# (Bull) Market May 2021



## ducati916 (1 May 2021)

So we move into May. We know April followed the pattern.

I have seen so many blogoland posts re. 'Sell in May'. Possibly I'm looking for it (confirmation bias) or it just seems that it is a real thing atm. Looking at last year:










It was a thing last year too.











So back to this year:






The market is vulnerable, especially after this last April.


The VIX is in dangerous territory. Just waiting to spike higher.











Looking weak. 











Now 2 days ago that reading was 13.7%. It has halved in 2 days. Not good.

Inflation not a thing currently. Rates still signalling higher.







Breadth still weak.







I spent the morning sorting out trades and making sure in the more vulnerable ones that they were hedged. You can see in the 'Swing Trades', there is a SPY short. That is actually a pretty major short, given the current weakness. Two of the new positions (TAN, NFLX) have suffered heavy sell-offs already and should fall less in a broad sell-off. I was going to add a lump of commodity exposure, but the markets closed before I got round to it.

Anyway, the point is: markets were really pathetic this last week. There were blow-out earnings from AMZN etc, yawn. Were they 'priced in', who knows. But when earnings come in x3 above expected and the stock sells off....sh*t ain't right.

Whether or not May is a clanger, just beware, this is now very much a shoot first ask questions later market.


jog on
duc


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## ducati916 (1 May 2021)

A few more charts on the 'Sell in May' meme:























They pretty much speak for themselves.

The takeaway: no-one actually knows what will happen. Given that everyone is guessing frame it another way: if stocks were to rise, do you think they will rise a lot more? If stocks were to fall, do you think they would fall further than they might rise?

Or:

If there is a 65% probability that they rise 2%; or
A 35% probability they fall 8% (or use whatever data that you want from the historical data).

How do you want to be positioned?

jog on
duc


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## ducati916 (2 May 2021)

Performance of the ETFs:









jog on
duc


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## ducati916 (4 May 2021)

First trading day in May:

Energy & Materials lead the way. Everything else meh currently.






Yields come off slightly. My model has yields at 1.66%. Which is pretty much where they were Friday, now they are slightly lower.






Whether the loss in yield is responsible or they would have had a good day anyway, commodities are up across the board:






BTC seems to be moving higher. Broke 50EMA, retested, held. Looks good to move higher:






Mr flippe-floppe-flye:






So atm, all quiet on the Western Front.

jog on
duc


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## ducati916 (5 May 2021)

Lots of new studies examining the 'Sell in May':









Over a really loooooong period:






This one is first half (of all months?) to the second half:






The rotation from growth to value:






The great commodities market:






Which brings us to today.

We currently have a run to safety: Bonds and DXY.






Pretty much a jog away from everything else:






BTC back in trouble:











Mr flippe-floppe-flye:






But we knew it was possible, even probable:






The VIX had bottomed and had been ticking higher for quite some time (daily charts). It was only a matter of when. When, might be now.


I would guess that we might see +/- 5% decline. The BTD brigade will probably buy this dip, which I think will fail. This might cause a minor panic and wash out a few of the real crazies. We stabilise. We go back up.

Essentially, a much higher volatility chop. The same, just a bit different.


jog on
duc


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## qldfrog (5 May 2021)

https://www.marketwatch.com/story/if-you-sell-in-may-dont-go-away-11620070962
More on the sell in may.with a twist
sell in may yes but do not go away and get back in during that few month after the fall


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## Skate (5 May 2021)

qldfrog said:


> https://www.marketwatch.com/story/if-you-sell-in-may-dont-go-away-11620070962
> More on the sell in may.with a twist
> sell in may yes but do not go away and get back in during that few month after the fall




* Takeaway from the article*
_"If you want an easy life, ignore all trading advice from the Wall Street crowd. Set some basic rules—asset allocation, clearly established sell signals and so on—and stick to them"

"Furthermore, they’ll say, once you and I get in the habit of getting into the market and then out of it again, most of us will simply mess it up. We’ll get back in too early, or too late, or not at all"_

Skate.


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## ducati916 (6 May 2021)

Start with oil news:

 Air travel is on the rise in the U.S., indicating an uptick in jet fuel demand.

-    Jet fuel demand has averaged 1.2 mb/d over the past four weeks, up 200,000 bpd from March levels.

-    In March, 1.2 million passengers passed through U.S. airports per day on average. That jumped to 1.4 million passengers per day in April. 

*Market Movers*

-    Citibank added *Valero (NYSE: VLO) *to its focus list, raising its price target to $121 per share, up from $95.

-    Bank of America upgraded *First Solar (NYSE: FSLR)* to a Buy rating, stating that recent bearish pressure is overdone. 

-    *BP (NYSE: BP)* is set to bid on a second offshore wind farm in Scotland.

*Tuesday, May 4, 2021 *

Oil prices jumped to a seven-week high as markets are pricing in higher demand expectations. As of 8:51 a.m. EDT on Tuesday, the U.S. benchmark WTI Crude was back above $65 per barrel, having touched the highest level since March earlier in the day.

_*Exxon and Chevron confirm carbon capture projects. *_*ExxonMobil (NYSE: XOM)* and *Chevron (NYSE: CVX) *confirmed their commitments to a build large-scale carbon capture projects. Exxon’s initial foray is a Texas hub to capture CO2 from heavy industries in Houston, a $100 billion idea that would need government support.

_*Venezuela puts jailed oil executives on house arrest. *_Venezuela moved six American oil executives from jail to house arrest, viewed as a gesture of goodwill to the Biden administration. 

_*Exxon locks out workers at refinery. *_*ExxonMobil (NYSE: XOM)* locked out union workers at its Beaumont, Texas refinery over a labor dispute. Exxon is bringing in non-union workers to keep the facility running.

_*Iraq may buy Exxon’s stake. *_Baghdad said that the Iraqi government could buy *ExxonMobil’s (NYSE: XOM) *32.7% stake in the West Qurna-1 oil field in southern Iraq. 

_*Spot LNG prices jump. *_Spot LNG prices in Asia rose earlier than expected ahead of a typical summer rally as buyers wanted to stock up over concerns about supply. Spot prices hit $8.85/MMBtu in the last week of April, the highest price since early January.

_*Commodity boom underway.*_ A wide-ranging price rally has swept over global commodity markets, bolstering the notion that a “supercycle” is underway. Iron ore, palladium, and lumber all hit record highs in the past week. Agricultural commodities have also hit near-decade highs. “I don’t know if we have seen anything like this before,” Ulf Larsson, chief executive of Swedish pulp and timber company SCA, told the FT. “We are in some kind some of perfect storm.”

_*Interior approves massive solar project. *_The Department of Interior approved a massive 350-megawatt solar plus battery storage project for the California desert. The $550 million Crimson Solar Project will be developed by a subsidiary of *Canadian Solar (NASDAQ: CSIQ)*. 

_*Investors stake out bullish bets on manufacturing pickup.*_ Hedge funds and other money managers boosted their positions in oil futures as manufacturing data shows a continued rebound.

_*Biden admin declines to shut down DAPL again.*_ A federal court gave the Army Corps one more chance to shut down the Dakota Access pipeline, but the Biden administration stated its support on Monday to keep it online while an environmental review proceeds.

_*Oil majors hike dividends.*_ With impressive bottom-line growth, many top energy names are rewarding investors with fatter dividends with no energy company announcing a dividend cut so far. Here's a rundown of Big Oil's dividend trends after the latest earnings report.

_*BMW and Ford bet $130 million on battery tech. *_*BMW (ETR: BMW) *and *Ford (NYSE: F)* invested $130 million in a solid-state battery startup, a vote of confidence in next-generation battery technology.

_*EnergyX raises $20 million for lithium mining.*_ EnergyX has raised $20 million in Series A funding to advance its direct lithium extraction technology, which would provide a technological boost to lithium production. 

_*Talen Energy announces 1 GW of battery storage.*_ Talen Energy Corporation announced the development of 1 GW of energy storage across three states. 

_*ESG debt surges. *_Since last summer, companies have issued nearly $240 billion in debt tied with ESG promises, nearly double the cumulative figure for the previous three years. 

_*Investors skeptical of oil majors’ green plans. *_Only a minority of institutional investors in oil and gas seem to believe that Big Oil will be able to pull off a green transition.

_*Mountain Valley Pipeline delayed again.*_ Mountain Valley Pipeline said on Tuesday that its in-service date has been pushed off until at least the summer of 2022, with costs ballooning to $6.2 billion. The pipeline is a key outlet for Marcellus shale gas to the U.S. southeast. The original price tag was pegged at $3.7 billion.

_*Saudi Aramco posts big profits.*_ *Saudi Aramco (TADAWUL: 2222)* reported $21 billion in first-quarter profit, up 24% from a year earlier. However, it was not large enough to cover its dividend. 

*Cheniere ships carbon-neutral LNG. Cheniere Energy (NYSE: LNG)* shipped what it says is a carbon-neutral LNG cargo. Carbon was offset by nature-based offsets.

_*Could oil shoot up to $80? *_Some investment banks have predicted that crude oil prices could hit $80-$85 in the second half of this year, as Europe, and many other regions, emerge out of lockdowns and as intercontinental aviation starts to pick up gain.

_*Baker Hughes upgraded. *_Barclays upgraded *Baker Hughes (NYSE: BKR) *to Overweight and said it is “time to own.”

_*Europe’s first big hydrogen hub?*_ The Port of Rotterdam in the Netherlands, emboldened by the European Union’s new Hydrogen Strategy, is taking significant fist steps to becoming Europe’s ‘hydrogen hub’ and one of the most advanced centers of green hydrogen production in the world.

Some earnings:






ETF inflows:












The high returning ETFs are the leveraged ETFs.

Returning to the 'Sell in May' an alternative viewpoint.






Mr flippe-floppe-flye:






Buffett and Munger past it?






Tech. not feeling the love atm.







Or the NASDAQ.






Which likely means they are due a bounce in the near future.

Daily VIX is looking bullish, as opposed to yesterday's weekly, which looks bearish.






Value still outperforming growth.






Which is kinda confirmed here.








It still remains a coin toss whether we move higher or lower. As I type, we have a bit of a sell-off. Buyers may return again to BTD or not. As I said: coin toss.

The defensive end of the market, the value end, is still outperforming growth. Energy, THE commodity is still moving in XLE. Yields are lower. Now whether this signifies a run to safety or just trading, difficult to say. I would say, just trading. It doesn't have the feel of a run to safety atm.

If pushed, I would say that this is pretty much it for the Bear raid. They have not instilled enough fear. The BTD brigade if they can get a bounce off of the lows in the next 30mins. will carry the day and tomorrow will be a big green day.


jog on
duc


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## ducati916 (7 May 2021)

As we approach the end of the week, SPY/DIA has pretty much held the line. QQQ and Tech. seem to be the focus of a short selling raid:











That may be about to end. Mid caps and Small caps, while not exactly strong are holding the line.

Meanwhile sectors across the board are flat, meh.






All which suggests that the Bears have lost the advantage. 

The all-important yields. The 10yr is lower and below its 50EMA. Just a short term blip? My model still says 1.67%. Currently we sit lower. Therefore I would expect yields to resume higher over the next week or so.

Gold/Silver are moving higher on the falling yields. It may simply go nowhere and churn further if yields resume their march higher, albeit that it is not nominal yields but real yields that matter. And real yields are negative.







Mr flippe-floppe-flye:






Summary:

It remains a coin toss. Maybe higher, maybe lower.

I am starting to lean long. The reason being that the shorts had their best opportunity this first week of May. The narrative was everywhere, stocks weakened into the end of April, leading to a good set-up for a follow through lower. Stocks held on with the BTD buyers undeterred and out in force in aggregate for the broad market.

Individual sectors rotate through pretty fast: short term move higher, pullback, move higher. Trends are truncated and choppy. Tech. has been a tough area as Wall St Hedge Funds seem to be targeting Cathy Wood and Ark, possibly envy at her fast growing AUM. Anything commodity related, XLE, XLB are on fire. Financials, XLF, on fire. Healthcare XLV, setting up. XLRE, setting up.

jog on
duc


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## ducati916 (7 May 2021)

So not only ARK, but Hedge Funds across the board:














They will bounce, no doubt. The question rather is when.

jog on
duc


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## peter2 (7 May 2021)

Good to see some common sense appear in the market. Although this means lower prices for the market "darlings" (growth stocks). Great to see APT - Afterpay below $100. Software companies are being sold off.  There's a lot of hot air that needs to dissipate. It's going to take time but not all the froth disappears. 

Banks and commodities are in demand. Real things. This feels normal. 

Only one sector left to blow up, cryptos. When it does, it'll be capable of causing a 10% dip in the equity market. A great BTD opportunity.


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## ducati916 (8 May 2021)

Oil news:

*Friday, May 7th, 2021*

Brent tested $70 per barrel on Wednesday but fell back on Thursday. Oil “had a great run, but it got a little bit ahead of itself,” Phil Streible, chief market strategist at Blue Line Futures LLC in Chicago, told Bloomberg. “We’ve hit resistance and prices pulled back,” but it’s hard to see a summer demand boost “being derailed,” he said. Oil is still set to close out the week with another gain.

_*Sempra to delay Port Arthur LNG.*_ *Sempra Energy (NYSE: SRE)* said on Wednesday that it would delay its proposed Port Arthur LNG project until 2022 instead of this year, citing global energy markets and a focus on greenhouse gas reductions.

_*Exxon to take $200 million charge related to job cuts.*_ *ExxonMobil (NYSE: XOM)* expects a $200 million charge related to severance costs for laid-off workers.

_*Copper hits record high. *_Copper price hit a record high on Thursday as Chinese investors unleashed fresh demand following a five-day holiday.

_*Pioneer says consolidation needed. *_*Pioneer Natural Resources (NYSE: PXD)* CEO Scott Sheffield said that the shale industry needs even more consolidation. “I hope other privates are taken out that are growing too much,” Sheffield told investors on an earnings call,” Sheffield said.

_*Wind costs rise due to the commodity boom. *_The rising cost of steel is forcing *Vestas (CHP: VWS)* to hike its prices for wind turbines.

_*Exxon and Chevron cautious in Permian. *_Neither *ExxonMobil (NYSE: XOM)* nor *Chevron (NYSE: CVX)* are rushing to boost production in the biggest American shale play, the Permian, despite the oil price rally this year that has sent WTI prices to above $60 per barrel.

_*Winners of Texas freeze.*_ Among the biggest winners of the Texas crisis in February were commodity trading major Vitol, pipeline operators including Kinder Morgan, Enterprise Products Partners, and Energy transfer, and lenders including Goldman Sachs, Bank of America, and Macquarie Group.

_*Energy Transfer made $2.4 billion in Texas crisis. *_*Energy Transfer (NYSE: ETP) *took in $2.4 billion from the Texas grid crisis, and the stock jumped nearly 5% on Thursday.

_*India to import more Saudi oil. *_After Saudi Aramco cut oil prices for June, Indian state refiners added more orders.

_*Peak LNG? *_The viability of LNG import terminals in Europe has dimmed and utilities are looking for alternative uses, according to Bloomberg. Last month, for example, Uniper SE said waning demand for new LNG led it to switch a project to a hydrogen hub. In Ireland, another project has been transformed into an offshore wind project.

_*LNG market to see deficit.*_ Rystad Energy said that the global LNG market could see a supply deficit in the coming years due to inadequate investment, made worse by the delays in *Total’s (NYSE: TOT) *massive LNG project in Mozambique.

