FT : Carbon counter: petrol vs hybrid vs electric

Carbon counter: petrol vs hybrid vs electric
The case for avoiding a hybrid stepping stone

Transitional technology is a problem for consumers. Why buy a product such as a hybrid vehicle whose obsolescence is a question of “when” not “if”? The dilemma is worsening. Belatedly, traditional carmakers are bombarding the public with adverts for hybrids, a sector once dominated by the Toyota Prius, with plug-ins a new part of the offer. Simultaneously they are promoting full electrics, a category where, for years, it was a Tesla or little else.

What should motorists do? With family cars, as with so many things, carbon savings sometimes come at a financial price.


The Tesla Model 3 costs over $39,000 new (UK: £41,000). Its emissions are very low, even if you include a weighting for hydrocarbons used to make electricity, as consultancy Carbon Footprint does. Drivers generate less than a tonne of CO2 for driving 10,000 miles. That is a midpoint between the average annual mileages of US and UK motorists. The carbon burden for the old Volkswagen Passat, a comparable petrol car costing about $24,000 (UK: £25,000) is a whacking 6.5 tonnes.

You can shave off almost half of that carbon with a traditional hybrid. Even more with a plug-in hybrid recharged with mains electricity. The average carbon burden is about 1.1 tonnes for 10,000 miles, according to Carbon Footprint.

Yet Professor David Bailey of Birmingham university is sceptical about hybrids: “Why haul around an engine you mostly do not use?” One reason might be the lower cost of a smaller battery. However, UBS reckons the price premium for electric vehicles over petrol cars will disappear by 2024. The bank expects better manufacturing to cut the cost of batteries to the magic figure of $100 per kilowatt hour.

There are two main conclusions. First, if you are better off, deeply green and can recharge at home, you might as well go electric now. Carbon Footprint’s John Buckley, who is installing solar panels to charge his Tesla, “cannot recommend this enough”. Second, if you are on a tighter budget, prefer to lag behind mainstream trends and live in an apartment, you may want to pause before shifting from petrol to electric. By avoiding a hybrid stepping stone, you may be able to save both money and CO2.

FT : Superyacht market surges as wealthy seek luxury and seclusion

Superyacht market surges as wealthy seek luxury and seclusion
Record orders as rich customers enjoy holiday havens on the sea to escape crowds and threat of Covid-19

After one of the worst crises in the history of tourism and travel, one part of the market has thrived as business has boomed on a surge of orders.

The demand for superyachts has rarely been stronger with rich tourists enjoying the holiday havens on the sea to escape the crowds and the threat of Covid-19.

For those who can afford it, there is everything from watersports to onboard yoga and fitness sessions, as well as the chance to spend quality time with friends and family in a secluded bubble.

“Since we came out of the first lockdown [last summer], the market has been absolutely booming to levels far in excess of before we went into lockdown,” said Antony Sheriff, chief executive of Plymouth-based Princess Yachts.

The success story is echoed by yacht makers across Europe. Ferretti, a shipbuilder based in Forli in northern Italy, delivered a record 56 yachts in the first quarter and said the “fantastic acceleration” in orders defied forecasts.

Elsewhere, a record 208 superyachts have been bought on the brokerage market for £1bn this year to May 17, more than the 131 a year earlier, according to luxury lifestyle publisher Boat International.

Yacht bosses also say the pandemic has spurred the wealthy to re-evaluate how they spend their time and to make the leap to purchase their first boat or upsize with soaring asset prices adding to their riches.

“With coronavirus, people realised ‘your life can change immediately’. Their perception of life changed and they wanted to exploit the moment,” said Marco Valle, chief executive of Benetti Yachts based in Viareggio in Tuscany. “It’s not a secret stock exchanges went up dramatically. We were ready with the right products.”

Even the cancellation of the many boat shows at glamorous locations such as Monaco have failed to damp demand as the online shopping boom has offset lost sales from the trade fairs, which normally attract buyers.


“In a year without boat shows, we’ve had one of the best order intakes ever,” said Rose Damen, managing director of Damen Yachting, a Dutch manufacturer whose order book has grown by about €800m in the past 12 months.

Yet, it has not all been plain sailing. Social-distancing requirements have made it impossible to catch up on the months of lost production when shipyards closed down last spring, while raw material costs, which cannot easily be passed on to buyers, have been soaring.

It also follows a difficult decade highlighted by a string of failures in a consolidating industry with 20 shipyards producing 65 per cent of the superyachts delivered last year, up from a third in 2010, according to the Superyacht Group.

Most recent failures include Nobiskrug in northern Germany, owned by French-Lebanese industrialist Iskandar Safa’s Privinvest, which fell into administration last month (April), and the bankruptcy of Italy’s Perini Navi in February and Norway’s Kleven last July.

In addition, manufacturers have to deal with some of the world’s toughest customers, as the wealthy make for fierce negotiators, on just a handful of megaprojects where budget miscalculations on one deal can hit profits hard.

“People expect it to be a very profitable business because your clients are billionaires, but in fact it’s not a high margin business and it can be high risk,” said Damen.

Now, the task for builders of the 5,700-strong superyacht fleet — defined as boats longer than 30m — is to hold on to customers in the post-pandemic market.

Even though the pool of 520,000 individuals with a net worth above $30m, as calculated by Frank Knight’s Wealth Report, is expected to grow, many rich customers may decide to spend their money on other things once the crisis is over.

Industry executives also say they have a battle to overcome what they consider an unfair stigma that superyachts are playthings of the rich, widening inequality and disproportionately contributing to climate change.

One British entrepreneur, seeing the pandemic out with his family on his yacht in the Bahamas while taking Zoom calls for work, hinted at the societal pressure.

The quality of life and quality of time is great.” But his email signature reads London to avoid unpleasantness from jealous colleagues or clients. “The green-eyed monster is alive and well,” he added.

Buyers are typically not the stereotypical cigar-toting oligarchs or party animals depicted on the popular television show Below Deck, either.

“The archetypal yacht owner — tanned skinned, martini in hand — is a bit of a trope. That has gone,” said Brendan O’Shannassy from aboard the 100m-plus vessel he was skippering in waters south of Bermuda.

Executives also add that the jobs the industry creates are sometimes overlooked. These workers or artisans have often honed their skills over long apprenticeships or years of hard work.

“People love to talk about the skills, quality and craftsmanship it takes to build a Bentley or Rolls-Royce. But not for superyachts,” said Martin Redmayne, chair of the Superyacht Group.

However, Valle of Benetti still expects a dip in orders and a battle to win and retain customers once the crisis is over.

“Our task as a manufacturer is to convince them [customers] . . . that yachting becomes something not just new, but a passion to repeat, keep in this life and transfer in the family to sons and daughters.”

