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not so far , the 3 major US indexes are still green , but the trading day isn't over yet .
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The Yen story is obviously not over yet.
Clearly heading to $134 and change. Then earnings. Important only because it carries the entire market with it. The market (see LEI's) carries the entire economy (as far as tax remittances) which keeps the Treasury's head above water for another couple of months or so.
Nothing much riding on it then.
Are we back to:
LOL.
jog on
duc
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Waiting on the Fed.
Meanwhile, Oil News:
Texas is set to confront its largest power generation squeeze this week as temperatures hit 105-110° F and will most probably push electricity consumption to the highest level on record.
- The previous record for Texas’ power consumption was set a year ago at 85.5 GW, however with the Dallas are expected to see 110° F in the first half of this week, ERCOT expects the new all-time high to be set at 86-87 GW.
- Electricity prices have been surging in unison with temperatures, with day-ahead quotes for Tuesday topping $500 per MWh, the highest hourly price in two weeks.
- Despite the heat, natural gas prices at the Waha hub have so far remained negative (-$1 per mmBtu on Monday), indicating that higher solar generation during the day and battery cover in the evening will be enough to cover the heatwave.
Market Movers
- Texas-based private equity firm Quantum Capital will acquire some Caerus Oil and Gas assets in Colorado’s Piceance Basin and Utah’s Uinta play for $1.8 billion as M&A activity moves into the Rocky Mountains.
- Upstream major APA (NASDAQ:APA) is considering the sale of some $1 billion worth of oil and gas assets in the Permian basin of Texas and New Mexico, seeking to pay down some of the debt incurred by the purchase of Callon Petroleum.
- Norway’s state oil company Equinor (NYSE:EQNR) has shut down its Gullfaks C offshore platform in the North Sea continental shelf after a well control issue that prompted the evacuation of staff.
Tuesday, August 20, 2024
Battered by weak economic data from China, oil prices have struggled to move closer to the $80 per barrel mark with ICE Brent now trading at $78 per barrel. With speculative positions tilted towards the bearish, the market will be looking at the Fed’s minutes and Jerome Powell’s Jackson Hole speech for bullish cues. Seeing Libya’s supply disruption dissipate, there are not that many currently.
M&A Activity Soars in the US Amidst Industry Consolidation. According to Ernst & Young, a total of $49.2 billion was spent on mergers and acquisitions in 2023, up 57% on the year, with the $59.5 billion Exxon-Pioneer deal alone set to surpass last year’s total and the $53 billion Chevron-Hess deal closing next year.
Canada’s Rail Strike Unsettles Oil Industry. As Canadian rail workers ready for a nationwide strike on 22 August, rail movements of undiluted bitumen across Alberta could be jeopardized, however, for crude the impact should be relatively minor as TMX could accommodate some 200,000 b/d more oil.
Guyana Moves Past Its Exxon Partnership. In Guyana’s first-ever competitive bidding round, the South American country has finalized production sharing contracts for eight offshore blocks, with deals signed with TotalEnergies, QatarEnergy, Petronas, Hess, CNOOC as well as ExxonMobil.
French Major Eyes Kuwaiti Solar Expansion. French oil major TotalEnergies (NYSE:TTE) is set to sign a deal with Kuwait to construct a 1,100 MW solar photovoltaic plant in a consortium with regional firms Acwa Power and Masdar as Kuwait seeks to bring renewable generation to 15% by 2030.
Gold Prices Break Another Record. Gold prices have soared above $2,500 per ounce for the first time in history, and even though the bullion has dipped marginally since, the triple whammy of recession fears, geopolitical tensions and persistently high demand will most probably push gold even higher.
Algeria Saves Lebanon After Total Blackout. After Lebanon’s only remaining operational power plant exhausted its fuel supply on 17 August, prompting a nationwide blackout, Algeria has promised to step in and deliver fuel oil to the cash-strapped country in the Eastern Mediterranean.
Venezuela Oil Spill Comes at the Worst Time. An oil slick of about 90 square miles has formed in Venezuela’s Golfe Triste, located next to the 146,000 b/d El Palito refinery, aggravating oil contamination in the country that witnessed 86 oil spills in both 2022 and 2023.
West Africa Seeks to Calm Oil Tensions. Niger will be resuming oil exports through the territory of neighboring Benin after the 1,200-mile pipeline connecting the two countries was shut in June amidst military tensions, blocking CNPC’s production ramp-up from the Agadem oil field.
China Keeps the Nuclear Construction Frenzy Alive. The Chinese government has approved five new nuclear power projects with a combined design capacity of 2,866 MW, adding a boost to the country’s current 56 operational reactors as Beijing prioritizes no-emission power generation.
Libya Resumes Sharara Output to Feed Refinery. In a sign that Libyan supply disruptions could ease soon, the country’s national oil company said that production at the 300,000 b/d Sharara field (blocked for two weeks) has risen to some 85,000 b/d to maintain refinery runs at the Zawia refinery.
