Tag: Climate Change

Vol. 6 No.1 Armageddon – out of the ashes

Note: This is the first of TB’s blogs for 2020. That wasn’t his intention but a lot has been happening personally. First, we decided to sell our condo in Dec. 2019, and have moved to a beautiful, luxury apartment, in Edina, MN. Of course, we will miss our lakeside home of the past nine years but there were several reasons for the move. We are only 20 minutes away so we will be there frequently.

Until 2019, TB had another website here (traderbill.com) but as a result of his retirement is no longer active. We are in a great crisis, one that not only affects the wine industry but everything in our lives, so, rather than re-opening the financial blog, both will be here as the financial markets affect every aspect of the wine business as with everything we do!

This first blog is about how we got here, and begins with the financial markets. The next will add in observations TB has made of various sectors of the economy. TB welcomes any and all comments.

Thanks for reading and hope you find it useful,

TB

TB is not a seer…or a genius… but for his own sanity he is resurrecting Trader Bill and perhaps creating a dialogue with his friends and former followers (not in the disciple sense…just following the blog!). Whatever it takes to get us through this crisis, one of the worst mankind has endured…and as the late Walter Cronkite used to say, “you are there.”

Crisis, panic, fear, lack of consistent leadership, denial, and loathing are just some of the adjectives that have crossed old TB’s mind. No, this isn’t his first rodeo, and perhaps that is why he, as a former bond geek for 45 years – yes, back in the last century. When he was in San Francisco, he loved going to hear Ed Yardeni speak. Ed would open up with some of the above adjectives and then gaze around the room silently. Then, a slight smile would emerge and he would say, “now that we have identified where all the bond guys are seated (they were the only ones smiling), we can begin.” Followed by laughter of course.

I bring this up as I have always admired Ed’s thinking. He only made one wrong call that I can recall: doom following y2k! But was he wrong…or did he act as a stimulus to thinkers to solve the problem?

You see, Dr. (not Mister) Ed’s premise was based on computers and the degree to which businesses used COBOL (Common Business-Oriented Language), developed in 1959 and based on the work of Grace Hopper. TB is old enough that in a finance class he took at UCLA in 1969, he can recall putting data, punching it in to IBM cards , stacking them , and feeding them into the hopper for input into a mainframe somewhere on the campus. Due to storage and ease of programming the year was simply two digits with the first two ‘19’ already in the computer. It was probably assumed (remember assume makes an ass of u and me!), that long before the year 2000, a new system would be in place but it wasn’t and thousands of COBOL programmers would be obsolete.

Soooo…back to Dr. Ed. He produced scenarios for different industries and one of them was railroads where all scheduling and locating of rail cars was done on computer. Where would those cars be on 1/1/2000? Lost, that’s where, and the entire economy would come to a halt due to this and other forms of commerce…including banking, stock exchanges, etc.

So was Ed wrong? No, but he underestimated (or did he bring it to their attention), that business would rehire thousands of COBOL programmers to take on the gargantuan job of fixing the coding. TB knows this because Kim Fawcett, wife of his partner in bonds, was recalled, and told  him about it. Unfortunately for them, they were let go again after solving the problem. They were heroes – except for Dr. Ed and his followers as y2k came without a hitch…globally, as far as we know. It is even entirely possible that Ed’s proclamation of the problem saved the global economy trillions of dollars. Ed’s  insightful thinking is still available at yardeniresearch.com.

In the mid-19‘70’s, small (computer) calculators came onto the scene. One of the most significant was Compucorp’s (later acquired by Monroe) Bond Trader and selling for around $1,500! This eliminated calculating bond prices by hand using a Basis Book, but was extremely time consuming. It meant when bids were due on a new bond offering, the data fed into the computer and could be stale due to an unexpected event…a Fed rate cut for example. By the way, COBOL-based computers are still in use today, primarily in the banking system and other areas finance such as insurance.