FT : Commercial landlords and tenants braced for £6bn rent decision

Commercial landlords and tenants braced for £6bn rent decision
Ministers consider how to replace eviction and debt collection ban ending on June 30

Tensions between commercial landlords and tenants are bubbling up ahead of a crunch decision that will determine who foots the £6bn rent bill built up during the pandemic. 

The British Retail Consortium said on Sunday that two-thirds of retailers in the UK are at risk of legal action on at least one of their stores, after a ban on evictions and debt collection from commercial tenants lifts on June 30. 

The BRC warned that the ending of the ban could lead to the closure of “thousands of shops” if property owners push tenants for unpaid rent. 

Kate Nicholls, chief executive of UKHospitality, said in the hospitality sector 40 per cent of businesses had not reached an agreement on rent arrears. “Once the moratorium is lifted, those [businesses] are most at risk and you would expect to see some legal action happening pretty quickly if agreement isn’t reached,” she said. “There is a real risk to businesses and jobs.” 

However, landlords have hit back at these claims. “It is disappointing to see the BRC failing to recognise that the vast majority of property owners and tenants have already reached agreement on rent,” said Melanie Leech, chief executive of the British Property Federation.

“Let’s not forget either that there remain well-capitalised retail businesses exploiting the moratoriums, refusing to engage with property owners or pay any rent,” she added. 

The salvo escalates a war of words that has run for the duration of the pandemic and comes at a critical juncture, as ministers consider how to replace the eviction ban that has been in place since March 2020 and navigate a course out of the rent debt crisis.

The government is considering six options, including a binding adjudication process for landlords and tenants who cannot reach agreement, lifting the ban only for certain tenant groups and simply letting the protective measures fall away entirely. 

Landlord and tenant groups have submitted their proposed solutions over the past month.

British Land and Land Securities, two of the UK’s largest landlords, submitted proposals alongside the BPF. They argue that arrears built up since March 2020 should be ringfenced and tenants protected until the end of 2021, but that tenants should pay rent from the end of June as they resume trading.

The BRC is also calling for rent arrears, which it says have reached almost £3bn in the retail sector alone, to be ringfenced.

UKHospitality said the moratorium will have to be extended to give the government time to find a solution to the crisis.

Pret A Manger’s chief executive Pano Christou said negotiating with landlords was one of the most challenging elements of the pandemic for the chain, which has seen its sales plummet while office workers have remained at home.

He said almost 90 per cent of Pret’s landlords had given concessions to the business but the remainder were “trying to make things difficult”.

(ZH) Space Plane Startup Promises Los Angeles To Tokyo In One Hour

Space Plane Startup Promises Los Angeles To Tokyo In One Hour


Modern transportation is experiencing significant upgrades thanks to transformative technologies. A startup space plane company is promising hypersonic flight worldwide and travel times to anywhere in about an hour.
Venus Aerospace is building a passenger aircraft that will revolutionize the world's transportation sector with hypersonic flight. The company raised $3 million in a March funding round. It plans to build a Mach 12 hypersonic aircraft designed to travel at the edge of space, allowing passengers to go from Los Angeles to Tokyo in one hour.
Traveling in a space plane is sort of like traveling in a regular plane, except for when the pilot initiates rocket boosters mid-flight that propels it to the edge of space. The aircraft then glides back into the atmosphere and can land at any conventional airport.
Two former Virgin Orbit employees started Venus: Sarah Duggleby, a launch engineer, and her husband, Andrew, who manages launch, payload, and propulsion operations.
"Every few decades humans attempt this," Andrew Duggleby told Bloomberg, as for now, the dream of high-speed global travel is in reach because of new rocket engine and hypersonic technologies. "This time, it will work."
The Dugglebys say their space plan has more efficient engines, wings, landing gear, and jet engines that allow it to take off like a commercial airliner.
Jack Fisher, a former NASA astronaut who analyzed Venus' plans, said the initial blast of acceleration "throws you back in your seat" but soon dissipates because "you get going so fast that you don't even feel it anymore."
Three scale models of the space plane will be tested this summer. The project is expected to take at least a decade of testing before commercialization.
If the technology works, Venus will have to decide if the plane is for commercial or military use first. Already, the husband and wife team, with a dozen employees, have secured a research grant from the U.S. Air Force.
Sassie Duggleby suggests the superfast space plane is for "regular people."
Before hypersonic space planes, we suspect supersonic ones would be commercialized first, at the end of this decade.
The Federal Aviation Administration is already issuing new regulations around supersonic travel as multiple startups are working on developing supersonic aircraft.

(ZH) Virologists Say Genetic "Fingerprints" Prove COVID-19 Man-Made, 'No Credibl

Virologists Say Genetic "Fingerprints" Prove COVID-19 Man-Made, 'No Credible Natural Ancestor'

Two notable virologists claim to have found "unique fingerprints" on COVID-19 samples that only could have arisen from laboratory manipulation, according to an explosive 22-page paper obtained by the Daily Mail.
The paper's authors, Norwegian scientist Dr. Birger Sørensen (left) and British Professor Angus Dalgleish (right) via the Daily Mail
British professor Angus Dalgleish - best known for creating the world's first 'HIV vaccine', and Norwegian virologist Dr. Birger Sørensen - chair of pharmaceutical company, Immunor, who has published 31 peer-reviewed papers and holds several patents, wrote that while analyzing virus samples last year, the pair discovered "unique fingerprints" in the form of "six inserts" created through gain-of-function research at the Wuhan Institute of Virology in China.
They also conclude that "SARS-Coronavirus-2 has "no credible natural ancestor" and that it is "beyond reasonable doubt" that the virus was created via "laboratory manipulation."
DailyMail.com exclusively obtained the 22-page paper which is set to be published in the scientific journal Quarterly Review of Biophysics Discovery. In it, researchers describe their months-long 'forensic analysis' into experiments done at the Wuhan lab between 2002 and 2019 (Daily Mail)
A 'GenBank' table included in the paper lists various coronavirus strains, with the dates they were collected and then when they were submitted to the gene bank, showing a delay of several years for some (Daily Mail)

Last year, Sørensen told Norwegian broadcaster NRK that COVID-19 has properties which have 'never been detected in nature,' and that the United States has 'collaborated for many years on coronavirus research through "gain of function" studies with China.

