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Ag’s Perfect Storm: Tight Supply, Strong Demand and Weather Uncertainty

Joining QuickHit for the first time is the commodities expert Kevin Van Trump of The Van Trump Report, helping us understand ag’s supply, demand, and clarifying uncertainties. Why are we seeing so much attention to agriculture right now? What’s contributing to the tightness in the ag market? How long will the corn rally last? How about wheat? What can we expect for the foreseeable future? And protein, how delicate is this with all that’s happening with ASF, cyber attacks, etc.?

 

The Van Trump Report, a very large agricultural newsletter and analysis service. Kevin Van Trump started trading in the 90s in Chicago. Switched over, traded Notes, 10 years, five years. And then really got more heavily into ag. He’s from a small rural town outside of Kansas City and I was really interested in corn, beans, wheat, cattle, livestock. They started putting together a newsletter 10, 15 years ago when ethanol started to become more prominent and it started to travel around the circuits with some of the bigger hedge funds and some of the bigger money managers.

 

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This QuickHit episode was recorded on June 2, 2021.

 

The views and opinions expressed in this Ag’s Perfect Storm: Tight Supply, Strong Demand and Weather Uncertainty QuickHit episode are those of the guest and do not necessarily reflect the official policy or position of Complete Intelligence. Any contents provided by our guest are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: There’s a lot of attention on ag right now. And can you just kind of give us a little bit of a set up of what’s happening in the ag markets, everything from the volatility of corn to, you know, what’s happening in wheat, a little bit of kind of protein, a little bit of beef activity. And that sort of thing. Can you tell us just generally why are we seeing so much attention on ag right now?

 

KVT: Well, I think you see the funds take a more proactive risk on approach. You know, just in commodities in general, we’re seeing location from Covid and things of that nature. And most people thought as we ramp back up, we’re going to have a pretty strong demand for, like you said, proteins bring in some of the livestock back on, just demand in general.

 

So we’ve seen more fund interest and more money flow into the space. Like you’ve seen the rebound in crude. You’ve also seen this rebound and in the ag and the commodity world. So China’s got a big appetite. They’ve been a huge, huge buyer of corn and have led the way. Beans as well on the protein side, as you and I will discuss here in a little bit. But yeah, basically, you know, we’ve we’ve gone from a oversupplied market for the last four, five years to all of a sudden we’ve got tight supplies. We’ve got record strong demand and some uncertainty into weather. So, you know, everything all said ripe for a possible rally.

 

TN: And is that tightness? Is that on, say, processing? I know with some of the protein, it’s processing concerns. But what is that tightness? Is it say, weather, drought in Brazil, that sort of thing, too much weather, too much rain, in the Midwest or what’s contributing to that tightness in the market?

 

KVT: Yeah, I think you had, you know, we really rarely get good numbers out of China from a supply or demand, especially a supply standpoint. They were supposedly sitting on a ton of corn and a ton of supply. All of a sudden they come online as a big, big buyer, you know, whether it’s maybe lack of quality with the storage of their corn, maybe the numbers just weren’t there all along. Maybe the supply wasn’t there. But it feels like they want to import the corn down into the southern part of China, maybe get away from.

 

We think Covid really exposed the rail dislocation. And when they had that rail shut down and dislocate, it probably crimped a lot of movement of corn supply and the Chinese government is looking at that and saying, hey, we can’t have that happen again if we’re going to see more possible problems. So they want to be a big buyer of corn from the US. They want to buy as much beans as they can from South America. And so so here we sit trying to juggle that. I think the world wasn’t really prepared for the size of buying that they were going to step in and do.

 

TN: OK. And how long specifically with corn, how long do you think that buying lasts? Is that kind of a three month phenomenon or does that go, say, for years?

 

KVT: Well, Tony is kind of how it played out for us in the soybean market years ago. China was what we would call a price buyer of beans. They would buy beans on the breaks and then they became a quantity buyer of beans, where it didn’t matter if soybeans were traded in five or six dollars a bushel or sixteen or eighteen dollars a bushel. They were going to buy beans every month. And so we see China as a quantity buyer of soybeans.

 

And we’ve predicted… Now, I hate to say this because we’ve made this call before. It’s OK. Own it. That China was going to become a quantity buyer of corn eventually. And like I said, we’ve heard guys in the market say this for the last 20 years and it never really came to fruition. They’ve continued to be a price buyer of corn.

