February 2025

[divs4ever]

i already hold useful amounts of GNC and SGLLV on the theory increased US consumption of grain ( for bio-fuels ) will leave export opportunities elsewhere

but maybe i could revisit GNC and check it there is an accumulate opportunity

 

[ducati916]

Last Week

The S&P 500 ($SPY) printed its first weekly all-time high since early December, rising +1.5% this week. Despite the recent choppiness, $SPY has rallied intraweek in each of the past five weeks. After nearly three months of digestion, $SPY is primed for a new leg higher. This was hardly a pullback but perhaps a correction through time. $SPY fell less than 5% (on a closing basis) from its December peak. Despite this single-digit drawdown, bearish sentiment reached a new 52-week high. The percentage of bearish respondents in this week's AAII Sentiment Survey rose to 47%, its highest since late 2023. The Takeaway: The S&P 500 achieved its first weekly all-time high of 2025, rising +1.5% this week. Meanwhile, bearish sentiment also reached a new high.

For next week






If Bessent reduces the issue of short term UST bills, money will start to flow back into RRP. That is a LIQUIDITY drain. Bessent has criticised Yellen for not terming out the debt (more long term) but is finding out that there is no demand for long dated paper.

Next problem, even if he stays with short term paper, the RRP is almost empty. Who buys?



Buffett 20yrs ago

Charlie and I, it should be emphasized, believe that true trade – that is, the exchange of goods and services with other countries – is enormously beneficial for both us and them. Last year we had $1.15 trillion of such honest-to-God trade and the more of this, the better.


But, as noted, our country also purchased an additional $618 billion in goods and services from the rest of the world that was unreciprocated. That is a staggering figure and one that has important consequences. The balancing item to this one-way pseudo-trade — in economics there is always an offset — is a transfer of wealth from the U.S. to the rest of the world.


The transfer may materialize in the form of IOUs our private or governmental institutions give to foreigners, or by way of their assuming ownership of our assets, such as stocks and real estate. In either case, Americans end up owning a reduced portion of our country while non-Americans own a greater part.


This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote you last year. Consequently, other countries and their citizens now own a net of about $3 trillion of the U.S. A decade ago their net ownership was negligible. The mention of trillions numbs most brains.


A further source of confusion is that the current account deficit (the sum of three items, the most important by far being the trade deficit) and our national budget deficit are often lumped as “twins.” They are anything but. They have different causes and different consequences.


A budget deficit in no way reduces the portion of the national pie that goes to Americans. As long as other countries and their citizens have no net ownership of the U.S., 100% of our country’s output belongs to our citizens under any budget scenario, even one involving a huge deficit. As a rich “family” awash in goods, Americans will argue through their legislators as to how government should redistribute the national output – that is who pays taxes and who receives governmental benefits.


If “entitlement” promises from an earlier day have to be reexamined, “family members” will angrily debate among themselves as to who feels the pain. Maybe taxes will go up; maybe promises will be modified; maybe more internal debt will be issued. But when the fight is finished, all of the family’s huge pie remains available for its members, however it is divided. No slice must be sent abroad.


Large and persisting current account deficits produce an entirely different result. As time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the “finance company” and less for itself.


Should we continue to run current account deficits comparable to those now prevailing, the net ownership of the U.S. by other countries and their citizens a decade from now will amount to roughly $11 trillion. And, if foreign investors were to earn only 5% on that net holding, we would need to send a net of $.55 trillion of goods and services abroad every year merely to service the U.S. investments then held by foreigners.


At that date, a decade out, our GDP would probably total about $18 trillion (assuming low inflation, which is far from a sure thing). Therefore, our U.S. “family” would then be delivering 3% of its annual output to the rest of the world simply as tribute for the overindulgences of the past. In this case, unlike that involving budget deficits, the sons would truly pay for the sins of their fathers. `


This annual royalty paid the world – which would not disappear unless the U.S. massively underconsumed and began to run consistent and large trade surpluses – would undoubtedly produce significant political unrest in the U.S. Americans would still be living very well, indeed better than now because of the growth in our economy.


But they would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society.” But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.


Many prominent U.S. financial figures, both in and out of government, have stated that our current-account deficits cannot persist. For instance, the minutes of the Federal Reserve Open Market Committee of June 29-30, 2004 say: “The staff noted that outsized external deficits could not be sustained indefinitely.”


But, despite the constant handwringing by luminaries, they offer no substantive suggestions to tame the burgeoning imbalance. In the article I wrote for Fortune 16 months ago, I warned that “a gently declining dollar would not provide the answer.” And so far it hasn’t.


Yet policymakers continue to hope for a “soft landing,” meanwhile counseling other countries to stimulate (read “inflate”) their economies and Americans to save more. In my view these admonitions miss the mark: There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets.


Proponents of the trade status quo are fond of quoting Adam Smith: “What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” I agree.