One diagram of the coronavirus shows six 'fingerprints' identified by the two scientists, which they say show the virus must have been made in a lab (Daily Mail)
A second diagram showed how a row of four amino acids found on the SARS-Cov-2 spike have a positive charge that clings to human cells like a magnet, making the virus extremely infectious (Daily Mail)
The paper detailing their months-long "forensic analysis," which looked back at experiments done at the Wuhan Institute of Virology between 2002 and 2019, is set to be published in the scientific journal Quarterly Review of Biophysics Discovery.
More via the Mail:
Digging through archives of journals and databases, Dalgleish and Sørensen pieced together how Chinese scientists, some working in concert with American universities, allegedly built the tools to create the coronavirus.
Much of the work was centered around controversial 'Gain of Function' research – temporarily outlawed in the US under the Obama administration.
Gain of Function involves tweaking naturally occurring viruses to make them more infectious, so that they can replicate in human cells in a lab, allowing the virus's potential effect on humans to be studied and better understood.
Dalgleish and Sørensen claim that scientists working on Gain of Function projects took a natural coronavirus 'backbone' found in Chinese cave bats and spliced onto it a new 'spike', turning it into the deadly and highly transmissible SARS-Cov-2.
One tell-tale sign of alleged manipulation the two men highlighted was a row of four amino acids they found on the SARS-Cov-2 spike.
In an exclusive interview with DailyMail.com, Sørensen said the amino acids all have a positive charge, which cause the virus to tightly cling to the negatively charged parts of human cells like a magnet, and so become more infectious.
But because, like magnets, the positively charged amino acids repel each other, it is rare to find even three in a row in naturally occurring organisms, while four in a row is 'extremely unlikely,' the scientist said.
'The laws of physics mean that you cannot have four positively charged amino acids in a row. The only way you can get this is if you artificially manufacture it,' Dalgleish told DailyMail.com.
Their new paper says these features of SARS-Cov-2 are 'unique fingerprints' which are 'indicative of purposive manipulation', and that 'the likelihood of it being the result of natural processes is very small.'
'A natural virus pandemic would be expected to mutate gradually and become more infectious but less pathogenic which is what many expected with the COVID-19 pandemic but which does not appear to have happened,' the scientists wrote.
'The implication of our historical reconstruction, we posit now beyond reasonable doubt, of the purposively manipulated chimeric virus SARS-CoV-2 makes it imperative to reconsider what types of Gain of Function experiments it is morally acceptable to undertake.
The study concluded 'SARS-Coronavirus-2 has no credible natural ancestor' and that it is 'beyond reasonable doubt' that the virus was created through 'laboratory manipulation' (Daily Mail)
When Sørensen and Dalgleish floated their findings last year, it was 'debunked' with the thinnest of logic - however former MI6 chief Sir Richard Dearlove pointed to the pair's findings as an "important" development which could prove that the pandemic may have originated at the WIV.
Sørensen and Dalgleish aren't the first scientists to find unusual features within COVID-19. Last June, the Daily Telegraph reported that there are two unique features to COVID-19:
First, the virus binds more strongly to human ACE2 enzymes than any other species, including bats.
Second, SARS-CoV-2 has a "furin cleavage site" missing in its closes bat-coronavirus relative, RaTG-13, which makes it significantly more infectious - a finding we reported in late February.
According to Israeli geneticist, Dr. Ronen Shemesh, the Furin site is the most unusual finding.
"I believe that the most important issue about the differences between ALL coronavirus types is the insertion of a Furin protease cleavage site at the Spike protein of SARS-CoV-2," he said. "Such an insertion is very rare in evolution, the addition of such 4 Amino acids alone in the course of only 20 years is very unlikely."
"There are many reasons to believe that the COVID-19 generating SARS-CoV-2 was generated in a lab. Most probably by methods of genetic engineering," he said, adding "I believe that this is the only way an insertion like the FURIN protease cleavage site could have been introduced directly at the right place and become effective."
Dr Shemesh, who has a PhD in Genetics and Molecular Biology from the Hebrew University in Jerusalem, and over 21 years of experience in the field of drug discovery and development, said it is even “more unlikely” that this insertion happened in exactly the right place of the cleavage site of the spike protein - which is where it would need to occur to make the virus more infectious. -Daily Telegraph
"What makes it even more suspicious is that fact that this insertion not only occurred on the right place and in the right time, but also turned the cleavage site from an Serine protease cleavage site to a FURIN cleavage site," he added.
In January 2020, a team of Indian scientists wrote in a now-retracted paper that the coronavirus may have been genetically engineered to incorporate parts of the HIV genome, writing "This uncanny similarity of novel inserts in the 2019- nCoV spike protein to HIV-1 gp120 and Gag is unlikely to be fortuitous in nature," meaning - it was unlikely to have occurred naturally.
The next month, a team of researchers in Nankai University noted that COVID-19 has an 'HIV-like mutation' that allows it to quickly enter the human body by binding with a receptor called ACE2 on a cell membrane.
Other highly contagious viruses, including HIV and Ebola, target an enzyme called furin, which works as a protein activator in the human body. Many proteins are inactive or dormant when they are produced and have to be “cut” at specific points to activate their various functions.
When looking at the genome sequence of the new coronavirus, Professor Ruan Jishou and his team at Nankai University in Tianjin found a section of mutated genes that did not exist in Sars, but were similar to those found in HIV and Ebola. -SCMP
According to the Nankai University study, the furin binding method is "100 to 1,000 times as efficient' as SARS at entering cells.
"This protein cleaving protein is highly promiscuous, it’s found in many human tissues and cell types and is involved in many OTHER virus types activation and infection mechanisms (it is involved in HIV, Herpes, Ebola and Dengue virus mechanisms)," said Dr. Shemesh. "If I was trying to engineer a virus strain with a higher affinity and infective potential to humans, I would do exactly that: I would add a Furin Cleavage site directly at the original less effective and more cell specific cleavage site."
Meanwhile, Flinders University Professor Nikolai Petrovsky found last year either "a remarkable coincidence or a sign of human intervention" within COVID-19 telling the Telegraph that COVID-19 is "exquisitely adapted to humans."
Professor Nikolai Petrovsky
"We really don’t know where this virus came from - that’s the truth. The two possibilities is that it was a chance transmission of a virus...the other possibility is that it was an accidental release of the virus from a laboratory," he said, adding "One of the possibilities is that an animal host was infected by two coronaviruses at the same time and COVID-19. The same process can happen in a petri-dish."
"In other words COVID-19 could have been created from that recombination event in an animal host or it could have occurred in a cell-culture experiment. I’m certainly very much in favour of a scientific investigation. Its only objective should be to get to the bottom of how did this pandemic happen and how do we prevent a future pandemic."
Keep in mind - reporting any of this last year was punishable by social media banishment, demonetiziation, and hit-piece articles from propagandists peddling CCP talking points.

