Authored by Gail Tverberg via Our Finite World blog,

One of the great misconceptions of our time is the belief that we can move away from fossil fuels if we make suitable choices on fuels. In one view, we can make the transition to a low-energy economy powered by wind, water, and solar. In other versions, we might include some other energy sources, such as biofuels or nuclear, but the story is not very different.

The problem is the same regardless of what lower bound a person chooses: our economy is way too dependent on consuming an amount of energy that grows with each added human participant in the economy. This added energy is necessary because each person needs food, transportation, housing, and clothing, all of which are dependent upon energy consumption. The economy operates under the laws of physics, and history shows disturbing outcomes if energy consumption per capita declines.

There are a number of issues:

• The impact of alternative energy sources is smaller than commonly believed.

• When countries have reduced their energy consumption per capita by significant amounts, the results have been very unsatisfactory.

• Energy consumption plays a bigger role in our lives than most of us imagine.

• It seems likely that fossil fuels will leave us before we can leave them.

• The timing of when fossil fuels will leave us seems to depend on when central banks lose their ability to stimulate the economy through lower interest rates.

• If fossil fuels leave us, the result could be the collapse of financial systems and governments.

[1] Wind, water and solar provide only a small share of energy consumption today; any transition to the use of renewables alone would have huge repercussions.

According to BP 2018 Statistical Review of World Energy data, wind, water and solar only accounted for 9.4% 0f total energy consumption in 2017.

Figure 1. Wind, Water and Solar as a percentage of total energy consumption, based on BP 2018 Statistical Review of World Energy.

Even if we make the assumption that

Congressional Democrats are setting their sites on US billionaires – and the roughly $5 trillion in wealth held by them, according to Bloomberg.

In the last five years, this exclusive group of more than 800 billionaires tracked by the Bloomberg Billionaires Index has more than doubled its collective net worth. And according to Democrats, these unrealized gains should be ripe for the picking.

Under the rules, investment returns are only taxed when assets are sold, and the wealthy have the flexibility to only rarely sell, if ever. For Democrats, that’s a problem that requires a creative — some say outlandish — solution. Specifically, a “billionaire’s tax,” which would be an unprecedented annual levy on the investment gains of America’s richest. -Bloomberg

Advocates of the proposal – spearheaded by Senate Finance Chair Ron Wyden (OR) say it will combat inequality by hiking the effective tax rate on billionaires – who "can entirely avoid income taxes by holding assets until they die," according to the report.

Under current rules, the ultrarich can entirely avoid income taxes by holding assets until they die. If they need money — and many have far more than they could ever spend in a lifetime — they can borrow against their assets, a tax-avoidance strategy known as “buy, borrow, and die.”

"Those three things get them out of paying taxes,” Wyden said earlier this month. “Nurses and firefighters pay taxes every year, and under my plan, billionaires will, too.”

On Monday, House Speaker Nancy Pelosi told CNN: "We probably will have a wealth tax."

Treasury Secretary Janet Yellen was a bit more careful in her wording than Pelosi – saying during a Sunday CNN appearance: "I wouldn’t call that a wealth tax, but it would help get at capital gains, which are an extraordinarily large part of the incomes of the wealthiest individuals and right now escape taxation until they’re realized."

NEW – U.S. Treasury Secretary Yellen proposes a tax on unrealized capital gains to finance Biden's "Build Back Better" plans.pic.twitter.com/pefi3PhoDe

— Disclose.tv (@disclosetv) October 24, 2021

Billionaires are predictably pissed.

"We should

Following the surprise upside surge in existing home sales, analysts expected new-home-sales to accelerate further in September but they literally exploded higher instead. After a downward revision to -1.4% MoM in August, September new home sales screamed 14.0% higher MoM in September – the biggest jump since July 2020…

Source: Bloomberg

New home sales are still down 17.6% YoY however.

New Home Sales SAAR jumped back to its highest since March…

Source: Bloomberg

Echoing Case-Shiller's recent data, median new home price rose 18.7% YoY to $408,800; average selling price at $451,700

This comes as quarterly home orders at PulteGroup Inc. missed estimates, the Atlanta-based builder said earlier on Tuesday. Pulte, faced with a backlog of contracts, have slowed sales while it catches up on production.

“The housing industry continues to experience robust demand, but significant disruptions in the manufacture and supply of many building products are extending overall build cycles,” Ryan Marshall, Pulte’s chief executive officer, said in a statement.