Note, however, that Mr. Smith’s statement refers to trade of product for product, not of wealth for product as our country is doing to the tune of $.6 trillion annually. Moreover, I am sure that he would never have suggested that “prudence” consisted of his “family” selling off part of its farm every day in order to finance its overconsumption.


Yet that is just what the “great kingdom” called the United States is doing. If the U.S. was running a $.6 trillion current-account surplus, commentators worldwide would violently condemn our policy, viewing it as an extreme form of “mercantilism” – a long-discredited economic strategy under which countries fostered exports, discouraged imports, and piled up treasure. I would condemn such a policy as well.


But, in effect if not in intent, the rest of the world is practicing mercantilism in respect to the U.S., an act made possible by our vast store of assets and our pristine credit history. Indeed, the world would never let any other country use a credit card denominated in its own currency to the insatiable extent we are employing ours.


Presently, most foreign investors are sanguine: they may view us as spending junkies, but they know we are rich junkies as well. Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners.


Berkshire Hathaway 2004 Annual Letter BERKSHIRE HATHAWAY INC

Remember Buffett is selling down and building cash.




Trump is trying to implement a soft YCC.

Here is how he is trying to do it.

Tariffs = USD higher UST 10yr higher
Fed lowers rates into an increasing inflation

Comes out to a soft form of YCC

Add into that remonetising gold to provide additional funds to reduce issuance of debt and you have a plan of sorts.

The debt ceiling drama is also getting closer and the Treasury is fast running out of money. Meanwhile markets are hitting ATH or close to it.

Monday markets are closed again for another holiday.

jog on
duc

 

[qldfrog]

Last Week

​

​ The S&P 500 ($SPY) printed its first weekly all-time high since early December, rising +1.5% this week. Despite the recent choppiness, $SPY has rallied intraweek in each of the past five weeks. After nearly three months of digestion, $SPY is primed for a new leg higher. This was hardly a pullback but perhaps a correction through time. $SPY fell less than 5% (on a closing basis) from its December peak. Despite this single-digit drawdown, bearish sentiment reached a new 52-week high. The percentage of bearish respondents in this week's AAII Sentiment Survey rose to 47%, its highest since late 2023. The Takeaway: The S&P 500 achieved its first weekly all-time high of 2025, rising +1.5% this week. Meanwhile, bearish sentiment also reached a new high.

​

​

View attachment 193352View attachment 193351

For next week

View attachment 193355View attachment 193354View attachment 193353


View attachment 193359View attachment 193360View attachment 193361View attachment 193362

If Bessent reduces the issue of short term UST bills, money will start to flow back into RRP. That is a LIQUIDITY drain. Bessent has criticised Yellen for not terming out the debt (more long term) but is finding out that there is no demand for long dated paper.

Next problem, even if he stays with short term paper, the RRP is almost empty. Who buys?

View attachment 193364View attachment 193363

Buffett 20yrs ago

Charlie and I, it should be emphasized, believe that true trade – that is, the exchange of goods and services with other countries – is enormously beneficial for both us and them. Last year we had $1.15 trillion of such honest-to-God trade and the more of this, the better.


But, as noted, our country also purchased an additional $618 billion in goods and services from the rest of the world that was unreciprocated. That is a staggering figure and one that has important consequences. The balancing item to this one-way pseudo-trade — in economics there is always an offset — is a transfer of wealth from the U.S. to the rest of the world.


The transfer may materialize in the form of IOUs our private or governmental institutions give to foreigners, or by way of their assuming ownership of our assets, such as stocks and real estate. In either case, Americans end up owning a reduced portion of our country while non-Americans own a greater part.


This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily, an increase of 20% since I wrote you last year. Consequently, other countries and their citizens now own a net of about $3 trillion of the U.S. A decade ago their net ownership was negligible. The mention of trillions numbs most brains.


A further source of confusion is that the current account deficit (the sum of three items, the most important by far being the trade deficit) and our national budget deficit are often lumped as “twins.” They are anything but. They have different causes and different consequences.


A budget deficit in no way reduces the portion of the national pie that goes to Americans. As long as other countries and their citizens have no net ownership of the U.S., 100% of our country’s output belongs to our citizens under any budget scenario, even one involving a huge deficit. As a rich “family” awash in goods, Americans will argue through their legislators as to how government should redistribute the national output – that is who pays taxes and who receives governmental benefits.


If “entitlement” promises from an earlier day have to be reexamined, “family members” will angrily debate among themselves as to who feels the pain. Maybe taxes will go up; maybe promises will be modified; maybe more internal debt will be issued. But when the fight is finished, all of the family’s huge pie remains available for its members, however it is divided. No slice must be sent abroad.


Large and persisting current account deficits produce an entirely different result. As time passes, and as claims against us grow, we own less and less of what we produce. In effect, the rest of the world enjoys an ever-growing royalty on American output. Here, we are like a family that consistently overspends its income. As time passes, the family finds that it is working more and more for the “finance company” and less for itself.


