does not manufacture chips. Apple outsources the manufacturing of those chips to "chip foundries." I believe Apple's M1 chips are made exclusively at the foundry in Taiwan known as the Taiwan Semiconductor Manufacturing Company, which trades publicly as TSM.
Apple refers to these chips generically as their "Silicon Valley" chip or something to that effect. The revolutionary M1 was the first iteration; M2 is already being produced, and I believe, they are already talking about an M3 chip.
TSM is in talks to build new foundries in Japan, well aware of the Chinese-Taiwan risk. Those foundries will be up and running by this time next year. Japan, the country, will share in funding the new TSM foundries.

Software: tied in with the "design" story described above.

Finally, hardware, the car itself. There's no way Apple could build an automobile factory from scratch to meet the 2025 deadline. In addition. Apple is not known to manufacture its own hardware. Again, they design their hardware, the car in this case, and then outsource the work.

There is no way another company could build a factory from scratch to meet Apple's 2025 deadline.
It turns out that there is already an old GM factory in Lordstown, Ohio, locked and loaded to manufacture Apple automobiles. See this link.

Bottom line:

if accurate, that Apple will deliver an AV / EV during calendar year 2025, it means:

the company already has the design in place;
it needs to announce a manufacturing partner;

it's possible the announcement could be delayed until early, very early, 2023, but that would be cutting it very, very close to get a car delivered sometime in 2025
in addition, even is Apple were to try to keep this "secret," rumors will certainly be heard much earlier than the formal announcement
my hunch: Apple will make the formal announcement at the end of 2Q22, around June, 2022
watch the shares of AAPL after the first of the year; share price will be a leading indicator -- as they say
partner:

Apple is not know for "cheap" products. Although it was exciting to hear that Hyundai and/or Kia were involved with talks with Apple at one time, both would seem to be "beneath Apple's heritage" to partner with either.
at the other end of the continuum, Porsche, BMW, Daimler Benz -- possible, but they also don't seem to fit for other reasons

the Lordstown, Ohio, factory: Foxconn (joined with Apple at the hips) and GM have a joint venture at this factory. In other words, locked and loaded.

New Landscape As Ford, Rivian Part Ways -- November 19, 2021

EV, tracked here. Ford, Rivian abandon joint venture. Ford will "go it alone" to produce 600,000 EVs per year.

EV scorecard just a few days ago, link here:
Rivian -- Amazon -- Ford -- GlobalFoundries
Lordstown -- Apple -- GM -- silicon M1 chip (GM currently depends on seven chip manufacturers)
Tesla -- chips (?)
Landscape changed:
Rivian -- Amazon -- Ford out -- GlobalFoundries
Lordstown -- Apple -- GM -- silicon M1 chip (GM currently depends on seven chip manufacturers)
Tesla -- chips (?)
Lucid - chips (?) -- Casa Grande, AZ

EV Work Today -- November 22, 2021

Updates

December 6, 2021: Intel (INTC) could publicly list its autonomous car division this week.