By the early 1980’s Microsoft had proposed to IBM that they combine and make small computers, but in what was perhaps the biggest blunder IBM ever made, the Bill Gates/Paul Allen proposal was rejected, and shortly thereafter Steve Jobs introduced the Apple computer which by no means was portable, but could be used on a desktop…the rest is history. How many desktops made by Microsoft or Apple are there today (although Apple now makes laptops and tablets exclusively) vs mainframe computers? How many, Watson? By the way, the first Apple desktop was auctioned off in 2014 for $905,000 and others are now in the $500,000 range…that for a clunky, slow by today’s standards, computing system?

The point is that the world was incapable of preventing the Bubonic Plague, and of preventing the Spanish Flu of 1917, but was able to ‘react to’ and limit the effects of the Hong Kong Flu and all the subsequent ones (while not curing Ebola, limiting its spread)– until now – to limit the effects thanks to inoculations. Even those are hit or miss, however, as scientists try to predict which strain will be the prevalent one each year. In 2020, they missed but still lessened the effects, and may even safe lives from COVID-19 – one can hope, that’s all we have but remember the phrase: “there are no atheists in foxholes.”

Lastly, as a Rotarian, TB became aware of the extent to which Bill Gates. whose father was a Rotarian, has teamed up to eradicate Polio nearly worldwide. TB can’t help but think of the damage that has been done by people – especially American politicians and evangelicals who have shunned science, many for their own benefit, to try to make vaccinations voluntary throughout the U.S., a pity. Today, even as the price of oil implodes, President Trump is relaxing emissions requirements for automakers? What kind of wisdom is that?  Beats the hell out of TB, as well as why 40% of so of American voters still approve him. (NOTE: that is the last political comment TB will be making in this series except as it pertains to markets and the overall economy.

Tomorrow: thoughts on the markets (finally!)

Thanks for reading and God Bless Dr. Fauci,

Trader Bill

©Traderbill.com 2020

 

 

Vol 3 No 13…an American tragedy…

(It has been over a month since the last post…mea culpa…partly this was due to the hurricanes and the destruction they brought that put TB in a funk. Will try to be more prompt and get back to the ‘every other week’ pace. TB)

TB doesn’t want to overemphasize the disaster in Napa and Sonoma counties, but it is a big deal, perhaps second only to Houston in damage, much of which cannot be measured.

First, having lived in the Bay Area for 29 years before moving to Minnesota seven years ago, I have visited scores of wineries and gotten to know many in the wine industry. My book project on the passion these people have for what they do, brings to light their hard work…and let’s not romanticize it: it’s farming (don’t take TB’s word for it, Joe Heitz was the one who said it to TB thirty years ago)!

Many of them came from the Midwest and were farmers, others, as my friend Lane Tanner puts it: “were bitten by the bug and when that happens you’re done.”

As much damage was done to the vines, wineries, and their homes, the growth in population, fueled by both the tourist industry where many are employed, and a place where retirees see an Eden to spend their twilight years was a key factor in the loss of homes and lives, especially in Sonoma County in and around Santa Rosa.

There is much confusion due to the massive size of these fires. For instance, they refer to the one with the huge perimeter that has destroyed much of Santa Rosa as the ‘Tubbs Fire”…huh? Aren’t they talking about the wrong fire? Actually, no. The Tubbs fire stretches from Tubbs Lane just to the north of Calistoga, over the Napa range along the Petrified Forest Highway and then down to Santa Rosa. That fire is bigger in area than all other fires in the state, which includes the Orange County fire combined!

I am grateful that none of the properties owned by friends were affected, but then, it isn’t over yet. Nearly 30 are known dead, and over 60 still missing (owing to the destruction of landmark hotels in Santa Rosa and since those were tourists, likely most, if not all scattered but there are still those who were trapped in their homes.

The last fire in the Santa Rosa area was in 1964, and note that there were no fatalities…zero! So you can see the impact of growth. Of course the high winds, with gusts to 70 mph were a major cause of dissemination. Firefighters say that embers were blown ahead of the fire for one to three miles…making it impossible to control or predict where it would strike.

Consider California coming off a 500 year drought! Then the rains of early this year caused the valleys and hillsides (I drove from Orange County to Seattle in mid-February), to be the most beautiful I have ever seen them…and now this.