Should we continue to run current account deficits comparable to those now prevailing, the net ownership of the U.S. by other countries and their citizens a decade from now will amount to roughly $11 trillion. And, if foreign investors were to earn only 5% on that net holding, we would need to send a net of $.55 trillion of goods and services abroad every year merely to service the U.S. investments then held by foreigners.


At that date, a decade out, our GDP would probably total about $18 trillion (assuming low inflation, which is far from a sure thing). Therefore, our U.S. “family” would then be delivering 3% of its annual output to the rest of the world simply as tribute for the overindulgences of the past. In this case, unlike that involving budget deficits, the sons would truly pay for the sins of their fathers. `


This annual royalty paid the world – which would not disappear unless the U.S. massively underconsumed and began to run consistent and large trade surpluses – would undoubtedly produce significant political unrest in the U.S. Americans would still be living very well, indeed better than now because of the growth in our economy.


But they would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an “Ownership Society” will not find happiness in – and I’ll use hyperbole here for emphasis – a “Sharecropper’s Society.” But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.


Many prominent U.S. financial figures, both in and out of government, have stated that our current-account deficits cannot persist. For instance, the minutes of the Federal Reserve Open Market Committee of June 29-30, 2004 say: “The staff noted that outsized external deficits could not be sustained indefinitely.”


But, despite the constant handwringing by luminaries, they offer no substantive suggestions to tame the burgeoning imbalance. In the article I wrote for Fortune 16 months ago, I warned that “a gently declining dollar would not provide the answer.” And so far it hasn’t.


Yet policymakers continue to hope for a “soft landing,” meanwhile counseling other countries to stimulate (read “inflate”) their economies and Americans to save more. In my view these admonitions miss the mark: There are deep-rooted structural problems that will cause America to continue to run a huge current-account deficit unless trade policies either change materially or the dollar declines by a degree that could prove unsettling to financial markets.


Proponents of the trade status quo are fond of quoting Adam Smith: “What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” I agree.


Note, however, that Mr. Smith’s statement refers to trade of product for product, not of wealth for product as our country is doing to the tune of $.6 trillion annually. Moreover, I am sure that he would never have suggested that “prudence” consisted of his “family” selling off part of its farm every day in order to finance its overconsumption.


Yet that is just what the “great kingdom” called the United States is doing. If the U.S. was running a $.6 trillion current-account surplus, commentators worldwide would violently condemn our policy, viewing it as an extreme form of “mercantilism” – a long-discredited economic strategy under which countries fostered exports, discouraged imports, and piled up treasure. I would condemn such a policy as well.


But, in effect if not in intent, the rest of the world is practicing mercantilism in respect to the U.S., an act made possible by our vast store of assets and our pristine credit history. Indeed, the world would never let any other country use a credit card denominated in its own currency to the insatiable extent we are employing ours.


Presently, most foreign investors are sanguine: they may view us as spending junkies, but they know we are rich junkies as well. Our spendthrift behavior won’t, however, be tolerated indefinitely. And though it’s impossible to forecast just when and how the trade problem will be resolved, it’s improbable that the resolution will foster an increase in the value of our currency relative to that of our trading partners.


Berkshire Hathaway 2004 Annual Letter BERKSHIRE HATHAWAY INC

Remember Buffett is selling down and building cash.


View attachment 193365

Trump is trying to implement a soft YCC.

Here is how he is trying to do it.

Tariffs = USD higher UST 10yr higher
Fed lowers rates into an increasing inflation

Comes out to a soft form of YCC

Add into that remonetising gold to provide additional funds to reduce issuance of debt and you have a plan of sorts.

The debt ceiling drama is also getting closer and the Treasury is fast running out of money. Meanwhile markets are hitting ATH or close to it.

Monday markets are closed again for another holiday.

jog on
duc

This letter is a gem! 2004......

 

[ducati916]

jog on
duc

 

[Garpal Gumnut]

Thanks @ducati916 . Very interesting particularly from 21:10 on.

gg

 

[ducati916]

The thing about Trump is that he broadcasts what he is going to do over social media.

So we have accelerating inflation. Trump wants lower FFR. Even more inflation.

Tariffs equal a stronger USD which drives UST 10yr higher.

Trump needs inflation above the UST 10yr or at least at par. The result is a wash or a soft form of YCC.

How wrong was this?



Natural Gas

Two years ago, Engine No. 1 reserved natural gas turbines, a move that could prove critical to its newest project.

The investment firm has formed a new company with Chevron to power AI data centers in the United States using U.S. natural gas. The venture, which will use natural gas turbines from GE Vernova and co-locate them with the data centers, won’t use the existing transmission grid to help avoid a spike in electricity prices.

The move comes amid increased corporate demand for artificial intelligence, which requires data centers and a massive amount of energy to run them.