_*Commodity boom adds inflation risk. *_Tight inventories for a long list of commodities are pushing up prices, which is increasing the odds of rising inflation. U.S. Treasury Secretary Janet Yellen rattled markets on Tuesday when she said that interest rates might need to rise.

_*IEA: metals shortage poses transition risk. *_The IEA came out with a new report warning that a shortage of critical minerals used in green technologies could slow the pace of energy transition and make it more expensive. The agency urged faster investment in new mining projects.

_*U.S. shale pre-hedge revenue hits record high. *_If WTI futures continue their strong run and average at $60 per barrel this year and natural gas and NGL prices remain steady, producers can expect a record-high hydrocarbon revenue of $195 billion before factoring in hedges, a Rystad Energy analysis shows. The previous record of $191 billion was set in 2019.

_*UN: World needs to cut 40-45% methane.*_ A new report from the UN finds that the global increase in methane emissions since 2010 is “primarily attributable” to the surge in oil and gas drilling – i.e., the U.S. shale boom. The report said cuts to methane emissions are actually inexpensive and achievable.

_*Marathon Oil returns to Oklahoma drilling. *_*Marathon Oil (NYSE: MRO)* is returning to limited operations in Oklahoma and the Permian Basin's western Delaware Basin in New Mexico before ramping up next year.

_*Michigan’s May 12 deadline for Line 5.*_ Michigan has ordered *Enbridge’s (NYSE: ENB)* Line 5 pipeline shut down by May 12 – next week – but the company said it would defy the order.

_*TC Energy takes $1.8 billion impairment on KXL.*_ *TC Energy (NYSE: TRP)* announced a C$2.2 billion ($1.8 billion) impairment related to the suspension of the Keystone XL project.

_*Half of Equinor’s profits came from renewables.*_ *Equinor (NYSE: EQNR)* reported $2.6 billion in first-quarter earnings, and 49% came from renewables.

_*Mining majors earn more than oil majors. *_The top five iron ore miners are on track to earn $65 billion this year, or about 13% more than the top five oil majors, according to Bloomberg. A big reason for this is the soaring price of iron ore, which has climbed to around $200 per ton, a record set a decade ago.

_*EQT to buy Alta Resources for $3 billion.*_ *EQT (NYSE: EQT) *said it would purchase Appalachian rival Alta Resources for $2.93 billion in cash and stock. EQT is already the nation’s largest natural gas producer, and a giant in Appalachia, but the acquisition expands its footprint.

_*Germany accelerates climate targets.*_ In the wake of a court decision ordering tougher action, the German government increased its 2030 emissions reduction target from 55% to 65% and moved up its net-zero target by five years to 2045.

_*Biden admin considers nuclear subsidy. *_The White House is considering a subsidy to keep existing nuclear power plants online to avoid a setback in its decarbonization goals if nuclear plants were to shut down.

For the week:






Some headlines/stories:






Mr flippe-floppe-flye:










The important development:






That was a very significant break in yields. What gives?

ATM it looks as if the trend to higher yields is broken. Someone, bought the 10yr in a BIG way. Who (if anyone) would want a still negative (possibly just positive) real yield? The answer is actually very important, although the net result is probably the same.

If and it is a pretty big if atm, yields continue lower, we could see a rotation back into growth stocks, which largely means Tech. and a rotation out of value. Commodities would get even more support and continue their bull move higher. Which leaves everything else in the middle as a bit of a toss-up. 

So my interest rate model is now calculating a yield of 1.7%. This is a pretty significant spread and from the chart, that spread could widen further.

Has the Fed. already stepped in and started to buy Bond ETFs? I have no idea. Until Fed. data comes out, I guess no-one (or very few) will actually know.






I don't see any outrageous volume, but as I don't follow volume, I'm probably not the best person to assess it.

Either way, whoever has and is buying, it will be interesting to see, as if the chart of $TNX (yield) continues to decline, whether buying pressure remains, sending yields lower. It could simply be short covering, if there have been large short positions.

As a result, my 'Inflation' chart has reversed:






On a daily time frame, inflation is Thunderbirds go. No wonder Gold & Silver are having good moves atm.  

So for the moment, commodities will continue to run hot. Industries that are at 1 higher stage than commodities will potentially run hot as long as the consumer demand at the final stage remains. The closer you get to end demand, the greater the volatility of those stocks as those that cannot pass on price inflation will see declining market share. Cost structures, expressed as margins, will, if this inflationary surge continues, come under pressure with stages of production furthest from raw materials feeling the pain first.

jog on
duc


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## ducati916 (9 May 2021)

Weekend knick-knacks, part I.

DXY breaking down, which of course combined with falling yields, sends inflationary pressures higher, which we will see.






Crypto. As a trading vehicle, sure why not, look at the returns. If you can get out before 99.9% of them go to zero and bank that coin, then the returns have been eye-watering.

How fast could some of these go from 'X' to zero? Literally over-night. Therefore if you start with a position that is equal to your stop-loss of 100%, fine, no issues. 






US vehicle sales. Those stimmies are getting used.






Buy before the prices rise.






So the record P/E levels could correct over time IF earnings continue at this rate. Unlikely. Rising PPI numbers will cut into those margins. Unless you can offset those rising costs to the consumer. Wages are still pretty stagnant, if not actually falling slightly. I would expect (over time) for these to compress again.






Travel slowly returning to previous levels. This if it continues indicates that business travel is also coming back and predictions of zooming were somewhat optimistic. I actually had to take part in a Zoom conference on Wednesday and I have to say, it was not too bad, better than I expected.






Stock returns under a variety of inflationary periods.






Bond returns under various inflationary periods.






ARKK holdings. Many (most) getting crushed.






The PPI pressure. Look at lumber etc.






Economists:






Self-explanatory.







jog on
duc


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## ducati916 (9 May 2021)

Part II.

Pressure in the commodity sector looks set to remain for some time. Mining is not exactly green. So all this mining, ostensibly for green products, somewhat contradictory.











Full article: https://www.nytimes.com/2021/05/06/business/lithium-mining-race.html

Mr flippe-floppe-flye:









Barrons is 100yrs old. A quiz:























And an interesting article if you are interested in philosophy: https://www.theguardian.com/news/2021/apr/27/the-clockwork-universe-is-free-will-an-illusion

I had a bit of a debate on this forum a while back on this subject.

So yesterday I posted a shorter term chart of inflation. Here is the longer term chart. Interestingly, since 2019 when clearly inflation was well under way, there wasn't the same obsession with the issue. Today, with inflation lower (albeit increasing) it is a really hot topic.








Gold certainly signalled inflation in 2019 while the CRB index went essentially nowhere. Of course the Gold Bugs were screaming about inflation, as they are now (hyper-inflation) but the market was, meh.






Gold is again signalling (potentially) that inflationary pressures are mounting and the CRB looks to be heading back to 2011 highs or greater currently. With many of the 'just-in-time-inventory' supply chain theory being pulled back from (lithium mine development in the US as an example) globalisation, THE big driver of 'dis-inflation' is on the wane.

The big sectors to watch: XLE, XLB, XLRE and Mining ETFs GDX, GDXJ, SLVP, COPX, REMX, the actual metals, GLD, SLV, CPER, WOOD, all potentially could benefit. Many are already through the roof.

The BIG question is interest rates. My model has 1.7%. The actual current rate is 1.6% (moving higher after that hard sell-off and bounce). Obviously the important number is not so much the nominal number but the real number.

To cap inflationary pressures, the 10yr yield will have to go much higher. I would guess (because who knows what the real inflationary number actually is) at least 2.5%. 

What happens to stocks at 2.5% (assuming the Fed does not move to YCC)?

With DXY moving back into its downtrend (and DXY is by far the most important driver) there will be added even more significant inflationary pressure.

Timeline: as previously posited, all variables seem to converge on the late summer, autumn period. Sept/Oct.


jog on
duc


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## qldfrog (9 May 2021)

ducati916 said:


> Part II.
> 
> Pressure in the commodity sector looks set to remain for some time. Mining is not exactly green. So all this mining, ostensibly for green products, somewhat contradictory.
> 
> ...



Interesting free will link, but even doubting the free will concept is imho actually destroying the base of civilisation: in justice obviously as you would know , but also relationship: I didn't have an affair, i was made to etc etc.it challenges work, property rights..
Whole societies deni free wil: "inch halla","comme dieu le veut" in the dark ages and that led to extreme fatalism and obscurantism, and falling societies.
The sheer fact we are even raising the question is imho a  sign of a suicidal society.interesting interlude.
So crash next September you think?


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## ducati916 (10 May 2021)

So 'Dodgy Coin' having a bad day"












From the look of the chart, the BTD traders have tried twice to BTD, both times it has failed. This could now go to zero. More interestingly, if it does, what psychological impact does it have on the rest of the s***e out there?


jog on
duc


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## ducati916 (10 May 2021)

qldfrog said:


> Interesting free will link, but even doubting the free will concept is imho actually destroying the base of civilisation: in justice obviously as you would know , but also relationship: I didn't have an affair, i was made to etc etc.it challenges work, property rights..
> Whole societies deni free wil: "inch halla","comme dieu le veut" in the dark ages and that led to extreme fatalism and obscurantism, and falling societies.
> The sheer fact we are even raising the question is imho a  sign of a suicidal society.interesting interlude.
> So crash next September you think?




The problem (if there is a problem) is that when Rationalism and logic meet Religion and faith, there is little common ground. There are a number of threads on ASF that address these issues, none of them ever really result in one side persuading the other.

Re. Sept/Oct. From a historical perspective, some of the nastiest falls have occurred in these months. If yields continue to rise with or without (but more likely with) rising commodity prices, so that the real yield is inflationary, the inflation argument will have progressed to an inflection point. A factual inflation added to a spooky season for stocks, could be enough to trigger a major tumble, if we haven't had one earlier.

This market increasingly seems to be driven by memes. This is reminiscent of the 1990's Bull market. With E. Musk appearing on SNL and that episode attached to and effecting serious market movement, is eerily echoing that earlier market. Hence, come the northern hemisphere autumn, there will be untold articles around past market collapses in Sept/Oct. Of course we have to reach that period intact first. No guarantees of that happening.

For the moment (next week) I think we are safe to move higher, but it has really been touch & go. Notice both charts create a triangle with upslopes/downslopes. It looks as if it will resolve to the upside, but, as usual, it just depends on how you look at it.

Moving away from the chart, to more practical terms: if the Bears were going to succeed, they needed to break the market last week when they had the meme, the early break and a big run-up in April with them.

It didn't happen.









By no means are we out of the woods. We will continue to see runs higher (relatively small) with shallow pull-backs. Those pull-backs will be BTD opportunities, conditioning participants that BTD is the way forward.

When (if) the big break comes, BTD will get you killed. Probably starting about know, rather than buying the dip early, it will be wiser to wait for solid confirmation and be late. This will unfortunately have the effect of making a choppy market even choppier as buying later reduces any upside before the next wobble. Either that or recognise the big break when it arrives.


jog on
duc


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## qldfrog (10 May 2021)

And this mood has some consequences.i am heavily cash now with systems, but on a buying spree this morning..i follow my systems..
Yet, i have another weekly system ready.and the cash for it, but reluctant to start it.still reliant on a bull trend. And i feel i have enough exposure as is..still human..and so weak..


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## ducati916 (11 May 2021)

So our choppy, frustrating market continues: Tech. selling off currently. The chart below illustrates this far more clearly than just the numbers











On my analysis, this is actually gathering steam and would qualify as a SHORT position.

In any case, this will create real choppiness in the indices because of the market caps. of these stocks, unless they turnaround this week at some point.

The takeaway: don't hang onto stocks too long. Unfortunately, this creates a mentality of take profits off the table sooner rather than later as later there may be nothing left. This then becomes, if the market becomes trendier, a tough habit to break.

I had the 'Dodgy Coin' chart up yesterday. SNL is the marker of the 'TOP'.













Add to that list Dodgy Coin.

VIX is ticking higher:






Hardly surprising with the sell-off in Tech. atm.

Mr flippe-floppe-flye:






With Tech. weak atm, the actual gains in the indices will be more muted. Individual sectors will outperform (or not) while the index just creeps higher in a really boring manner with all manner of small pullbacks. In other words NOISE will dominate. The Tech. trade will come back at some point and is a turn I'd like to catch. 

Yields are moving higher:






My model has 1.7% currently. We'll see. If yields do eventually move to that 2%-2.5% area, then potentially we have problems. If they shoot up really fast, we definitely have problems.


jog on
duc


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## ducati916 (11 May 2021)

qldfrog said:


> And this mood has some consequences.i am heavily cash now with systems, but on a buying spree this morning..i follow my systems..
> Yet, i have another weekly system ready.and the cash for it, but reluctant to start it.still reliant on a bull trend. And i feel i have enough exposure as is..still human..and so weak..




Monsieur Frog,

I'm trying to get a weekly system up and running. I really think from @Skate and 'Dump It' thread there is merit in trading a weekly. The current 'Swing Trades' I'd like to catch a trend potentially a lot longer than the current day or two as it is a profitable way to go. The problem is (a) very choppy market, (b) some already mature trends in sectors which are possibly a bit late to jump on (bias).

So newer (potential) trends that have weekly systems applicability: GDX, GDXJ, GLD, SLV, SLVP.

So I have taken a position in JNUG, which I will run as a weekly trade, but I opened this a few weeks back.

Anyway this is still a project under construction.

jog on
duc


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## ducati916 (11 May 2021)

Currently Tech. is the hated segment of the market:







The leaders:






Semi's to lead the broad market lower? Never heard that one before. Keep 1 eye on it.






I do have XLU back on my watch list (XLU, XLY, CARZ, ROBO, XLY).






Not being talked about a great deal currently is the $11T in short term government Treasuries that roll over soon.  Now just suppose that the Treasury decided not to issue new debt.

The REPO market would go into a major meltdown. Short term Treasuries are used as collateral. Ok, so this won't happen. Who is going to buy? Or does the Fed. simply monetise? With debt/GDP at 130%+ this could turn into an issue.

We remain in churn range.










With Tech. being currently so weak, the indices will struggle, but the right sectors will continue to power ahead. I'll be keeping an eye on Tech. to try and get a good entry back in, assuming that it doesn't collapse the broad market.

jog on
duc


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## ducati916 (11 May 2021)

Inflation data.















Inflation is as much psychological as actual expansion of credit. That Rubicon seems to have been crossed. This is something that can quickly spiral out of control of the Central Banks as they no longer have the ability to raise interest rates.

Fed. Chair Volcker raised rates to combat inflation in the late 70's early 80's markets. He could do so because the Debt/GDP ratio was 33%:






That is simply not tenable today. Can you imagine the effect of raising rates to the levels in 1980 (see chart below). The Great Depression would look benign by comparison. In 1929 the Debt/GDP was 16%. Today it is in excess of 130% and growing fast.






So if inflation does take hold, what exactly can be done? After 2008/09 the idea was that the economy could 'grow' out of it. Clearly that failed miserably. The ratio simply continued to grow.

Therefore debt has to fall. And fall by a huge amount. Estimated is an $11 Trillion handle. We are back to (Krugman) discussions of a platinum $1T coin or revaluing the US gold reserve to $50K/oz. and paying off that $11T short term debt. Unfunded liabilities sit at $130T (Medicaid, Social Sec.) which are not even in the equation.

So of course crypto's are another way that people are trying to hedge inflation out.






While I am not a fan of cryptos, it is better than doing nothing.



jog on
duc


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## ducati916 (12 May 2021)

Market caught whatever ails the NASDAQ:










No particular rhyme or reason by sectors.