 

We feel we’re at a tipping point and we believe they’re going to continue to be a quantity buyer of US corn for the foreseeable future as they try to transition, open more ethanol facilities, try to transition to cleaner energy. And some of those types of place, I think they’re buying corn longer term.

 

TN: So we’ve hit. It sounds to me like we’ve hit almost a semi-permanent new price level. Is that, would that be fair to say?

 

KVT: Probably not, I would say, how would you say? The grain markets in general and farmers in general. They’re going to plant from fencerow to fencerow. They’ll be planting acres on their back patio if they can, and they’re going to roll out more acres in South America. And so you’re going to see a lot of supply really come on with technology changes that can come on fairly quick.

 

 Even though I think China, you know, is going to be a continued buyer and demand is going to remain strong. I bet we really start to increase some of this production and we’ll probably balance it back out here. So that’s you know, they’ve caught us a little offsides right now. You got the price of corn at seven, close to seven dollars. And then we, barring any weather incidents or craziness that would really upset production, we probably trade here well, and then we start to ramp up supply and balance or back out.

 

TN: Very good. OK, interesting. Can we move on to wheat for a little bit? There’s been you know, we saw wheat come on strong and then come off and there’s expectations of wheat prices rising again. And you’ve covered this in detail in your daily newsletter. Can you talk a little bit about the wheat market dynamics and kind of what you’re seeing there?

 

KVT: Yeah, you know, wheat has become a big follower of corn, so to speak. We’ve seen, especially in China, you’re seeing a lot more wheat substituted into feed rations. So you’re getting a, you’re getting a bigger demand for wheat as a feed ration, but of corn, more to fizzle out. We probably see wheat drop off as well just because its demand is kind of correlated right now to being substituted in for the higher prices and corn. There are some pockets where we have some weather stories.

 

Spring wheat seems to be in short order here in the US. Some of those acres didn’t get planted, probably were planted to corn. You’re seeing those conditions problematic in, say, North Dakota, which is our biggest spring wheat producing state. They’re having problems with the drought and dry conditions. You’re having some pockets of some concern in parts of Canada, Canadian prairies, southern prairies, where also big spring wheat producing areas. So that, you know, spring wheat, maybe a little hot right now. But we see wheat is mainly a follower to corn at the moment.

 

TN: Very interesting. OK, let’s move on to proteins, because I think that’s a really interesting story. We had this cyber attack on the largest beef or one of the largest beef processors in the US this week. And we already had some tightness in the beef market. The inventories, the frozen inventories, from what I learned from your newsletter, were already low, other things. So how delicate is that market and will we see that follow on effects come later into the market or will that be sooner?

 

KVT: No, I think, you know, there’s going to be, there’s massive dislocation right now across the board still, and I think you can see that and we could talk about. I’m sure your follow up into the hog space. But I mean, you’re seeing that with both cattle and hogs. If you recall, back early in Covid, they had to shut down a lot of processing plants because workers were getting sick and they had to take precautions.

 

Now, on the hog and poultry side, as I’m sure as we were going to discuss, those shutting of the plants, whether it be a Tyson or whoever it may have been at the time. I mean, that really backed up supply or the herd. Now, you had producers had to call the herd and they pulled back and reduced the size of the hog or quite a bit or with cattle or things of that nature. Well, then all of a sudden, corn prices and feed prices take off to the upside. And you have a producer or rancher who just really doesn’t want to expand his herd because he’s not certain about the processing plant if they’re going to stay in his local area because it Covid and now he sees corn take off and the feed take off to these extreme highs. You’ve got them caught where there were a little bit short supply and all of a sudden demand coming back like gangbusters.

 

All the restaurants, or people around the world are starting to try to get out and about more. And so, like you said, you guys, you got surging demand right here and you got the supply pipeline dislocated a little cut off size.

 

TN: And then when we see things like ASF, African Swine Flu in China and the calling of the even the breeder hogs, that sort of thing, how global is that dynamic? Does not present pressure on, say, US pork prices or or is that really just a regional Chinese pork price phenomenon?

 

KVT: No, we think it does. I mean, we’ve seen as it creates ripples in China and they try to get on top of it. I mean, it’s a crazy dynamic. They cut their hog order in half. But as they tried to get on top of it, they’ve had to be bigger buyers of importing of pork and the United States has been a beneficiary. And I think that could continue to be the case. You know, God forbid that we were to get a case here in the United States that’s always kind of the last few years, the big wild card in the mix.

