April 2024 DDD

[ducati916]

Let's start with Mr fff



So as I pointed out in my previous post, when markets plunge below their 50 day MA, it is only for weeks to a couple of months. Unless it is a recession. How do you actually differentiate? After the fact is easy. At the time, not so much.



This is true. High energy prices are not good for the overall market.



So a bounce is one thing. A resumption of the trend higher is something else.

The next pivot will be pretty important in trying to determine which is the case.



Not great for stocks.



Bonds bad news for stocks.



There will be endless speculation on what will be announced.

Rest assured, the spin will TRY to be positive for stocks. All need a rising market.

The Treasury NEEDS lower rates. Powell has lost control (if he ever had control) of inflation. That loss of control mandates higher for longer (even though higher rates = higher inflation) and no cuts. Higher rates will impact in a really negative way those companies that need to roll-over and refinance debt that they have been holding out on for lower rates. They will start to have major issues.

Housing market is frozen.

BTC had it's halving on Friday:



A lot of hype around these.

Fact: it is now more expensive for the miners to do the work required.
Speculation: based on previous halvings, speculators expect the price to go up.
Fact: previous halvings occurred without the massive number of ETFs and paper BTC. Does this make a difference?

Next page.

 

[ducati916]

AI stocks:



Over-hyped, over-valued and over?

We'll see.

I have always hated FB (Meta). GOOG I wish I had bought at the IPO. I thought it was overvalued. Duh. I also hate MSFT. Under Ballmer it was dead. He made billions, but the stock sucked big time. Hate Windows. Hate video games.

So all that angst, I never really engaged with Tech.

* So I almost forgot, the IMF meets over this past w/e. The IMF has been critical of the level of US debt.

jog on
duc

 

[ducati916]

Some interesting headlines from WSJ:



jog on
duc

 

[Craton]

Thank you @ducati916 for these type of posts.
You seem to have a great knack for gleaning useful and insightful material, much of which I would never be aware of. E.g. FOMC blackouts and duration thereof.

Your last post above, re. China's dominance in clean tech supply chains, demonstrates why manufacturing/production/upscaling whatever, quite clearly should be dispersed across diverse nation states and geographies.

Wall Street and its chase for never ending, rising profits seems to be a odds with the very mantra ESG espouses. Not that I'm a fan of ESG "scoring" however, I do appreciate the ESG concept.

Anyways, keep up the sharing of information mate, thanks again.

 

[ducati916]

Markets ripping higher:




The question will be answered at the next pivot: higher and probably new highs or lower highs and lower lows.



Higher oil = higher CPI (except in 2000's) where Chinese exports, reshoring, etc were highly disinflationary. Higher oil today will again = higher CPI.



Markets don't love high CPI.



Great if you could have done it.





So currently BTD is working. As stated above, the critical test (for equities) is the next pivot. It will be the question: the pullback because a recession, which means just the start of a bear market or just a pullback below the 50 day MA, which recovers in a short (weeks/months) time frame.



Energy will have a lot to say on this.

I think it goes to $91.32 pp. At that price I'm a buyer. Although that rising 50 day MA may provide support earlier. China, India, both with massive populations and growing economies are demanding ever increasing energy.



India is already buying oil in rupees, courtesy of Mr Putin. Gold will be used as the reserve asset. Indians have bought gold as wealth preservation forever. That Gold/Oil ratio will work well for India.

Short term, with further SPR releases, blah, blah geopolitics, oil may fall. But long term: oil higher:




jog on
duc

 

[UMike]

Thank you @ducati916 for these type of posts.
You seem to have a great knack for gleaning useful and insightful material, much of which I would never be aware of. E.g. FOMC blackouts and duration thereof.

Your last post above, re. China's dominance in clean tech supply chains, demonstrates why manufacturing/production/upscaling whatever, quite clearly should be dispersed across diverse nation states and geographies.

Wall Street and its chase for never ending, rising profits seems to be a odds with the very mantra ESG espouses. Not that I'm a fan of ESG "scoring" however, I do appreciate the ESG concept.

Anyways, keep up the sharing of information mate, thanks again.