Barron's : 10 Ways to Cash In on the Shortage of Just About Everything

10 Ways to Cash In on the Shortage of Just About Everything

America’s chicken-sandwich war has the combatants scrambling for supplies. Breast prices have doubled this year. Chick-fil-A has run low on sauce. Burger King has had pickle problems—jars, not cucumbers, are hard to come by. An isolated supply squeeze? Anyone who is building or remodeling a home, or buying or renting a car, or stocking up on pool chlorine or dog food, knows better. In the land of plenty, there suddenly seems to be an everything shortage.

In February, when Mitch Hires ordered furniture for a second home he is building in the Florida Panhandle, he was told that delivery would probably be delayed until June. Now, the estimate has slipped to August or September. “There are things going on now I’ve never seen,” says Hires, who, as CEO of Construction Resources in Decatur, Ga., has supplied builders with flooring and fixtures for 25 years.

Hires says his own business is “in a good place, all things considered.” Barely a year ago, he was planning for cash preservation and survival. Now, he is challenged to keep up with demand.

Illustration by Doug Chayka

Countertops are available, and there have been few hiccups in mirrors and shower doors, but workers are scarce, especially installers. Even though he raised entry-level pay, Hires has struggled to increase his payroll, now 726, to his goal of closer to 800. Garage door prices have spiked with the cost of steel and freight, but at least units can be found, unlike with major appliances, where shortages stretch from mass-market brands like Whirlpool and Frigidaire to luxury ones like Subzero and Wolf. Hires has had to advise some builders, “It’s not really the range you picked, but we have one. You need to take this.”

Investors are left wondering what it means. If widespread shortages lead to prolonged, hot-running inflation, the Federal Reserve could contemplate raising interest rates, and the mere whiff of an expectation of a signal of that could hamper stocks. After all, a decade of near-zero rates has helped plump up the S&P 500 index to about 22 times projected earnings, close to its highest level since the dot-com stock bubble. But if supply bottlenecks ease, pent-up demand is satisfied, and economic growth returns to its prepandemic level of meh, rates are likely to remain at historic lows for longer and stock indexes could continue to shine.

Consider a third, more nuanced outcome. The causes of today’s shortages are numerous, varied, and changing. But one theme unites many of them. Companies have spent decades fetishizing efficiency at the expense of investing in resilience. Our digital, virtual, shared, asset-light, just-in-time economy has been wonderful for profit margins, but it has left many companies short on stuff—plants, equipment, and, in some cases, inventory. This might soon change, grudgingly. Some bottlenecks will last well into next year.



Prices will surge this summer, but then moderate, if bond-market apathy is any guide. The uptrend in wages could prove stickier, but most big companies that populate the S&P 500 should cope well enough, for two reasons. First, automation and long-term productivity gains have reduced their wage exposure; it takes an average of barely two workers to generate $1 million in revenue today, versus eight in 1986. Second, workers are also customers, and healthier wage inflation at the bottom has been a long time coming.

Stock indexes can climb past a summer fling with inflation, and perhaps even a gradual rise in bond yields. Jonathan Golub, chief U.S. stock strategist at Credit Suisse, points out that stocks have lately risen on days when inflation and yield expectations have increased. Meanwhile, earnings expectations have shot higher so quickly that even with the S&P 500 up 12% so far this year, its price/earnings ratio has fallen a smidgen.



“I actually think that valuations are not going to be an issue at all because the earnings are so good,” says Golub. He predicts that the S&P 500 will end the year with a 22% gain, and cyclical stocks will extend a lead they have built since highly effective Covid-19 vaccines were announced in November.

BofA Research is predicting that companies will put part of their surging earnings to work by making up for past underspending on plants and equipment. The average age of fixed assets has reached levels not seen since the 1960s. Investors who are looking to top up their industrial exposure might want to focus on companies that sell machines and know-how for bolstering supply chains, such as Oshkosh (ticker: OSK) and XPO Logistics (XPO). As for go-go growth stocks that have led gains in recent years but have stalled or swooned lately, resist buying ones with questionable cash flows now. “All of the liquidity that’s been poured into the market has created a lot of development of new companies, but it’s also actually lessened the chance of failure for companies that probably should have failed,” says Ann Miletti, who oversees active stock strategies at Wells Fargo Asset Management.

The Pandemic Effect

To assign blame for shortages, give some one-off events a passing mention. Remember the February polar vortex that brought record low temperatures? It shut down Texas petrochemical plants, drying up supplies of little-noticed but crucial goods, like the preferred resin for holding together compressed wood strands to make siding for houses. Hurricane Laura last August set off a Louisiana factory fire from which chlorine production hasn’t fully recovered. This year, uncooperative weather in Brazil and the American Midwest have added to a run-up in corn.

Move on to some obvious pandemic effects, and some less-obvious ones. Time spent at home has fueled demand for bicycles, both stationary and mobile. A theorized pandemic baby boom never occurred, but a puppy spree did, and it set off a run on kibble. Hog farmers and processors are still recovering from last year’s Covid-19 plant closures, just as vaccines and a shift toward outdoor eating point toward a big year for grilling hot dogs.

Some goods have recovered from one bottleneck but look vulnerable to another. A toilet paper shortfall early in the pandemic came as manufacturers recalibrated to package fewer rolls for restaurants and offices, and more for grocery stores. Hoarding didn’t help. Now rolls are plentiful, but there is a shortage of shipping vessels that threatens to disrupt the flow of wood pulp to make them.



Transportation kinks are many and far-reaching. Shipping containers that carry most of the world’s goods are suddenly difficult to secure, but at the same time, Daniel Miranda, president of the Longshore and Warehouse Local 94 union that works two massive California ports, sees too many of them. “Your goods are on the dock, but who’s going to pick them up?” he says. “If you don’t believe me, I’ll take you to L.A., Long Beach, and you can see them stacked eight high.”

The dock backup, says Evercore ISI transportation analyst Jonathan Chappel, has been caused at times by too few chassis used by trucks to pull containers, too little warehouse space, too few warehouse workers, and tight conditions in rail service.



There are also ripple effects from shortages of key components. Apple (AAPL) says that semiconductor scarcity will hold back iPad and Mac production and cost $3 billion to $4 billion in forgone revenue this quarter. Ford Motor (F) says that problems securing chips will subtract $2.5 billion from operating earnings this year, and General Motors (GM) says $1.5 billion to $2 billion.

Read More: The Chip Shortage Is Creating an Opportunity for These 2 Stocks

Of course, many supply shortfalls are due to producers simply guessing too low on demand. Early in the pandemic, lumber yards stopped ordering from sawmills, because who in their right mind would want to build during a pandemic? Seemingly everyone, it turns out, and sawmills are struggling to catch up.