The new venture also follows Donald Trump’s declaration of a national energy emergency to encourage more oil and gas production to power AI data centers. Trump claims domestic fossil fuel production is needed to keep the U.S. ahead of China on AI, even though there is evidence that solar can cost-effectively do the job.

Trump, whose reelection campaign received $445 million from the fossil fuel industry, has delivered a long list of benefits to oil and gas companies so far, including stopping all wind and solar projects, hampering electric vehicle adoption, and pulling the U.S. out of the The Paris Climate Agreement. Even though Engine No. 1’s project has been in the works for two years, it benefits from the policy changes.




Over the past five and a half decades, there have been two previous peaks in market concentration: one in 1973 and another in 2000. Today, market concentration has reached an all-time high – and while not shown here, is even higher than levels seen in the early 1930’s. Given these extremes, here are five ideas to consider regarding the opportunities and risks that tend to follow periods of extreme market concentration.






jog on
duc

 

[divs4ever]

The new venture also follows Donald Trump’s declaration of a national energy emergency to encourage more oil and gas production to power AI data centers. Trump claims domestic fossil fuel production is needed to keep the U.S. ahead of China on AI, even though there is evidence that solar can cost-effectively do the job.

???

is that including the batteries expense to keep the supply constant , servers enjoy 24/7 power input with 99.99% reliability ( AND battery backups for that extra 0.001% )

for solar to cost effectively power all those data centers , that is

China is ramping up coal-fired power plants , traditional nuclear power plants and thorium nuclear power plants to power it's data centers , and just Western boffins think it can be done with solar ( and existing power facilities ) AND is leaps and bounds ahead in battery technology

maybe those Western computers aren't so good , or the West will be running it all on laptops

 

[qldfrog]

???

is that including the batteries expense to keep the supply constant , servers enjoy 24/7 power input with 99.99% reliability ( AND battery backups for that extra 0.001% )

for solar to cost effectively power all those data centers , that is

China is ramping up coal-fired power plants , traditional nuclear power plants and thorium nuclear power plants to power it's data centers , and just Western boffins think it can be done with solar ( and existing power facilities ) AND is leaps and bounds ahead in battery technology

maybe those Western computers aren't so good , or the West will be running it all on laptops

Or AI in the west is only available/cheap between 10am and 3pm daily.
Servers sleeping outside that window

 

[ducati916]

Full:https://www.zerohedge.com/political/might-be-biggest-fraud-history

Strong USD bad for Mag 7:https://finance.yahoo.com/news/risi...donalds-signal-more-pain-ahead-140248076.html



Cannibals are companies with heavy share buybacks, which is another way of saying that they issue their C suite lots and lots of options as alternative to cash salaries. AAPL and AXP are in there.

Politics

​

President Trump signs a proclamation for Gulf of America Day, aboard Air Force One on Feb. 9. Photo: Roberto Schmidt/AFP via Getty Images

One of the big reasons President Trump is limiting AP reporters' White House access is to protest what aides see as years of liberal word choices that the wire service's influential stylebook spread across mainstream media, top White House officials tell Axios' Marc Caputo.

• Why it matters: The trigger was the announcement by The Associated Press that it would continue using the 400-year-old "Gulf of Mexico" rather than switch to "Gulf of America," as declared by Trump in a Day 1 executive order. But it turns out that broader underlying grievances made AP a target.

The big picture: By spotlighting AP, Trump is amplifying Republican and conservative criticisms that the AP Stylebook, a first reference for most U.S. news organizations, shapes political dialogue by favoring liberal words and phrases concerning gender, immigration, race and law enforcement.

• "This isn't just about the Gulf of America," White House deputy chief of staff Taylor Budowich told Axios. "This is about AP weaponizing language through their stylebook to push a partisan worldview in contrast with the traditional and deeply held beliefs of many Americans and many people around the world."
• The dispute with AP is part of Trump's broader effort to discredit legacy media outlets and the public's trust in the press — already at a record low.

The other side: AP — which has long been considered the gold standard of neutrality — rejects any accusation of bias. Lauren Easton, vice president of corporate communications, told Axios that AP "is a global, fact-based, nonpartisan news organization with thousands of customers around the world who span the political spectrum."

• "If AP journalism wasn't factual and nonpartisan, this wouldn't be the case," she said.
• Easton said AP provides "guidance on issues brought to us by members and customers, and it is up to them what they choose to use. Again, this is guidance. It's not surprising that political parties, organizations or even individuals may disagree with some entries. The Stylebook doesn't align with any particular agenda."

State of play: After barring AP reporters from covering several events with Trump last week, the White House said Friday that because the wire service "continues to ignore the lawful geographic name change of the Gulf of America," AP slots in the Oval Office and on Air Force One "will now be opened up" to other reporters.

• An AP reporter and photographer were blocked Friday from boarding Air Force One for Trump's weekend trip to Florida.
• The White House said AP journalists "will retain their credentials to the White House complex."