Probably also illustrates how the West Isn't really serious about "Clean" energy.

 

[divs4ever]

Probably also illustrates how the West Isn't really serious about "Clean" energy.

i never doubted that ( smells like a big tax scam to me , at least on the Western side )

China will do what it can to make it efficient ( and help it become energy self-sufficient )

 

[ducati916]

For tomorrow:



Most are expecting at least another day or two of the bounce as am I.

jog on
duc

 

[ducati916]

Very quick today, early start:

Oil News:

Fuel oil has risen to prominence as the most improved oil product of late, boosted by higher demand from Asia’s power generation sector as well as limited supply of heavy crudes required to produce it.

- The US’ snapback of sanctions against Venezuela and Mexico’s sudden cut to exports of heavy sour grades such as Maya have greatly limited the pool of heavier crudes Asia could buy, just as OPEC+ keeps on restricting its production by voluntary cuts.

- The collapse in Asian and European diesel cracks, both down $6-7 per barrel since the beginning of April, came on the heels of higher refinery runs, however fuel oil wasn’t as abundant with ship bunkering and increasing power generation demand from countries like Pakistan or Saudi Arabia kept supply limited.

- With Asian and US fuel oil cracks as low as -$8 per barrel, whilst European cracks remain slightly in the low double digits, prices of heavy sour crudes are poised to balloon over the upcoming weeks including Middle Eastern formula prices.

Market Movers

- Crescent Midstream, a US-based midstream operator backed by Carlyle Group, is reportedly exploring a potential sale after receiving takeover interest, with the Gulf of Mexico-focused firm valued at $1.3 billion including debt.

- US oilfield services giant Baker Hughes (NASDAQ:BKR) landed a deal with Saudi Aramco that would see it delivering equipment to the third phase of the Saudi NOC’s gas network expansion.

- Delayed by several years, UK oil major BP (NYSE:BP) launched the $6 billion Azeri Central East platform it operates offshore Azerbaijan, seeking to boost production by 23,000 b/d by year-end.

Tuesday, April 23, 2024

After a string of politics-heavy weeks when the oil markets were predominantly focused on political risks such as a potential Israel-Iran war, macroeconomics are back in business, with Brent dropping marginally lower to $86 per barrel. The markets have shrugged off the looming threat of Iranian sanctions, believing they wouldn’t have a material impact on physical flows.

Trafigura Bets Big on Copper Boom. Global commodity trader Trafigura believes increasing demand from EVs, power infrastructure, AI and automation will add at least 10 million metric tonnes of additional copper consumption over the next decade, expecting a bull run in the late 2020s.

Equinor Might Feel the Environmentalist Squeeze, Too. A small group of investors led by the UK-based Sarasin & Partners filed a resolution at Norway’s state oil firm Equinor (NYSE:EQNR) to ramp up the ambition of its emissions-cutting, even though the Norwegian state that owns 67% has voted against all previous climate resolutions.

The US Gulf’s Superport Lacks Commercial Backing. The ambitious plan of Enterprise Product Partners (NYSE:EPD) to build the first deepwater port in the US Gulf, capable of loading VLCCs, has been stalled as Chevron and Enbridge both backed out and stagnating US oil supply makes new capacity less desirable.

Namibia’s Giant Discovery Too Big to Handle. Portugal’s national oil company Galp Energia (GALP) is reportedly looking to farm out half of its stake in exploration block PEL 83 offshore Namibia, having only recently discovered a multi-billion-barrel field with its Mopane-1 exploration well.

Jet Fuel Demand Fails to Catch Up with Flights. As newer generations of passenger aircraft become more fuel efficient, the recovery in flight activity will most probably not lead to jet fuel demand surpassing pre-pandemic levels as the IAE forecasts kerosene demand to rise to 7.4 million b/d, still a far cry from 7.9 million b/d in 2019.

Global Traders Cash In On Byzantine Sanctions. Glencore and Trafigura stand to benefit from recent UK sanctions on Russian aluminium as they withdrew some $400 million worth of material from LME warehouses and re-registered it under a new designation, signing storage deals with warehouses to get a share of the rent for as long as it's there.

