The Market Ticker
Commentary on The Capital Markets- Category [Company Specific]

What sort of nonsense drove this so-called "research", eh?

If you work for this clown-car brigade you ought to be ashamed of yourself -- and be shunned by anyone who knows you.  If you actually transact business with these people, well, just remember PT Barnum's saying....

There has been speculation that the ongoing Volkswagen emissions scandal could spell out the end of the diesel car. But Morgan Stanley thinks the consequences are far greater — that it could help kill off the internal combustion engine altogether.

In a research note published Tuesday, the investment firm makes the case that the news "could raise the cost of doing business for all participants in the internal combustion engine business, accelerating a potential move to EVs," or electric vehicles, "that is just taking root."

Uh huh.

Let's first dispense with the obvious hyperbole.

The VW debacle relates to diesel emissions.  And yes, it's serious.  It may destroy the diesel engine in America on a permanent basis, far worse than the damage done by GM to diesels with their infamous game-playing decades earlier when they tried to build a diesel out of a gas engine block and discovered that the internal stresses were far too high for that design.  The result was an utter disaster with too many on-road failures to count.

But -- there is utterly no reason to believe that this will filter down to gas powered vehicles which are much cleaner over the last decades and do not suffer from the same NOx problems, mostly because unlike a diesel gas engines are run as close to the optimum 14.7:1 air-fuel ratio as possible all the time where a diesel runs there only under full power -- at light load it runs extremely lean, which means there is excess oxygen available.

So why is Morgan Stanley putting out such a load of speculative nonsense?

Maybe it's because they're an underwriter for Tesla's bond offerings.... you know, the electric car company that just moves your vehicle pollution from your tailpipe to a nice big fat power plant and, if you use one of their "gigachargers", it might actually just have moved it to the diesel genset sitting in the back of the building where the Gigacharger is located!  In other words, in that case the pollution got moved from your tailpipe 20 feet away and even better, it was "upgraded" from what would (presumably) be a gas engine to a diesel one!

Naw, that sort of nonsense would never, ever happen..... right?  There's a "Chinese wall" that prevents any sort of cross-pollination or any sort of pollution of opinion from one side to the other...... yes?

Go ahead and believe if you'd like.

I, for one, do not.

View this entry with comments (registration required to post)

Oh really?

So what this amounts to is an admission that a monstrous price increase for users of Microsoft Office is coming.

Nice try guys... I suspect this is going to blow up in your face....

View this entry with comments (registration required to post)


Volkswagen says that an internal investigation has revealed that 11 million of its vehicles sold worldwide are fitted with the same software designed to trick emissions-testing equipment as the 500,000 vehicles involved in an emerging scandal in the United States.

This is not limited to the US; it is worldwide.  Specifically:

The company then admitted that it intentionally installed software programmed to switch engines to a cleaner mode during official emissions testing. The software then switches off again, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit.

Let me recap: NOx (which is the pollutant in question) is formed from the high temperature of combustion, in the presence of oxygen and nitrogen (both of which are inherently present in an engine's air charge.)  Above a certain temperature the NOx production goes up rapidly.

A heat engine's maximum theoretical efficiency is defined by the difference between the temperature of combustion and the temperature of the exhaust in Kelvin.  This means that for the best efficiency and the best power output you want the temperature in the combustion chamber to be as high as possible (without melting things, of course.)

However, doing so makes a lot of NOx.

One of the ways this is managed is to use EGR -- exhaust gas "recirculation."  Exhaust gasses are routed back into the incoming air stream, which dilutes it and thus reduces the maximum temperature.  This attenuates NOx but at the time hurts both fuel economy and power.

"Clean diesels" also, in modern versions anyway, use what is called "DEF", which is urea in liquid form.  They inject this into the exhaust stream and, in the presence of a catalyst and heat (from the exhaust) the NOx is reduced chemically to harmless nitrogen (N2), water (H2O) and a small amount of CO2 (the carbon coming from any unburned hydrocarbon in the exhaust stream, of which there is little) using some of the heat in the process.

However, that catalytic reduction reaction is only so efficient.  It does work, but it's not possible to eliminate all of the NOx this way, so the amount coming in has to be within a certain boundary or a fair bit of it will not be reduced before the gas passes through the secondary catalyst.  That appears to be what's going on here.