The backstory: AP said in its Jan. 23 "style guidance," released proactively to guide members and customers, that it will refer to the gulf "by its original name while acknowledging the new name Trump has chosen. As a global news agency that disseminates news around the world, the AP must ensure that place names and geography are easily recognizable to all audiences."

• AP said in the same announcement that it'll follow Trump's executive order returning the name of Alaska's Mount McKinley, which had been changed to Denali in 2015. AP's logic: The peak is solely within the U.S., and "Trump has the authority to change federal geographical names."

Behind the scenes: Five days after AP issued its guidance concerning the gulf name change, White House press secretary Karoline Leavitt held her first briefing, and foreshadowed the fight the White House would pick with legacy media.

• "Karoline said she would not lie and that she would call out media organizations who do lie," a Trump adviser said, speaking on condition of anonymity. "And we knew the AP would keep calling the Gulf of America the Gulf of Mexico, and that's misinformation."

To attract maximum attention to his change, Trump signed an order in front of reporters on Air Force One as he flew over the Gulf en route to the Super Bowl on Feb. 9, declaring the "first ever Gulf of America Day."

• Two days later, the White House blocked an AP reporter from an Oval Office event.

Zoom out: Trump allies — including Mike Cernovich, a leading MAGA influencer on X — began attracting the attention of the president's advisers by highlighting longstanding complaints with AP's stylebook guidance. Among the AP guidance that rankles conservatives:

• Warning against "all views" in transgender coverage: AP's "Transgender Coverage Topical Guide" says to avoid "false balance — giving a platform to unqualified claims or sources in the guise of balancing a story by including all views."
• Using the phrase "gender-affirming care": AP says the term, commonly used by advocates and physicians, refers to "a swath of mental and medical treatments (such as counseling, hormones or surgery) that help bring a person's gender expression (such as voice, appearance or anatomy) in line with their gender identity."
• Capitalizing Black but not white for race: AP's stylebook advises that "Black" should be used for racial descriptions while the lowercase "black" is considered just a color. AP says "white people's skin color plays into systemic inequalities and injustices, and we want our journalism to robustly explore those problems. But capitalizing the term white, as is done by white supremacists, risks subtly conveying legitimacy to such beliefs." AP notes that white people "generally do not share the same history and culture, or the experience of being discriminated against because of skin color."
• Describing immigrants: The Stylebook frowns on the term "illegal immigrant" and says to "use illegal only to refer to an action, not a person: illegal immigration, but not illegal immigrant."

The Axios position: We've taken a different approach than many media companies, based on serving primarily a U.S. audience. The government, plus Apple Maps and Google Maps, call it the Gulf of America. For clarity, we call it the "Gulf of America (renamed by the U.S. from Gulf of Mexico)."

• "At the same time," Axios said in a statement Friday, "the government should never dictate how any news organization makes editorial decisions. The AP and all news organizations should be free to report as they see fit."

From JC

​ ​ Monday, February 17, 2025 ​ ​ ​ As more stocks, more sectors and more countries around the world start to participate in this bull market, any of the short sellers who overstayed their welcome are getting blown up. Good. This is a classic characteristic of healthy bull market environments. I would encourage you to go back and study every bull market ever. You'll find that investors who own stocks are much more profitable than those who are selling stocks. It's just math. Here's the thing about short sellers that I think gets forgotten. Short sellers are guaranteed future buyers. Longs are only promising to be future sellers. The thing is that when shorts are getting squeezed, these can become forcedliquidations. And margin clerks don't use limit orders. They'll spray the market, and it will crush you if you're on the wrong side of that. But if you're on the right side - pay day! Here is a list of stocks where short sellers are the most vulnerable to get blown up: ​ The list begins with names that have a high short interest. Then we look at the ones where the number of shares short are exponentially greater than the average daily volume. We call this the "Short Ratio". But then here's the trick. We sort the list by short-term rate of change. Why do we do this? Just because a stock has a high short interest, and/or high short ratio, doesn't mean it's getting squeezed. That just means that it's vulnerable to get squeezed. We sort by that momentum as an indication that the squeeze is already on! Meanwhile, there are segments of global markets that doesn't quite fit the category of a "short squeeze" per se. However, the lack of long exposure in China, combined with the record high short interest, puts China right at the top of our Short Squeeze candidates: ​ And just like we sort our short interest list by short-term momentum, we already know that there's a squeeze happening in China. Not only are investors NOT long China (we know, we have the data), but there are more short sellers in Large-cap China than ever before. And our trades are working. That's how we know these short sellers are getting wiped out. Of the 8 China-related trades that we've put out since the Election, ALL 8 TRADES HAVE AT LEAST DOUBLED IN VALUE!

jog on
duc

 

[ducati916]

jog on
duc

 

[ducati916]

Oil News

Europe’s wind generation posted a whopping 16% year-over-year decline, triggering a largely unexpected squeeze on natural gas inventories, however despite huge wind park buildouts globally climate change could make wind generation less efficient over the upcoming years.