Saudi Arabia Penetrates Even Deeper into China’s Downstream. Saudi national oil firm Saudi Aramco (TADAWUL:2222) signed a preliminary agreement to buy a 10% stake in one of China’s newest refineries, the 400,000 b/d Hengli Petrochemical.

Back Under Sanctions, Venezuela Flirts with Crypto Again. PDVSA, the national oil firm of Venezuela, is looking to hedge against dollar risks by shifting its crude and fuel oil exports to digital currencies, including the dollar-pegged cryptocurrency known as Tether.

Slowing Down of Electric Transition Puts EU Targets at Risk. The European Court of Auditors, the EU’s auditing service, warned that the bloc’s 2035 ban on fossil cars would hurt its own industry and aggravate dependencies, suggesting a policy rethink amidst slower-than-assumed EV growth.

Gulf of Mexico to Hold Second Offshore Wind Auction. Even though the first Gulf of Mexico offshore wind tender last August saw only one competitive bid, BOEM is pushing ahead with the second lease sale to be held in the fall, offering new acreage in offshore Louisiana and allowing for the production of hydrogen.

Everyone Wants a Piece of UAE Gas. European energy majors TotalEnergies (NYSE:TTE) and Shell (LON:SHEL) are in talks to buy stakes in the next LNG export project of ADNOC, the national oil company of the UAE, with market rumours suggesting an FID on the project might come as promptly as next month.

California Vows to Finish Exxon Probe Shortly. California’s attorney general promised to conclude a two-year investigation into US oil major ExxonMobil (NYSE:XOM), previously subpoenaed, and the oil industry’s role in global plastic pollution by summer, hinting at a potential lawsuit arising therefrom.

Canada Objects to Mega-Agriculture Merger. Canada’s Competition Bureau flagged major competition concerns around the proposed $34 billion merger between top grain traders Bunge (NYSE:BG) and Glencore-backed Viterra (LON:GLEN), saying it would harm competition for grain markets in Western Canada.



jog on
duc

 

[peter2]

Got to love the bounce when we BTD.

 

[Sean K]

If Trafigura have only just realised there's going to be a copper shortage what the hell have their 20000 commodity analysts been doing?

 

[peter2]

what the hell have their 20000 commodity analysts been doing?

Long lunches, getting their business cards just right (Amercian Psycho).

Not one of them smart enough to read ASF.

 

[divs4ever]

Long lunches, getting their business cards just right (Amercian Psycho).

Not one of them smart enough to read ASF.

smart or arrogant ( enough ) ?

remember they mostly rely on consensus ( which can be good for me , a contrarian )

 

[ducati916]

Will require a double post:



Interesting data: the duc does also track this:



Which suggested a selling exhaustion point. The issue going forward is the next pivot and where it occurs.



pg 2

 

[ducati916]

So you can see that different people view the same chart in quite different ways.



Which is the really important point.



I wasn't playing TSLA so I didn't bother checking. However in an earnings play, where the vibe is so bad for so long, definitely worth checking out. TSLA went against expectations this time round.



I like these types of historical notation charts or summaries.







Why would you leave long term savings in a savings account at the bank when you could buy a 1yr, 2yr Bill?

Will the banks start losing savings accounts?



The vagaries of the market.

27 years ago, Zbig Brzezinski warned "the most dangerous scenario would be a grand coalition of China, Russia, & perhaps Iran."

Out of hubris, US policymakers spent the last 20-25 years pursuing policies that [wait for it]... pushed China, Russia, & Iran closer together.


If the US did not want higher interest rates to add to deficits & inflation, it would be saying "Sorry Ukraine, Israel, & Taiwan, interest rates have risen on our $35T in debt so we cannot afford to give you any more aid."

Inflation Higher for Longer.



Lots to digest.

jog on
duc

 

[ducati916]

After market close news:

The big news is Meta tanking (LOL I hate FB)











Now being one of the Mag.7 stocks, this will (could) weigh on the market tomorrow with additional earnings being announced:



We are waiting for that 'pivot'...

Tomorrow may provide that catalyst.

Currently:




We have:



Falling 20 day MA and we are still below the 50 day MA.