Now for the speculation part: EGR in a diesel has some bad side effects and owners of ALH-engine vehicles (of which I have been one) know about it well.  Specifically, the particulates in the raw exhaust stream (EGR is taken from before the catalytic converter and DPF traps) mix with the small amount of oil vapor that is inherently in the intake stream in a turbocharged engine (because the bearings are not perfectly sealed and are oil-lubricated) to produce a paste-like sludge.  This deposits in the intake as that is quite a lot cooler than the exhaust stream that is being introduced and over time plugs it up.

That clogging is a maintenance pain in the ass; on the ALH engine vehicles you wind up with having to pull the intake off every 40-50k miles and clean it or it will starve the engine of air and thus both power and fuel economy.  The ALH is a relatively simple design in this regard; the newer engines are not.

It is reported that there are "no" intake-clogging problems with these newer designs.  What I'd like to know is if the reason there is no clogging is that EGR is basically inoperative most of the time, being engaged only when the ECU detects an emissions test cycle!

If so then the "fix" will have a modest but real impact on both power and fuel economy, but it may have a relatively-severe impact on maintenance schedules and cost.  On the ALH engines removing the intake to clean it is a relatively straight-forward if messy operation (~4 hours of work or thereabouts for the guy in his garage) but I suspect that it is materially more-complex for these newer engines as integration of components has become far more commonplace.

We'll see how this shakes out as time goes on... but I bet this code was not put in these ECUs simply to get a couple of percent higher fuel economy and power output numbers -- there were other reasons for it as well, and reducing what may have been unreasonable maintenance requirements may have been a part of it.

PS: Who's going to get indicted over this?  Anyone?  Or is this is yet another example of "do it as a corporation and nobody committed any crimes"?

View this entry with comments (registration required to post)

I've heard stupid before.

But this pretty-much takes the cake.

Describing Mars as "a fixer upper of a planet," Musk noted that the main problem with our red neighbor is that it's too cold for inhabitation. But, he noted, it can be made to more closely resemble Earth if we just warm it up. "There's the fast way and the slow way," Musk said, with the slow way being the gradual release of greenhouse gasses, which are famous on Earth for causing global warming and climate change.

There's dumb and then there's really dumb.  This falls into the second category.

Mars lacks an atmosphere of material density because it was stripped off by the solar wind.

The reason it was stripped off is because Mars lacks a molten iron-bearing core in the center of the planet, which Earth incidentally has.  This is why our atmosphere wasn't stripped off -- it is protected from having that happen by the magnetosphere, which is a magnetic field generated by the spin of the earth and that molten iron-bearing core.

Nuking the planet would eject warm material above the surface (of course) and it would circulate as an "atmosphere" for a while (albeit likely high in various radiological elements) but it would be stripped off by the solar wind just the same.

This is a huge problem for water-vapor molecules without which an "atmosphere" has no material value in terms of sustaining life.  Venus, for example, has a dense atmosphere but almost no water in it because it too lacks a magnetosphere.

There are people who have talked about attempting to trigger a "runaway" warming effect by finding the means to sublime the CO2 (existing as dry ice today) at the Martian poles.  This is an interesting idea but doesn't solve the problem in any material way, in that you still wind up with no water vapor of note in the atmosphere and any that does manage to get in there is subject to being stripped off.  Since the supply of such material is finite releasing more of it is only a "temporary" victory, comes at extreme cost, and doesn't reach the goal.

But then again neither are lithium-battery electric cars.....

View this entry with comments (registration required to post)

Amusing, really.

Did someone wake up to the fact that the company has a monstrous off-balance-sheet forward liability and is dropping non-first-release content (presumably due to costs?

That, by the way, has the likely impact of rendering them not a "one-stop" streaming shop for your movie content.

Where is your "advantage" in cord-cutting if, instead of a $50 cable bill and $50 internet bill (which works to $58 if you can cut the cable) you wind up with another $50 worth of "ala-carte" streaming subscriptions -- and still don't have sports and local channels?

Netflix seems to believe you'll keep them even if you have to add others to get back what you used to have with them alone.

Here's my projection of Netflix' stock price....

View this entry with comments (registration required to post)

Main Navigation
MUST-READ Selection:

Full-Text Search & Archives
Archive Access

Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.


The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.