Blain’s Morning Porridge Nov 22 2019, Trolls and Climate Cure

Blain’s Morning Porridge – November 22nd 2019

“And was Jerusalem builded here, among these dark satanic mills?”

Its Friday…. Can I have the weekend off please?

I seem to have developed a talent for pressing people’s angry buttons – but it’s not actually my fault. I just like say it like I see it.  Don’t blame me.. I’m just pointing stuff out.

But, first – a diversion:

Years ago, a doctor chum told me about a patient.  The chap was desperately unhealthy, pale, spotty, unable to sleep, losing weight, agitated and extremely nervous. They checked out everything and couldn’t find anything wrong. They sent him on courses, taught him to meditate, and even tried all kinds of homeopathic nonsense on him. One day the doctor noticed him sitting in waiting room reading the newspaper.  He asked him: “Do you read the Daily Mail every day?”.

The patient replied; “Oh yes, I read it religiously, it’s the first thing I do.”

The Doctor immediately prescribed a course of Not Reading The Daily Mail and made sure the chap’s newsagent wouldn’t deliver or sell it to him.

The patient came back a month later completely cured.

The lesson of the tale: don’t believe everything you read, especially stuff on the internet babblesphere – there is an awful lot of bogus fake news and manipulation going on. I got spanked by some of it yesterday – trolls sent me some extraordinarily angry emails.

I managed to really upset some Americans when I suggested electing a female Democrat might not trigger the end of the World.  I expressed the opinion there is no particular reason for stocks to tumble 25% on a Democrat White House – very little in the real economy will change, although there will be tinkering on the edges re taxing the rich and trying to untie the Gordian Knot of US healthcare.

These heretical comments made some Americans quite rude. They questioned my parentage and kindly sent me pages and pages of stuff conclusively proving Elisabeth Warren is the antichrist and will trigger Armageddon. I was also treated to a treatise on how the current Ukrainia thing isn’t actually about Trump – who is a great president btw – but will be about exposing Democrat corruption when the trial goes to the senate.

Let me assure all Americans – you elected them; you deal with it.

Believe whatever you want to believe. Not our problem, so please don’t make it so.  However, if I think your politics are likely to move markets, then I reserve the right to express such an opinion – I believe your constitution protects that right, or doesn’t it apply to me as I’m a “Commie Stooge” and much worse?

I also managed to upset a number of Brits – but in the nicest possible way. One of my very good chums spluttered into his early morning Earl Grey: “I say Blain, you really can’t write things suggesting the Tories and Labour are no better than each other… Bad show Old Chap.”  But even he agreed the choice between them didn’t look particularly appealing.

Well, apologies to him. He is probably right.

I expect many of the waverers fed up after 10-years of Tory incompetence will be reassured by just how utterly and completely hat-stand the new Labour manifesto is. It was announced yesterday, and it’s marvellously implausible stuff – guaranteed to stiffen up the resolve of just about anyone who was thinking 10-more years of Tory marginal dithering, patronage and naked entitlement wasn’t going to be good enough. The Labour proposals are simple: eat the rich, tax the middle classes till they squeak, and splurge lots of money on wrecking the economy.

Let me think about it – 10 years of Boris or 10-years watching my savings and pensions disappear?

I’ve voted Labour all my life and sincerely believe in a New Jerusalem – but what that manifesto proposes will not get us there. Ever.

And, to cap it all, I got a nasty email from an aircraft leasing company exec following my earlier comments on Aviation finance, telling me my rambling incoherent discourse on the lack of transparency around aircraft pricing and future aircraft valuations was unhelpful and unlikely to reassure investors. I countered about full information and sound due diligence being likely to improve the investment case in the aviation market.. and got nothing back.

What you win on the swings, you lose playing Ice Hockey.

Climate Cure – Saving the Oceans

This morning I thought I might further digress deeper into the Green Theme. One of the key issues I’m exploring, and building consensus on with key stakeholders, is the nature of climate cure as a public good. For instance, how will businesses get paid for making the environment better when there is clear environmental improvement, but no immediate payback or sellable off-take?