Copper Rebounds on Improving Chinese Consumption. Copper’s benchmark three-month contract has recovered to $9,110 per metric tonne this week after Chinese copper exports dropped 40% from June to 140,940 tonnes, indicating that demand conditions are improving in China.
Senegal Seeks to Revisit Oil Contracts. The new President of Senegal Diomaye Faye has set up a commission of legal and tax experts to review the country’s oil and gas contracts to ‘rebalance’ them in the national interest, just as the 100,000 b/d Sangomar project started producing this June.
Mexico Exempts Pemex from Paying Tax. The Mexican government gave state oil company Pemex a tax break for the fourth time this year already, not paying any profit-sharing levies nor production taxes in July and saving more than $6 billion in tax payments in 2024 to date.
Just a ho-hum session currently. Maybe it heats up once Powell speaks.
I would imagine that the market 'expects' the Fed to confirm rate cuts in September.
I don't think he will.
Which means that the market may throw its toys out of the pram. Even if he does confirm, is that already priced in? Are rate cuts even a good thing? Good for Yellen that's for sure. Powell hates Yellen.
The whole strategy of higher for longer was not US inflation. The US needs inflation. In any case, they could just manipulate the data and lie.
The point was a strategy based on Soros' Imperial Circle. That is: the US is at war with China and Russia. Higher interest rates were supposed to break them. It worked in the 1980's because the debt was exponentially lower. It has failed this time because the US will implode long before China or Russia.
With the data coming out of China, possibly the US thinks it can still win. If so, higher for longer, no cuts in September. Stuff continues to break and breaks bigger and faster.
jog on
duc
Meanwhile, Oil News:
Texas is set to confront its largest power generation squeeze this week as temperatures hit 105-110° F and will most probably push electricity consumption to the highest level on record.
- The previous record for Texas’ power consumption was set a year ago at 85.5 GW, however with the Dallas are expected to see 110° F in the first half of this week, ERCOT expects the new all-time high to be set at 86-87 GW.
- Electricity prices have been surging in unison with temperatures, with day-ahead quotes for Tuesday topping $500 per MWh, the highest hourly price in two weeks.
- Despite the heat, natural gas prices at the Waha hub have so far remained negative (-$1 per mmBtu on Monday), indicating that higher solar generation during the day and battery cover in the evening will be enough to cover the heatwave.
Market Movers
- Texas-based private equity firm Quantum Capital will acquire some Caerus Oil and Gas assets in Colorado’s Piceance Basin and Utah’s Uinta play for $1.8 billion as M&A activity moves into the Rocky Mountains.
- Upstream major APA (NASDAQ:APA) is considering the sale of some $1 billion worth of oil and gas assets in the Permian basin of Texas and New Mexico, seeking to pay down some of the debt incurred by the purchase of Callon Petroleum.
- Norway’s state oil company Equinor (NYSE:EQNR) has shut down its Gullfaks C offshore platform in the North Sea continental shelf after a well control issue that prompted the evacuation of staff.
Tuesday, August 20, 2024
Battered by weak economic data from China, oil prices have struggled to move closer to the $80 per barrel mark with ICE Brent now trading at $78 per barrel. With speculative positions tilted towards the bearish, the market will be looking at the Fed’s minutes and Jerome Powell’s Jackson Hole speech for bullish cues. Seeing Libya’s supply disruption dissipate, there are not that many currently.
M&A Activity Soars in the US Amidst Industry Consolidation. According to Ernst & Young, a total of $49.2 billion was spent on mergers and acquisitions in 2023, up 57% on the year, with the $59.5 billion Exxon-Pioneer deal alone set to surpass last year’s total and the $53 billion Chevron-Hess deal closing next year.
Canada’s Rail Strike Unsettles Oil Industry. As Canadian rail workers ready for a nationwide strike on 22 August, rail movements of undiluted bitumen across Alberta could be jeopardized, however, for crude the impact should be relatively minor as TMX could accommodate some 200,000 b/d more oil.
Guyana Moves Past Its Exxon Partnership. In Guyana’s first-ever competitive bidding round, the South American country has finalized production sharing contracts for eight offshore blocks, with deals signed with TotalEnergies, QatarEnergy, Petronas, Hess, CNOOC as well as ExxonMobil.
French Major Eyes Kuwaiti Solar Expansion. French oil major TotalEnergies (NYSE:TTE) is set to sign a deal with Kuwait to construct a 1,100 MW solar photovoltaic plant in a consortium with regional firms Acwa Power and Masdar as Kuwait seeks to bring renewable generation to 15% by 2030.
Gold Prices Break Another Record. Gold prices have soared above $2,500 per ounce for the first time in history, and even though the bullion has dipped marginally since, the triple whammy of recession fears, geopolitical tensions and persistently high demand will most probably push gold even higher.
Algeria Saves Lebanon After Total Blackout. After Lebanon’s only remaining operational power plant exhausted its fuel supply on 17 August, prompting a nationwide blackout, Algeria has promised to step in and deliver fuel oil to the cash-strapped country in the Eastern Mediterranean.