The demand surprise, in turn, has been fueled by the wealth effect of a soaring stock market, and a shift in consumption from travel and entertainment to goods. Government relief payments have eased hardship for individuals, but in aggregate, they have probably contributed to demand outstripping supply. “The level of the stimulus appears to be bigger than the size of the problem,” says Credit Suisse’s Golub.

These are recent effects. There is one that has been taking hold since decades before the pandemic. Just-in-time manufacturing, developed by Toyota in the 1970s and gradually adopted by companies around the world, has freed up capital and boosted profit margins and shareholder returns. There are many variations on the approach, with names like continuous-flow and short-cycle manufacturing, or simply lean manufacturing, and modern supply chain software and tracking technology have taken efficiency to new heights. Miranda, the Longshore union president, recalls how shoppers used to ask store clerks whether they have more inventory in the back. Today, inventory is stacked on the sales floor. Shipping containers serve as warehouses.

This works well enough under normal conditions, or even moderate shocks, when manufacturers can always switch goods from ships to costlier planes to get caught up on orders. But the pandemic and, before it, a trade war between the U.S. and China, have exposed risks in focusing too narrowly on efficiency. Supply-chain managers now talk about shifting from a just-in-time approach to a just-in-case one. In a survey last year published by the Council of Supply Chain Management Professionals, 42% said that supply chains had gotten too lean. Fixes for that include bringing manufacturing closer to customers, and bolstering inventories, which will require more warehouse space. Intel is spending $20 billion to build two new U.S. chip plants. GM and its Korean joint-venture partner LG Chem are building a second battery factory in Tennessee for $2.3 billion. U.S. warehouse construction starts will climb 8% this year to a record $33.2 billion, according to Dodge Data & Analytics, a market forecaster.

Valuations for many industrial stocks appear elevated, but that is justified by a cycle that is in the early stages of recovery, with upward revisions to earnings estimates likely, according to the industrial analysts at KeyBanc Capital Markets. “We think ongoing supply chain challenges could spur long-term investment for more outsourced design, engineering, and manufacturing capabilities, as well as increased utilization of robotics, automation, and [the industrial Internet of Things],” they wrote in a recent report.

One of their stock picks is Oshkosh, a maker of aerial work platforms and specialty trucks including cement mixers, which trades at 17 times projected earnings. Another is Wesco International (WCC), at 14 times earnings, whose activities include supplying electrical and automation equipment for capital projects.

Analysts at Credit Suisse say that the warehouse automation market will double by 2026, even as the pandemic fades and consumers return to spending more on experiences. Their top stock picks tied to that theme are XPO Logistics, at 22 times earnings, and a pair of industrial conglomerates: Honeywell International (HON), at 27 times, and Germany’s Siemens (SIEGY), at 18 times.

BofA has recommended companies whose sales respond quickly to spending on nonresidential fixed assets. Historically, those have included Lam Research (LRCX), 24 times earnings; smart factory supplier Rockwell Automation (ROK), 27 times; Deere (DE), 19 times; and Caterpillar (CAT), 23 times.

Transportation is tricky, because desperate customers have sent prices multiplying and stock valuations ballooning, says Evercore’s Chappell. He favors a segment of the trucking market called less-than-truckload, which consolidates small batches of freight at terminals, and enjoys relatively high barriers to entry. LTL customers are largely industrial, and demand from them is still catching up to consumer demand, says Chappell. His top picks, Old Dominion Freight Line (ODFL), at 32 times earnings, and Saia (SAIA), at 30 times, might give value investors pause, but he’s comforted that new data points continue to send earnings estimates higher.

“I Need a Subzero”

When will shortages clear? Chappell says that back in March he would have said by summer, but now it appears that supply chains will remain stretched going into the holiday shopping season, which means the first opportunity they will have to recover might be early next year. Golub at Credit Suisse guesses more than two to three months but less than two to three years.

Back at Construction Resources in Georgia, Hires wonders if last year’s toilet paper mentality, where shoppers pulled forward purchases of rolls, is taking hold in appliances. Luxury and custom builders have begun placing orders when they break ground on a house, something that his appliance company has never seen. Manufacturer order backlogs continue to grow.

“I have people from all over the country call me: ‘Hey, I’m in Texas. I went to college with you. Remember me? I need a Subzero,” he says. “And I’m like, ‘I can’t help you.’ ”

Hires is grateful for the demand, and confident he can work through the shortages. “It’s about transparency and honesty,” he says. “If we do that, we’re going to be fine.”

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Ten ways for investors to play the inventory shortages that are causing bottlenecks in the economy

* Cover story: If widespread inventory shortages—which are the result of several factors—lead to prolonged inflation, the Federal Reserve could raise interest rates, denting stocks, but if supply bottlenecks ease, pent-up demand is satisfied and economic growth returns to modest pre-pandemic levels, rates are likely to remain at historic lows for longer and stock indexes could continue to shine; Ten industrial stocks are helping ease bottlenecks in the economy, and offer investors a way to play the shortages (positive on CAT, DE, HON, ODFL, OSK, ROK, SAIA, SIEGY, WCC, XPO).

* Tech Trader: Positive on AMZN: MGM Holdings doesn’t own a particularly compelling set of assets, aside from the James Bond films, but there are merits to the retailer’s acquisition of it—the deal locks up access to some old but familiar content at a time when that’s getting harder to do, and shows from MGM’s TV production arm, which produces series for DIS, Comcast, and others, could eventually be shown on Amazon Prime.

* Trader: Positive on AXTA: The company—along with PPG, Nippon Paint Holdings, and Akzo Nobel—controls the global industrial coatings industry, has the widest profit margins, is the leader in the refinish niche of the sector, and with aggressive expansion plans should see growth accelerate in the coming years; Positive on DG: The company and rival DLTR’s earnings reports beat expectations, but Dollar Tree’s warning the freight costs could have a big impact on earnings make Dollar General the stronger operator, a position it’s likely to hold for some time; “Valuations aside, many cyclical and value stocks coming off a nightmarish 2020 are in a position to show faster earnings growth in 2021 than the relatively pandemic-insulated software and technology sectors, which face tougher comparisons.”

* Profile: John Porter, lead portfolio manager of the $4.8B BNY Mellon Small/Mid Cap Growth fund, identifies long-term investment opportunities while eliminating fads; His team prioritizes high-quality businesses with organic top-line growth and the potential for continued, long-term high growth whose stocks the fund can hold for years, and applies a “four M model”—management, moat, market size, and business model—to narrow down candidates (top 10 holdings: TWLO, PTON, SQ, BAND, LYFT, HUBS, PFPT, PLNT, ONEM, HZNP).

