Tag: Donald Trump

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Until 2019, TB had another website here (traderbill.com) but as a result of his retirement is no longer active.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

 

 

 

Vol 3 No 12…there is no global warming, got it? …and no climate change…sheesh!

Pardon, TB’s tongue-in-cheek slug for this blog, but he has had it with the naysayers. This was prompted by Hurricane Harvey but it goes deeper than that…much deeper.

First, the scientists who noted the rapid rise (not to the naked eye) in global temperatures, saw a problem: never in recorded history had the temperatures risen that rapidly and 2016 was the hottest year ever – globally! Then came the naysayers…mainly pseudo-scientists and as my good friend who is a member of the National Academy of Sciences and the prestigious National Academy of Engineering.

Years ago I asked him about climate change and he said that the only scientists that didn’t believe it was occurring were shills for the energy industry…the same ones who said smoking wasn’t bad for your health. I believe we wouldn’t have so many who disagree if it hadn’t been Al Gore who created the documentary An Inconvenient Truth.

So TB is always asking winemakers if it is occurring and not one…zero, zip, zilch…has refuted it. Now remember, these guys, like all farmers, keep records of daily temperatures, highs, lows, frosts, freezes, heat waves, rain…you name it…so when they say it is happening…trust me, it’s happening!

Now let’s go back to Katrina: made landfall August 29th, 2005 in New Orleans…almost exactly twelve years ago. Scientists noting the ice melting at the poles (note the recent break-off in Antarctica that is bigger than Manhattan!), predicted that rising sea temperatures…remember we began losing the ozone layer decades ago and that protected the earth from high temperatures…that rising water temp in the Caribbean would create more intense hurricanes…of course they were scoffed at by people like Sarah Palin and Donald Trump and joined by the conservatives of today who make the Reagan Republicans look like liberals. (Interesting that after Katrina the evangelicals were saying it was because God had brought this on them due to their morals…have you heard a single comment like this about Harvey? Perhaps God’s aim was a wee bit off…or was he punishing the big oil companies headquartered in Houston?…just askin’…)

In 2016, we were on a trip to Spain and Portugal followed by a wine cruise of southern and eastern Spain. I wanted to go to Madeira (which I highly recommend…an incredibly beautiful island), so while we were in Lisbon we took a day trip there. On the plane, out of boredom I was thumbing my way through EasyJet’s Traveller, inflight magazine (April 2016) and ran across this article: Can Bordeaux Survive the 21st Century? Obviously it caught my eye: “Last summer (2015) ,was the second hottest on record in France. If temperatures continue to rise, the nation’s most famous wine-producing region could be in serious trouble.” Aha, you say…Al Gore again…’fraid not, skeptics. The story was an interview with Arnaud Lasisz, assistant winemaker at Château Pape Clement, which dates back to 1252 and is a grands cru Bordeaux. The blend there is 55% Merlot and 45% Cabernet Sauvignon. 60% of the left bank vines – all of the original 1855 classification chateaus are located here – are Merlot…a grape that cannot tolerate intense heat.

“Within 20 or 30 years, Merlot will ripen in August (as opposed to late September or early October,” according to Dr. Kees van Leeuvwen, of the National School for Agricultural Sciences in Utrecht, “that will clearly compromise the quality of the wines, because they will lack freshness and have too much alcohol.”

So…what to do? In the nearby Médoc, they have planted 52 alternative varieties of vines to see how they cope with the higher temperatures. They are also abandoning tractors and replacing them with Breton plough horses at some of the chateaux in order to reduce the carbon footprint and within ten years will be biodynamic. Believe it or not, a three-quarter ton plough horse leaves less of a footprint than a tractor.

Now that TB has established the reason global warming is in this blog, let’s look at some of the effects and some of the bad players. First, Harvey occurred at a time where the sea temperature was six degrees above average – SIX! This is what scientists warned about and it is coming to pass. Some will argue that the 900 year drought in California followed by massive rains this year was just a fluke…or the increase in intensity and number of tornadoes…or the increases in flooding in low lying areas of the southeastern states. Let them…they are simply wrong. As stated earlier it is not in the interests of the petroleum companies to admit to global warming. Just this week a report was written that Exxon Mobil (you do recall the Exxon Valdez, right?), had been privately funding research while publicly denying climate change. Why? Because the cause of it is the rapid increase in man made carbon emissions from ….fossil fuels! In an act of Chutzpah, they took their denials to a new level: they challenged researchers to look at all their internal memorandums and the studies and see for themselves…bad move, because they were taken up on it and oh-oh…they lied…through their teeth for years. In May, the company agreed to activists to reconsider the effects of climate change on their assets…and a class-action lawsuit has been filed charging them with overvaluing their reserves in light of the problem. TB wonders if anyone told Rex Tillerson about this??? Naw…he knew nothing.

Looking around, sparkling wine grapes were harvested in early August in California, earliest on record, Burgundy had horrible hailstorms and weather, Italy has its worst drought on record and the smallest harvest in decades, Oregon and Washington are suffering from record high temperatures with effect on grapes uncertain.

Honk if you believe there is climate change, global warming, whatever you want to call it, and if you don’t, ask yourself this: what are you going to tell your grandchildren, when they ask why everything is dying?

It’s a great life if you don’t weaken…

TB

©2017, traderbillonwine.com