Venezuela Oil Spill Comes at the Worst Time. An oil slick of about 90 square miles has formed in Venezuela’s Golfe Triste, located next to the 146,000 b/d El Palito refinery, aggravating oil contamination in the country that witnessed 86 oil spills in both 2022 and 2023.
West Africa Seeks to Calm Oil Tensions. Niger will be resuming oil exports through the territory of neighboring Benin after the 1,200-mile pipeline connecting the two countries was shut in June amidst military tensions, blocking CNPC’s production ramp-up from the Agadem oil field.
China Keeps the Nuclear Construction Frenzy Alive. The Chinese government has approved five new nuclear power projects with a combined design capacity of 2,866 MW, adding a boost to the country’s current 56 operational reactors as Beijing prioritizes no-emission power generation.
Libya Resumes Sharara Output to Feed Refinery. In a sign that Libyan supply disruptions could ease soon, the country’s national oil company said that production at the 300,000 b/d Sharara field (blocked for two weeks) has risen to some 85,000 b/d to maintain refinery runs at the Zawia refinery.
Copper Rebounds on Improving Chinese Consumption. Copper’s benchmark three-month contract has recovered to $9,110 per metric tonne this week after Chinese copper exports dropped 40% from June to 140,940 tonnes, indicating that demand conditions are improving in China.
Senegal Seeks to Revisit Oil Contracts. The new President of Senegal Diomaye Faye has set up a commission of legal and tax experts to review the country’s oil and gas contracts to ‘rebalance’ them in the national interest, just as the 100,000 b/d Sangomar project started producing this June.
Mexico Exempts Pemex from Paying Tax. The Mexican government gave state oil company Pemex a tax break for the fourth time this year already, not paying any profit-sharing levies nor production taxes in July and saving more than $6 billion in tax payments in 2024 to date.
Just a ho-hum session currently. Maybe it heats up once Powell speaks.
I would imagine that the market 'expects' the Fed to confirm rate cuts in September.
I don't think he will.
Which means that the market may throw its toys out of the pram. Even if he does confirm, is that already priced in? Are rate cuts even a good thing? Good for Yellen that's for sure. Powell hates Yellen.
The whole strategy of higher for longer was not US inflation. The US needs inflation. In any case, they could just manipulate the data and lie.
The point was a strategy based on Soros' Imperial Circle. That is: the US is at war with China and Russia. Higher interest rates were supposed to break them. It worked in the 1980's because the debt was exponentially lower. It has failed this time because the US will implode long before China or Russia.
With the data coming out of China, possibly the US thinks it can still win. If so, higher for longer, no cuts in September. Stuff continues to break and breaks bigger and faster.
jog on
duc
- Joined
- 13 February 2006
- Posts
- 5,057
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- 11,457
Full:https://www.bloomberg.com/opinion/a...r-trades-are-just-too-profitable?srnd=opinion
For more than thirty years, one of the most prevalent strategies for insider trading has gone undetected and unaddressed. This Article uncovers the techniques by which executives and directors sell overvalued stock worth more than $100 billion per year, shifting losses to ordinary investors. The basic idea is that insiders conceal their suspicious trades by publicly reporting them (as they are required to do) in ways that confuse or discourage investigators. We develop a taxonomy of concealment strategies, complete with suggestive examples. We then empirically test our taxonomy using a database of essentially all stock trades since 1992. We find that insiders who trade using the subterfuges we describe outperform the market by up to 20% on average. Worse yet, we find evidence that this simple subterfuge works. Essentially no one has ever been prosecuted for undertaking one of these suspicious trades. Nor do journalists or scholars seem to appreciate them. Accordingly, we call for scholars and prosecutors to cast a wider net in their studies and market surveillance, then discuss implications for the design of insider-trading reporting requirements and related legal rules.
Insider Trading by Other Means
For more than thirty years, one of the most prevalent strategies for insider trading has gone undetected and unaddressed. This Article uncovers the techniques b
papers.ssrn.com
We are starting to see UST vol. increase again with a weak USD. The USD can't be too hot or too cold, it has to be just right.
Turbulence in either market now (Bonds/Stocks) creates turbulence in the other market. Once, they offset each other (the 60/40 portfolio) now they just amplify each other. If you want balance you need gold.
Full: https://mishtalk.com/economics/bls-revises-jobs-down-by-818000-the-most-ever-about-68000-per-month/
Full: https://www.zerohedge.com/crypto/su...oin-ripe-short-squeeze-etf-inflows-accelerate
This is essentially how they have controlled gold, silver, etc through the years. You need a paper market to control the physical. The physical can overwhelm the paper, but you need big players in the room to do so.
Which leads me to:
Probably the most leveraged ETF (LOL) for BTC out there.