- The amplified warming of both land and troposphere, known as wind ‘stilling’, is expected to result in wind speeds slowing down across northern mid-latitude regions such as North America and Europe by some 4-5% between 2021 and 2050.

- With typical lifespans of 20 years, the efficiency of wind turbines in converting wind into electricity tends to be between 30% and 40%, with the Betz Limit setting the theoretical maximum efficiency at 59% (gas combined cycle power plants operate with efficiencies over 60%).

- According to recent studies, the Arctic has been warming four times faster than the tropics over the past 50 years, with the relatively smaller temperature differences triggering weaker winds, further aggravated by increasing ‘surface roughness’ coming from urbanization.

Market Movers

- US shale oil firm Diamondback Energy (NYSE:FANG) agreed to buy parts of EnCap-backed oil producer Double Eagle IV for $4.08 billion, adding some 40,000 net acres in the core of Midland.

- Brazil’s state oil firm Petrobras (NYSEBR) reported a new oil discovery to the west of the Buzios field, drilling to a pre-salt depth of 5,600m and adding to the oil field’s 11.3 billion boe reserves tally.

- US oil major Chevron (NYSE:CVX) has finally received government approval for its $4 billion Aphrodite gas project in offshore Cyprus, opting for a floating production facility and a gas pipeline to Egypt.

Tuesday, February 18, 2025

Ukraine’s drone strikes on Russian pipeline infrastructure, somewhat ironically carrying Kazakh crude oil to the Black Sea, have set a bullish tone for this week as the Monday settlement of ICE Brent climbed back above $75 per barrel. However, there seems to be no upside beyond that as US-Russia negotiations on a potential end to the Ukraine conflict could de-risk Russian supply over the upcoming months.

Drone Attacks Disrupt Kazakhstan Production. A Ukrainian drone attack damaged a pumping station on the CPC pipeline that carries Kazakh crude oil through the territory of Russia, with the operator suggesting some 400,000 b/d of production would need to be cut for the next 1-2 months.

Ukraine Rejects US Rare Earths Bid. According to the Financial Times, Ukraine has rejected a bid by the Trump administration for the US to own 50% of the country’s rare earth minerals, with Kyiv saying any US and European guarantees need to be tied directly to mineral resource deals.

US Fund Builds Up Italian Biofuels Stake. Global equity fund KKR (NYSE:KKR)signed an agreement with Italian oil major ENI (BIT:ENI) to buy an additional 5% stake in the company’s biofuel business Enilive for $615 million, bringing its total stake to 30% in the new venture that’s valued at $13 billion.

South Africa Flaunts Russian Nuclear Investment. Amidst a deepening rift between South Africa and the United States, the South African government announced its plans to add 2.5 GW of nuclear capacity to tackle the country’s electricity outages, leaving the door open for Russian bids.

LNG Carriers Return to the Red Sea. For the first time since the Houthis’ maritime offensive started in October 2023, a non-Russian LNG carrier braved a Red Sea transit with the unloaded Liberian-flagged Trader III ship moving to Asia after discharging a cargo in Turkey.

Kurdish Export Resumption Back on the Agenda. Iraq’s Oil Ministry stated that oil exports from Iraqi Kurdistan could resume as soon as next week, but Baghdad’s ongoing $1.5 billion arbitrage with Turkey and Baghdad’s shaky OPEC+ compliance could derail the return of that 300,000 b/d of oil.

Japanese Companies Want More US LNG. Australia’s energy firm Woodside Energy (ASX:WDS) has reportedly held talks with Tokyo Gas, JERA, and Saudi-backed MidOcean Energy to sell 50% of the first phase of its 27.6 mtpa Louisiana LNG project, expected to cost around $16 billion to build.

Venezuelan Production to Hit 7-Year Highs. President Trump’s constructive attitude vis-a-vis Caracas has allowed Venezuelan output to rally, led by Chevron’s (NYSE:CVX) projects as Petropiar is set to reach 143,000 b/d in output this month whilst Petroboscan climbed to 101,000 b/d.

European Diesel Prices Signal Tightness. Europe’s ICE gasoil diesel futures hit the steepest backwardation since March 2024, with the M1-M2 spread rising to $14 per metric tonne as the March contract trades around $720/mt, prompted by tight US diesel stocks and cargo divertions there.

Iraq Eyes First Ever LNG Import Terminal. The government of Iraq plans to build its first LNG import terminal in Basrah, with a 40km pipeline set to connect it to the country’s power grid, a move prompted by a recent halt in Tehran’s gas deliveries to Iraq amidst higher Iranian domestic demand.

Glencore Rejects Congo Takeover Bid. Global trading firm Glencore (LON:GLEN) disclosed that it had rejected an unsolicited approach for its mining operations in the Democratic Republic of Congo at the end of 2024, with rumors suggesting Middle Eastern buyers would be keen to expand there.