 

If we were to spot something like that here in the US, know probably the knee jerk immediately as to the downside. Just because prices probably break because people are going to want to eat the hogs. You’re going to kill a lot. But I think longer term, that creates a supply shortage and we rebound back in the opposite direction. So it could be a double edged sword.

 

TN: OK, so we’ve seen a lot of volatility in these markets. What are you looking for kind of for the remainder of 2021. Do you see these prices elevated, say, until Q3? Do they come off in Q4 or do you see these, the kind of the volatility and elevated prices continuing through the end of the year?

 

KVT: You know, kind of like we talk in crude, we probably see demand outpace supply through Q3, Q4, maybe even a little later if you get some dislocation. In our sector, if you’re talking corn, beans, wheat, things like that, it’s really right now about US weather.

 

In Brazil, they’ve had some real rough patches of dry, dry and hot weather and we continue to see their corn crop get smaller in size. The USDA was talking they had lowered it down to one hundred and two million metric tons for corn. Now they’re talking some guys in the 95 to 90 million metric tons. And so that that’s going to take more corn out of the supply pipeline or are available for exports. And now here in the US, we’ve got the drought that’s lingering and could, it just sit, we’re just right here on this tipping point, Tony, where if it turns hot and dry within the next 60 days, corn, beans and we take off. I’m talking we’ll probably go all time record highs. If you see what I’m saying.

 

So and you remember back to the 2012 drought, the USDA had the crop rated about the same condition as it does right now. Things were similar, but all it takes, Tony, and corn, is for you to get really hot and dry right around the pollination period, which will be the end of June, first week of July somewhere in there. And boy, I tell you what, the market will add a ton of risk premium and, you know, a lot of fireworks take place.

 

So that’s kind of what we positioned ourself for. If we get that story, we take off to the upside because demand’s so strong. OK, so we’re looking for hot and dry potentially in late June, early July. And that would really set things on fire and in ag markets.

 

TN: Right. Very good. Kevin, thank you so much for your time. I really appreciate this. This is a real pleasure to have you here. You know this stuff inside and out and we’re really grateful for all of the insights you’ve given us today. Thanks so much. For everyone watching, please like the video, please subscribe. That helps us out a lot. And we’ll see you on the next one. Thanks very much.

 

KVT: Thanks, Tony. Appreciate it.

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QuickHit

QuickHit: Will China Invade Taiwan? (Part 1)

Albert Marko and Christopher Balding are back for another #CageMatch special episode for QuickHit, where the two experts discuss the million dollar question: Will China invade Taiwan? Tony Nash is hosting this episode with Marko and Balding sharing what they think the two countries will do. Does China have the capability (and money) to invade Taiwan? If ever, will Taiwan ever retaliate? Can they afford to go to war? And how will the US fit in all these? Will this be another war waiting to happen?

 

This China and Taiwan conflict is Part 1 of 2 episodes. Subscribe to our Youtube Channel and signup to the CI Newsletter to be among the first to know when the second part is out.

 

The China-Taiwan relations was briefly discussed in the first ever #CageMatch episode. Watch the Part 1 here. 

 

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This QuickHit episode was recorded on January 26, 2021.

 

The views and opinions expressed in this Chinese invasion of Taiwan QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: We’ve seen some build up of China’s activity toward Taiwan especially over the last month and we wanted to have a deeper discussion about one of the big questions that is out there which is “Will China invade Taiwan?” and is that a viable likely possibility or is it just saber-rattling to shake things up a little bit. With the new Biden administration and the change over there, there is potentially an opportunity for China to take a more aggressive stance toward Taiwan, the region and, the U.S.

 

We’re joined by Chris Balding and Albert Marco to talk about this. Let’s go through your basic thesis. Chris, what’s your position China preparing to invade Taiwan? Do you think it’s something that is possible and or likely?

 

CB: I would put what we think of as a full-scale invasion, where there’s soldiers and rubber rafts storming the beaches of Taiwan. I think that is relatively unlikely as a scenario. But I do think what is much more likely, and I would put it above 50% is some type of escalated conflict either in the East or South China Sea over the next 18 months as distinctly possible.

 

And when I say that, let me emphasize, we’re talking a range of possibilities. This could be everything from a PLA navy boat ramming a Taiwanese fishing boat. It could mean blowing up a shoal or something like that they’re fighting with Vietnam about. There’s a range of possibilities, but some type of conflict within the next 18 months is distinctly possible.

