For all the “gigafactory” hype, Tesla doesn’t make batteries: Cell production is the responsibility of its Japanese partner Panasonic. The other leaders in the field are LG Chem and Samsung SDI ,both listed subsidiaries of the namesake Korean conglomerates, which supply the electric-vehicle projects of Nissan, General Motors and BMW , among others.
.. Hot on the Koreans’ heels are two Chinese companies determined to supply the ballooning Chinese electric-vehicle market: BYD, 25% owned by Berkshire Hathaway and also an electric-car maker, and CATL, which is planning a $2 billion initial public offering in Shenzhen in the coming months.
.. These five companies and a few newcomers—among whom car makers are conspicuously absent—currently intend to build 24 factories with a total capacity of 332 GWh by 2021
.. Investors looking to benefit from this gold rush need to take a very long-term view. The capital requirements are vast, and the contracts being signed are at wafer-thin margins. Sam Jaffe, managing director of battery researcher Cairn ERA, says the companies are taking “the traditional Asian conglomerate approach” of prioritizing market share over profits.
.. And manufacturers are under intense pressure from environmental regulators to sell electric cars even though their cost is uncompetitive. The only solution for car makers will be to pile pressure on battery prices. Big new factories will enable suppliers to cut unit costs, but profits could get lost in the squeeze.
.. Investors may be better off looking further up the supply chain. The most valuable component of a battery is its cathode
.. The risk for these companies is that a radically new technology makes existing investments obsolete.
.. John Goodenough, a now 95-year-old professor at the University of Texas considered a founding father of the lithium-ion battery, this year claimed a breakthrough with “solid-state” cells, which sideline various problems by replacing a flammable liquid electrolyte with a hard layer. Toyota expects to sell cars with solid-state batteries by the early 2020s; British engineering firm Dyson has penciled in a 2020 launch date for a solid-state car.
Donald Trump Takes a Hostage
Contrary to belief, decertification neither violates nor cancels the agreement. It does not betray our commitments to our allies and it does not abrogate our obligations to the Iranians. It’s an act of domestic politics between two branches of the United States government.
But it’s also a psychological step, a brash signal that Trump is prepared to see the deal fail and accept the consequences, including war, if he can’t negotiate a better one.
.. There’s escalatory risk, as the United States, its forces thinly stretched in the Middle East, become vulnerable to attack by Iran’s terrorist proxies. Think of the Marine barracks bombing in Beirut in 1983 and the humiliating American withdrawal in its wake.
There’s diplomatic risk, as Iran traps Western diplomats in a process of never-ending negotiations designed to go nowhere — all the while turning the Islamic Republic into a reputable member of the international community and the United States into the global pariah.
.. the risk that Iran will call Trump’s bluff, much as Bashar al-Assad called President Obama’s when he failed to enforce his chemical red line in 2013. A superpower repeatedly exposed as a paper tiger by lesser, if more willful, adversaries will not maintain its pre-eminence for long.
.. Iran’s regional behavior has become worse since the nuclear deal came into effect, not least because it provided the regime with a huge new income stream — $10 billion in cash and gold in 2016 alone.. plus more than $100 billion in additional sanctions relief.. it wants a robust nuclear base that puts it within a screw’s twist of a sizable nuclear arsenal without the economic and security risks of actual possession... If we couldn’t prevent Pakistan or North Korea from going nuclear in the 1990s, why should we think we’ll be able to stop Iran in the nick of time?.. The American Goliath needn’t be helpless against a Middle Eastern state with a gross domestic product only slightly larger than that of metropolitan Atlanta... We are living through a nuclear nightmare on the Korean Peninsula after more than two decades of optimistic diplomacy. That’s a fate we ought to do everything possible to avoid with Iran... decertification isn’t a sufficient condition to break the paralysis of our Iran policy, but it is a necessary one
Your Tolerance for Investment Risk Is Probably Not What You Think
Questions financial advisers ask clients to get at the answer actually measure something completely different—often leading to misguided investment strategies
they take all sorts of different concepts—such as regret, fear and overconfidence—and they lump them all together under this vague concept called risk. Each of those things is worth understanding and examining on its own.
.. people who are labeled as having a high tolerance for risk may really be reflecting dangerous overconfidence. You don’t want them owning portfolios of risky stocks because they have a mistaken sense of their ability to pick winners. Conversely, investors who are considered to have a low tolerance for risk could actually be excessively afraid of daily ups and downs. Instead of having them forgo the returns from stocks, better to teach them to overcome the fear, rather than let the effects of fear bleed into their investment decisions.
.. Rather, how people feel about a big decline depends almost entirely on what has been happening in the market recently. So asking people how they would feel if the market falls 40% is likely to elicit an answer “I am afraid” in the wake of a big decline, and elicit “I am not afraid” when the market has been moving up. Asking people today how they felt in March 2009 is likely to elicit a response indicating less fear than they actually felt in 2009.
Next Up for GOP Congress: Raising the Debt Ceiling
Treasury Secretary Steven Mnuchin says federal borrowing limit must increase by Sept. 29, giving lawmakers little time after recess to act
It is going to be a tight squeeze. Treasury’s cash balance is expected to drop to near $25 billion in September—a precariously low level, especially in the event of some unforeseen shock, such as a severe natural disaster, global crisis or unexpected drop in revenue.
Strategic challenges hang over Mr. Mnuchin’s options. When President Barack Obama was in power, some Republicans challenged the White House to allow cash to run down and prioritize some payments, such as interest on debt, over others, such as discretionary spending. That idea could return.
.. Complicating matters, the debt limit isn’t the only fiscal fight lawmakers are bracing for when they return from the August recess.
The showdown will coincide with the end of the fiscal year on Sept. 30, and the prospect of a government shutdown if Congress fails to authorize new spending for 2018. That could make the debt limit increase more difficult to address, if lawmakers get bogged down in a fight over spending.