Yields across the world are rising. Inflation becoming a far wider concern.





VIX:






Mr flippe-floppe-flye:









Gold off today, but....






It is a different type of market, again.

My yield model shows 1.7%. Actual yields are 1.63%, so moving up, but lagging the model. If past is prelude, those yields will continue to move higher.

Not what 'growth' particularly wants, which largely means Tech. Commodities could also slow or fall. The problem is what is the 'real' rate of inflation? As there are no real numbers, it is largely guesswork. 

My model suggests inflation sits here:









The last time commodities had a run (oil, gold) was also circa 2009 - 2011. Which is more or less where we sit currently. The big spike in 2020 was not as noticeable because of C19 and lockdowns, and the Fed's crushing of rates across the curve was felt to be necessary.












So gold sits at about the same level as in 2011 on a par with the then and now inflation. Oil of course is (still) much lower. DXY is much higher. All eyes will (should) be on DXY and/or oil.

This is why currently the Fed. is not so worried about inflation. The Fed. is very worried about DEFLATION or debt defaulting. Corporate debt sits at +/- $16 T. Sovereign debt at $150 T. GDP is in the toilet. Currently after 2020, any number for GDP looks good. It still sucks. 

Inflation and lots of it, is one way, the primary way, that governments try and reduce the debt burden. No way does the Fed. let rates rise much above 2%. YCC control will be implemented. Yes, DXY is f***ed. Worse would be widespread defaults which could include the government.

The big RISK is that an inflation runs so hot, it morphs into a hyper-inflation. Without the ability to halt an inflation via raising the short end of the curve, because you blow everyone up, an inflation can just run and run until you blow up the currency.

Which raises all manner of questions of how to protect what you have.

jog on
duc


----------



## ducati916 (12 May 2021)

One way postulated by the crypto crowd are crypto currencies. The only 1 that really matters is BTC. If BTC fails, pretty much all of them go into oblivion.

Companies that have BTC on their Balance Sheets. Not so great.








TSLA has its BTC in Cash/Short Term Inv.






You can see the impact from the Annual Statements:






There seems to be an argument that BTC should be valued equivalent to gold, based on its equivalent monetary value:









						BTC could trade for $250K within five years: Morgan Creek Capital CEO
					

Speaking to CNBC, Morgan Creek Capital Management’s Mark Yusko predicted Bitcoin will tag $250,000 in the next five years.




					cointelegraph.com
				




NNT:








BTC is looking very vulnerable on the charts currently. While I would love to SHORT it, there is no real acceptable way to manage its volatility apart from small size.

Oil news:

-    U.S. natural gas production posted the largest monthly decline on record in February, according to recent EIA data.

-    Production averaged 104.8 Bcf/d, an 8.1 Bcf/d decline (7%) from January.

-    Texas accounted for a 4.3-Bcf/d decline, the largest on record.  

*Market Movers*

-    The UK’s largest asset manager, Legal & General, said that it would back the activist hedge fund’s slate in the *ExxonMobil (NYSE: XOM)* shareholder meeting later this month. 

-    *Motiva Enterprises *cut production at its refinery by 45% because of the Colonial Pipeline outage. *Total (NYSE: TOT)* reduced output by 25% at its Port Arthur refinery. 

-    *EQT (NYSE: EQT)* announced the sale of $1 billion in debt to finance its takeover of *Alta Resources Development*. 

*Tuesday, May 11, 2021 *

Oil prices eased on Tuesday as some resolution to the Colonial pipeline outage came within sight. “As most operational service is expected to be restored by the end of this week, traders have removed yesterday’s price premiums, realizing there are enough commercial gasoline stocks to tide over the currently expected duration of the crisis,” Rystad Energy said in a statement. But gasoline shortages were starting to emerge due to panic-buying.

_*Colonial Pipeline outage fallout. *_The Colonial Pipeline carries gasoline from Texas to the Northeast, delivering 45% of the East Coast’s gasoline supply. The ransomware outage has left the pipeline offline for days. The Biden administration declared an emergency, which opened up a few paths to ease the bottleneck. “Colonial Pipeline is ultimately the jugular of the U.S. pipeline system. It’s the most significant, successful attack on energy infrastructure we know of in the United States.” 

_*Colonial outage and rerouted gasoline flows. *_A record-high amount of gasoline from the Mideast is being rerouted to the U.S., and European gasoline is also likely heading for the East Coast. “With the loss of Colonial's roughly 1.5 million b/d plus of gasoline, inventories will reach 5-year lows (52.4 million barrels seen in October 2017) after 8 days of outages,” Platts Analytics said, referring to Atlantic Coast inventories.

_*Gas stations running out of fuel. *_Some gasoline stations on the East Coast are starting to run out of fuel. An estimated 7 percent of gas stations in Virginia were out of fuel as of late Monday, according to GasBuddy analyst Patrick DeHaan.

_*Oil industry adds jobs.*_ In March, the U.S. oil and gas industry added 12,000 jobs, the largest monthly gain in 30 years. 

_*OPEC’s production increases.*_ OPEC’s crude oil production is estimated to have increased to a three-month high of 24.96 million barrels per day (bpd) in April, thanks to a major jump in Iran’s output.

_*China shuns Australian LNG.*_ At least two Chinese importers of LNG were told by the government to stop importing gas from Australia, another casualty in the two countries’ worsening trade spat. 

_*Colorado drillers merge.*_ *Bonanza Creek Energy (NYSE: BCEI) *and *Extraction Oil & Gas (NASDAQ: XOG)* announced plans to combine into a company valued at around $2.3 billion. The two companies will together become the largest pure-play driller in Colorado’s Denver-Julesburg Basin. The combined company will be renamed Civitas Resources Inc.

_*Dutch government grants $2.4 billion in subsidies for carbon capture.*_ The Dutch government has granted a consortium that includes *Royal Dutch Shell (NYSE: RDS.A) *and *ExxonMobil (NYSE: XOM)* $2.4 billion in subsidies for what is set to become one of the largest carbon capture and storage projects in the world.

_*Rystad: Oil majors run out of reserves in 15 years.*_ The proven reserves of the oil majors declined by 15% last year, and the remaining reserves are on track to run out in 15 years, according to Rystad Energy. “The task is becoming more and more challenging as investments in exploration shrink and success rates slump,” Rystad said.

_*Indian refiners cut output. *_Due to the drop in demand from the pandemic, India’s refiners have trimmed processing. Indian Oil Corp, the country’s largest refiner, reduced runs to about 85-88% capacity. "We do not anticipate that our crude processing would be reduced to last year's level of 65%-70% as inter-state vehicle movement is still there ... (the) economy is functioning," a company official told Reuters.

_*Jet fuel demand remains down.*_ Long-haul flights are not returning anytime soon, so jet fuel demand could average around 5.8 mb/d in 2021, up 30% from 2020, but down from 8 mb/d in 2019, according to FGE. 

_*Shell announces Gulf of Mexico discovery.*_ *Royal Dutch Shell (NYSE: RDS.A)* announced a deepwater discovery in the Gulf of Mexico.

_*Gas flaring declined by 5%.*_ Gas flaring worldwide decreased by 5 percent last year due to lower demand for oil and a knock-on decline in drilling. 

_*IEA: Renewables surging. *_In a new report, the IEA said that renewable installations soared to 280 GW globally last year, up 45% from 2019. The strong additions are set to become the “new normal,” the agency said, with renewables accounting for 90% of global electric capacity installations in 2021 and 2022. 

_*Vitol’s carbon trading surged.*_ Vitol Group’s carbon emissions trading soared by 61% last year, a sign that oil traders are pivoting into carbon trading. 

_*Shell to get half of energy from clean sources within a decade. *_*Royal Dutch Shell (NYSE: RDS.A) *CEO Ben van Beurden said that half of the company’s portfolio will come from clean energy “somewhere in the next decade.”

_*EVs to be cheaper in every segment in the coming years. *_EV cars will be cheaper than gasoline and diesel vehicles by 2027, and larger electrified SUVs will be cheaper by 2026, according to BNEF. 

_*$1.7 trillion in mining needed for energy transition. *_The mining industry needs to invest $1.7 trillion over the next 15 years to develop enough copper, cobalt, nickel, lithium, and other metals to fuel the energy transition. 

_*S-curve for renewables.*_ A new report argues that renewable energy is about to enter the steep portion of an S-curve adoption scenario. That is, solar and wind are on the cusp of rapid growth as costs decline and coal gets phased out. 

_*Qatar plans to dominate LNG.*_ Qatar really means business when it comes to leveraging this cost advantage in global markets. Qatar has put other mid-decade FID’s on notice, that without rock-bottom cost economics their projects may not be competitive.

_*Vineyard Wind approval expected.*_ The Biden administration is set to give the final approval to the U.S.’ first large-scale offshore wind farm, an 800-megawatt project off the coast of Massachusetts. The project could come online in 2023.


jog on
duc


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## qldfrog (12 May 2021)

Mr Ducati,
DXY is fxxxed:


ducati916 said:


> Market caught whatever ails the NASDAQ:
> 
> View attachment 124116
> 
> ...



DXY: that means for us Aussies and NZ residents, that all USD investments will basically fall a bit: any return from swing trades , wise ETFs moves etc will see a few percents lost to USD overall down move [against the AUD/NZD].
How do you cover yourself?  with a few Euro plays on the USD market, a bit of gold..and maybe one day BTC ;-) or are you happy with no share local exposure to RE etc?
The US market is fascinating with its size, diversity and potential but for us, it always adds a touch of currency exposure.
I think this issue is of interest to many of your follower..even if not strictly a bull market subject


----------



## ducati916 (12 May 2021)

qldfrog said:


> Mr Ducati,
> DXY is fxxxed:
> 
> DXY: that means for us Aussies and NZ residents, that all USD investments will basically fall a bit: any return from swing trades , wise ETFs moves etc will see a few percents lost to USD overall down move [against the AUD/NZD].
> ...





Monsieur Frog,

The obvious answer would be short DXY. Or short UUP. You could also be short USD in the currency markets. Another possibility would be long $TNX or short the 10yr. The issue of course is that if the Fed. goes to YCC, that trade is dead.

Then you have as you say, long gold, silver or their respective mining shares as a paper position. You could also buy the physical. There are some advantages to the physical.

(i) If and it is only an if currently, the Fed. blows up DXY, then paper assets will if they survive, have an extreme volatility event. All manner of shenanigans could ensue. Therefore, limit your total exposure to financial markets, as if you could suffer a 100% loss.

(ii) The only way to save the 'system' is to immediately back a new currency to gold primarily, with silver in a subsidiary role. This would push gold to an unbelievable +/- $500K/oz. to cover the liabilities, based on the US reserve of 8000 tons. Silver is currently sitting at 64:1. Silver goes much higher than gold as it will revalue also, but return to that 15:1 ratio or lower. This is the physical. In your hand.

(iii) At those values, you don't need a significant volume of physical to protect your wealth. You'll actually turn a massive profit. The idea is not to speculate, just provide an insurance against the inconceivable proposition that they blow DXY the f**k-up. I hold 50Kg of physical silver. 

(iv) Get rid of your mortgage. Banks will seize hard assets where possible. Even better if you hold land that can be productive.


All the above seems EXTREME. It is. 

This comes down to the original work completed by Bernoulli in 1738 and 'Utility Theory'. This was modified by Tversky & Kahneman in 'Prospect Theory'. Essentially, it boils down to risk avoidance and risk taking behaviours under uncertainty or the future.

This is currently being discussed by Gundlach, Dalio and others, as the 'Forever Portfolio'. So you should be something like 80% property (productive is better) 10% stocks, 5% cash, 5% gold/silver/other. Bonds are a 0% allocation. Which means, worst case you lose 15% of your assets. You could go 4% cash, 1% cryptos without any issues or whatever ratio you want in that allocation.

Re. cryptos: 99% of them are pure junk and will disappear. They are purely speculative vehicles. Treated as such, I have no issues. When they preach that I need to drink the kool-aid, that is something else altogether.

Thought experiment: if in a hyper-inflationary collapse, would you accept a crypto coin as payment for real goods or services? If you would, then you should invest in cryptos. If not, then unless you are purely speculating, there is no value for you in crypto.

I'll be travelling down to Christchurch tomorrow on business, so it is unlikely that I will update the thread until my return Saturday NZ time.

jog on
duc


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## qldfrog (12 May 2021)

Have a nice trip.
Will read your posts with high interest at the end of what could be an interesting week


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## ducati916 (12 May 2021)

This strange market continues.

From Bespoke:

Although equities are lower today, for a large portion of stocks these declines represent reversals from 52-week highs.  In the charts below, we show the daily readings in the net percentage of stocks reaching 52-week highs across the S&P 500 and multiple sectors since 1990.  While not even 1% of S&P 500 stocks have reached a 52-week high today, yesterday a net of 44.55% of stocks did so. Going back to at least 1990, that is the strongest reading in net new highs on record.  The same could be said for Materials, Industrials, and Financials.  The latter saw the strongest reading of these as 84.62% of the sector hit a 52-week high.  Materials were also strong with three-quarters of the sector at a new high while the Industrials sector reading was lower but also at an impressive 63.51%.

While they did not hit a record high, Consumer Discretionary and Energy both also saw elevated readings of 47.62% and 52.17%, respectively. For Consumer Discretionary, the only higher readings came in April of 2010 with some similar but slightly lower readings also in the fall of 2013. Meanwhile, just over half of Energy stocks were at a 52-week high, and although the reading as recently as March was higher almost hitting 70%, yesterday still managed to land itself in the 99th percentile of all days since 1990.









As for other sectors, the readings yesterday were not as close to record highs but were still impressive.  Just about every other sector saw a reading in the top 5% of all periods with a single major exception: Technology.  Only 14.67% of stocks in the sector traded at a new high yesterday. While that is still indicative of solid breadth in the 88th percentile of all periods, it pales in comparison to the rest of the S&P 500. 









Elsewhere in blogoland:






Mr flippe-floppe-flye into the close:






This is a map of the last 5 trading days for the ETFs and their sectors:






Leadership:

Economically sensitive, reflation groups (Materials, Industrials, and Financials), continue to lead while Energy remains neutral. I am watching the base-building process in the defensive sectors (REITs, Staples, and Utilities) for trend changes.

The 'Sell in May' meme is not dead, like a zombie, it is back:








jog on
duc


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## ducati916 (13 May 2021)

Just before I leave for the airport:






This is if not the bottom of this pullback, pretty damn close!

jog on
duc


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## qldfrog (13 May 2021)

ducati916 said:


> Just before I leave for the airport:
> 
> View attachment 124175
> 
> ...



Not yet Mr Duc:




If that does not look like the start of a crash?
 and 
	

		
			
		

		
	





well..no: BTC is not the new gold..yet?


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## qldfrog (13 May 2021)

VIX:




let's wait to see the end of the session:




would be interesting to see the sector base movement today: is it just the tech?


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## ducati916 (14 May 2021)

So from Christchurch....

I see that this has already been covered:






The P/C ratio indicates an extreme, which we haven't seen for a while.






Breadth at a level that isn't good, but we could expect a reversion to mean short term.






VIX






Yesterday the weekly was touching the EMA, which always likely meant a pullback today, which currently we have.














The Fear Index






Mr flippe-floppe-flye:











All manner of explanations will be put forward for yesterday's sell-off. The inflation number will probably be the main culprit. Whatever the real reason, the market needs Tech. and the leadership stocks to stop going down, even if they can't go up. MSFT, GOOG, AAPL and a few others. ATM that is a possibility. But the question is more of: is it just an oversold bounce, only to be followed by more selling? 

