Numlock News: December 18, 2019 • New Year's, Grid, Palladium

Dec 18, 2019

By Walt Hickey

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Prix Fixe

A suit brought by Pennsylvania will end with 13 financial firms coughing up $337 million to settle claims that they collaborated to artificially inflate the price of bonds issued by Freddie Mac and Fannie Mae, government-controlled loan companies. This would be in addition to the $49 million already won from Deutsche Bank, Goldman Sachs and First Tennessee Bank. Barclays was the largest holder of the bonds, controlling 14 percent of the market and agreeing to pay $87 million, with another 12 banks agreeing to pay $250 million. All told, the 16 banks controlled approximately 77 percent of the market for GSE bonds, and from 2009 to 2015 are alleged to have violated anti-trust law. Once prosecutors started releasing chat messages like, “where are we going out on these bonds? 99.90? just want to make sure everyone’s cool w/ that. . .,” you know it’s probably time to crack out the checkbook, rather than take it to a jury.

Marc Levy, The Associated Press

Palladium

The price of an ounce of palladium on the open market reached $2,000.35 on Tuesday before dropping back down to $1,947 by noon. Still, that pleasant round number is the hallmark of an increasingly fascinating market in metal. Unlike, say, the gold market, where the commodity being priced ridiculously is a shiny rock of occasional industrial use, palladium is a critical component of the future economy given its role in autocatalysts. Those are necessary to reduce emissions, which is a key reason that the price is up as much as 59 percent this year. It was priced below $600 per ounce as recently as 2016 and below $1,000 per ounce as recently as late last year. Despite rising demand for cleaner cars amid new laws, supply of palladium has struggled to keep pace given its rarity and outages in South Africa, a major miner. Citigroup forecasts it could reach $2,500 per ounce next year.

Ranjeetha Pakiam and Luzi-Ann Javier, Bloomberg

Trash

A Wall Street Journal investigation details the realistic pathway by which you could literally be buying trash on Amazon, thanks to the difficulties in regulating the company’s third-party marketplace. There are plenty of ways that Amazon could turn into a conduit of discarded items to consumers, some fairly straightforward — a seller buying remaindered goods from a liquidator and selling the mint-condition items on Amazon — and others less so, like a seller who raided a commercial dumpster, cleaned the goods and then inserted them back into the market through Amazon’s third party network. An analysis of 45,000 comments posted on Amazon in 2018 and 2019 found 8,400 — on some 4,300 food, makeup and medication listings — that said they were expired, unsealed, moldy, sticky or otherwise objectionable. Of those 4,300 items, 544 were “Amazon’s Choice,” and 241 had at least five reviews saying the perishable item was expired or used.

Khadeeja Safdar, Shane Shifflett and Denise Blostein, The Wall Street Journal

Movies

An analysis of sex in cinema found that of the 148,012 feature-length films released since 2010, just 1.21 percent contained some kind of depiction of sex. That’s the lowest since the 1960s. Cinematic sensuality peaked in the 1990s, when 1.79 percent of films in the sample set featured a sex scene. That may seem like a slim difference, but given the volume of releases that half-point difference is the equivalent of hundreds of movies. Part of this is simply that — particularly given the box office domination of The Walt Disney Company — those kinds of movie simply don’t sell, as the inflation-adjusted $360 million made by Fatal Attraction in 1987 would be unheard of today.

Kate Hagen, Playboy

You may remember Kate’s work, her story on the demise of the video store was the basis for the very first Numlock Sunday edition.

New Years

Either Americans are excellent at accomplishing their New Year’s resolutions or, more likely, they allow the memory of making a resolution to escape them rather than confront their failure. A Morning Consult ongoing survey found that the number of Americans who said they made a resolution for 2019 inexplicably declined over the course of a year: 42 percent said they made one when asked on January 3-6, but just 30 percent of Americans said they did on the poll conducted December 13-16. What happened to that 12 percent is a mystery. The survey also asked those who made one if they had actually kept it, and people did alright! In that very first poll in early January, already 9 percent had broken it, but by late December, just 39 percent said they didn’t keep their resolution.

Joanna Piacenza, Morning Consult

Off The Grid

Many contenders for the presidency have made a goal of improving the electrical grid by 2030, including transitioning it to greener energy sources. Here’s where things stand now: most dams and nuclear plants are still in service, and wind and solar plants have grown to 10 percent of electrical supply, so all told 38 percent of electricity in the U.S. comes from low emission sources. To bring it home by 2030 would require about 120,000 wind turbines and 44,000 large solar plants, given the lead-time and cost of nuclear plants. That would require the U.S. to be as fast as China when it comes to wind and solar. So a daunting goal, but a feasible one. For instance, 130,000 new oil and gas wells have been drilled since 2010, so certainly building a couple of turbines is in the cards.

Justin Gillis and Sonia Aggarwal, The New York Times

The advertising industry is attempting to come to grips with a future where it’s not needed or wanted in streaming services, particularly as consumers become accustomed to services like Netflix, Amazon Prime and Disney+ that are free of advertisements, and tiers of service on streaming sites like Hulu that specifically exclude what they’re hawking. In 2018, streaming accounted for some 56 percent of video viewing. That’s projected to rise to 60 percent of video viewing in 2020 and then to 70 percent in 2024, and Madison Avenue would like instructions on how to spend the $70 billion a year it currently allocates to television commercials. Because right now, getting some skin in the game on streaming is a lot of work compared to the basic pay-to-play of television: Coca-Cola literally had to resume making New Coke to get on Stranger Things.

Brian Steinberg, Variety

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Correction, 12/18/19: a previous version of this post misstated the number of movies affected by a half-point shift, it is hundreds and not thousands.

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