 

The reason I say 18 months is Xi will be going up for election of his third term in about 18 months. That is a very important time period. And I guarantee you, Xi and those around him know what basically they’re looking to accomplish within those 18 months. You have a number of complicating factors. It’s not uncommon for Chinese leadership to say: “Hey there’s a changeover in the U.S. Let’s see what we can get away with”. That’s not why they would do it. The timing is fortuitous.

 

So, I do think some type of escalation in the East and South China over the next 18 months is likely.

 

TN: Okay. Albert, what do you think?

 

AM: China likes the poke and they like the prod and they like to test the perimeters of defenses like most nations. When it comes to offensive capabilities, they want to test their adversary’s defensive capabilities.

 

Do I think that there’s going to be some kind of escalation? Well, I kind of agree with Chris there. Something might happen along those lines. But I don’t think it would be anything very serious. China would need an assurance of a quick and decisive victory if they were to attempt something like that. Obviously, a full-scale invasion is definitely not going to happen.

 

But even blowing up a shoal or taking out a couple fishing trawlers or whatnot, they certainly don’t want to sit there and affect their shipping lanes. Taiwan straits in that entire region, is the world’s biggest trading lanes for ships. You can’t have the United States running there with an armada just to protect Taiwan. It would adversely affect the Chinese economy. Xi at that point in 18 months, like he’s running up for election like Chris said, he can’t afford any kind of hiccups right now in the Chinese economy. And most of the CCPs elite are ingrained with Taiwanese companies. So, for them to sit there and disrupt that wealth, I just don’t see it happening.

 

TN: We saw over the last week where the Chinese government said that they can now defend itself in its claimed territorial waters. And with China expanding its claims, whether it’s with India, South China Sea, wherever it is, it seems to me that they’re telegraphing a more aggressive stance. Do we expect that as a warning? That is fairly hollow but they just want to put it out there or is that something that we believe they’ll act on against the Philippines, Vietnam, Taiwan, Japan or something like that. Could we see the claim over, maybe, the Senkaku Islands go hot at some point for some phosphorous hills or whatever?

 

CB: A lot of this follows a very similar pattern of what we call “salami slicing,” is over the course of a couple years, they just continue to slice away and slice away and slice away, until the last logical step in progression of some type of escalation. That’s a similar type of strategy. That’s part of why I say a full-scale invasion of Taiwan, likely no, I don’t think it is. I generally agree with Albert in that sense that I would put it as a very low probability type of event.

 

Are there other types of conflicts that may take place? Whether that is Taiwan or Chinese navy and fishing vessels circle islands and stuff like that. Absolutely. I think it’s relatively likely 50 percent over the next 18 months.

 

There’s been very under-the-radar moves in the sense that within the past year, maybe 18 months, Xi replaced key generals that oversaw the southern and eastern areas, which are very closely tied to Taiwan.

 

If there’s not some type of conflict, they’ve taken all the move that seemed to indicate signal that yes, they are at the very least they want to stick out their chest a lot more in these areas. And I think probably the one area where I would fundamentally disagree with Albert is that I think he’s perfectly right on “why would China do this this? This could mess up their shipping lanes they’re invested in Taiwan.?” And the reason I disagree is not that I think Albert is wrong. But I think, it’s the wrong type of rationale.

 

If we look at why is China picking a fight with India in a frozen ground on the Himalayas at 25,000 feet? It makes no sense. I mean there’s little logical reason. They’ve successfully turned India against. They’re kicking out in India. They’re kicking out Chinese apps as fast as they can find them. And they’re looking to start an Indian smartphone market. Very little action is proven has provoked a very large reaction from India. Albert’s rationality, in a way, is perfectly accurate. I don’t think that necessarily captures the reality of what I would call Chinese rationality of the logic that they’re using to make those decisions and the risks they’re willing to take.

 

TN: If we take the Hong Kong scenario and we talk about the salami slicing that Chris talked about. After the umbrella revolution in 2014, intel I was hearing out of China was that the decision was made in Beijing that Hong Kong would lose its status as a global financial center. And it was just a matter of time, right? And we’ve hit that point effectively. Okay? Hong Kong is not a place where you, unless you want risk, where you’re going to necessarily park your assets. It’s taken five years. They were patient and it seems to me they’re beyond the tipping point. It was that kind of salami-slicing approach to taking away the credibility of Hong Kong, but also injecting the inevitability of Chinese ownership. Is it possible that can happen with Taiwan?