* Interview: Daniel Kahneman, who won the Nobel Prize in Economics in 2002, says “noise” is the most common cause of bad decision-making—and that the wide dispersion of “correct” answers, and the amount of noise among so-called professionals in finance, medicine, and elsewhere, is nothing short of alarming.

* Features: 1) Positive on ASML, AMAT, LRCX: Amid a growing shortage of semiconductors—a problem mentioned this year at 275 public company events, mainly earnings calls, up from one in 2020—should benefit the companies that supply chip makers and will help the industry catch up; 2) Positive on MLHR: With half of US adults fully vaccinated, many companies are making plans to get people back in the office, which should boost sales of chairs, sofas, desks, and other seating; The company, which owns retail chain Design Within Reach, is expanding in this area with the acquisition of KNL; 3) Positive on EQT: The nation’s largest producer of natural gas is a disciplined company that projects a free cash flow yield of more than 10 percent next year—and with higher natural gas prices, up 15 percent this year, the company stands to benefit, as it accounts for some five percent of total US output; 4) Positive on PLNT: The health and fitness chain has experienced a strong recovery, and none of its franchise or company-owned gyms were put out of business by the pandemic, and while some analysts are skeptical about whether members will return, bulls are betting they will, and that the home-fitness trend won’t pose a long-term problem; 5) Positive on XOM, CVX, Royal Dutch Shell: Big Oil suffered a triple setback last week after shareholders pushing for shifts to greener energy made gains and a Dutch court ordered Shell to slash carbon emissions, but the defeat could move the industry forward in ways that will benefit energy companies and their shareholders.

* European Trader: Positive on Next: The British fashion giant has long been a solid performer and has expanded its customer base by selling its own brand designs through its shops and e-commerce—and a range of new initiatives could push the share price even higher.

* Emerging Markets: China can’t quite command world metals prices, but it can certainly slow down the new commodities supercycle many investors are counting on—net long positions on commodities of all types are at a 25-year high globally, and developments in Beijing could mean a lot of those bulls get burned.

* Commodities: “Silver hasn’t kept pace as other commodities have reached record highs—and about the only consolation is that silver has topped an even smaller rise by gold”; The metal could reach “higher highs and higher lows in the coming years,” says Michael Cuggino of the Permanent Portfolio Family of Funds.

* Streetwise: SPAC sponsors get paid in stock, and SPAC targets get a low-hassle stock listing, but for ordinary investors the benefits may not be worth it, says columnist Jack Hough—though some experts say they aren’t really destroying shareholder value.

Barron's : How British Retailer Next Stays Fashionable With Investors

How British Retailer Next Stays Fashionable With Investors

For decades British fashion giant Next has been a solid performer, expanding its customer base by selling its own brand designs through its shops and e-commerce.

The stock (ticker: NXT.United Kingdom) has gained 76.8% to 80.98 pounds ($114.31) over the past year—boosted by strong performance through the pandemic and an 10% increase in online sales. But a range of fledgling initiatives could push the share price even higher.

The company, the U.K.’s biggest clothing retailer in terms of sales, sets itself apart from rivals, many of whom have gone out of business, by constantly trying new ideas.

A separate division, Label, sells popular brands such as FatFace, Nike, Ted Baker, and Adidas. Label, along with selling its own branded products overseas, is now one of the fastest-growing parts of the group. Label is forecast to generate £1.3 billion in sales for the year ahead and a 28% profit.

A smaller venture is Next’s Total Platform, which leverages Next’s online expertise to help brands such as Victoria’s Secret and Reiss to expand online sales.

The division provides services including website operations, call centers, warehousing, distribution, and returns. Next receives either a fee or a combination of a fee and a share of earnings if it takes an equity stake. It has the potential to scale this up—which could complement its core business of selling its own Next brand clothing.

Richard Chamberlain, an analyst at RBC Capital Markets, has forecast the stock could rise to £95 because it has among the most defensive and balanced exposure in the sector.

Next will benefit from a further shift of sales to online and from growth in its other sales channels, he wrote in a note. “Next should generate a higher rate of sales and profit growth of 6%, with net income growth of 7% and further strong cash generation, giving it the opportunity to enhance total shareholder returns with buybacks and/or special dividends.” The company should have a price-earnings multiple of 17 in calendar year 2022 compared with 15 today, he wrote.

Next has a market value of £10.5 billion and employs more than 25,000. Its catalog customers have migrated online, which means the retailer—with 498 stores—has generated more than half of its sales and profit through e-commerce. In addition to everyday clothing, the retailer sells shoes, sports apparel, furniture, home goods and accessories, and beauty products.

It fetches a multiple of 16.9 times this year’s expected earnings and is valued in line with its peers. It posted annual pre-tax profit of £342.4 million for the 53 weeks to Jan. 30, which, because of Covid-19 lockdowns, was half the £748.5 million the year before. Annual revenues were £3.6 billion.

“The business grows through constant innovation, a relentless endeavour to deliver new products, systems, services and ideas in a rapidly changing world,” Next CEO Simon Wolfson told Barron’s. Next evolves by testing new business ideas, maximizing the good ones, and “making sure that the less successful ones fail fast,” he says.

Next also is poised to gain customers from rivals who have struggled during the pandemic—department store Debenhams collapsed into administration, and John Lewis is closing 12 stores.

It also has expanded into suburban shopping areas that provide more parking, which has been easier for customers in the pandemic. Other initiatives include licensing, in which it collaborates with designers to offer an exclusive brand, and Platform Plus, which uses its high tech systems for Next customers to order partners’ stock directly from the partner warehouses.

Barron's : Moderna Warns New Waves of Covid-19 Are Coming

Moderna Warns New Waves of Covid-19 Are Coming

Moderna scientists and executives laid out their plans to combat new strains of the virus that causes Covid-19 at a virtual investor event on Thursday, saying that new waves of the epidemic are on their way.

“As the virus spreads, it is rapidly mutating,” the company’s chief scientific officer, Melissa Moore, said on the call. “Some of these new viral strains appear to be even more transmissible than the original strain… We already know that some of these new strains are less susceptible to neutralization by our current vaccine.”

The company said that it tests new variants in the lab against its vaccines, and is “constantly” making and testing new versions of its vaccine. But it warned that the process is not instantaneous, and that the company’s agility is limited by the complexity of the work.

“The shortest time from the detection of a variant of concern to preclinical immunogenicity readout against a panel of pseudoviruses is approximately 2 to 3 months,” said Guillaume Stewat-Jones, a Moderna (ticker: MRNA) scientist who works as associate director of antigen design and selection on their infectious disease team. “And new viral variants are coming — emerging constantly in real time.”