The Northeast saw the biggest (+32.3%) surge in sales while the MidWest saw sales slide 1.5%.

It has been a wild week of trading for the SPAC presently known as DWAC after traders were blindsided last week by the announcement of a deal between the obscure SPAC and President Trump's nascent "Trump Media and Technology Group", meaning the combined company will become the home of Trump's "TRUTH" social network.

But as demand for the SPAC's richly valued shares (with a TTM multiple of 0 since neither firm has any revenue or sales, just projections) has waned after a meme-stockian retail-driven runup (which saw some institutional investors miss out on one of the biggest trades of the year) saw the market cap of the company explode into the billions, it looks like President Trump – who stands to benefit the most financially from this project give his massive ownership stake – is doing everything he can to pump up the valuation once again.

In a statement released Tuesday, Trump announced that the combined company is preparing to launch a paid streaming service (alongside other businesses that have been bandied about) in an effort to "explain more about what I am doing and why." He added that "this endeavor is about much more than politics…this is about saving our country."

Right now, censorship on social media platforms is rampant, with not just political content, but content from scientists, philosophers and other 'unorthodox' thinkers – or anything that goes to far to cross the SJWs' ideological boundaries – being reflexively censored.

Because of this corruption, Trump feels compelled to act.

The corruption of these platforms cannot be ignored. We have fallen far down the “slippery slope” of censorship in our country, and the topics that Americans are increasingly forbidden to debate are among the most important issues of our day. This wildly aggressive censorship and “cancel-culture” is not only un-American—it has direct, real-world consequences. Most obvious are the many catastrophes unfolding under the current administration: the calamitous Afghanistan withdrawal, the disaster at the Southern Border, runaway inflation, and the multi-trillion-dollar socialist spending nightmare, just to name a few.

These "silencing and cancellation" effects are more subtle but equally destructive to our society. An obvious consequence of this is polls show that Americans have little

By Bloomberg macro commentator and analyst Tommi Utoslahti

A global bond market meltdown is only a matter of time. One fine morning, traders will wake up to find all benchmark yields sharply higher, 10 to 20 basis points or more, and no buyers around.

Bond price indicators are flashing deep red right now, from decade-high inflation expectations to waning auction demand and whispers of depressed liquidity. Last week, the U.S. 5-year breakeven rate briefly topped 3% for the first time since the maturity was restarted in 2004

Bloomberg’s U.S. Treasury index is on track for its worst annual loss since 2009, and that’s only the beginning. Expect the Treasury 10-year yield to top 2%, Bunds to end their two-year trek in the sub-zero wilderness and Gilts to continue pushing higher toward levels last seen in 2018.

It’s not a taper tantrum. The time for that passed months ago, and the Fed’s well-telegraphed intention to start slowing its $120 billion monthly bond purchases at next week’s meeting is all baked in.

Bonds will collapse on investors’ delayed realization that inflation is here to stay, and won’t be tamed without serious policy tightening.

Equally serious concern stems from the fact that a big part of the recent inflation spike is supply-shock driven. Conventional policy tightening would do little to resolve supply-chain problems, leaving policy makers unable to directly influence rising prices.

If all that sounds unrealistic, or just a mere tail risk scenario, consider this: wagers for Bank of England rate hikes over the next year have been ramped up to more than 100 basis points in only a few weeks. A Hundred basis points! Saying that aloud would have been seen as a joke as recently as early September.

Perma-bulls often point out that yields fell following the 2013 taper tantrum. That is correct, but it only happened after the Treasury 10-year yield had surged about 140 basis points in four months and took well over a year to return to where it was before the selloff. A similar move now from August lows would take Treasuries above 2.5%.

The biggest difference is in the macro backdrop. In 2013, the headline U.S.

Hui Ka Yan, founder of China Evergrande Group, had once amassed a fortune of $42.5 billion, placing him at the top of the wealth rankings for all of Asia. But 73% of that immense fortune has now evaporated, and the tycoon will almost certainly lose even more as anxious creditors, suppliers and homebuyers besiege Evergrande’s offices.

But that's not nearly enough for Beijing.

In a new twist of how China may soon conduct corporate bankruptcies, Chinese authorities told Hui Ka Yan to use his personal wealth to "alleviate" China Evergrande Group’s deepening debt crisis, Bloomberg reported according to people familiar with the matter.