 

AM: Well, of course, it is certainly possible. There’s no question about that. Do I think it’s possible in the next 18 months? Absolutely, like even Chris agrees. I don’t think that’s going to happen in 18 months.

 

There’s no Chinese build up militarily for Taiwan invasion. If you were to look at every single military offensive project has logistics involved. There’s just none piling up. The United States would see that in satellite images well in advance.

 

However, back to the Himalayas, which I think is something we should rather key on. If you want to talk about India’s slicing away stuff, there is a rationale for the Himalayan conflict. It’s the watershed. They need that water and they they’ve been piping that water into agricultural areas in China for years now and they haven’t done too much of it because it’s going to really upset India. You have a billion people in India versus a billion people in China that needs fresh water. It’s going to be a problem. They’ve built mountaintop bases. They have built up a military presence there. That’s where I would actually focus in the next 18 months as a real skirmish.

 

This Taiwan thing, I completely agree. It’s well within the Chinese game playbook to slice away and just wait for their time. But a Taiwanese invasion would be extremely costly for the Chinese. The risk-reward for the Chinese right now to even think about adventuring into Taiwan would cost them significant military losses, significant economic losses. It would ruin some BRI projects. It would ruin the perception of China as a growing superpower. There’s just so many negatives that I can’t see any real generals in the PLA telling Xi that this is a good idea. Now that’s not to say that Xi won’t do it anyways because…

 

CB: Tony, let me ask a question. So, Albert, 70 people I’ve talked to say they actually see the military risks increase significantly to Taiwan based upon hardware that’s getting onboarded in the PLA. They see the risks to Taiwan’s increase significantly post about 2022. Okay. Would you share a similar outlook?

 

AM: You have to understand, when it comes to offensive versus defensive capabilities, the defense always has a clear-cut advantage, right? Offensively, it takes seven dollars per one dollar of defense of offensive spending to actually take over. Now without a doubt, China would win over the long term. But at what cost will the PLA navy take? The Taiwanese defenses are no joke. They’re well equipped to at least hold them off for quite a long time and invading. Even the PLA. The PLA officers, that’s a social structure. That’s a social ladder realistically. How would it look like for Xi if the firstborn son of some of these elite families are coming home in body bags?

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QuickHit

QuickHit: Understanding the Covid Vaccine Supply Chain

Blue Maestro co-founder Kirstin Hancock joined us this week on QuickHit to explain the sensitivities around transporting the Covid vaccines. How vaccine manufacturers are adjusting to the special handling requirements, and how technology helps make sure that these are delivered in perfect condition?

 

Kirstin is the co-founder of Blue Maestro, which was set up eight years ago. Blue Maestro designs and manufactures Bluetooth sensors and data loggers. These are very small devices that have a PCB chip in them that use Bluetooth technology to communicate with smartphones to measure variations of the environmental conditions such  as temperature, humidity, barometric pressure, etc.

 

💌 Subscribe to CI Newsletter and gain AI-driven intelligence.

📺 Subscribe to our Youtube Channel.

📊 Forward-looking companies become more profitable with Complete Intelligence. The only fully automated and globally integrated AI platform for smarter cost and revenue planning. Book a demo here.

📈 Check out the CI Futures platform to forecast currencies, commodities, and equity indices

 

This QuickHit episode was recorded on December 11, 2020.

 

The views and opinions expressed in this QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

 

Show Notes

 

TN: Great. Okay. That sounds really interesting and I’ve been looking at you guys for a long time and what I’m really interested initially to talk about as we look at the environment with Covid and a number of other things happening this week and next week, I’d really like to understand what you’re seeing around the vaccine supply chains because I know you guys do some work there and I know it’s critical to see your types of products in those supply chains. Otherwise, we don’t get live vaccine, right? So, can you talk to us about a little bit of the work that you’re doing there?

 

KH: One of the criteria for the CDC is that sensors and data loggers are able to measure temperature in real time and that this is able to be recorded over a period of time and that maximum and minimum temperatures can be seen throughout the time.  Our sensors and data loggers are all unique.

 

They have a unique MAC ID address on them and they can be named, and logging intervals can be set at specific intervals. So, within the storage and transportation of vaccine, Tempo Disc in particular, is a really useful tool because it does all of these things. Now, we have actually been using Tempo Disc in a number of different countries to transport vaccines already.