Thinking about a position.
| While even noted Goldman Sachs skeptic Scott Rubner was recently forced to admit that it's hard to be bearish this summer vacation season, it's worth keeping an eye on the Cboe Volatility Index as investors await not only a key Jackson Hole speech from Fed Chair Jerome Powell, but a season-capping earnings report from de facto market bellwether Nvidia. With stocks clinging to slim gains at midday, the VIX is up more than 7%, suggesting that some of us are paper-handing it right into this afternoon's Fed minutes. |
 |
| U.S. stocks today are modestly higher, with the S&P 500 posting a 1-month high, the Dow Jones Industrials posting a 2-1/2 week high, and the Nasdaq-100 posting a 4-week high. Positive corporate news is lifting stocks today, along with M&A activity. The Bureau of Labor Statistics (BLS) revised U.S. payrolls down by -818,000 for the year through March, a bigger decline than expectations of -600,000 and the largest downward revision since 2009. The report was dovish for Fed policy, since it indicated a weaker labor market than was originally reported. The markets are awaiting the minutes of the July 30-31 FOMC meeting later this afternoon for clues on how close the Fed is to cutting interest rates. |
So Powell speaks today.
Could be wild.
What exactly does the market want? Joe Blow would say rate cuts. Maybe. But maybe not. Rate cuts could drive a sell-off contra to most commentators expectations. Rate cuts signal weakness. The yield curve will un-invert. Historically not a great signal.
I have been doing a little selling the last couple of days. Just lightening up a little. I'll sacrifice a little upside to protect the downside, you know, just-in-case.
jog on
duc
- Joined
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Another one of those Mag 7 selloff days
Probably at this point just profit taking. Whether it develops after the w/e into something more...
jog on
duc
Probably at this point just profit taking. Whether it develops after the w/e into something more...
jog on
duc
- Joined
- 13 February 2006
- Posts
- 5,057
- Reactions
- 11,457
Oil News:
Friday, August 23rd, 2024
Oil prices have been rangebound this week, recovering after the frenzy seen in the first two weeks of August, with ICE Brent settling in a narrow band between $76 and $78 per barrel. Overall sentiment has been improving after the US Federal Reserve’s July meeting notes indicated September would be the most probable date for the much-anticipated interest rate cut. If Jackson Hole doesn’t disappoint, macroeconomics might lift oil even higher.
Houthis Attack Greek Oil Tanker. A Greek-owned Suezmax tanker carrying Iraqi Basrah crude is adrift in the Red Sea after being attacked by Houthi militias as they claimed the operator company had ties with Israel, with the EU’s naval mission calling it a navigational and environmental hazard.
US Coal Megamerger Creates New Champion. Leading US coal producers Arch Resources (NYSE:ARCH) and Consol Energy (NYSE:CEIX) will merge in an all-stock deal to create a mining giant valued at more than $5 billion, boosting an export capacity of 25 mtpa across two separate shipping terminals.
Canadian Rail Strike Ends in Federal Arbitration. A Canadian rail strike that started this Thursday has been forcibly cut short by the federal government after it compelled labour unions and the CPKC and CN railroad companies into binding arbitration, under section 107 of the Canada Labour Code.
Oil Majors Quit War-Torn South Sudan. With Malaysia’s state oil firm Petronas withdrawing from South Sudan on the back of the ongoing civil war, the country’s state-run Nile Petroleum is to assume ownership of its assets in the country, once producing more than 150,000 b/d across six license blocks.
Chevron Eyes Australian Carbon Capture. US oil major Chevron (NYSE:CVX) has been awarded a permit to evaluate an area of around 8,500 km2 in Western Australia’s offshore territory for potential CO2 storage projects, to be captured from its Wheatstone and Gorgon LNG liquefaction plants.
Czech Refinery Shuts Down Due to WWII Bomb. The Czech Republic’s Litvinov refinery operated by PKN Orlen has shut down production after an unexploded World War II was found in a remote part of the plant, with preliminary estimates suggesting the forced halt could take up to 2-3 weeks.
EU Gas Storage Reaches Strategic Threshold. EU underground natural gas storage sites reached 90% of capacity this week, holding 1,025 TWh more than two months ahead of schedule, with central and eastern Europe seeing the highest fill rates whilst Latvia and Denmark have been the region’s laggards.
Environmentalists Sue UK Government. The Oceana UK environmental group is challenging the United Kingdom government in court for issuing 31 exploration licences in May as part of its latest offshore licensing round, saying authorities failed to assess the projects’ environmental impact on marine life.
Mexico Rules Out Revamp of Oil Policy. Mexico’s soon-to-be president Claudia Sheinbaum ruled out a reversal of oil policy to the Nieto-era associations between private producers and state oil firm Pemex, despite a dramatic 12% decline in oil production in AMLO’s six-year tenure to a low of 1.48 million b/d.
Egypt Promises to Get Its Mojo Back. Egypt’s government has promised to return oil and gas production in the country to normal levels from 2025 onwards after a spectacular plunge in gas output from the offshore Zohr field that prompted the North African country to import LNG and fuel oil to meet power needs.
Russia Delays Key LNG Plant. Russia’s LNG specialist Novatek has postponed the start of Arctic LNG 2’s third train from 2026 to 2028 as sanctions have complicated the procurement of Chinese-built liquefaction platforms and gas carriers, potentially seeking to relocate future plants to ice-free ports.