Without a doubt, there has been serious technical damage to the NASDAQ. In 2000 the technical damage was similar and Tech. rolled over gradually taking the S&P500 down later in the year. This break is similar, in part because of the tremendous run higher.

So my point is this: if XLK, XLC do not hold the line here, then we will be looking at a mess heading into the summer. Short term, next couple of days, we bounce. Once the bounce is over, comes the test of whether we have a far more serious issue or not.

If inflation is the thing...oil is the thing. 






The sell-off or rise in oil prices has a big (outsized) impact: oil currently is selling off.










jog on
duc


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## ducati916 (16 May 2021)

Home from Christchurch and half a weekend to enjoy.

Markets.

Volatility exploded higher, markets fell. Where to?






Well VIX came down sharply, markets predictably rose. Pretty bog standard stuff.

Stocks are back up to 67% participation above the 50EMA. That is enough to create upward pressure on the index. Now that doesn't mean we will explode higher, but, for the moment it means that we don't explode lower either.






We are back in the mid-range. That means choppy. Little bit up, little bit down, indices kinda go nowhere overall. The key to this market is to be in the right sectors and out of the wrong ones.






Which are the right sectors?

This week it was: 










The individual names:






That being said, Tech. is ready to bounce:






Which can only be good for the over-all market.

The 'inflation' thing:











So you wonder why the inflation number came in hot!

Is that SUSTAINABLE? Errr, probably not. However, it's not the CPI number that is important. It is the PPI number. That number currently looks a lot stickier as DXY is not in a great place. The PPI number is governed by DXY and yields. One is falling, one is rising. How fast (the ratio between them) is the rate of inflation.

Rates are 1.63%. My model has 1.66% atm. Rates for the moment at least, could pause. That will also help Tech. bounce. What they do further down the road, obviously depends.


Credit spreads didn't budge during the sell-off.






Which means that the threat of default, which WOULD cause a massive stock meltdown is not a threat Monday. Mostly look at earnings. Earnings across the board have been outstanding. Analysts are so far behind the curve that they should seek new employment. Clearly that will not last either. The point is however that defaults are not in issue currently. No credit panic. No stock market meltdown.


Mr flippe-floppe-flye:






Oil news:

*Friday, May 14th, 2021*

Oil prices rebounded on Friday after a midweek selloff. Neither the bullish nor bearish narratives are taking hold at the moment, and Brent crude is trading in the upper-$60s. 

_*Colonial pipeline restarts. *_The Colonial Pipeline restarted product flows on Wednesday, although localized shortages will take time to ease. The company reportedly paid the ransom, but the operator of the ransomware group Darkside said on Friday it had lost control of its servers and some of the money it had made through ransom payments.

_*Exxon ratchets up Guyana production.*_ *ExxonMobil (NYSE: XOM) *has boosted its 2025 forecast for oil production in Guyana to 800,000 bpd, with plans for a fourth project in the Stabroek block. “Production is expected to begin at year end 2025 with an expected field life of at least 20 years,” Exxon told Guyana regulators.

_*Fed presses banks on climate risk.*_ The U.S. Federal Reserve has asked lenders to start providing information on the measures they are taking to mitigate climate change-related risks to their balance sheets, according to Reuters.

_*Qatar to partner with China on LNG. *_Qatar is in talks with Chinese firms to make them partners in its LNG expansion.

_*Enbridge runs Line 5 despite shutdown order. *_*Enbridge (NYSE: ENB)* continues to operate the oil pipeline through the Great Lakes, reiterating that it is up to the U.S. federal government to say if the pipeline should continue operations. Michigan revoked Enbridge's easement for the operation of the twin Line 5 pipeline last November, citing repeated violations of the easement and the need to protect the Great Lakes.

_*Oil prices drop.*_ Oil prices fell on Thursday as concerns about rising inflation filtered through to market expectations. “Oil’s getting sucked into the inflation fear scenario,” said Bob Yawger, head of the futures division at Mizuho Securities, according to Bloomberg. Inflation tends to drive up crude, but knock-on concerns about weaker growth can drag down commodities. Similarly, expectations of interest rate increases can undercut rising prices. By Friday, oil was regaining ground.

_*IEA: Glut cleared, demand revised down. *_The IEA said that the global oil supply glut that resulted from the pandemic has disappeared, due to a steep drop in supply, aided by the OPEC+ production cuts. Inventories have drained off. But the agency also revised down its oil demand forecast for 2021 by 270,000 bpd, due to lower consumption levels in Europe, OECD Americas, and India.

_*Iran proposes oil sales via Saudi Arabia.*_ Iran is looking to persuade its regional rival Saudi Arabia to help it to sell Iranian crude oil on international markets in exchange for limiting attacks from the Iran-aligned Houthi rebels in Yemen on Saudi oil infrastructure.

_*Occidental sees stock fall after 1st quarter results.*_ *Occidental Petroleum (NYSE: OXY)* saw its stock fall by 8% on Tuesday after reporting a net loss of $300 million in the first quarter, but a strong $1.6 billion in free cash flow. Higher Permian production and strong earnings from its chemicals unit boosted cash flow. But the company’s incremental cash flow will be dedicated to whittling away at its $30 billion debt pile.

_*EIA cuts supply forecast.*_ The EIA cut its supply forecast slightly for U.S. oil production for 2022 due to the ongoing spending restraint from E&Ps, lowering its expected output by 20,000 bpd to 11.84 mb/d.

_*ESG bubble bursts.*_ Clean energy has so far been the worst-performing sector, with investors yanking cash from the sector at the fastest pace in a year. The iShares Global Clean Energy ETF (ICLN), a catch-all bet on clean energy, has sunk 26.7% in the year-to-date while the market’s only pure-play solar ETF, Solar Invesco ETF (NYSEARCA:TAN), has cratered 32.7% over the timeframe.

_*Biden's $2.5 Trillion Infrastructure Plan Could Send These EV Stocks Soaring. *_A massive $2.5-trillion infrastructure plan could send EV companies--and many of their tie-ins--to record new heights. And some investors are getting ready to pile in like never before as the “green tidal wave” prepares to reach tsunami proportions.

*Pembina puts Jordan Cove on pause. Pembina (NYSE: PBA)* “paused” its Jordan Cove LNG export project in Oregon, a project that has been on and off the drawing board for 15 years, but has been hit by repeated permit denials.

_*Tesla looks at renewables credits. *_*Tesla (NASDAQ: TSLA)* is looking to enter the multi-billion dollar U.S. renewable energy credit market. The EPA is looking at qualifying EVs earning tradable credits under the Renewable Fuel Standard.

_*Gas faces an uncertain future in Europe.*_ With carbon prices hitting record highs and EU climate policy turning the screws on carbon emissions, coal is on the way out in Europe, but natural gas is also under increased scrutiny. “The window for (building) conventional gas generation does seem to be narrowing. We have the feeling you have to get material gas investments done by the mid-decade unless pairing it with CCS or doing something creative with hydrogen,” Murray Douglas, research director at consultancy Wood Mackenzie, told Reuters.

_*Renewables post record first quarter. *_The U.S. added 2.5 GW of wind and 1.2 GW of utility-scale solar in the first quarter, the best start to a year on record.

Now oil is the big PPI threat. Gasoline prices in the US (and shortages) are already causing news headlines.

I like this quote:






I've run out of chart space allocation. I'll probably do a gold update as a follow up post.

Takeaway: Tech. to bounce, markets still meh overall, but hot sectors will remain hot for the moment at least.


jog on
duc


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## ducati916 (16 May 2021)

Stuff from around blogoland:

The weakness (to date) in Tech.






The 'inflation' thing:









Gold.












Include silver in there. Actually I prefer silver over gold.






Staples (defensive) still outperforming the growth names.






Market still trading higher, although also a value bent.






There is the '2 Year' meme circulating atm.







These chaps have sold (I'm guessing) out of Tech.






Far easier to go with what is working currently than fight the market. There are plenty of sectors moving higher currently, why fight it by trading the hard names looking for the bounce or recovery, whichever one it turns out to be.

jog on
duc


----------



## ducati916 (18 May 2021)

The market opens the new week soft. Will it continue?

The top 4 ETFs are all 'inflation' based.

Tech. is (I think) starting to find its low. 






Now Soros could change his mind and sell it all before I even finish typing, but it is indicative that there are those out there seeking tech. 'bargains'.






Tech. and particularly yesterday's high fliers got smashed.









Inflation is a thing. Currently.













The numbers, YoY, are coming from March 2020. Of course they will show manic change. The question is does the trend higher continue, or does it as the Fed. suggests, consist of a transitory nature?

Mr flippe-floppe-flye:














Some facts:

(a) Cryptos are a new technology;
(b) They are part of a new industry, DeFi.;
(c) This industry is developing fast;
(d) There have been any number, historically of new tech. creating new industies (Rail, Aircraft, Cars, Radio, TV, Internet etc);
(e) The companies involved have failed and thrived and it was hard to know which will thrive or survive;
(f) Many are still here, many are long gone.

Some opinion:

(a) Cryptos rely on network effects;
(b) Network effects are sticky until they are not;
(c) Which current coins/tokens will survive?
(d) Are you sure? How are you sure?
(e) Network effects seem to evolve with tech. advances;
(f) What are the next advances in tech.?


So to say or imply that any crypto WILL come back, is simply engaging in a very high risk bet. The 'industry' will probably grow. It will probably interact with traditional finance in some way, but possibly not. There is a not marginal probability that something newer and shinier will emerge. The non-shiny goes to zero.

Housing on fire.






For this space, XLRE, XHB as possibilities.


jog on
duc


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## Beaches (18 May 2021)

ducati916 said:


> Housing on fire.
> 
> View attachment 124424
> 
> ...





Agree with NAIL also thrown in for leverage


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## Smurf1976 (19 May 2021)

ducati916 said:


> So to say or imply that any crypto WILL come back, is simply engaging in a very high risk bet. The 'industry' will probably grow. It will probably interact with traditional finance in some way, but possibly not. There is a not marginal probability that something newer and shinier will emerge. The non-shiny goes to zero.



Computers most certainly turned out to be a very big thing for example but just about every computer company and computer operating system which existed in the early days is long gone now and most went bust or simply withered away. 

Cryptocurrencies will very likely be the same. The concept may have a big future but almost certainly most of the current coins won't.


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## ducati916 (19 May 2021)

Bull back on track.

We have enough breadth and vol. is holding below the danger levels.









Some charts on the 'rotation'















If the 'inflation' trade continues, the middle of the field, XLRE and XLV should continue to move higher. As part of that economic situation, commodities will be part of that move. If/when oil is no longer the energy provider (no time soon) then that generation of energy will have to come from somewhere. The 'where' is estimated below.






Mr flippe-floppe-flye:








Tech. is bottoming. It's not yet quite ready as a buy, it will likely base with choppiness for a while, but the big declines are pretty much over for the moment. Which means that the Bears have run out of ammo.

We might see on SPY a bit of a two bites approach at $423, the previous all-time high, but we move towards $427. At $427 we'll see what happens. What will be important are the state of the VIX and breadth, as usual.

The gold/crypto debate. Outside of pure speculation and profiting from vol.

(i) The 4 Horsemen;
(ii) Store of value;
(iii) Independent or dependent;
(iv) Dilution.

(i) If we have a scenario as occurred in Weimar Germany, where the fiat currency is destroyed, this is where an alternative asset that can be used as money becomes critical. Other than money, land etc. are critical. But the ability to transact and exchange are one of the primary functions of a money.

(ii) The store of value is really in situation (i) above. Where your asset is not legal tender and exists outside of the financial orthodoxy, there will be significant speculation. Gold rose to $800/oz in 1979 and then fell to $200/oz over the next 20yrs or so. BTC has risen/fallen with even greater vol. 

That is not the issue. The issue is: if/when the currency implodes, what will your gold/BTC be valued at?

Government as an institution will never give up voluntary control of the money supply. That is where they derive their power from. If a fiat currency implodes, that government or the next, need to provide a 'money' to their electorate so that daily life can function. A minor fiat can use a stronger fiat. Zimbabwe used the DXY, as have others.

If the DXY implodes, what can be used? If the DXY implodes probably 90%+ of all fiats will implode. All (most) governments hold gold/silver stocks that they could and would, link to an issued currency: exchangeable at whatever ratio. Commerce could and would continue, as would government's power, although severely curtailed.

What would the value be currently? To cover current US liabilities, gold would have to be valued at $500K/oz. Silver at 15:1 would be $34K/oz. 

Now this would ONLY happen in the collapse of DXY. The market price of gold/silver has been diluted and can be diluted further through the continued issue of 'paper' gold/silver, keeping the price somewhat manageable.

Why not BTC? Well the simple answer is that governments do not hold sufficient BTC. BTC being the gold standard of crypto currencies. All the others are simply fiat and worthless other than as speculative vehicles.

(iii) If we enter scenario (i) what happens in the short term? Days, weeks, months? Life continue uninterrupted? Unlikely. There will be chaos and anarchy for a period. Who maintains and looks after the internet infrastructure? Does the internet continue to function seamlessly? Maybe yes, maybe no. If no, how do you access your BTC?

Who exactly will transact with you? You need someone who has a level of trust in crypto. Again, maybe yes, maybe no. With gold/silver, you hold the physical in your hand. You have control over it 100%. There is no reliance on the internet actually working or whether your counter-party will accept it as 'money', it has been used as money for thousands of years, it is deeply ingrained.

As for the paper gold/silver, forget about it, poof, gone.

What triggered this post? I had a client offer to settle his bill in crypto! I opted for the worthless paper.


jog on
duc


----------



## ducati916 (19 May 2021)

Oil news:


-    U.S. residential energy consumption declined by 4% in 2020, despite people spending more time at home during the pandemic.

-    Relatively warmer weather reduced heating needs during winter months, offsetting the 2 percent increase in electricity sales.

-    Space-heating and water-heating are usually the most energy-intensive uses in the average U.S. home.   

*Market Movers*

-   * BP (NYSE: BP)* is in advanced talks to sell its 28% stake in a North Sea oil field. 

-    Natural gas stocks rose in concert with prices following new weather forecasts showing hotter-than-average temperatures later this month. Nymex natural gas was up more than 5% on Monday. Coal stocks also rose on the news.

-    *Gran Tierra Energy (TSX: GTE) *announced that it was shutting some of its oil wells in Colombia due to unrest. 

*Tuesday, May 18, 2021 *

Oil prices took a breather Tuesday morning, but Brent is once again testing $70 per barrel, with expectations of improved demand on the heels of widespread vaccinations in the U.S. 

_*IEA: No new fossil fuel exploration. *_The IEA is out with a landmark report on a pathway to net-zero emissions by 2050. Among the many important points in the 200-plus-page report is the call to end fossil fuel exploration. “[N]o exploration for new resources is required,” the agency said. It also listed a series of restrictive policies that are necessary, including phasing out sales of the internal combustion engine and bans on new natural gas hookups in buildings. The conclusion is a dramatic shift in tone. 

_*Supply crisis coming?*_ The steep cuts to capex and the increasingly stringent climate policy have forced the oil majors to lower their growth plans. Some analysts warn that this could set the market up for a supply crunch in the coming years.

_*India demand takes 500,000-bpd hit in May.*_ India’s oil demand could be off by as much as 500,000 bpd for the month of May, according to Reuters. The negative effects from the Covid-19 spike are expected to extend into June.