Algeria Pushes Back 2025 Bid Round. Algeria’s hydrocarbon regulator Alnaft has extended the deadline for its 2025 licensing round by three months to 17 June, allegedly to allow companies that expressed interest late to submit their bids with 5 out of 6 offered blocks containing gas discoveries.

Nigeria Boasts of Lower Oil Theft. Nigeria’s upstream regulator said that oil production losses from theft have plunged to less than 5,000 b/d, a mere fraction of the 150,000 b/d that was siphoned off from producers back in 2018, claiming some 1,861 illegal pipeline connections were removed last year.

​ After a painful bear market, China was one of the most crowded shorts heading to 2024. However, it outperformed the S&P 500 last year and is dominating again in 2025. Over the past year, the China Large Cap ETF ($FXI) has gained more than twice as much as the S&P 500 (+61% vs. +25%) ​

Europe

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Trans-Atlantic Rupture​ You know a big geopolitical event when you see it, and last week’s speech by US Vice President JD Vance to the Munich security conference was one of them. You can read it all here, and view it here. This was the most important line: The threat that I worry the most about vis-à-vis Europe is not Russia. It’s not China. It’s not any external actor. What I worry about is the threat from within — the retreat of Europe from some of its most fundamental values, values shared with the United States of America. He made various complaints about free speech and cultural issues in Europe, not all of which were wholly accurate. Some disagreement on cultural issues is inevitable; some dislike US book bans, for example. But the idea that an American administration would say these were more dangerous than a nuclear-armed Russia currently waging a war in Europe and that murders political dissidents with impunity horrified the audience. Former UK Prime Minister John Major, a Conservative euro-skeptic, said this to the BBC: It’s extremely odd to lecture Europe on the subject of free speech and democracy at the same time as they’re cuddling Putin. In Mr. Putin’s Russia, people who disagree with him disappear, or die, or flee the country, or — on a statistically unlikely level — fall out of high windows somewhere in Moscow. Quite. Such a speech has been unthinkable for the last 80 years, thanks to the trans-Atlantic alliance. Europe must now assume that that’s over. Even NATO itself is called into question. Blunt barely describes it. Photographer: Alex Kraus/Bloomberg The repercussions are already spreading. Europe is now under pressure to nominate its own envoy for Ukraine peace talks; leaders are discussing a common defense policy (and starting at least a decade late); the US appears to have made the crucial concessions that Ukraine doesn’t regain its borders and stays out of NATO. Europe is now bracing for the possibility of paying a potential bill to put Ukraine back together that could come to $3 trillion. Postwar reconstruction proved to be a boon eight decades, but they won’t have a Marshall Plan to help this time. Given all this, it’s startling to see that European stocks have beaten the S&P 500 by almost 10% since Christmas: The shock administered by Trump’s election has now been completely reversed, although Europe is still suffering from the political quagmire in France. It helped that European stocks started cheap, but Andrew Lapthorne, chief quantitative strategist at Societe Generale SA, shows that this is more than a rebound for the cheapest; it’s a broad-based rally: This seems delusional at first, but there is at least one obvious beneficiary — the European arms industry. EU politicians are in discussions to improve their defense, while there are even proposals to allow common European borrowing on weaponry. If Europe is indeed going to divert spending from butter to guns, then buy European arms-makers. That’s certainly the judgment at present, as they’ve outperformed the Magnificent Seven since Election Day. It’s an ill wind, but it’s made European arms one of the hottest sectors on earth: Higher defense spending cuts both ways. It more-or-less forces increased government borrowing. That in turn could mean higher bond yields and less spending on everything else. It does, however, seem a good bet that the spending commitments will benefit stocks at the expense of bonds. Likely monetary easing and US tariffs could counteract this, but European equities have performed far less well compared to bonds than their US counterparts: The effect of the Vance shock can be overstated. Europe’s defense spending has been increasing markedly since Trump 1.0, as this chart by Mark Wall of Deutsche Bank AG demonstrates: The EU may still be short of its 2% target, but the Trump foghorn diplomacy has had quite an impact, even during the Biden interlude. Weapons expenditure has trebled since 2018, a shift that can also presumably be attributed to Vladimir Putin: Previous periods when European nations upped their spending on arms didn’t end well. That is the risk that the US seems to ready to accept. For now, the message is to buy stocks, particularly in defense, and sell bonds. ​ ​ Over to Germany​ This weekend’s German elections are the next critical development. The center-right Christian Democrats under Friedrich Merz will likely win, with the anti-immigration Alternative für Deutschland on course for second with about 20%. Vance chided German parties for excluding the AfD from government, prompting unified opposition from them. But asylum seekers are a huge issue for voters, as BCA Research’s Matt Gertken demonstrates: Source: BCA Research Vance is right that German voters care a lot about this. But the “never again” policy of refusing to deal with far-right parties has deep roots in the mistakes of 1933. If a party like the AfD wants power, it will need to get 50% of the vote, and German electors are probably happy with that. But with 20% of seats in the legislature, it