If the market closes lower and below the 9 day MA, that is dangerous.

jog on
duc

 

[ducati916]

Evening round-up:



Not a great day for Mr fff.

jog on
duc

 

[ducati916]

LOL.



I saw that this has already made the BHP thread. Copper is going to go very short moving forward. I think that this is BHP buying at the bottom of the cycle. Of course you would need to figure out whether they have paid a fair/good price or overpaid.



So this continues on for a bit.

MMT also requires:

1. A robust domestic industrial base (to respond to inflation). If you have high productivity, this will moderate/eliminate price increases. This is what we saw initially with cheap Chinese goods flooding the market, inflation capped.

2. Low sovereign debt (so rate hikes to fight inflation don't exacerbate it). Currently high rates on the sky high debt is causing additional inflation.

3. Functioning domestic politics (to quickly hike taxes to fight inflation). If you have no cash, you can't buy stuff. LOL.

Currently 0 out of 3. Which is why fiscal dominance is exerting so much pressure on the system currently.



Yellen and others are well aware that a strong USD is very bad news for everything other than gold.



She really wants a weaker USD across the board. A strong CNY would go a long way to helping the situation.



So Chinese manufacturing surpluses are at 30yr highs. This chart was shown last week at some point. So with manufacturing booming on a current CNY valuation, why would China weaken the CNY (which increases the cost of imports, reducing profitability)?

They are unlikely to do so.


While seemingly wonkish, average US investors should care deeply about whether or not CNY is devalued, as an unexpected CNY devaluation would likely drive significant risk-off across markets, as seen in August 2015 (I'll dig up the data).
So markets are trading lower largely due to META getting spanked. Technically this may form the 'pivot' that I have been talking about. If it is, it is very bearish.



Ugly.

For the moment, you have to be a bear. Taking bullish trades other than gold, silver and oil is fraught with risk atm.

jog on
duc

 

[Sean K]

View attachment 175568

LOL.

View attachment 175566

I saw that this has already made the BHP thread. Copper is going to go very short moving forward. I think that this is BHP buying at the bottom of the cycle. Of course you would need to figure out whether they have paid a fair/good price or overpaid.

View attachment 175564View attachment 175563View attachment 175562View attachment 175561

So this continues on for a bit.

MMT also requires:

1. A robust domestic industrial base (to respond to inflation). If you have high productivity, this will moderate/eliminate price increases. This is what we saw initially with cheap Chinese goods flooding the market, inflation capped.

2. Low sovereign debt (so rate hikes to fight inflation don't exacerbate it). Currently high rates on the sky high debt is causing additional inflation.

3. Functioning domestic politics (to quickly hike taxes to fight inflation). If you have no cash, you can't buy stuff. LOL.

Currently 0 out of 3. Which is why fiscal dominance is exerting so much pressure on the system currently.

View attachment 175560View attachment 175559View attachment 175558

Yellen and others are well aware that a strong USD is very bad news for everything other than gold.



She really wants a weaker USD across the board. A strong CNY would go a long way to helping the situation.

View attachment 175571

So Chinese manufacturing surpluses are at 30yr highs. This chart was shown last week at some point. So with manufacturing booming on a current CNY valuation, why would China weaken the CNY (which increases the cost of imports, reducing profitability)?

They are unlikely to do so.


While seemingly wonkish, average US investors should care deeply about whether or not CNY is devalued, as an unexpected CNY devaluation would likely drive significant risk-off across markets, as seen in August 2015 (I'll dig up the data).
So markets are trading lower largely due to META getting spanked. Technically this may form the 'pivot' that I have been talking about. If it is, it is very bearish.

View attachment 175572

Ugly.

For the moment, you have to be a bear. Taking bullish trades other than gold, silver and oil is fraught with risk atm.

jog on
duc

BHP making a big bet on copper makes me happy.

 

[qldfrog]

BHP making a big bet on copper makes me happy.

I am a bit sad as BHP has always f***ed up every grand scale scheme they ever went in,I am talking 20y plus so does that mean copper is not going to be it ..I am in Rio for that coming commodity boom....