Venezuela Fires Dozens over Political Dissent. Over a hundred employees at Venezuela’s state oil company PDVSA and its Oil Ministry have been fired after they failed to support incumbent President Maduro at rallies and disputed the official voting results of the presidential ballot held July 28.
California Solar Subsidies Cost Billions. According to California’s Public Utilities Commission, the cost of the Golden State’s residential solar subsidy would amount to $8.5 billion annually, mostly carried by customers who do not have rooftop panels as they pay utilities’ fixed costs, such as maintenance.
Hedge Funds and Mag.7: https://www.ft.com/content/7d48e551-73d3-4b89-ba24-4d9119df87d0
Ackman: https://www.institutionalinvestor.c...-office/the-summer-of-bill-ackmans-discontent
Sovereign: https://www.institutionalinvestor.com/article/2btfpiwkwid6fq6f5zmyo/home/secrets-of-sovereign
NZ Sovereign Wealth: https://www.ft.com/content/b6bc18f8-e595-4c82-bc08-6e177d12817f
Key Takeaway: Both the ride and the returns improve when we set aside fear and take time to be out of the market.
The “Time in the Market vs Timing the Market” charts are making the rounds again. Depending on the parameters that are used (starting date, # of days excluded) the actual numbers can vary, but they usually look something like this:
They are often put together by the Marketing departments of Wall Street firms to induce a little fear of missing out and thereby keeping investors sitting on their hands through the ups and downs of a market cycle.
The arithmetic used to produce these charts is sound. If you miss too many of the best days in the market (but stick around for the worst days) your cumulative gains evaporate rather quickly. On the other hand, if you sidestep just the worst days but fully participate in the best days, your cumulative gains soar. Remove the 50 best days from the market since 1990 and the annualized return is negative. Remove the 50 worst days and the annualized return more than doubles.
The market logic of just missing the best days (or just missing the worst days) is faulty. No one is so perfectly bad or so perfectly good at reading the environment that they will be missing out on just the best days or avoiding just the worst days. We do, however, know that the best days and the worst days often cluster together in periods of elevated volatility. So, if we are missing some of the best days, we are probably also missing some of the worst days.
The marketing departments for the big firms won’t tell you this, but I will: missing equal numbers of the best days and worst days will tend to increase returns and reduce overall volatility. The more volatility you miss, the better the investing experience. That means both a smoother ride and a better destination.
Share
While that is a market fact, it is not an implementable strategy. But we know that these best day/worst day clusters are not random. They occur during periods of elevated volatility and those tend to occur during downtrends in the market. Increasing equity exposure during periods of trend strength (e.g. when the 200-day average is rising) and reducing equity exposure during periods of trend weakness (e.g. when the 200-day average is falling) is an implementable strategy and achieves the goal of largely sidestepping both the best and worst days in the market.
When we let go of the fear of missing out and embrace the longer-term trends, we can avoid volatility and sleep better at night, whether we are spending our time in the market or out of the market.
Mr fff
All of the important people have convened at Jackson Hole to discuss policy concerns, the things that shape your lives in ways you don’t truly understand.
Want a new home? They’ll decide what you will pay at Jackson Hole.
How about that new car? Jackson Hole.
You and your fiancé want to get married this fall? All Jackson Hole will decide on the costs.
The velocity of money is about to go up. The presumption of the bears is that ‘it doesn’t matter’ because ‘we have too much debt.’ I used to believe in all of that but bur living in the real world and not some ******* fantasy has taught me not to touch the Fed’s kettle when it’s hot. I’ve got the burns to show for my mistakes.
In a sense, the Fed has eliminated the economic cycle. Gone are the days of boom bust boom. Now we just plod along higher with a stable unemployment rate, GDP buoyed by an ever increasing population. The correlation between population increase and GDP is almost 1.00.
But what about how shitty stocks have been recently?
In the short term there are plenty of things that can go wrong. As a trade we remain vigilant and will short this ******* tape into the ground if we must. But in the intermediate term into the Fed cuts, there isn’t a good bear case to be made, lest we are now discussing the specter of WW3, which on the surface might seem scary and foreboding; but ultimately that too is super bullish, lending to all sort of new money creation and industry.
I don’t make the rules; I just follow them.
NVDA earnings next week:
jog on
duc
Friday, August 23rd, 2024
Oil prices have been rangebound this week, recovering after the frenzy seen in the first two weeks of August, with ICE Brent settling in a narrow band between $76 and $78 per barrel. Overall sentiment has been improving after the US Federal Reserve’s July meeting notes indicated September would be the most probable date for the much-anticipated interest rate cut. If Jackson Hole doesn’t disappoint, macroeconomics might lift oil even higher.
Houthis Attack Greek Oil Tanker. A Greek-owned Suezmax tanker carrying Iraqi Basrah crude is adrift in the Red Sea after being attacked by Houthi militias as they claimed the operator company had ties with Israel, with the EU’s naval mission calling it a navigational and environmental hazard.
US Coal Megamerger Creates New Champion. Leading US coal producers Arch Resources (NYSE:ARCH) and Consol Energy (NYSE:CEIX) will merge in an all-stock deal to create a mining giant valued at more than $5 billion, boosting an export capacity of 25 mtpa across two separate shipping terminals.