limits others’ room for maneuver while its growth forces other parties to adjust, particularly on migration. AfD’s performance now grows even more important. The bigger their vote share, the harder it is for the German and European establishments to maintain a united or coherent policy. If they do well enough so that the big two traditional parties cannot form a coalition on their own but need to take on a partner from their left, the next government will be fragile. Vance’s speech (followed by meeting the AfD’s leader, but not current Chancellor Olaf Scholz) was seen as a deliberate attempt to help this happen. Demonstrators protest against the AfD. Photographer: Krisztian Bocsi/Bloomberg But you never know how such interventions will work out. In April 2016, ahead of Britain’s referendum on EU membership, President Barack Obama gave a speech in London encouraging the country to stay. His language and demeanor were more courteous than Trump’s or Vance’s, but the bottom line was similar — bad consequences on trade if Britons didn’t do what he wanted: Maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done. The UK is going to be in the back of the queue. Betting markets wrote down the chances that the UK would vote to leave. It didn’t work out that way: Many factors influenced the narrow victory for Brexit, but Leave campaigners talked about Obama’s intervention more than the EU’s defenders did. His speech may even have aided the cause of Brexit. Like the British, German voters probably dislike being told what to do by a US president. They now have a choice between rebuking their own establishment, or the new team in Washington. A Rough Guide to Geopolitical Shocks​ Geopolitics matters to markets, a lot, in the long term. In the short term, much depends on whether markets were cheap or expensive, while the greatest impacts take many years to play out. Arguably the single greatest geopolitical shift of the last half-century was Chinese accession to the World Trade Organization, largely unremarked in December 2001. For other shocks that we felt at the time, markets didn’t always react: The Berlin Wall Reform had been rising in Eastern Europe for months, but allowing the wall to come down was the unmistakable signal that things had profoundly changed in the Soviets’ Cold War empire and came as a huge surprise. German stocks rallied, but in the US the event had no discernible impact. A year later, with Germany embroiled in unification talks and the world dealing with Saddam Hussein’s occupation of Iraq, the S&P 500 and the DAX were both down about 10%: In the longer term, the fall of the wall was as epochal as it appeared. The “peace dividend” was a key driver of the great 1990s bull market. The price that France exacted for German reunification was the euro, perceived by President Francois Mitterrand as a bulwark to maintain peace. Germany’s own price of reunion, allowing the East to convert money at an absurdly generous exchange rate, drove inflation and contributed to the imbalances that have bedeviled the euro zone for decades. None of this was clear at the time. 9/11 The horrifying 9/11 attacks came as a total shock. It was instantly obvious that they would provoke a response, while the physical destruction guaranteed a swift initial selloff. But markets, even in the US, recovered within weeks. In context, that selloff looks a brief interruption to the steady bear market that followed the bursting of the tech bubble a year earlier: There would have been no US invasions of either Afghanistan or Iraq without 9/11, the deficit would have been far smaller, and there might well have been no President Obama or President Trump. It’s not possible to say how, but history and markets would have been different had those attacks been averted. Iraq’s Invasion of Kuwait This came as a blindside and had obvious implications for the oil price, so it drove a very big selloff. Once Operation Desert Storm had expelled the Iraqis from Kuwait’s territory, the market recovery was all but complete. A year later, developed market stocks were exactly where they’d been before the invasion. This was the rare geopolitical shock that came as a total surprise but could be decisively resolved within months. It might appear to be a template, but is rather the exception that proves the rule. Resolving shocks is usually far messier. Brexit Everyone knew that the referendum would be close, but it was stunning when Britain voted to leave. That prompted a massive sterling selloff, wider market disruptions, and — it turned out — a buying opportunity. A year later, the UK was still in the EU. British stocks, and the S&P 500, were comfortably ahead of where they had been: In the longer term, Brexit hasn’t yet helped the UK economy. The FTSE 250, covering mostly domestic stocks, is up 3% since the referendum in dollar terms, while FTSE’s index for the rest of the world is up 122% and the FT-Wilshire index of 5,000 US stocks is up 188%. Russia Invades Ukraine Russian forces were massed on Ukraine’s border, but the invasion on Feb. 24, 2022, still came as a surprise. Points of Return described it as “the greatest negative shock to the international order since the end of the Second World War,” and European stocks sold off hard. Yet the S&P 500 rose in the next 24 hours, on the basis that Russia would win an easy victory. That was wrong, but a year later European stocks were higher: The invasion still mattered. It ended any hope that the “transitory” rise in inflation could quickly reverse, and the European energy crisis it caused has had immense political and economic repercussions. It certainly contributed to Trump 2.0 and a critical shift in US foreign policy. The financial consequences will be profound, but it’s not clear which sectors and asset classes win from this in the long run. It’s not necessarily wrong for European stocks to gain on recent news, but that tells us nothing about the future.

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