Let me illustrate: one of the critical areas are the Oceans.

There are estimated to be over 7-12 trillion pieces of plastic floating in the seven seas – 71% of the earth’s surface is now polluted with everything from tyres, bottles to micro-plastics. We’re all familiar with photos of whales drowning in rubbish, turtles caught in beer rings, and seabirds caught in fishing lines.  Much of the plastic waste is breaking down into smaller and small bits of microplastic – which is sinking into the ocean. These are the microplastics that are now working into the food chain, and poisoning us in ways we barely understand.

Where does all that plastic come from?  Some 800,000 tonnes of plastic fishing gear and waste is lost at sea every year. But that is only a fraction of the 12 million tonnes of plastic being dumped into the sea every year. A clever young Dutchman, Boyan Slat, has figured out the best way to address it – check out his company Ocean Cleanup, it’s a sign the world is getting better!

Slat has done the science – identifying how most of the rubbish comes from the land, gets dumped into rivers, floats out to sea where is circulates with the currents before collecting in the Ocean gyres in the centre of the major seas.  He’s researched river waste and found its 1000 rivers that account for 90% of plastic waste flowing into the ocean. He’s also spotted river waste tends to flow into the faster flowing parts of the river, thus its relatively simple to corral river waste into floating “interceptor” barges, when the waste is then collected.

Cutting down that 12 million tonnes of plastic will take is a fleet of these solar powered interceptors around the globe. They make sense – but who pays?

That still leaves the billions of tonnes of waste already floating in the ocean. We’ve been looking at technologies to address that.  And let’s start with a proposition anything cleaning up the oceans has to be clean itself.

The solution will be to automate the process and make it zero-energy. Some very bright engineers in Ireland have developed a “Wave Tug” technology that uses the circular motion of waves to propel a device through the waves. It won’t require crew and can be steered by remote technology, (like a drone) and set on a pre-set course.

Put two of these tugs together, towing a flexible “beach” behind them, and you have a cheap, simple ocean clean up unit. Its slow and steady so it doesn’t trap sealife, and won’t get strained. The beach lands the waste, which is collected behind. Put 10-20 of these units into each of the oceans to clean up the plastic gyres, and they will quickly clear it up. The costs will be those relating to collecting the rubbish from the tug units.

There is an even more fascinating potential use for the Wave Tug tech – using the to steer and drag icebergs to drought stricken areas. Water security will be the biggest global resource issue in coming years.

The question with both Ocean Clean Up and the Wave Tug is who pays? The plastic they collect from rivers and oceans can’t just be reprocessed. There are so many different plastic types that mixing them up results in a grey gloop. It isn’t worth anything – in fact waste treatment plants are based around charging gate-fees to dispose of waste – ie, we’d have to pay!

Yet, the environmental benefits are enormous. Who pays?  It’s a clear public good, and its something we’re engaging the right people on.

Meanwhile, funding initiatives like Ocean Clean Up, Wave Tug and other new tech is complex, unproven and risky. Its Frontier Venture Capital. Do we go to well known philanthropic funds – who typically tell us they don’t finance start-ups – or do we take them elsewhere?  A large plastic manufacturer may see them as attractive – coming to agreements with Governments to only produce as much new plastic as they recover and process?

If I was a smart businessman keen to be linked to ocean clean up – well, I’d want my name all over these projects… just saying…

It’s fascinating stuff, and if you want to learn more… Ghostbusters…. (ie.. who ya going to call?_

Five things to Read Today

BBerg – Citi Tells UK to Make a Decision on Brexit as Jobs are Pondered

BBerg – Battery Giants hit by slump in China’s Electric Vehicle Market

WSJ – Fiona Hill Pushes Back on Theory of Ukraine Election Interference

WSJ – Emerging Markets Losses Hit EM Fund

FT – Bond Markets no longer care very much about deficits

Out of time and have a great weekend… back to the day job…

Bill Blain

Shard Capital