Canadian Rail Strike Ends in Federal Arbitration. A Canadian rail strike that started this Thursday has been forcibly cut short by the federal government after it compelled labour unions and the CPKC and CN railroad companies into binding arbitration, under section 107 of the Canada Labour Code.
Oil Majors Quit War-Torn South Sudan. With Malaysia’s state oil firm Petronas withdrawing from South Sudan on the back of the ongoing civil war, the country’s state-run Nile Petroleum is to assume ownership of its assets in the country, once producing more than 150,000 b/d across six license blocks.
Chevron Eyes Australian Carbon Capture. US oil major Chevron (NYSE:CVX) has been awarded a permit to evaluate an area of around 8,500 km2 in Western Australia’s offshore territory for potential CO2 storage projects, to be captured from its Wheatstone and Gorgon LNG liquefaction plants.
Czech Refinery Shuts Down Due to WWII Bomb. The Czech Republic’s Litvinov refinery operated by PKN Orlen has shut down production after an unexploded World War II was found in a remote part of the plant, with preliminary estimates suggesting the forced halt could take up to 2-3 weeks.
EU Gas Storage Reaches Strategic Threshold. EU underground natural gas storage sites reached 90% of capacity this week, holding 1,025 TWh more than two months ahead of schedule, with central and eastern Europe seeing the highest fill rates whilst Latvia and Denmark have been the region’s laggards.
Environmentalists Sue UK Government. The Oceana UK environmental group is challenging the United Kingdom government in court for issuing 31 exploration licences in May as part of its latest offshore licensing round, saying authorities failed to assess the projects’ environmental impact on marine life.
Mexico Rules Out Revamp of Oil Policy. Mexico’s soon-to-be president Claudia Sheinbaum ruled out a reversal of oil policy to the Nieto-era associations between private producers and state oil firm Pemex, despite a dramatic 12% decline in oil production in AMLO’s six-year tenure to a low of 1.48 million b/d.
Egypt Promises to Get Its Mojo Back. Egypt’s government has promised to return oil and gas production in the country to normal levels from 2025 onwards after a spectacular plunge in gas output from the offshore Zohr field that prompted the North African country to import LNG and fuel oil to meet power needs.
Russia Delays Key LNG Plant. Russia’s LNG specialist Novatek has postponed the start of Arctic LNG 2’s third train from 2026 to 2028 as sanctions have complicated the procurement of Chinese-built liquefaction platforms and gas carriers, potentially seeking to relocate future plants to ice-free ports.
Venezuela Fires Dozens over Political Dissent. Over a hundred employees at Venezuela’s state oil company PDVSA and its Oil Ministry have been fired after they failed to support incumbent President Maduro at rallies and disputed the official voting results of the presidential ballot held July 28.
California Solar Subsidies Cost Billions. According to California’s Public Utilities Commission, the cost of the Golden State’s residential solar subsidy would amount to $8.5 billion annually, mostly carried by customers who do not have rooftop panels as they pay utilities’ fixed costs, such as maintenance.
Hedge Funds and Mag.7: https://www.ft.com/content/7d48e551-73d3-4b89-ba24-4d9119df87d0
Ackman: https://www.institutionalinvestor.c...-office/the-summer-of-bill-ackmans-discontent
Sovereign: https://www.institutionalinvestor.com/article/2btfpiwkwid6fq6f5zmyo/home/secrets-of-sovereign
NZ Sovereign Wealth: https://www.ft.com/content/b6bc18f8-e595-4c82-bc08-6e177d12817f
Key Takeaway: Both the ride and the returns improve when we set aside fear and take time to be out of the market.
The “Time in the Market vs Timing the Market” charts are making the rounds again. Depending on the parameters that are used (starting date, # of days excluded) the actual numbers can vary, but they usually look something like this:
 |
The arithmetic used to produce these charts is sound. If you miss too many of the best days in the market (but stick around for the worst days) your cumulative gains evaporate rather quickly. On the other hand, if you sidestep just the worst days but fully participate in the best days, your cumulative gains soar. Remove the 50 best days from the market since 1990 and the annualized return is negative. Remove the 50 worst days and the annualized return more than doubles.
 |
The marketing departments for the big firms won’t tell you this, but I will: missing equal numbers of the best days and worst days will tend to increase returns and reduce overall volatility. The more volatility you miss, the better the investing experience. That means both a smoother ride and a better destination.
 |
While that is a market fact, it is not an implementable strategy. But we know that these best day/worst day clusters are not random. They occur during periods of elevated volatility and those tend to occur during downtrends in the market. Increasing equity exposure during periods of trend strength (e.g. when the 200-day average is rising) and reducing equity exposure during periods of trend weakness (e.g. when the 200-day average is falling) is an implementable strategy and achieves the goal of largely sidestepping both the best and worst days in the market.
 |
Mr fff
A Fed Loosening Cycle is About to Occur
Dr. Fly Fri Aug 23, 2024 9:49am EST Leave a commentAll of the important people have convened at Jackson Hole to discuss policy concerns, the things that shape your lives in ways you don’t truly understand.