The company offered an overview of a range of its scientific programs in the presentation, including discussions on the engineering of its messenger RNA and the performance of the lipid nanoparticles that enclose the messenger RNA particles.

Analyst questions at the end of the call, however, focused almost entirely on its Covid-19 vaccines. That is another sign of the importance the vaccine to the current valuation of Moderna (ticker: MRNA) shares, as SVB Leerink analyst Mani Foroohar wrote in a note out Thursday.

In a separate note, Jefferies analyst Michael Yee wrote that the presentation demonstrated Moderna’s leadership in messenger RNA-based therapeutics.

“[Management] is investing in engineering to ensure they have ‘differentiated’ mRNA constructs… and this will be a key ‘moat’ to just anyone being able to ‘do mRNA,’” Yee wrote.

Moderna shares climbed 2.3% on Thursday, and were down 0.4% on Friday.

Barron’s argued in a feature in late April that Moderna shares had room to climb, and that Wall Street’s worries over its market value, which at that time was $67 billion and is now $70.5 billion, were overblown.

Foroohar and Yee are more cautious. Foroohar has an Underperform rating on Moderna, at a target price of $83, while Yee has a Hold rating and a target price of $170. Moderna closed at $179.54 on Thursday, and is up 71.9% so far this year, and more than 220% over the past 12 months.

WSJ : Exxon vs. Activists: Battle Over Future of Oil and Gas Reaches Showdown

Exxon vs. Activists: Battle Over Future of Oil and Gas Reaches Showdown
Shareholders vote Wednesday on a bid for four board seats by investors seeking a company commitment to reach carbon neutrality by 2050

For years, Exxon Mobil Corp. didn’t have to pay much attention to investors because of its gargantuan profits. Yet on a Friday night in January, Exxon Chief Executive Darren Woods was defending the company during a video call to an investor owning about 0.02% of the oil giant’s stock.

Tech investor Chris James’s Engine No. 1 had launched an activist campaign against Exxon in December, calling the company a fossil-fuel dinosaur that lacked a coherent plan for surviving a global transition to cleaner energy sources. On the call, Charlie Penner, a hedge-fund veteran helping lead the Engine No. 1 campaign, pressed Mr. Woods to commit to steering Exxon to carbon neutrality, effectively bringing its emissions to zero—both from the company and its products—by 2050.

Mr. Woods refused, arguing that oil companies making such pledges had no real plans to achieve them. “They weren’t interested in having a conversation,” he said in a recent interview. “Frankly, they didn’t have a plan.”

Messrs. Woods, James and Penner failed to come to any agreement in what ended in a contentious exchange, people familiar with the matter said.

Since January, Engine No. 1’s bid for four seats on Exxon’s board has turned into one of the most expensive proxy fights ever. Exxon has spent at least $35 million, and Engine No. 1 has spent $30 million, regulatory filings show, in an increasingly pitched battle to persuade shareholders voting Wednesday at the company’s annual meeting.

The activists got a boost this month when Influential proxy adviser Institutional Shareholder Services backed three of the Engine No. 1’s four board nominees. The hedge fund hasn’t called for Mr. Woods’ removal, but many view the vote as a referendum on his performance, and the outcome could affect his ability to execute his strategy.

The fight demonstrates the challenge facing Mr. Woods: He is defending Exxon’s pumping of oil and gas just as finance is moving decisively toward funding a future based on renewable resources.

“One of the things I’ve learned in this job and particularly with this activist campaign, is the need and the opportunity for us to do a better job of explaining what we’re doing,” Mr. Woods said. “We are certainly a large, iconic U.S. company. We are associated with the industry…that brings a spotlight.”

Less than a decade ago, Exxon was the largest U.S. company by market capitalization, and the idea of an activist campaign challenging its leadership would have been unthinkable. Former Exxon CEO Lee Raymond sometimes publicly belittled questions by bank analysts on the company’s strategy as stupid, once likening some analysts to “Mickey Mouse” and “Goofy.”

The underpinning of that attitude has largely crumbled. Exxon last year posted a $22 billion loss when the pandemic crushed fuel demand and upended what turned out to be an ill-timed plan by Mr. Woods to substantially increase spending to boost oil and gas production. The loss has given momentum to the campaign by Engine No. 1, which has sought to capitalize on investors’ fears about years of shrinking profits and concerns about the company’s future, as governments increase regulations to address climate change.


So far, the country’s three largest pension funds—the California State Teachers’ Retirement System, California Public Employees’ Retirement System and the New York State Common Retirement Fund—have said they would support Engine No. 1’s candidates.

A spokeswoman for Engine No. 1 disputed that it was unwilling to have a dialogue with Exxon. The fund has accused Exxon’s board of presiding over the company’s demise and argued its own candidates have energy experience, unlike many current directors.

“Engine No. 1’s plan is to add four directors who have all profitably looked around corners in the energy industry and can help management achieve long-term success in a rapidly changing world,” she said.

On Monday, Exxon wrote shareholders pledging to appoint two directors with energy industry and climate experience within the next 12 months, part of a monthslong charm offensive. Since December, Exxon has spent millions of dollars on advertising and mailed shareholder solicitations. It has appointed three new directors and announced changes long-sought by some investors, including creating a business unit for carbon emissions-reducing technologies and disclosing for the first time the emissions from Exxon products.

“At a certain point you have to decide, ‘If you’re not with me, then you’re not with me,’ ” Mr. Woods said in a 2019 interview at his alma mater, Texas A&M University.

Some investors fear that attitude has made the oil giant slow to react to a changing energy landscape.

In a 2019 meeting of business leaders with Pope Francis at the Vatican, the pontiff implored the CEOs and executives of Exxon, BP PLC, Royal Dutch Shell PLC, BlackRock Inc., State Street Corp. and others to accept moral responsibility to help clean up the planet. Mr. Woods acknowledged the need to address climate change, but he said Exxon had to do so in a way that satisfied its obligation to generate returns for shareholders. His response frustrated his peers at the meeting, which was perceived as tone deaf, people familiar with the matter said.

Stephen Arbogast, a 32-year-Exxon executive who is now director of the Energy Center at the University of North Carolina-Chapel Hill, said the role of big oil CEO has evolved, and now requires communicating the company’s future in a low-carbon world to a broader audience.

“Many of these audiences believe that climate is an existential threat, and that oil and gas need to be sunset industries,” Mr. Arbogast said.

Up the ranks
Mr. Woods said he didn’t seek out the job of Exxon’s chief executive. When his predecessor, Rex Tillerson, offered him the position in 2016, Mr. Woods told him he didn’t want it.

“Frankly I’m not interested in the limelight,” Mr. Woods said, adding that he has learned to deal with it.