_*Gas industry faces an existential threat from renewables.*_ The Wall Street Journal details the gas industry’s looming decline from renewables. “I’m hellbent on not becoming the next Blockbuster Video,” said *Vistra (NYSE: VST)* Chief Executive Curt Morgan. “I’m not going to sit back and watch this legacy business dwindle and not participate.” Vistra owns 36 gas-fired power plants but said it will not build anymore, instead it will invest $1 billion in solar and batteries. 

_*Central banks step up climate scrutiny.*_ A coalition of 90 central banks from around the world – the Central Banks and Supervisors Network for Greening the Financial System – is scheduled to meet next month at a major conference to address risks from climate change.

_*Gasoline shortages ease. *_Over 1,000 retail gasoline stations were resupplied over the weekend, easing the shortages from the Colonial Pipeline outage. 

_*Iran planning oil export boost. *_Iran is preparing to boost production and exports of crude oil as talks on the nuclear deal with the United States continue to progress, government officials said.

_*OPEC+ production rising by 1 mb/d. *_OPEC’s oil exports have jumped by 1 million barrels per day (bpd) so far in May, while the OPEC+ group started easing the production cuts by 350,000 bpd this month.

_*Spain to end fossil fuel production.*_ Spain’s parliament voted in favor of a new climate law that commits the country to cut emissions 23% by 2030, compared with 1990 levels. The law also bands coal, natural gas, and oil production by 2042, and outlaws new permits immediately.

_*Shell says Nigerian assets not compatible with energy transition.*_ *Royal Dutch Shell (NYSE: RDS.A)* acknowledged that its operations in Nigeria are incompatible with its green transition. “The balance of risks and rewards associated with our onshore portfolio is no longer compatible with our strategic ambitions,” CEO Ben van Beurden told investors. “We cannot solve community problems in the Niger Delta.” Shell has been selling off assets in Nigeria incrementally in the past decade, so a “full retreat would be an obvious end point,” Bloomberg said.

_*Offshore wind turbines require 63,000 pounds of copper.*_ Renewables—and especially offshore wind—are set to drive a surge in copper demand that will push prices even higher, as the amount of copper required per wind turbine is staggering, at 63,000 pounds.

_*Activist investors get another boost against ExxonMobil. *_Glass Lewis & Co. agreed with investor activist Engine No. 1 in its quest to revamp the board of *ExxonMobil (NYSE: XOM)*, another boost for the effort. 

_*Washington State’s most aggressive climate policy.*_ Washington State just enacted the most aggressive climate policy in the nation, a cap-and-trade system that would take emissions down close to zero by 2050. Utilities need to be carbon neutral by 2030. The law covers more of the economy (70% of overall emissions) than most other state policies. 

_*UK seeks G-7 deal to end fossil fuel subsidies. *_The UK is helping the G-7 move close to an agreement to phase out fossil fuel subsidies. 

_*Oil industry gets a partial win at Supreme Court.*_ The U.S. Supreme Court gave the oil industry a partial win in a highly-anticipated court case. The City of Baltimore has sued 20 international oil companies seeking damages related to climate change, and the Supreme Court decided that the case should be heard in federal court, which the oil industry views as more favorable terrain. The case now goes back to federal court. 

_*Shell wins backing from shareholders.* _*Royal Dutch Shell (NYSE: RDS.A)* won backing from shareholders in a non-binding vote on its green transition plans, with 88% of shareholders voting in favor.

_*Shale comeback would be disastrous for oil. *_Experts are now warning that OPEC+ could see its efforts thwarted by a chief rival: U.S. shale. According to the Oxford Institute for Energy Studies, rising oil prices could allow for a significant return of U.S. shale to the market in 2022, potentially upsetting the delicate rebalancing of the global oil market.

Restaurants:












I'm not aware of a pure restaurant ETF.

jog on
duc


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## ducati916 (20 May 2021)

What a difference 24hrs makes. 


Crypto getting smashed and taken to the woodshed.










An unfortunate side-effect of this is that it seems to have crashed markets generally. I guess margin calls will feature in the news later today or this week.

The VIX, weekly and daily:










As far as the cryptos go, this next chart is now pretty irrelevant, but it did demonstrate just how stupid the whole thing had become:






For the diehard dimwit.

Inflation:












I see in blogoland there is a rumour or possibly accurate, that the Fed. has started to talk 'Taper'. The market didn't like it in 2019, probably won't like it now. We'll just have to wait and see.

Credit card debt:






Banks and Amex, etc. are crying that their revenues are drying up.

Mr flippe-floppe-flye:







This market, just in case you have been asleep for the last week or so, has become very treacherous. Everyone has become a flippe-flopper currently.

Gold is holding up well. Silver not as well. But essentially if you are in these sectors you are reasonably happy atm.

jog on
duc


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## ducati916 (20 May 2021)

Today was all about BTC and cryptos:




















Which spilled over into stocks:






I wouldn't be surprised to hear that Mr Musk is receiving death threats etc for his 'involvement' in what many will perceive as his causation of the route in BTC. 

After hours, BTC is falling again.

BTC is all about belief and confidence. Not much of either remains currently. The die hard kool-aid drinkers may well end up the way of their predecessors in the jungle.

What does it mean for the market? In a sentence: I have no idea.






We dropped and bounced. The market structure of the indices is now broken, the bounce came from support levels, which I think will be tested again tomorrow. I don't think that they hold. We'll see.

There was a lot of chatter about 'inflation', 'Taper' 'Fed': commodities sold off hard. Yields went up.

Currently 'May' is living up to its reputation.


jog on
duc


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## ducati916 (20 May 2021)

So BTC.

BTC is this: the Ruling Ring.






All the rest, some 4000+ pieces of sh**e trigger off of BTC.

Railways. Same network effect that is in play today, same with telephones, TV, etc. All rely on the network effect. But taking railways as our example:

Railways in the 1890 period.






Railway companies in the 1890's:









Today:






Lots more railways, but only 6 major railways, 7 if you include Buffett's BNF.

The blockchain will persist, survive, thrive. The 'coins' will disappear by their thousands. Consider how much capital it took to start a railway as opposed to floating a digital coin. So 4000 coins is probably a conservative estimate.

However many there are, they live and die by BTC.

Which brings us to the BTC narrative, which is fundamentally changing. At the last collapse:

(i) Being banned was a possibility. Now it is fact. China has its own digital Yuan. Obviously competition is not a good thing. Illegal. Overnight. BTC just lost 1.3B customers. The US will obviously watch with (glee) interest. The US want a digital currency. The US will, depending on China's success/failure, ban BTC. Another 360M customers lost. Add the rest of Europe another 560M customers gone. You think Mr Putin wants a BTC, errr, not a chance.

(ii) Companies were gradually adopting BTC as a payment option, led by TSLA, MSTR PYPL and a few others. Poof, gone or very soon.

(iii) Which brings us to our HODLers (hold on for dear life). With a material part of the narrative in doubt, will BTC recover and trade to new highs? How much capital evaporated today? Where will the new capital come from? There will be the $value of destroyed capital in blogoland by tonight. Here's the thing: if you went out last night, came home a bit late and slept in, you could have gone out a millionaire and come back potless. That is not a store of anything. That is just rampant tulip speculation.

Frodo is approaching the boundaries of Mordor.

jog on
duc


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## gartley (20 May 2021)

Waiting for a pullback in gold first sub 1800 before making a move in miners


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## Skate (20 May 2021)

*BTC is a "Train wreck"*
I really got a kick out of the analogy of "Trains & Bitcoin" 

*Bitcoin is built on the enthusiasm of others*
Enthusiasm or lack thereof, drives BTC in both directions. Bitcoin is "built on enthusiasm" (BOE) as it has no intrinsic value.

Skate.


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## Smurf1976 (20 May 2021)

ducati916 said:


> Here's the thing: if you went out last night, came home a bit late and slept in, you could have gone out a millionaire and come back potless. That is not a store of anything. That is just rampant tulip speculation



The basic problem with Bitcoin as I see it is that even if it is accepted and legal, it's just far too volatile to use as basis for real world transactions of anything at all.

Would anyone agree to sell me their house for an agreed price denominated in Bitcoin? By the time it settles, it you could be receiving anything from an outright fortune through to not enough money to buy a loaf of bread.

Even the official fiat currency of most Third World countries is considerably more stable and that being so, it's something with neither an intrinsic value nor a practical use.


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## qldfrog (20 May 2021)

Smurf1976 said:


> The basic problem with Bitcoin as I see it is that even if it is accepted and legal, it's just far too volatile to use as basis for real world transactions of anything at all.
> 
> Would anyone agree to sell me their house for an agreed price denominated in Bitcoin? By the time it settles, it you could be receiving anything from an outright fortune through to not enough money to buy a loaf of bread.
> 
> Even the official fiat currency of most Third World countries is considerably more stable and that being so, it's something with neither an intrinsic value nor a practical use.



a snake eating its tail:
if you can use bitcoin to easily buy stuff, then it becomes stable!
 why?
if you can buy  any car with BTC, if BTC falls 10% vs your currency and you want to buy a car, you buy  BTC and pay in BTC to get the bargain, so as money flows into BTC to allow bargain hunters to buy stuff (cheaper) with BTC, BTC goes up..a virtuous circle;
So until you can buy stuff with BTC easily, it will not be stable;

And I do not believe the fact you can buy guns or a slave on the dark web is enough to create the virtuous loop


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## ducati916 (21 May 2021)

So a late post. Early work commitments and a psychotic market all combined with sleeping a little late to hamstring posting at the normal time.

So the market has been up/down/up/down. Going pretty much nowhere, but necessitating a tremendous amount of flippe-floppeing. There are no directional trends currently unless you include sideways.

Defensive is the way to go currently: these are the Dow groups, Transports, Industrials and Utilities. Utilities are obviously ultra defensive, but are demonstrating strength. I'll do some for the S&P500.






Of course BTC has been all over the blogosphere:






Margin Calls:






The Bouncccccccce






The market:










I'm liking this sector currently.











And XBI for the bounce (no chart).

Mr flippe-floppe-flye:









The $VIX still has me concerned.






Some (defensive) sectors can make headway even against the jump in vol. They probably won't make great headway, but there moves to the downside in a market route, will allow reasonable time to exit, maybe.

No surprises here:






jog on
duc


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## ducati916 (22 May 2021)

Last day of the week.

With the 'inflation' discussion everywhere, the leading sectors this week should be no surprise: either prices rise with inflation, real estate based businesses or monopolies that have a pretty inelastic demand curve, medicine, health care.

Tech. halting the slide.

Commodities and yield flippe-floppeing. Currently my model posits 1.57% as the 'correct' yield. Actual yield as of yesterday 1.63%. Today yields fell to 1.625%. Which means, next week should continue to see yields come back to the 1.57% level. Good for stocks.






My inflation model has inflation under control re. PPI prices. DXY is also taking a pause in its trend lower. DXY will have a huge impact on inflation, yields. DXY is pausing. It is not reversing. At the moment, the correlation to stocks (SPY) doesn't seem high.






The issue now is going to be and certainly where all the chatter is: CPI prices, tied as it is to many minimum wage price hikes to attract workers who seem to be happy to sit on their arse at home currently, waiting on stimmies. The YoY CPI number was always going to be huge after March 2020. The chatter also revolves around that retail sales number (chart a couple of posts back) which has been estimated as 5yrs of future retail sales pulled into the present. Supply chains and availability or rather shortages going forward is now an issue.

Crypto risk.







Mr flippe-floppe-flye:













A list:















That is not even really a fraction of what is out there.

So far, whether it be the May seasonality or just the confluence of events, these past 3 weeks have been even choppier, breaking many established trends. I 'think' going forward into June, some will gradually reassert themselves. What has happened this month is that we as market participants have been conditioned to jump in, jump out, very quickly, grabbing small profits if we can. The best money is in sitting tight. Obviously sitting tight in something that works. If it's not working, there is no point sitting tight. I'll have a few more comments in the trades thread.

The S&P500 looks finally to have broken the Bear's dreams once again. Small caps (SLY) also look as if they are stabilising. The Mid-caps (MDY) however still look vulnerable. Which is odd. I'm going with the 2/3 majority on this: long. It may be that MDY correlates closer to DXY, but again an eyeball look doesn't see much correlation.

The big story this week was of course cryptos. Stocks have been a bit of an afterthought.


jog on
duc


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## ducati916 (22 May 2021)

Just to wrap up the week:

Just on the numbers, it would have seemed in retrospect, a pretty calm sort of market and to be fair, it probably was. It just didn't feel that way.






The market and BTC are not correlated:






While in BTC it has been a shocker of a month. Well cryptos in general.






What the market is correlated to currently is DXY.






DXY trades higher, market trades lower. DXY trades lower, market trades higher. Assuming that relationship holds....which way DXY? Lower. I don't know what rates would need to be to create a bull market in DXY, but it certainly is higher than 2% To turn DXY round I'd posit at least 5%. 

Chances of rates going to 5%? ZERO.

With above $150 Trillion in Federal liabilities, never mind another $14T in Corporates, $50T in MBS and Munis, rates have to stay low, otherwise the level of defaults will trigger a deflation that will put the 1929 - 1934 period to shame. The Fed. would try to fight that deflation with liquidity (what else is there?) resulting in more than likely a true hyper-inflation and the demise of DXY.

So we will have an ongoing inflation for years, probably for my lifetime now. The only issue is, once the genie is out of the bottle, just how bad is it going to get?

With regard to stocks, the market will rise in a bull trend, but it now becomes more of a stock picker's market. Sectors that benefit from inflation will outperform those that struggle against a rising tide.

What I like:

(i) Healthcare. Boomers are ageing, they have money, health is pretty non-negotiable.
(ii) Drugs. Which runs alongside to the above.
(iii) Real Estate. REITS can push up rents etc. Again, somewhere to live is pretty non-negotiable.

Commodities

(iv) Energy to a point. If prices rise past a point 'X', lots of supply can come in.
(v) Agriculture, more so than in the recent past. Tricky one. Stay with the biggies, Wheat, Corn, SOYB.

Gold as paper.

(vi) Miners as a leveraged play on gold/silver. Probably slow, steady, sustained.

The other big issue will be growth. With tensions rising across the globe, the entire globalisation thing, along with just-in-time-supply is going to take a baseball bat to the head. If, inflation runs hot through commodities, into producer goods and on into consumer goods, holding excess inventory makes more sense. If supply lines are patchy, it makes more sense to hold more inventory. Rising prices = higher inventory. Falling prices = less inventory. Shortages are de rigueur in inflationary periods.

The Fed. is committed to higher inflation. They think that once it arrives that they can control it. The problem is that yes, it can be controlled, only the tool to control it cannot be employed....because it'll blow-up the economy into a monster deflation.

Anything really with an inelastic demand curve and elastic prices will work well.

jog on
duc


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## Skate (22 May 2021)

ducati916 said:


> The market and BTC are not correlated:




*Thanks*
I was going to look into (BTC / Market Correlation) but as usual, your thread has saved me time & trouble.

Skate.


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## bsnews (22 May 2021)

ducati916 said:


> Just to wrap up the week:
> 
> Just on the numbers, it would have seemed in retrospect, a pretty calm sort of market and to be fair, it probably was. It just didn't feel that way.
> 
> ...



My read and for what it is worth, China is playing a long game and the USA are going to get slammed dunk.

Chinese Yuan continues to rise against the USD so there input costs stay in check so China keep exporting higher inflation to the world. Since China is the input manufacturer and the USD keeps going down USA keep adding more inflation are now trapped into a never ending QE cycle. 
Now they are making a play on there digital currency as well. 
My call for Australia will be for a September election while we are still getting over the party as we also will be trapped into the QE.