Want a new home? They’ll decide what you will pay at Jackson Hole.
How about that new car? Jackson Hole.
You and your fiancé want to get married this fall? All Jackson Hole will decide on the costs.
The velocity of money is about to go up. The presumption of the bears is that ‘it doesn’t matter’ because ‘we have too much debt.’ I used to believe in all of that but bur living in the real world and not some ******* fantasy has taught me not to touch the Fed’s kettle when it’s hot. I’ve got the burns to show for my mistakes.
In a sense, the Fed has eliminated the economic cycle. Gone are the days of boom bust boom. Now we just plod along higher with a stable unemployment rate, GDP buoyed by an ever increasing population. The correlation between population increase and GDP is almost 1.00.
But what about how shitty stocks have been recently?
In the short term there are plenty of things that can go wrong. As a trade we remain vigilant and will short this ******* tape into the ground if we must. But in the intermediate term into the Fed cuts, there isn’t a good bear case to be made, lest we are now discussing the specter of WW3, which on the surface might seem scary and foreboding; but ultimately that too is super bullish, lending to all sort of new money creation and industry.
I don’t make the rules; I just follow them.
NVDA earnings next week:
jog on
duc
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Jay Powell has gas-lit me before , so much so my ass is now fire-proof
i am thinking a 0.25% cut ( in September ) there is an election coming ( and if he didn't the market will crater , the economy is already crumbling ) and promising a 0.25% is largely factored in with major investors ( and the weak is currently nervous and weak )
so one last gas-light ( to slow the Kamala-crash ) lest Trump wins all the impoverished Democrat voters as well
i am thinking a 0.25% cut ( in September ) there is an election coming ( and if he didn't the market will crater , the economy is already crumbling ) and promising a 0.25% is largely factored in with major investors ( and the weak is currently nervous and weak )
so one last gas-light ( to slow the Kamala-crash ) lest Trump wins all the impoverished Democrat voters as well
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Start with last week's results:
So pretty much everything went up.
Put/Call ratio:
Next week's earnings:
NVDA after the close.
The most anticipated earnings full stop. I have no idea.
Data:
Mr fff
jog on
duc
So pretty much everything went up.
Put/Call ratio:
Next week's earnings:
NVDA after the close.
The most anticipated earnings full stop. I have no idea.
Data:
Mr fff
jog on
duc
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Global liquidity:
Oil News:
Markets have now locked in a September rate cut and it is well priced in.
Markets definitely starting to look like they are running out of momo. Looking toppy. There might be a little upside juice left, but not looking great.
I have been selling today and taking profits in XLV, XLI, XLB.
THE event this week is NVDA earnings.
NVDA was indicating a 10% expected move on earnings. 10% on a $3 Trillion dollar company. To have a 10% to the upside, the earnings will need to be a pretty significant surprise to the upside. Druckenmiller is out of NVDA.
The CEO is a seller.
Today, obviously, NVDA is off a tad, which indicates possibly a bit of nervousness.
Mr fff
jog on
duc
Global liquidity is on the rise. Last week, it slowly climbed $1.13 trillion, pushing the total to an unprecedented $174.67 trillion, marking a new all-time high. This influx of capital into the global financial system indicates an overall increase in access to capital across international markets and an approving nod for risk-on assets, including equities and high-yield bonds. |
With more capital available, global markets could see some momentum in stock markets, especially in sectors sensitive to economic growth, which bodes well for the U.S. and global economies as increased liquidity can fuel economic expansion and boost investor confidence. |
If global liquidity continues to rise, financial markets may strengthen further, with equities likely continuing their upward trajectory. A persistent increase in liquidity would likely lead to lower borrowing costs and stimulate economic activity, but it would also raise concerns about asset bubbles and financial stability. |
Oil News:
Markets have now locked in a September rate cut and it is well priced in.
Markets definitely starting to look like they are running out of momo. Looking toppy. There might be a little upside juice left, but not looking great.
I have been selling today and taking profits in XLV, XLI, XLB.
THE event this week is NVDA earnings.
NVDA was indicating a 10% expected move on earnings. 10% on a $3 Trillion dollar company. To have a 10% to the upside, the earnings will need to be a pretty significant surprise to the upside. Druckenmiller is out of NVDA.
The CEO is a seller.
Today, obviously, NVDA is off a tad, which indicates possibly a bit of nervousness.
Mr fff
jog on
duc
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Oil News:
One of the two rival powers in Libya, the Benghazi government run by Field Marshal Khalifa Haftar said it would shut down all crude output and exports in the country, declaring a nationwide force majeure.
- The decision comes amidst an escalating dispute over who should appoint NOC officials and control oil revenues, aggravated by the kidnapping of Central Bank officials and growing calls to investigate potential misuse of Libya’s financial resources.
- Even the Tripoli-based government has called for institutional change, demanding that central bank governor Sadiq al-Kabir be replaced, a key position given that all crude oil revenues flow into the central bank.