Whatever his ambition, current and former colleagues of Mr. Woods say he was marked to climb the ladder at Exxon from early on.

The son of a military supplier, Mr. Woods grew up living at or near U.S. bases around the world. He was an offensive lineman on his Texas high-school football team. He followed his high school sweetheart, now his wife, to Texas A&M and earned a degree in electrical engineering. He received an MBA at Northwestern University and joined Exxon in 1992.

Mr. Woods eventually agreed to lead the company. The board selected him, in part, because he had climbed the ranks of Exxon’s refining division, where profits are made squeezing pennies from every barrel. He also spoke the language of Wall Street, having spent time in Exxon’s investor relations division, according to the people. The board wanted a break from Mr. Tillerson., a plain-spoken Texan oilman who had spent billions of dollars in pursuit of high-price oil projects that haven’t worked out, these people said.

Current and former Exxon executives describe Mr. Woods as demanding. Before signing off on investment ideas, he subjected employees to marathon review sessions sometimes lasting more than a day. He employed Exxon’s practice of randomly assigning executives to blue and red teams, one to tear down an idea, the other to defend it.

Big bets
Some former Exxon executives said Mr. Tillerson left Mr. Woods a bad hand.

In 2016, Mr. Tillerson’s final full year, Exxon’s return on capital was 1.3%, down from 26% in 2005, during Mr. Raymond’s last year, according S&P Global Market Intelligence. Exxon had nearly $21 billion in its war chest when Mr. Tillerson took over, and had more than $39 billion in net debt when he left.

Some of Mr. Tillerson’s biggest bets, including investments in Canadian oil sands and U.S. shale gas, came during a period of high commodity prices, and they failed to generate strong profits when prices fell. Exxon also had to exit some joint ventures with state companies in Russia as a result of Western sanctions. It wrote down U.S. shale gas, Canadian oil sands and other properties by $19 billion this year. Mr. Tillerson didn’t respond to requests for comment.

Despite that, Mr. Woods continued Mr. Tillerson’s big spending, laying out a plan in 2018 to invest $230 billion to pump an additional one million barrels of oil and gas a day by 2025. He sought to differentiate his plan, saying it was a return to Exxon’s old playbook: large, disciplined investments on prospects that can make money at low oil prices.

Even before the pandemic, the strategy wasn’t yielding immediate results. Production was roughly flat through 2019, Exxon’s return on capital that year was just 3% and its net debt ballooned to nearly $50 billion, according to S&P Global Market Intelligence.

The spread of Covid-19 wrecked Mr. Woods’s plans. As countries world-wide imposed quarantines, fossil fuel demand plummeted. Exxon responded by slashing its planned capital spending between 2021 and 2025 by about a third and said it would cut as much as 15% of its global workforce.

Its $22 billion annual loss last year was the first ever. In August, the company was removed from the Dow Jones Industrial Average, after nearly a century on the index.

Exxon’s lead director, Merck & Co. Chief Executive Kenneth Frazier, defended Mr. Woods’ performance in an interview, saying he had to make difficult decisions to pull the plug on projects and carefully choose among new ones as soon he became chief executive CEO.

“Darren, in his tenure, has had the wind in his face,” said Mr. Frazier, who will retire as Merck’s CEO in June. “CEOs should be judged, in part, by how they develop and how they execute plans at the bottom of the cycle.”

Some of Mr. Woods’ biggest investments could turn out to be profitable for Exxon as oil demand recovers and Exxon’s peers, including BP PLC and Royal Dutch Shell PLC, divert money from oil production to renewables. In Guyana, where Exxon made one of the largest oil discoveries in years, the company could see a return on investment of 20% or more, analysts said, far surpassing returns from renewable projects.

Still, many investors are growing increasingly disaffected. Exxon’s stock has recovered after plummeting during the pandemic, Yet still only trades at about 1.5 times its book value, down from about 3.5 times book value shortly after Mr. Raymond left.

Tough sell
Engine No. 1 is banking on that dissatisfaction. It has hammered home Exxon’s financial underperformance to investors, while also challenging Exxon’s refusal to entertain the idea that fossil fuel demand may decline faster than anticipated.

Mr. Woods has acknowledged the contribution of fossil fuels to climate change, unlike Mr. Raymond, and said Exxon can help reduce emissions while staying committed to oil and gas. In March, he unveiled a strategy that would maintain Exxon as the largest Western oil producer. That has proven a tough sell with some investors.

Large money managers, like BlackRock, are also under pressure to exert influence on their portfolio companies to do more about climate change. BlackRock, State Street and Vanguard‌ collectively‌ own ‌more‌ than 20% of Exxon’s shares and could tip the scale on Wednesday’s vote. All three have signed a pledge supporting goals to reach net zero carbon emissions by 2050 or sooner. The International Energy Agency said investment in new fossil-fuel projects must stop immediately if the world was going to achieve that.

Legal & General, Britain’s biggest asset manager, which owns about $1 billion in Exxon shares, said this month it couldn’t support Mr. Woods’ strategy and would vote for Engine No. 1’s slate. John Hoeppner, who heads its U.S. Sustainable Investments, said his team had met with Exxon representatives several times in recent months and noticed a more conciliatory tone, but that Exxon had not offered substantive proposals to address the firm’s concerns.

“It was like, ‘We heard you, investment community, we listened and delivered, now let’s move on,’ ’’ he said. “They don’t recognize there is a structural challenge.”

Other investors said they had spoken directly to Mr. Woods in recent months and that he had improved investor outreach since becoming chief executive. But, they said, Mr.‌Woods‌is‌unwavering about‌his views‌that demand for oil and gas will increase in coming years and unwilling to entertain suggestions that Exxon ‌ought to hedge ‌its‌ bets.

Engine No. 1 has said Exxon’s moves since the proxy fight began are inadequate. It has portrayed Exxon’s low-carbon unit as an exercise in greenwashing, more about public relations than investment. The fund said Exxon refused to meet with its candidates. Exxon said it reviewed Engine No. 1’s candidates and determined they didn’t meet the board’s standards.

Despite the contention, Engine No. 1 said it wasn’t calling for Exxon to unwind its oil and gas business but to gradually diversify itself to be ready for a world that will need less oil and gas. Committing itself to cutting carbon emissions to zero isn’t only a benefit to society but a business imperative for Exxon in a changing energy market, it said.

Mr. Woods is adamant that Exxon will be a leader in the energy transition. Exxon was making substantial investments to reduce carbon emissions, he said, while meeting the world’s need for oil and gas.

“Whatever the future shapes up to be,” Mr. Woods said, “we will be more valuable. That is the objective that we’re working for.”