While it was green and beautiful, it came at the expense of mudslides, especially in the Santa Cruz area where you had to zigzag on surface streets to get from US 101 to Santa Cruz since the main (and only) highway connecting the two was inundated in a mudslide that took more than a month to recover from. Also, there are some great vineyards and wineries stretching from Santa Barbara to Paso Robles. North of there, in the flat between the coastal range and the Carrizo plain to the east, the vineyards are flat and looked like a swamp. While this concerned me, Randall Grahm of Bonny Doon noted that before budbreak it isn’t problematic. Still, I can’t help but think the wines from the area north of Paso to Greenfield, which is solid vineyards, would not be producing very good wine. For 2017,wines you are going to have to be very careful, and might want to pay attention to ratings before you buy (can’t believe I just wrote that!). Besides the rains, many areas suffered early frosts, then came the record-breaking heat, most notably in Napa Valley.

Twelve days above 100 degrees with no cooling at night, as Napa Valley traps in the heat, normally a good thing, while to the west and atop Howell Mountain there was some relief. Look for wines from there this vintage. Smoke taint is certainly a risk but over 90% of the grapes had been picked…the holdouts being some of the big cabs and zins, so you will have to be careful with these. In addition, to the record number of days, the highest temperature recorded was 115 degrees! Not good for wine…especially whites, pinot noir and merlot which are cooler climate grapes.

The combination of rain making the valley lush, then frosts, then the searing heat which dried out all that new greenery as well as the accumulated dead brush from the drought, was a prescription for disaster.

Here is another thing I bet you didn’t think of: with a lot of grapes in fermentation, they need to be tended to daily. Judd Finkelstein, whose father was a widely respected winemaker at Whitehall Lane, and owner of Judd’s Hill Winery, just off the Silverado Trail to the west of the Atlas Peak burn, had no damage but his winemaker had to be escorted in to tend to the fermenting wine, called my attention to this in an email to friends of the winery. How much wine that is in inaccessible areas will be lost? A pity.

While California took the brunt of it, Oregon and Washington were also impacted with fires. Note that all these fires are occurring at a time that fire crews are usually disbanding. This was particularly true in Washington where the largest burn was caused by a teenager setting off fireworks in the forest! It is likely that some of the California fires were due to human negligence, however the high winds toppled trees causing power lines to collapse setting off several fires.

Hopefully, while you are sipping your wine you will think of the wine people and also of those who lived nearby and are now homeless.

Lastly, a political statement, but one that shouldn’t be: there can be no doubt about climate change. First, we had 95% or more of the scientific community signing off on it, with most (all?) of the dissenters being shills for the energy industry and others. This is not from me but a friend with the National Academy of Sciences and of Engineering. Nothing new here…he told me this a few years ago.

Meanwhile, Trump and Co., including Secretary of State Tillerson (who, by the way was made a member of the National Academy of Engineering about five years ago for his work on fossil fuels), who while CEO of EXXON denounced climate change along with the rest of his company, despite funding many scientific studies which proved just the opposite. When challenged on this the company released all internal communications (what the hell were they thinking?), and the proof was shown that while they were denouncing it, the very studies they funded showed it to be real.

TB doesn’t know whether you believe in climate change, but if you don’t, and with the leadership (sic) of Trump, we do nothing, what will you tell your grandchildren when they bear the consequences of our inaction? Good luck on that one! I would like to add the climate change in Europe where Burgundy and Bordeaux had a huge disaster of a harvest. One winemaker in St. Estephe has predicted that in ten years there will be no more merlot!

A friend told me he was going to the wine country next week! I said, “still?” He said he was and going to both Napa and Sonoma. I tried to talk him out of it, and may have, saying they don’t need tourists there now. I added that IF he is still going he should focus on the Dry Creek and the Alexander Valley, both just out of Healdsburg and north of the fires, and further north the Anderson Valley, all of which produce some great wines.

Condolences to those who have lost their homes, or have friends or relatives that have had their lives torn apart by this catastrophe…also to the hurricane victims who continue to suffer.

Trader Bill

(c) traderbillonwine.com