I am almost 100% invested into our gold miners. I have a little bit of dry powder left for maybe a bear EFT.
I brought a little early on 2 and good timing on one miner so not to bad spot atm.


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## qldfrog (22 May 2021)

Gold....
Yes gold miners: safety and stability..not
look at rrl and arv : 2 of my stunning losers of this month;
Got seriously kicked
Ncm managed ok but just
i would recommend an etf 
i believe GDX on the asx is a decent gold miners etf.


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## Gunnerguy (22 May 2021)

qldfrog said:


> Gold....
> Yes gold miners: safety and stability..not
> look at rrl and arv : 2 of my stunning losers of this month;
> Got seriously kicked
> ...



I had GDX quite a few years ago, I liked it, but as usual sold out too early with a small profit. Should have held longer.
In my younger days I use to trade too much ‘on emotions’.
Wiser and greyer now.
GG


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## bsnews (22 May 2021)

qldfrog said:


> Gold....
> Yes gold miners: safety and stability..not
> look at rrl and arv : 2 of my stunning losers of this month;
> Got seriously kicked
> ...



Not so much safety and stability its the hedge against inflation if you don't think inflation then don't buy gold.
EFT's don't give as much bang for your buck.
My choice of gold miners 
NCM is OK 
NST is now a monster with the merger 
EVN is my first choice 

But for a 20% + bounce you would want a mid cap.
RRL I am still holding I feel it is the one to be in. They might of paid a bit much for Tropicana and shares have been punished but I still see them as undervalued. (I am at a lose ATM brought a bit to early)
GOR looked good as well.
Just my thoughts take them with a grain of salt.


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## Smurf1976 (23 May 2021)

ducati916 said:


> (iv) Energy to a point. If prices rise past a point 'X', lots of supply can come in.



Something I'll caution there is that as prices rise, so does the cost of new supply.

There are considerable commodity inputs to any large energy project and the other big cost is return on capital. If materials costs rise, and interest rates (as a proxy for expected return to investors) rise, then so does the cost of production from the new oil field, power station or whatever.

Quite a few were rather spectacularly burned with that one in the 1970's and 80'st. Relatively small electric utilities tripped up in all sorts of places around the world and, infamously at the time, Exxon spent more than US $1 billion before walking away from an unconventional oil project in the US , the estimated cost to complete it having blown out to $5.5 billion and rising as of 1982 when they pulled the pin. Those figures are actual $ at the time, not adjusted for inflation over the past 39 years which would put them far higher in "real terms" today.

History makes me cautious on this one. The cheapest time to build a dam or drill a well is when nobody else wants to build a dam or drill a well. Once the idea catches on, prices soar for every input - materials, specialist skilled labour, drilling rigs, etc plus the investors tend to start wanting a return too.

That's not to say nothing can ever be built, just that as the commodity price goes up the cost of building a big project on the supply side tends to go up too.


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## ducati916 (23 May 2021)

Oil news.

*Friday, May 21st, 2021*

Oil is heading for the biggest weekly drop since March, following three consecutive days of huge losses. Still, oil recouped some losses on Friday, edging up after getting sucked down with a broader selloff in commodities. 

_*IEA says no new fossil fuels. *_The IEA’s Net-Zero report dropped like a bombshell midweek. The IEA said that to reach net zero, there should be no new oil, gas, and coal projects. There was no shortage of proponents and critics, but either way, the report could influence how investors think about oil.

_*Asia snubs IEA report. *_“The report provides one suggestion as to how the world can reduce greenhouse gas emissions to net zero by 2050, but it is not necessarily in line with the Japanese government's policy,” a Japanese official told Reuters. Officials in the Philippines also said no new fossil fuel investment would be a setback.

_*OPEC warns against IEA report. *_“The claim that no new oil and gas investments are needed post-2021 stands in stark contrast with conclusions often expressed in other IEA reports and could be the source of potential instability in oil markets if followed by some investors,” OPEC said.

_*U.S. and Iran near deal. *_The U.S. and Iran have sketched out the broad outlines of a deal to restore adherence to the 2015 nuclear agreement, which would include lifting sanctions. “We can now say that we have reached a framework or structure of an agreement,” said Iran's deputy foreign minister Abbas Araqchi, according to Argus. Oil prices dropped by more than 2% on the news.

_*Qatar cornering LNG market. *_Qatar is ramping up LNG supply and dropping prices, boxing out LNG projects elsewhere. “Qatar’s expansion plan is so huge that there are questions on the need for other supply options,” Julien Hoarau, head of EnergyScan, told Bloomberg. “It’s still the number one, but the U.S. has never been so close, so Qatar needed to move if it wanted to keep its leading position.” Qatar has the lowest cost LNG in the world. Bloomberg estimates that 10 U.S. LNG projects may struggle to secure financing.

_*Another year of canceled LNG projects.*_ Reuters reports that 2021 is shaping up to be another year in which many LNG projects are postponed or canceled.

_*Europe oil demand rising. *_European traffic is nearing pre-pandemic levels as vaccinations improve and the latest Covid-19 wave recedes.

_*India asking LNG suppliers to delay deliveries.*_ Slammed by Covid-19, India’s LNG importers are asking suppliers to defer deliveries scheduled for May and June. In addition, India’s disappearance from the spot market – due to the glut of supply in the country – could drag down spot prices for LNG.

_*Ford’s electric F-150.*_* Ford (NYSE: F) *announced details about the new electric F-150. The pickup truck has been the nation’s bestselling vehicle for decades, so an all-electric version will be highly anticipated. The new F-150 “Lightning” has a price starting at $40,000, a 230-mile range or 300-mile option. More notable is the fact that the battery can provide backup power to homes in the event of a power outage for as long as three days. Ford secured 20,000 deposits from interested buyers in less than 12 hours.

_*Shell sells stake in Philippines gas field.*_ *Royal Dutch Shell (NYSE: RDS.A) *is selling its 45% stake in the Malampaya gas field in the Philippines for $460 million.

_*Large methane plume found in Canadian shale.*_ Satellites have detected a large methane plume over Canada’s Duverney shale basin, adding to growing concerns about methane pollution from oil and gas operations.

_*Colonial CEO explains ransom decision. *_Colonial Pipeline paid a $4.4 million ransom to hackers. The company’s CEO explained his decision.

_*BP hiring spree for offshore wind. *_In a sign that *BP (NYSE: BP) *is taking offshore wind seriously, it is aiming to hire 100 people in the UK, and that figure will double by the end of the year. “This is the first step in terms of building our capability in this space,” a BP official said.

_*Biden waives penalties on Nord Stream 2 sanctions. *_The Biden administration said that blocking the Nord Stream 2 pipeline, which is over 95% complete, is a long shot. The U.S. waived penalties on sanctions on the project in order to avoid burning goodwill with Germany. The pipeline is expected to be completed later this year. “It is a good moment not only for Nord Stream 2 but also for the U.S.-Germany and the U.S.-Russia relationship,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies.

*BP and Eni look at merging in Angola. BP (NYSE: BP) *and *Eni (NYSE: E)* are in talks to merge their oil and gas operations in Angola.

_*Executive order on climate financial risk. *_A highly-anticipated executive order by President Biden was signed on Thursday, directing financial regulators across multiple agencies to begin plans for assessing financial risk from climate change.

_*U.S. shale sticking with restraint. *_An Energy Intelligence analysis finds that U.S. shale drillers are staying true to their word to maintain spending restraint, even in the face of higher oil prices. The 20 leading shale firms totaled $4.4 billion in free cash flow as a result.

_*California to require Uber and Lyft go electric. *_California regulators adopted rules on Thursday to mandate that 90% of ride-hailing miles come from EVs by 2030.

A list of the 30 Dow Stocks:












And it didn't take blogoland long to calculate the market capitalisation destruction suffered in the crypto universe.








jog on
duc


----------



## ducati916 (23 May 2021)

Smurf1976 said:


> Something I'll caution there is that as prices rise, so does the cost of new supply.
> 
> There are considerable commodity inputs to any large energy project and the other big cost is return on capital. If materials costs rise, and interest rates (as a proxy for expected return to investors) rise, then so does the cost of production from the new oil field, power station or whatever.
> 
> ...




Morning Mr Smurf,

Point taken re. profitability and probable losses on capital down the road should such a scenario play out. My point is that as you have already indicated, this error seems to be repeated consistently and not just by the oil industry.

If oil prices returned to the $150/barrel level, I suggest that there would be huge swathes of capital attracted to the extraction of oil, increasing supply. Whether an economic return could be earned would depend on in part the continuing trend higher in inflationary pressures and demand at those prices and the timeframes involved and whether alternatives could be accelerated.

The thing with pernicious inflation is that it is slow, slow, slow, fast, very fast. Once it takes hold, it accelerates and becomes very difficult to contain. There are really only 2 ways: (a) increase supply by multiples or (b) raise interest rates significantly above the rate of inflation, which curtails the expansion (any further) of credit. Currently (b) is not an option.

If (b) is not an option, then ignoring for the moment expanding supply, there comes a point where demand just falls away to such an extent that prices stall. What is that? $200/$300/$400/barrel oil? What does that do to an economy? A lockdown by price?

There could also be an acceleration towards 'green' technology, although it seems that green is simply an acceleration of commodities being used in construction other than oil. The production of energy will never (it seems) be free or low cost and is therefore an issue in an accelerating inflation.

The world economy is in a parlous state when the answer to the crisis is to create an inflationary crisis.

jog on
duc


----------



## qldfrog (23 May 2021)

bsnews said:


> Not so much safety and stability its the hedge against inflation if you don't think inflation then don't buy gold.
> EFT's don't give as much bang for your buck.
> My choice of gold miners
> NCM is OK
> ...






Smurf1976 said:


> Something I'll caution there is that as prices rise, so does the cost of new supply.
> 
> There are considerable commodity inputs to any large energy project and the other big cost is return on capital. If materials costs rise, and interest rates (as a proxy for expected return to investors) rise, then so does the cost of production from the new oil field, power station or whatever.
> 
> ...



True,true ..
And something valid outside energy: any commodity : was involved in that loop for coal, nickel,   gold too.
And not only energy or mining restricted but as well services.
We are well aware,at least in the industry of the mining sector boom and bust cycle, but it is parallel for example in IT
Blockchain becoming trendy: specialists are rare asking more, people want to learn and skill up,they need teachers who are in high demand already in the industry ...even specific hardware..if any required..until a new wave of experts arrive on the market and the skill so common place that the experts drive taxis to pay back their uni fees.
The beauty/scary side of capitalism which is often misunderstood by both our leaders and us pawns in the system.


----------



## Smurf1976 (23 May 2021)

ducati916 said:


> Morning Mr Smurf,
> 
> Point taken re. profitability and probable losses on capital down the road should such a scenario play out. My point is that as you have already indicated, this error seems to be repeated consistently and not just by the oil industry.
> 
> If oil prices returned to the $150/barrel level, I suggest that there would be huge swathes of capital attracted to the extraction of oil, increasing supply. Whether an economic return could be earned would depend on in part the continuing trend higher in inflationary pressures and demand at those prices and the timeframes involved and whether alternatives could be accelerated.



A simpler way to look at it is that if someone today calculates that a project needs $100 per barrel to be profitable, then most likely they've based that on present day costs.

So today's cost for a drilling rig, today's cost for steel, today's cost for labour, today's acceptable return on capital and so on. If the price of oil does rise to $100 then, unless the inflationary pressure is unique to oil and doesn't apply to other things, all those costs will also have gone up.

Agreed that money will likely be poured in in that scenario, I'm really just saying don't assume they'll make a profit out of it at whatever price has been calculated today as being profitable. Previous broad inflationary environments, as distinct from purely oil price spikes, have caught quite a few with that one. Start building a $400 million project and it ends up with a 1 in front of that price by the time it's actually built, etc.


----------



## ducati916 (24 May 2021)

So BTC has been trading over the w/e (as far as I can tell).






And is back down near the lows. If this support level gives way then it will free fall to somewhere between $20K and $5K. Assuming for the moment that it does, would you want to buy it on any fundamental basis at all?

It has no earnings, therefore its Book Value will always remain $0.00. Simply holding over any time period changes nothing. It pays obviously no dividend.

It cannot be a currency currently as its vol. is simply too high. Even if its vol. were to drop to the level of a fiat or of gold/silver, you have the added two following issues: (a) it will likely be outlawed and (b) currently, there is pretty much nothing that you can purchase with it.

It has no commodity value. You cannot use it for an input into the manufacture of anything.

It has no historical track record of providing a store of value. This MAY change. It may not. Currently, everyone who purchased below $30K is happy (actually based on behavioural economics they are really pissed off) but those that purchased and held at higher prices are on their knees praying.

Lacking all of the above, the ONLY value it holds is as a speculative instrument. This is the 'greater fool' avenue. If I buy it at 'X' I need someone dumb enough to pay a higher price, if I am looking to exit because I want to purchase a good or service. If I am simply holding it as a 'store of value' that implies at some point I will want or need to unlock that value. Time will judge whether BTC fulfils this claim.

The Guru or White Coat Syndrome.

Mr M. Saylor is the BTC guru. Having placed some $1B of MSTR cash into BTC at somewhere north of $20K, obviously was showing a massive paper profit at $69K. The blogoland half-wits have adopted Mr Saylor as their 'fundamental' argument. He is the CEO of a Company.

Looking at this company.

Financials:












Not terribly impressive.

The stock:






Trading BECAUSE of the BTC on the Balance Sheet. It is located under 'Long Term Assets'. You can see the effect.

How exactly is BTC an asset to this company? Listening to him speak on a variety of YouTube videos, the asset value resides in increasing his marketability, ie. he is now internet famous and can present ,'sell', MSTR products (whatever they are). Are the herd interested or likely to buy his product? Unlikely. Are potential customers likely to buy the product due to his BTC guru status? Unlikely.

If and the if is looking more likely as time passes, BTC is outlawed, what will companies do re. BTC holdings on their Balance Sheets? They will HAVE to SELL them. Now taking MSTR as the poster child, dumping $1B into an illiquid, falling market will incur huge losses, enough potentially to bankrupt the company (these were cash assets used to purchase the BTC originally). 

He could refinance, issue equity, debt, whatever. ZERO chance. MSTR if BTC continues to fall is toast. This guru CEO has placed the entire company and all of its employees etc at risk, all 2000 of them. All for a speculation, which pursuant to Company Law would be deemed illegal.









Claimed: 

BTC is an 'asset'. How is it an asset, other than as a speculative instrument? Never addressed.
Core business is improving. I haven't broken down the numbers (I may) but on a quick squizzy, it looks bad.
Twitter followers. Hmmmm.
Software is an asset that can be financed. True, but that value is far lower than the current market cap. which is based on BTC The EV is going to be multiples lower.

In the other corner you have Buffett & Munger.

This is the Tulip mania and South Sea mania playing out in real time.


jog on
duc


----------



## ducati916 (24 May 2021)

Security issues for BTC.

From here: https://www2.deloitte.com/nl/nl/pag...tum-computers-and-the-bitcoin-blockchain.html



> Since Google announced that it achieved quantum supremacy there has been an increasing number of articles on the web predicting the demise of currently used cryptography in general, and Bitcoin in particular. The goal of this article is to present a balanced view regarding the risks that quantum computers pose to Bitcoin.