Beijing’s "directive" – which to us sounds just a bit m,more forceful than merely "urging" – to the Evergrande founder came after his company missed an initial Sept. 23 deadline for a coupon payment on a dollar bond, and takes place as local governments across China are monitoring Evergrande’s bank accounts to ensure company cash is used to complete unfinished housing projects and not diverted to pay creditors, the people said.

According to Bloomberg, the demand that Hui to breach the corporate veil and "tap his own fortune to pay Evergrande’s debt adds to signs that Beijing is reluctant to orchestrate a government rescue, even as the property giant’s crisis spreads to other developers and sours sentiment in the real estate market."

Our read is slightly different: Beijing will still have to orchestrate a government rescue because while Yan's fortune has shrank to "just" $7.8 billion from its 2017 peak of $42 billion, that would be a tiny fraction of the $300+ billion in debt and other liabilities the company owes. As such, Beijing's demand is merely a warning to other oligarchs: if your company became over indebted and is suddenly no longer viable, your own fortune will be at risk.

Bloomberg's notes as much, saying that it was unclear whether Hui’s fortune is big and liquid enough to make a sizable dent in Evergrande’s liabilities, which swelled to more than $300 billion as of June. The developer’s dollar bonds are trading at deep discounts to par value as investors brace for what could be one of China’s largest-ever debt restructurings.

To be sure, Beijing won't have

Home sales are rebounding, despite median prices at record highs and mortgage rates notably higher, and that demand-pull is evident in August's Case-Shiller Home Price data (the latest data released today from this heavily lagged series). The data was slightly mixed however with the 20-City Composite Price Index growth decelerating from +20.02% YoY in July to 'only' +19.66% YoY in August; while the National Home Price Index growth accelerated from +19.75% YoY to +19.85% YoY in August…

Source: Bloomberg

It is worth noting that the 20-City Composite Price Index has not seen prices fall on a MoM basis since March 2012…

Source: Bloomberg

Phoenix, San Diego, and Tampa reported the highest year-over-year gains among the 20 cities in August.

Phoenix led the way with a 33.3% year-over-year price increase, followed by San Diego with a 26.2% increase and Tampa with a 25.9% increase.

Eight of the 20 cities reported higher price increases in the year ending August 2021 versus the year ending July 2021.

“Persistently strong demand among traditional homebuyers has been amplified by an increase in demand among investors this summer,” said Selma Hepp, deputy chief economist at CoreLogic.

“While strong home price appreciation rates are narrowing the pool of buyers, particularly first-time buyers, the depth of the supply and demand imbalance and robust demand among higher-income earners will continue to push prices higher.”

All of which explains why (according to UMich sentiment surveys), homebuyer sentiment is firmly at record lows driven by price:

Source: Bloomberg

But, what is missing from that 'survey' is the elephant in the room… Wall Street investors. As we noted previously, how is it that homes are both unaffordable and soaring in price?

As with so many other things that shouldn’t be, the answer can be found at the intersection of Wall Street and easy money.

There's no doubt that Tesla has been the story this week. The stock rocketed higher by more than $100 per share – or several Ford market caps – on Monday to open the week following an MS upgrade and news that Hertz would be buying 100,000 vehicles from the automaker.

But even this meteoric rise hasn't been enough to keep Cathie Wood's flagship ARKK ETF ahead of the S&P 500 so far this year. 

Despite the fact that Tesla makes up 10% of the $21 billion ETF and that Tesla is up 45% this year, ARKK is still down by about 2% so far in 2021, according to Bloomberg.

The inability to outperform the market can be attributed to 34 of ARKK's 46 holdings falling since early August, Bloomberg data showed. Names like Roku and Zoom have weighed the heaviest on the ETF's performance, once again proving exactly how integral Tesla has been to Wood's success. 

Meanwhile, as we have noted, Wood has been selling Tesla on the way up, reducing her firm's exposure to the name as it has grown in size. 

Matt Maley, chief market strategist for Miller Tabak + Co., commented: “Teladoc, Roku, Zoom, Zillow, etc — they’ve all performed quite poorly. It shows that the continued rally in the big innovation stocks is really starting to narrow quite a bit.”

Despite the poor performance in 2021, ARKK is still up about 500% since 2016. Almost all of the ETF's profound success has been a result of Tesla growing more than 10x in size over the last 24 months. 

Maley says that other parts of Wood's portfolio may still have further to stumble. He concluded: “A lot of these innovative stocks got an extra boost from the Fed’s massive stimulus program. Investors realize that the Fed is going to pare back.”