 

We’ve been working with the UN this year, 2020, to deliver vaccines in developing countries in Africa through a project that they’ve been working on and that’s been very successful.

 

TN: Very good. So, what are the considerations like how long are these things usually in transport? I mean, what variability are… are there huge temperature swing variabilities? Are there huge… What are the kinds of things that the vaccine makers are really worried about because this seems like a really delicate supply chain?

 

KH: What vaccine makers are really concerned about is that the vaccines go out of their temperature range. Now, using our app for Tempo Plus 2, you can see real-time data. So, you can see exactly what the temperature is of the container that the vaccines are being put in and that’s generally what our users are doing.

 

They’re using Tempo Disc in the containers and they’re labeling them according to that batch of vaccines and that’s really important so that they’ve got the traceability from when they go from the manufacture of the vaccine right out to the pharmacies, the nurses, the clinics where these vaccines are administered.  And I think that’s probably the number one concern that these vaccines go out of temperature range because when they do, there is an emergency procedure that goes into place and basically, all of the vaccines have to be disposed of.

 

TN: Interesting. Okay. I really wanted to talk to you because with all of the talk of this distribution, I know this is probably something that there’s not a lot of thought from kind of your average consumer. But it’s such an important part of what’s happening here that I wanted to get some understanding of that. So, can you also tell me or help me understand… Blue Maestro does a lot of other work around healthcare and we’re an artificial intelligence company, we use a huge amount of data. You guys are an IoT company. You do the same. So outside of the vaccine supply chain, how are people using your products around health care and life sciences?

 

KH: We have a number of different use cases for Tempo Disc in a number of different healthcare applications. We work with a number of different US companies to monitor specific environmental conditions and I’ll just give you a couple of examples. We’re working with Boston O&P Orthopedics and Prosthetics to develop a solution where Tempo Disc is used in prosthetics to monitor how long people are wearing their prosthetics.

 

We also work with a company called GoGoband on a device that monitors when children or people with disabilities have wet themselves at nighttime because then their parents can get alerted. So, there’s a variation. We work with some international companies to actually monitor and record the pharmaceutical equipment that they have throughout the factory and then for its transportation to particular pharmacies within a number of different countries.

 

TN: Interesting. So, with the pharmacy activity, I mean that’s very precise manufacturing processes. As we get more into say precision manufacturing, how are manufacturers using your devices to understand precision around their manufacturing processes? Because again, as we have more sophisticated products, manufacturers have to know this stuff. It reduces defects. But it also creates ultimately better products for customers. So, can you help us understand a little bit about that?

 

KH: So, we issue conformity certificates and calibration certificates. They’re a little bit different. But basically, what they do is they track the PCB devices from the very start of the manufacturing process. So then when they’re programmed by our team, we have each device has a unique ID so that particular device can be tracked right from its manufacturing cycle right to its end user.

 

Now this is really important for traceability within the supply chain because the end user knows exactly which product they’re using for what purpose. So, if they’re looking at just temperature, they can have an ID that they can trace all the way through. And this ID is, it’s embedded in the electronics firmware. But then the end user can also change this so they can give it its own name.

 

So, if you’ve got a vaccine batch, then you can give it that idea of the vaccine batch. But then you can trace it right back. Now, our calibration certificates are two-point temperature calibration certificates. They’re very accurate.  Our devices use a product called si7020 silicon labs sensor. It’s one of the most accurate on the market. Its accuracy is 0.3 percent and we’ve had that tested and very verified by labs and our devices are very accurate.

 

TN: Very interesting, Kirstin. I think we could go on for a couple hours talking about this stuff. But I just wanted to kind of get a quick overview out to people so they understand what’s happening particularly with vaccines but also with other aspects of the manufacturing supply chain. So, thanks so much for your time today. I really appreciate it.

 

For anybody who’s watching, please check out the details in the bottom of the page. Also follow us on Youtube. Thanks very much. Have a great day.

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QuickHit Visual (Videos)

QuickHit: We’re not going to normalize

In this episode, our expert guest Grant Wilson of Exante Data said that “we’re not going to normalize” and that countries need to make the very difficult decision to risk re-infection or re-outbreak in order to reopen the economy.

 

Grant Wilson is the Head of Asia Pacific for Exante Data, a macro advisory and data analytics company based in New York, with a broad global client roster. Exante Data was one of the first to identify and analyze the impact of Coronavirus with detailed data.