> All known (classical) algorithms to derive the private key from the public key require an astronomical amount of time to perform such a computation and are therefore not practical. However, in 1994, the mathematician Peter Shor published a quantum algorithm that can break the security assumption of the most common algorithms of asymmetric cryptography. This means that anyone with a sufficiently large quantum computer could use this algorithm to derive a private key from its corresponding public key, and thus, falsify any digital signature.






> The prerequisite of being “quantum safe” is that the public key associated with this address is not public. But as we explained above, the moment you want to transfer coins from such a “safe” address, you also reveal the public key, making the address vulnerable. From that moment until your transaction is “mined”, an attacker who possesses a quantum computer gets a window of opportunity to steal your coins.






> In such an attack, the adversary will first derive your private key from the public key and then initiate a competing transaction to their own address. They will try to get priority over the original transaction by offering a higher mining fee.






> In the Bitcoin blockchain it currently takes about 10 minutes for transactions to be mined (unless the network is congested which has happened frequently in the past). As long as it takes a quantum computer longer to derive the private key of a specific public key then the network should be safe against a quantum attack. Current scientific estimations predict that a quantum computer will take about 8 hours to break an RSA key, and some specific calculations predict that a Bitcoin signature could be hacked within 30 minutes.




jog on
duc


----------



## qldfrog (24 May 2021)

ducati916 said:


> Security issues for BTC.
> 
> From here: https://www2.deloitte.com/nl/nl/pag...tum-computers-and-the-bitcoin-blockchain.html
> 
> ...



Not wanting to go technical but there are way to ensure a slow actual check.so however fast your quantum pirate churn keys , it could be made slow to check these, no issue for real transaction or legit error but a killer for a pirate.a digital version of 3 tries and timeout.
But yes not implemented as i know .
And i do not know much.
Just to say  i do not believe quantum computer is a thread to the concept of crypto currencies.but yes, a few could get burn initially.
Much easier to hack the cryoto exchanges platform users right now..and this happens..


----------



## ducati916 (24 May 2021)

Interesting article. I did post a link to it a few months ago, but here are the lowlights:









						The Bit Short: Inside Crypto’s Doomsday Machine - Global Intel Hub
					

From Medium This is the story of a Bitcoin trade — the most financially impactful trade I’ve ever made in my life. It’s also the story of the deep-yet-frantic investigation of the crypto ecosystem that led me to make that trade. And it’s the story of what’s really going on in crypto — and what...




					globalintelhub.com
				












































Takeaway: even if BTC itself is legit, there are frauds out there taking advantage of the complexity and lack of knowledge. The full article is worth the 10 mins it takes to read.


jog on
duc


----------



## Skate (24 May 2021)

The Bit Short: Inside Crypto’s Doomsday Machine - Global Intel Hub
					

From Medium This is the story of a Bitcoin trade — the most financially impactful trade I’ve ever made in my life. It’s also the story of the deep-yet-frantic investigation of the crypto ecosystem that led me to make that trade. And it’s the story of what’s really going on in crypto — and what...




					globalintelhub.com
				




*What a great article*
The article Duc referenced was a real eye-opener as I've failed to understand the enthusiasm of traders wanting to pile into something that is non-existent. There are a few great passages in the article but none more sobering that this one "_crypto is a highly liquid market — exactly the kind that attracts crooks, and crooks like to do fraud"_

*What about Bob*
Without giving too much away, there is a phone conversation with Bob & the exchange with him solved the mystery of cryptos. There are millions of Bobs, all around the world. Many of them are leveraged up to their eyeballs & almost all of them are going to lose their money when it all comes crashing down.

*How to wrap my head around cryptos*
Imagine this scenario. In the palm of my hand, I have a pill (there are only 100 pills ever made) making them very scarce because that's all there will be ever made. So how much are they worth? What does the pill do? you ask - The pill cures childhood cancer. Could you imagine the enthusiasm to buy the pills? Image trading them, the value would skyrocket as bidding would drive the price higher & higher.

*The problem with the scenario *
The pills never existed but the "value of the pill" was built entirely on the enthusiasm of traders.

*Here is a story about a dead horse*
The story is about Chuck who moved to Montana & bought a horse from a farmer for $100.00.
The farmer agreed to deliver the horse the next day.

*The next day he drove up & said*
"Sorry, Son, but I have some bad news, The horse died."
*Chuck*, "Well, then just give me my money back."
*The farmer*, "Can't do that. I went and spent it already."
*Chuck*, "Ok, then, just bring me the dead horse."
*The farmer asked*, "What are you going to do with him?"
*Chuck*, "I'm going to raffle him off."
*The farmer*, "You can't raffle off a dead horse!"
*Chuck*, "Sure I can. Watch me. I just won't tell anybody he's dead."

*A month later, the farmer met up with Chuck & asked*
"What happened with that dead horse?"
*Chuck*, "I raffled him off. I sold 500 tickets at two dollars each & I made a net profit of $898.00."
*The farmer*, "Didn't anyone complain?"
*Chuck*, "Just the guy who won, so I gave him his two dollars back."

Skate.


----------



## qldfrog (24 May 2021)

Skate said:


> The Bit Short: Inside Crypto’s Doomsday Machine - Global Intel Hub
> 
> 
> From Medium This is the story of a Bitcoin trade — the most financially impactful trade I’ve ever made in my life. It’s also the story of the deep-yet-frantic investigation of the crypto ecosystem that led me to make that trade. And it’s the story of what’s really going on in crypto — and what...
> ...



Let's still have a sobering view: what's the difference between Bitcoin, the pill and a bit of paper with a dollar sign printed on it?
Just common use and trust, that's absolutely all there is, worse people and fraudsters can print and print more of these at will and no cost, whereas the BTC and pills are number limited.
So let's take that lesson with us.


----------



## Skate (24 May 2021)

qldfrog said:


> Let's still have a sobering view: *what's the difference *between Bitcoin, the pill and a bit of paper with a dollar sign printed on it?




*A simple answer is the "strength" of the backer, that's the difference*
The perceived value of a bitcoin or my magical pill represents very little - as it has no intrinsic value & not guaranteed by another "entity or government".

*I still have some pills if anyone is interested*
Make me an offer as I'm sure there would be others more gullible who would be willing to buy them from you. There is tremendous profit to be made. Hurry before they are all gone!!

*Remember*
My pills are as rare as hen's teeth.

Skate.


----------



## qldfrog (24 May 2021)

Skate said:


> *A simple answer is the "strength" of the backer, that's the difference*
> The perceived value of a bitcoin or my magical pill represents very little - as it has no intrinsic value & not guaranteed by another "entity or government".
> 
> *I still have some pills if anyone is interested*
> ...



What do you mean the dollar value backed by the government?
What backing exactly do you have since removal of gold Standard?
Anyway, off track but a 2021 AUD or even US dollar is nothing more than an historical black tulip mania.
Good for exchange but not as a store of value


----------



## Skate (24 May 2021)

ducati916 said:


> *Claimed in the video: BTC is an 'asset'.         *                                                                                                                                                                                                      How is it an asset, other than as a speculative instrument?
> 
> *In the other corner you have Buffett & Munger.*
> This is the Tulip mania and South Sea mania playing out in real time.




*Warren Buffett on "intrinsic value"*
“Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments.”

*Dogbert know the value of cryptos*
When the value of a "perceived asset" or as Duc would say "speculative instrument" is valued purely on the enthusiasm of the traders, you have to ask the question is this another mania that will be spoken about in years to come?






Skate.


----------



## ducati916 (25 May 2021)

Start of the end of May. Last week.

Start with the 10yr: looks to be falling atm. My model has 1.59%. Current yield 1.62%. So yes, a few basis points to fall. Good for stocks, particularly Tech. Good for Gold. Bad for DXY.






DXY falling slightly. Unless there are some really fundamental changes in both Fiscal and Monetary policy, DXY will continue to decline. At what level it really becomes an issue....low 80's?






Inflation is doing nothing much atm. A false alarm? Rosenberg certainly thinks so. Also calling it transitory. I did have an article somewhere, but seem to have misplaced it.






Whole market moving higher:






Enterprises that hold BTC might (MSTR) find issues next reporting period.






Mr flippe-floppe-flye:









Crypto:














The HODLers will HODL and we shall see how it plays out.


jog on
duc


----------



## ducati916 (25 May 2021)

Day's round-up:

Pretty consistent message from blogoland: value/growth rotation is weakening. Risk on is coming (potentially) back into vogue:


















Copper running into issues?










BTC:






And"




A new indicator for you:






Closing comments from Mr flippe-floppe-flye:







jog on
duc


----------



## ducati916 (26 May 2021)

Pretty meh day.

Flat across all sectors:






The 'this is transitory' meme gaining ground: there is an argument there, inflation while present isn't in runaway or trending mode currently. My interest rate model pins the 10yr lower at 1.56%. The 10yr holding steady or falling will help Tech. and the risk-on trades. Certainly Tech. based stocks have or seem to be making signs of consolidating their recent lows and making breaks to the upside. Obviously this bodes well for the broad market. The more sectors that are moving higher, the better for the Bulls.

We will obviously have the Fed. continue with its inflationary stance. It can do nothing else. The debt load is so high. If inflation stays muted, then the risk of deflation and a big systemic blow-up risk will weigh on traders minds.

This dual wall of worry will allow stocks to rise, at a slower rate than the bounce out of 2020 and there will be the constant wail against the valuation levels...which are totally insane, but what else is there? Your alternative are the crazy coins.






VIX is muted atm.






NYMO: moving higher indicating strength, but safe for the moment, not running too hot. Breadth is about 67%. Could be better, but could be a lot worse.






This is the only 'risk-off' chart I have currently, which is the transition of Junk Bonds back to Treasuries. If, Treasury yields are set to fall, given that 'inflation' is a false fear, then there will be gains in owning the longer dated Bonds for their duration and the fact that you can leverage Treasury paper truly to the moon, which can then be used as collateral for further leverage. So it might actually be a massive risk-on trade.






Mr flippe-floppe-flye:






On the coins:








So currently we sit here:






I would expect to trade higher into the close. There is no vol. or urgency to the move lower. It would seem that May will come to a close with the indices trading back towards their highs.

Seasonality. There is something to it. I have been posting the seasonality chart for a few months now and the market has leaned in the direction of its past behaviour. Sudden unexpected developments would likely break any pattern, but absent that phenomena, I think paying attention to seasonality is worthwhile. June for the S&P500 is a good (100%) month. June is also the start traditionally of the Wall St. summer doldrums...low volume. The big dog traders etc leave for their holidays and junior is in charge with orders not to f**k it up. We'll see how it plays out this year as the US re-opens.

Oil News:

  Natural gas-fired power generation averaged 3,394 GWh per day in the first four months of 2021, down nearly 7% from the same period in 2020.

-    The decline is mostly the result of higher natural gas prices and increased competition from renewables. The decline is the first year-on-year decline since 2017. 

-    The drop is even more notable given that overall electricity generation increased by 6.6% over the same period.  

*Market Movers*

-    *Williams Companies (NYSE: WMB)* has an extra two years to build its proposed Northeast Supply Enhancement (NESE), a gas pipeline from Pennsylvania to New York, according to a decision from FERC. The project has run aground due to the lack of permits in New York and New Jersey.

-    *BP (NYSE: BP)* said it will sell its stake in the Shearwater field in the North Sea to Tailwind Energy for an undisclosed sum.

-   *Royal Dutch Shell (NYSE: RDS.A) *won a $2.5 billion 10-year contract to supply New South Wales with battery backup power. 

*Tuesday May 25, 2021 *

Oil prices rose by more than 3% on Monday on renewed optimism about global demand as global vaccinations continue. Also, concerns about a rush of new supply from Iran eased.

_*Hiccups in Iran negotiations. *_Iran said that gaps remain in negotiations with the U.S., which helped push up crude oil prices. 

*Cabot and Cimarex to merge. Cabot Oil & Gas (NYSE: COG) *has agreed to merge with *Cimarex Energy (NYSE: XEC)*, combining two shale drillers in a deal valued at $7.4 billion. It is the latest sign of consolidation in the shale industry, and the combined company will have a major presence in the Marcellus, Permian, and Anadarko basins. 

_*Investors skeptical of new oil deal. *_Shares of both Cabot and Cimarex fell by 6% on the announcement, an indication of skepticism from investors. Analysts questioned the logic of combining companies from different geographies rather than creating scale in one basin. “This deal comes as a bit of a surprise and may have a less clear story to tell investors,” Andrew Dittmar, an analyst at Enverus, wrote in a statement. “Some investors may wonder why in-basin opportunities weren’t pursued ahead of a surprising multi-basin deal.”

_*Goldman: $80 oil this year.*_ Goldman Sachs still expects crude oil to rise to $80 per barrel by the end of the year despite reports about progress on U.S.- Iranian talks about the lifting of sanctions. "The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply," Goldman analysts said.

_*Dakota Access to remain open. *_A federal judge decided against shutting down the Dakota Access pipeline, even though the same judge vacated a crucial permit last year. Still, the Army Corps of Engineers is conducting an environmental review on a new permit that will be completed in 2022, which will decide the fate of the project. But the court decision lets the pipeline operate until then.

_*China tamps down commodity prices. *_China said it will curb “unreasonable” increases in commodity prices, a move intended to deflate soaring prices.

_*Exxon’s referendum on Darren Woods.*_ On Wednesday, shareholders will vote on one of the most significant investor activist campaigns in years, with Engine No. 1’s proposal to replace a third of *ExxonMobil’s (NYSE: XOM)* board. The vote is shaping up to be a referendum on CEO Darren Woods’ tenure, and also a symbolic fight in Exxon’s corporate strategy in the context of energy transition. 

_*European oil majors compete with renewables companies. *_The European oil majors are increasingly expanding their footprints in renewable power generation, and are trying to compete with traditional renewables companies. “We’re actively exposed to different forms of energy in a way that pure-play renewable companies don’t have,” Dev Sanyal, *BP’s (NYSE: BP)* head of gas and low-carbon energy, told the WSJ. “We’re basically getting our wind from the Nordics, and we’re taking solar from Spain… We’re providing a blended offer.”

_*OPEC to enforce compensation.*_ OPEC has had to remind once again the laggards in compliance in the OPEC+ oil production deal to submit plans on how they will compensate for pumping above their respective quotas in recent months, sources at OPEC told Energy Intelligence this week.

_*Oasis exits Permian, switches to Williston.*_* Oasis Petroleum (NASDAQ: OAS)* said that it is exiting the Permian basin and is instead doubling down on the Williston Basin as a pure-play driller. Oasis is selling its Permian acreage for $481 million to an undisclosed buyer.

_*U.S. looks abroad for EV metals.*_ The Biden administration plans on looking abroad for metals needed for batteries, while focusing domestic efforts on processing, according to Reuters.

_*California begins rulemaking on fracking. *_California initiated on Friday the pre-rulemaking stage of proposed legislation that would end fracking in the state in 2024.

_*Shell on trial in the Netherlands.*_ A Dutch court is expected to issue a decision on Wednesday on whether or not *Royal Dutch Shell (NYSE: RDS.A) *has a legal responsibility for climate change. The decision is only legally binding in the Netherlands but is being closely watched by both industry and environmental groups for its potential impacts elsewhere. 

_*$150 billion in stolen oil money in Iraq. *_Some $150 billion in oil revenues has been stolen and smuggled out of Iran since the fall of Saddam Hussain in 2003, the president of Iraq said.

_*Texas requires winterization.*_ A new law has advanced in Texas that would require power plants and some gas facilities to winterize their operations, potentially adding significant costs to utilities and owners of gas infrastructure.

