Juggling Dynamite

Not only will these trucks be much cheaper to run than ICE versions, no one will need a loud, expensive, gas-powered backup home generator either.  Smart-tech is going mainstream, at last.

The F-150 has been the best-selling vehicle in Canada for 11 years in a row, and Ford’s first all-electric pickup truck is to be available for purchase starting in 2023.

Ford lists 2,000 pounds of payload capacity with the standard-range battery, while the extended-range battery offers a 10,000-pound tow rating when equipped with the tow package. The Lightning will also come with either 420 or 563 horsepower depending on battery size. With the extended-range battery, its 0-60 mph acceleration time is in the mid-4-second range. As for the electric part of the F-150 Lightning, it is best to think of it as one big battery you can drive. Ford is introducing a feature called Intelligent Backup Power that, when configured properly, can provide 9.6 kilowatts’ worth of power to your home. Over the next 18 months, we expect to see new electric trucks from GM, Rivian and Tesla. The electric Ford F-150 Lightning is positioning itself as the most real-world practical of these EV trucks. It has all the features you would expect from an electric vehicle yet maintains its pickup truck roots. This is the reveal of the all-new Ford F-150 Lightning electric pickup. Here is a direct video link.

As I detailed last week in Inflation-cycle déjà vu, commodity prices lead inflation expectations, and inflation readings are a lagging economic indicator.   Because commodities and commodity futures are widely stockpiled and traded by speculators, users and producers alike, prices can wildly disconnect from supply and demand factors and, hence, mislead inflation expectations.

As shown below in my partner Cory Venable’s updated chart of the commodity index since 2007 (CRB- a basket of 19 commodities-39% energy contracts, 41% agriculture, 7% precious metals and 13% industrial metals), the 110% rebound in commodity prices over the last year has been greater than the 85% rebound out of the great recession into 2011.

With 80%+ of the economy already open, and consumers having spent record amounts throughout the shutdown on commodity-intensive goods like housing, vehicles and other goods, there are reasons to suspect that the reflation “trade” and inflation expectations are now wildly overdone.

While China has consumed some 50% of all global commodities produced over the last two decades, domestic consumption is just 43% of China’s GDP growth. So, western demand for Chinese exports remains the swing vote on global commodity demand.

After an 8.7% annualized GDP growth rate between 2008 and 2013, China’s growth target over the next 5 years has dropped to 5.3%.  As shown below since 2009 (courtesy of the DailyShot.com), China’s credit impulse in dark blue–a measure of changes in new public and private credit as a percentage of GDP, typically marks turning points in economic activity–appeared to have peaked in March, as commodity prices (light blue) went parabolic.  This suggested commodity prices and inflation expectations had overshot.

As shown on the left, updated through April, China’s credit impulse contracted further over the last month.

Before the COVID-induced spending splurge of the past year dragged forward even more future consumption, aging populations in most countries were already set to want fewer goods over the next decade+, and technological advances are helping us do more with less.

The other major reason we suspect inflationary pressures will recede is that what’s inflated most in the past decade is asset prices. And, as shown throughout history (and today), highly-levered asset inflation, and the over-zealous expectations thereon, are always transitory.

Unlike most, billionaires have more money than they can spend in a lifetime.  Hence they have a higher risk tolerance for losses and tend to hold a lot of assets of all kinds.  This has made them ideally situated to benefit from the $9 trillion of central bank injections into financial markets over the past 14 months.  At the same time, these same forces have increased the correlation between global asset classes as well as social and economic vulnerability to price declines.  Historically, such extreme imbalances have been followed by giveback periods of one kind and another.

“It took nearly 20 years for the wealth of billionaires to double. Then just last year the wealth of billionaires went up more than 50%,” says Morgan Stanley’s Ruchir Sharma. “It’s staggering.” pic.twitter.com/a3DfpwNtnI

— Squawk Box (@SquawkCNBC) May 19, 2021