 

You can also check out our previous QuickHit episodes: How do we use up all the corn now? and How ready is the military to face COVID-19 and its challenges?

 

Show Notes

 

GW: So we saw COVID very early – mid to late January. In fact, I positioned it as a key risk factor for our clients. And as the situation evolved we just stayed with it.

 

We moved the firm increasingly towards all data through this period because we’re trying to assess how the virus is affecting the economy: [what are the] different scenarios to restart in different countries, different sectors, which is really the most germane question at the moment.

 

TN: Where do you think we are? I think the initial shock is past. Do you think we’re on a path to normalization or are we still in a hesitation phase before we get on to that normalization path or something different?

 

GW: I think it’s something different. I don’t think we’re going to normalize. I do think there are going to be industries, which have fundamentally changed coming out of this. People want to put a time frame on it, and I think you just got a run with it.

 

But to give you some examples, I’m extremely pessimistic about commercial real estate globally. The way people work has changed fundamentally, and it’s not going to change back. Whether the virus comes off a little bit more or whether we do get a second wave. The fundamental changes that are happening in terms of office environment, the digitization of communication. Those things are not going to turn around. So if you’re a large landlord or a sponsor of CMBX, derivative structure, you’ve got some real problems, and it does not matter where the virus is.

 

Similarly like public infrastructure. People are clearly using less trains, less buses, obviously less planes. Interesting that there could be a shift back to private car usage. We are trying to think through the secular things coming out of this.

 

And then for the virus itself, one of the most peculiar things is that there’s only probably a couple of countries globally that can truly achieve elimination, like to totally get rid of the virus within a proximate, self-contained environment. New Zealand’s a very good example of that. In Australia, the case counts are extremely low. So the rest of the world will not eliminate this thing. They’re gonna have to pick and make these really, really difficult decisions about how much of a virus risk and re-outbreak that they want to tolerate as against the imperatives of restarting the economy.

 

TN: A lot of the talk was about flattening the curve, which was about reducing the kind of overwhelming capacity going into hospitals so they could actually treat people. That flattening the curve discussion has changed to something different. And it seems to almost be approaching a zero-tolerance discussion where we have these lockdowns and people can’t go into work and make a living.

 

In the States, we recently saw Elon Musk threatened to move his company out of California to Texas potentially so that he could get his company to work. And the State of California or the county relented and let them come into work. Are we in a period where there’s selective lockdowns? Does flattening the curve mean anything anymore? What are you seeing in terms of the economy, industries?

 

GW: The thing is that a lot of companies, retail, hospitality, mass events, you know football games, basketball, things like that, they don’t really work in this model where you have social distancing. And so, you either really just have to go for full eradication. But it’s not possible in many of these places. You’re going to have to tolerate some reinfection risk and get on with it.

 

I’m very far away from the U.S., but we’re tracking it very closely state-by-state that there is sort of a polarization developing where Republican states are more inclined to try to restart the economy and sort of run this risk. Democratic states are still more tolerant of lockdown. And it seems increasingly politicized, and that’s not a great surprise given you’ve got a big event at the end of the year.

 

I’ve contrasted to Europe. When you listen to Angela Merkel, not Britain because Britain was very late and very confused in terms of their strategy. She’s a scientist by training and she explained very, very clearly that the first part of the strategy was to make sure that they didn’t blow through their ICU constraint. And now that they’ve achieved that, indeed they have flattened a curve. They’re not gunning for elimination. They know they can’t get there. And so they’re just trying to manage what’s known as the r0 so it doesn’t pop back up above one and you have a real explosive re-acceleration. But they’re having to live with it.

 

What still hasn’t necessarily gotten through to people, is that business models that worked previously don’t work anymore. It’s very hard to see how a lot of small and medium-term enterprises are going to make it out of this. And I think that’s the Chapter 3 or Chapter 4 version of it. But that’s the concern. There’ll be some winners and there’ll be some adaptation of the economy. But the legacy and the tail on this is just immense. It’s immense.

 

TN: So tell me this. Is there anything good that’s going to come out of this?

 

GW: There’s probably going to be a very significant re-think about climate change. This is going to be one of the first years where carbon emissions globally are going to fall. Effectively, it’s because we shut things down. It was the way that people actually wanted to get there. That’s probably one interesting data point. If you look at that area very closely, we’ve never been able to run a real-time experiment like this. So it will be very interesting to see how the effects sort of percolate through.