_*Pemex buys Houston refinery.*_ Pemex will buy *Royal Dutch Shell’s (NYSE: RDS.A)* stake in a Deer Park, Texas refinery for $596 million.

_*Top 5 oil firms saw revenues fall 31%. *_The five largest oil and gas companies in the world saw their combined revenues drop by 30 percent last year, although they still generated more than $1 trillion in total revenues.


jog on
duc


----------



## bsnews (26 May 2021)

bsnews said:


> Not so much safety and stability its the hedge against inflation if you don't think inflation then don't buy gold.
> EFT's don't give as much bang for your buck.
> My choice of gold miners
> NCM is OK
> ...



Any of the above shares purchased, would see you now in profit so far today. 
Now to let the winners run!


----------



## ducati916 (26 May 2021)

So a follow up on the Tether/BTC imbroglio:














						Gensler Says SEC Should Be 'Ready to Bring Cases' Involving Crypto
					

The SEC chair continued to highlight investor protection as he previewed the regulator’s cryptocurrency enforcement efforts.




					www.coindesk.com
				


















And just in case you are wondering:











As an asset, looking increasingly risky.


jog on
duc


----------



## qldfrog (26 May 2021)

Ro be fair any crypto as"asset"🥴


----------



## ducati916 (27 May 2021)

Mid week and the bull continues:










Pretty much up across the board sector wise.

Breadth: could be better, still a little wobbly.






VIX staying under atm. 






Inflation picking up again.






So the key atm. is to differentiate between an inflation, stagflation, disinflation or deflation. We can rule out deflation as occurring currently. It remains THE BIG risk. Disinflation will pick up once supply chains etc pick-up, assuming they do pick-up. Stagflation is inflation without growth, tied to a weak currency. Inflation is a weak currency with growth.

So if inflation, you want to own commodities (agricultural, energy and industrial). If stagflation, gold/silver. Re. Real Estate: when there is growth tied to a (strong) currency, own REITs. When there is growth tied to a weak currency, own farmland.







Mr flippe-floppe-flye:






MaVIS was a top pick of Mr fff some 15yrs ago. It crashed and burned badly. Here it is again, re-invented. I'll add AI to a watch and wait. It looks to be trying to turn the corner. It was also a recent IPO, so it has that cachet. I'll look to see if it was included in ARKK.







Obviously the bulls need to make this one stick into the close. We (the bulls) do not want a late day collapse to give impetus to the bears to give it another go. We want to close out May on a positive note preparing for a rip higher in June. This market is pretty much about confidence. Valuations are nonsense, debt is nonsense, global conditions are dodgy and fluctuating.

Mid caps are meh. Small caps are looking a little more positive. Large caps are essentially leading the train out of the station. Large caps means that growth and tech need to lead and come back to the party. We'll see.


jog on
duc


----------



## ducati916 (27 May 2021)

Market round-up from blogoland:




















Now this one I found interesting:
















Mr flippe-floppe-flye:






The supporting data:









So we are about to enter the summer doldrums. Junior will have strict instructions not to f**k anything up while everyone else holidays in the Hamptons.


jog on
duc


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## ducati916 (28 May 2021)

Markets are as a whole, going nowhere in particular.

As I start this post, this is where we are.











Some minor 'noise' rotation.  This is almost algo. arbitrage: sell yesterday's winners, buy yesterday's laggards. Noise. Means nothing. Chop. If possible, you don't want to trade in and out of this. Sit tight as best you can.

So this appeared on the crypto thread, Mr @moXJO:






I don't disagree. The thing is the 'game' for the moment at least has changed. In the massive bull run that these coins have had up until a couple of weeks ago, almost any half-wit could make money: how? Buy long and Hold On for Dear Life (HODL). The market barring some short lived pullbacks bailed you out.

Then it all changed for many.






Total liquidations to date $46B +/-.









Now those that 'thought' they were clever and knew how to trade got blown-the-f**k-up. Probably just as well, they could have lost in excess of 100% and ended up owing money.

There is a current massive range in BTC: resistance at $47K and support at $30K. The various coins key off of BTC and are all churning. Now the profits are still there and available, but much harder to acquire and more importantly hold onto. One thing most experienced traders that survive learn is: don't trade the chop. Which means, BTC and coins are dead currently. What may happen is that range will compress into a triangle, eventually breaking out in a new trend.

What happens to those still HODLing is that they will become emotionally burned out, up, down relentlessly day after day. Those in the red will simply turn off the trading platform, those still in the green will incur such stress that they may even go PTSD.

More data re. correlations twixt 'Coins' and 'Stocks':






Make up your own mind. Certainly the vol. is quantitatively different.






Now whether Mr Musk has any credibility left or is now a leper, I have no idea. But it was an obvious problem in the run up: news, well hardly news, but that a handful of individuals could influence an entire market across all coins was just such a massive risk. Particularly with a loose cannon like Mr Musk who like Mr Trump, would tweet all manner of nonsense. Your trading account was linked to how he felt on any given day.

Mr flippe-floppe-flye:






Even the 'Space Age Magician' has trouble trading the chop. Recognising these days is easier said than done. That being said, traders would be well advised to tune their methodologies to avoid where possible chop days.

The 'BIG' trends are still in place:

DXY is having a bit of a bounce. This for 'stocks' is perceived as a negative. While possible, it is unlikely that DXY will not resume its downtrend. DXY of course is linked to yield. My model shows 1.62%. Yesterday yields were 1.58%. Today yields are marginally higher. The 10yr is in chop itself, which represents the conflict between the two prevalent theories: inflation or deflation. Polar opposites. The inflation theory is predicated on the massive credit creation that has occurred. Deflation, that that massive credit creation blows-the-f**k-up. 

One is happening. One remains a possibility. The one that is happening is posited to be transitory. If the other happens, sh*t will go south at such a rate of knots that getting out intact will be a challenge. No-one actually knows what will happen. Eventually, it will be bad. Until then, unless you take your toys home, cautiously long.

However that being said: Small caps and Mid caps are breaking higher. This will help the big boys carry the load as the Large caps are mired, probably due to their liquidity and ease of entering/exiting, caught in some algo. hell. Also on the bright side, May is almost in the bag.


jog on
duc


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## ducati916 (28 May 2021)

Today's roundup from blogoland:

Some more 'seasonality' data:






This is definitely noticeable.






Again, mentioned in previous post, both Small & Medium caps seemed to have joined the party.






Probably alluding to the fall in the 10yr yield. Financials love a steep curve.






Certainly the anti-inflation meme (argument) gathering steam.






Crypto:






Told Ya!






The BEST one of the lot...






This provides confidence:






As does this:






This makes me nervous...






Over the w/e I'll be undertaking a detailed analysis of the inflation or lack of thereof arguments.


jog on
duc


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## qldfrog (28 May 2021)

ducati916 said:


> Today's roundup from blogoland:
> 
> Some more 'seasonality' data:
> 
> ...



Indeed mr Duc, i am amazed at how low volatility is.
Not yet out of one of the biggest self imposed economic crisis of the last 50y, open software and commercial  war with China in a market with up or down of 1pc a day, or roughly a year of bond interest 
And vix so low it is ridiculous.
What am I missing?


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## ducati916 (28 May 2021)

qldfrog said:


> Indeed mr Duc, i am amazed at how low volatility is.
> Not yet out of one of the biggest self imposed economic crisis of the last 50y, open software and commercial  war with China in a market with up or down of 1pc a day, or roughly a year of bond interest
> And vix so low it is ridiculous.
> What am I missing?




What are you missing? How about S&P500 earnings coming in at $225/share. Put a x20 multiplier on that and you have a level of 4500. The market isn't overvalued at all. In fact it is a little undervalued.

What has made the 'difference' are the cyclicals hitting the ball out of the park.

Of course cyclicals infers that at some point, earnings will fall. But atm, we are undervalued. Get ready for the summer rip higher.


jog on
duc


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## qldfrog (28 May 2021)

ducati916 said:


> What are you missing? How about S&P500 earnings coming in at $225/share. Put a x20 multiplier on that and you have a level of 4500. The market isn't overvalued at all. In fact it is a little undervalued.
> 
> What has made the 'difference' are the cyclicals hitting the ball out of the park.
> 
> ...



Ok, and happy with that;
but isn't volatility also/first supposed to show market volatility, and regardless if we are still in bull mode or not, market volatility is high it seems with yoyo actions in the last quarter or so, so my puzzlement; so is volatility an indicator of market volatility anymore or just a guide to investor anxiety
Nevertheless interesting stat, not that I see PE of 20 as the base more PE 17 to 18 which would bring a right S/P of around 3850 vs current 4200.
So we are extended..but not by much and  I agree we are in abnormal time and endless QE should results in higher PE so yes no issue with 4500 or even PE of 22  or SP500 near 5000..so yes we could see big growth in the coming months


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## ducati916 (29 May 2021)

End of the week and pretty much the end of the month.

Oil News:

*Friday, May 28th, 2021*

It was a historic week for the oil industry, potentially marking a turning point, at least for the corporate strategies of the oil majors. More curbs on the supply side do add some bullish sentiment to the market, although the impacts on the fundamentals are not necessarily going to unfold in the near term. But in the wake of the huge blows to the oil majors this week, more than a few analysts spoke about growing odds of a supply crunch in the years ahead. 

_*Shell loses in court. *_*Royal Dutch Shell (NYSE: RDS.A)* lost a landmark legal case in a Dutch court, which, if it stands, will require 45% cuts in GHG emissions by 2030. The case is seen as a warning sign for the rest of the oil industry, signaling legal exposure to Scope 3 emissions (those burned by end-users). More litigation related to emissions is likely.

_*Exxon loses board vote.*_ Engine No. 1 won votes for two if its candidates in a stunning blow to *ExxonMobil (NYSE: XOM)*. The win is being viewed as a shocking and powerful statement by shareholders as to their displeasure with the oil giant for not doing enough to mitigate the effects of its business on the climate. And For Exxon, it could mean big changes are coming.

_*Court ruling could shrink Shell.*_ The court ruling ordering Shell to speed up its plans to cut greenhouse gas emissions could lead to a 12% decline in the company's energy output, including a sharp drop in oil and gas sales, according to Reuters.

_*Exxon must cut production, Engine No. 1 says.*_ Engine No. 1 said that *ExxonMobil (NYSE: XOM) *must cut oil production. “They need to position themselves for success,” Charlie Penner, of Engine No. 1, told the FT. “You would certainly believe that would mean less oil and gas production going forward.” The hedge fund’s founder, Chris James, added: “Watching that meeting yesterday was such a perfect example of how they don’t realize the world has changed. It was all on display.”

_*Chevron shareholders vote for Scope 3.*_ *Chevron (NYSE: CVX) *also lost a notable shareholder vote, with a measure requiring a target to reduce Scope 3 emissions passed by more than 60% of shareholders, another major rebuke to the oil industry.

_*Oil rises after boardroom brawls. *_Oil prices rose early on Friday for a sixth consecutive day and were on track for weekly and monthly gains after the defeats on climate policies that major oil firms suffered at the hands of shareholders and judges.

_*Total to see investor pressure. *_On the heels of the string of losses suffered by *Exxon, Chevron,* and *Shell*, France’s *Total (NYSE: TOT)* is facing growing scrutiny from investors over its corporate strategy.

_*Biden defends Alaska oil project.*_ President Biden’s administration has backed the Willow oil project in Alaska in a new filing by the Department of Justice.

_*Commodity boom driven by speculation. *_A Bloomberg analysis argues that the spectacular rise in commodity prices in recent months is not the result of demand outstripping supply, but mainly the result of increased risk appetite – i.e. speculative financial flows into commodities.

_*Tellurian signs a 10-year deal with Gunvor.*_ In a major achievement towards a new LNG project, *Tellurian (NASDAQ: TELL)* inked a 10-year deal for 3 mtpa of LNG with Guvnor, linked to JKM and TTF prices. The deal could bolster a push towards an FID on the Driftwood LNG project on the U.S. Gulf Coast.

_*Heat to test U.S. grid.*_ The risk of grid blackouts to multiple regions in the U.S. is rising this summer, with 40% of the U.S. population now living in areas at risk, according to the North American Electric Reliability Corporation. This is the first time that NERC included parts of New England and the Midwest in this threat assessment.

_*Moody’s: Credit risks growing for Big Oil. *_This week’s climate-related actions in boardrooms and courtrooms involving some of the largest international oil companies signal a rising threat to the sector, Moody’s Investor Service said in a comment on the industry. “A new court ruling against Royal Dutch Shell and shareholder votes at ExxonMobil and Chevron highlights the increasing credit risk for major oil producers over concerns about climate change,” Moody’s said.

_*Oil region to become hydrogen hub? *_The largest oil producers in the Arab Gulf have jumped on the hydrogen bandwagon — especially its so-called green variety produced from water electrolysis using electricity from solar or wind — as it gains momentum with governments and the world’s largest international oil companies.

_*China bars banks from selling commodity-linked products to retail buyers.*_ China's banking regulator has asked lenders to stop selling investment products linked to commodities futures to retail investors, according to Reuters. The move comes after soaring commodity prices has put the spotlight on speculative flows.

_*U.S. says sanctions on Nord Stream 2 “counterproductive.”*_ The Biden administration stuck with its new position on refraining from sanctions on companies working on Nord Stream 2, citing the risk of fraying ties with European allies.

_*Biden unveils Pacific offshore wind push.*_ The Biden administration announced a decision to open off blocks in offshore California for wind development. Deep waters have made development more difficult, as well as opposition from the U.S. military.

_*DHS to propose regulations for pipelines. *_The U.S. Department of Homeland Security is preparing regulations on cybersecurity for oil and gas pipelines, a move that could beef up security in the wake of the Colonial outage.

As I write this post we are here:








Yields have fallen again.






The daily position.






The weekly position.








The monthly position.







Mr flippe-floppe-flye:
























Much more on inflation to come.

I mentioned yesterday that S&P500 earnings are projected to come in at $225/share, which with a x20 multiplier puts the S&P500 at 4500. Undervalued.

The earnings from the Big 4.







From the Wall St. Journal:









						Bitcoin’s Reliance on Stablecoins Harks Back to the Wild West of Finance
					

To understand the weakness of stablecoins such as Tether, it is worth a quick history lesson from pre-Civil War American finance.




					www.wsj.com
				




Worth a read. 

jog on
duc


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## ducati916 (29 May 2021)

Closing out May as Monday is Memorial Day and US markets are closed.

From around blogoland:














Forget selling in June. June is shaping up to be very bullish. More on that later.

VIX looks on my weekly chart to be headed strongly lower. 1 of the reasons I'm very bullish for June. I worry more about VIX when stocks are toppy and VIX is very low or has been indicating a strong consolidation or breaking out from that base. Not the case currently. VIX looks to be heading into the teens.











BTC on my weekly is headed to $22K. UGLY.







Mr flippe-floppe-flye:







Heading into June:

Breadth is solid once again. 74% takes us higher. All indices, SPY, DIA, QQQ, SLY, MDY are bullish on the weekly. MDY is the last to move. In SPY 11 out of 11 sectors are bullish. XLE & XLB have a little work to do and might lag a little.






Bullish. Break through the down trend line (not drawn).













This post closes out May.


jog on
duc


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## Dr.Stock (29 May 2021)

ducati916 said:


> Closing out May as Monday is Memorial Day and US markets are closed.
> 
> From around blogoland:
> 
> ...



cheers


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## Dr.Stock (29 May 2021)

cheers duc
always a pleasure thank for your effort


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