- Having recovered from the oil blockades of 2020 and 2022, Libya’s production has been relatively stable at 1.2 million b/d lately, with a little more than 1 million b/d exported to the global markets.
Market Movers
- Saudi Arabia’s shipping company Bahri has agreed to purchase nine scrubber-fitted VLCCs from Greece-based firm Capital Maritime & Trading for $1 billion, boosting its current fleet of 40 super-large tankers.
- Norway’s state energy company Equinor (NYSE:EQNR) will be closing down its Vietnamese office and canceling plans to invest in the Asian country’s offshore wind sector due to regulatory hurdles.
- Global oil trader Vitol is under investigation in the Netherlands pertaining to alleged bribery in Kazakhstan, with the country’s prosecutor’s office claiming it failed to disclose suspicious transactions to consultants.
Tuesday, August 27, 2024
Khalifa Haftar has become the savior of oil bulls this week, with Libya’s Benghazi-based eastern government announcing a nationwide shutdown of oil production and exports. Seeking to wrest control of the central bank and the national oil company from the Tripoli government, the current standoff could become the next phase in Libya’s high-stakes civil war. ICE Brent futures surged above $81 per barrel on Monday, but have since fallen back slightly.
UN Calls for Global Phaseout of Oil & Gas. UN Secretary-General Antonio Guterres has called on world leaders to phase out oil and gas and stop all new exploration in hydrocarbons, speaking on the Pacific island of Tonga and arguing that greenhouse gases are cooking our planet.
China Flags M&A Interest in Oil Projects. China’s national oil company CNPC said it is reviewing its global strategy and would seek to sign new deals, focusing on gas liquefaction capacity and deepwater offshore projects as it faces an uphill battle with maturing domestic production.
Kuwait Signs Long-Term LNG Deal with Qatar. Kuwait signed a 15-year term contract with Qatar to supply up to 3 million tonnes of LNG per year from 2025 onwards, to be delivered to the port of Al Zour as meeting Kuwaiti power generation became even harder amidst recurring power outages.
Brazil Allows Producers to Inject Less Natural Gas. Brasil’s President Lula da Silva signed a decree authorizing oil regulator ANP to mandate reductions in natural gas reinjection into new oil wells, seeking to make more gas available for the domestic power generation market and make power cheaper.
Canada to Impose Punitive Tariffs on Chinese Goods. The Trudeau administration has slapped a 100% tariff on imports of Chinese electric vehicles as well as a 25% levy on steel and aluminum produced in China, with Beijing calling the measure protectionist and defying WTO trade rules.
California’s Refiners Revolt Against Newsom Bill. California’s refiners are dissenting against Governor Newsom’s proposal that would allow the state to compel refiners to sell their gasoline inventories in times of undersupply, saying it misdiagnoses the problem instead of focusing on weak infrastructure and restrictive quality specifications.
Quality Switch Left Lead Sellers Confused. Sellers of battery metal lead on the Shaghai Futures Exchange are forced to change trading strategies after ShFE lowered the content of bismuth in the metal that can be delivered in its contracts, reflecting tighter emission standards in China.
ExxonMobil Calls for Oil Investment. The global outlook of US oil major ExxonMobil (NYSE:XOM) has oil production declining at a rate of 15% per year without new investment, double the IEA’s estimate of 8%, believing oil demand will plateau beyond 2030 and hold more or less steady until 2050.
Canada’s Rail Unions Mull Restart of Strike. Defying the government’s binding arbitration proceedings, Canadian labor unions of rail workers continue to issue strike notices to Canadian National as they believe Ottawa’s mandate sidestepped the collective bargaining process and jeopardized workers’ rights.
Improving Iron Ore Eases China Worries. Inventories of iron ore held at Chinese ports have been declining for four straight weeks, indicating that a period of severe oversupply might be easing soon as steel demand improves, lifting iron ore futures back above the $100 per metric tonne threshold.
Ukraine’s Power Sector Damaged from Russian Strikes. In one of the largest strikes ever in the Russia-Ukraine war, Russia launched more than 100 missiles on Ukraine’s energy infrastructure, triggering nationwide blackouts and damaging Kyiv’s hydroelectric plant and water supplies.
US Slaps Sanctions on Russia’s Next Big Project. The US Treasury Department announced further sanctions on Russia’s flagship Arctic upstream project Vostok Oil, targeting 10 companies associated with building pipelines and the export terminal, as Rosneft seems to be falling behind its 2024 commissioning target.
Brazil Wants a Bigger Share of Argentina’s Shale. Brazil’s national oil firm Petrobras (NYSE
BR) is actively seeking out shale gas deals in Argentina as part of a bigger plan to increase the company’s exposure to the Vaca Muerta shale play, potentially by acquiring a stake in upstream firm Tecpetrol.
NVDA Options are still showing an expected move of 10% which is +/- a $300 Billion move. LOL. What that actually tells you is that no-one really has a clue how this will play out.
Miss: will take you lower.
Beat: may take you higher, but how much higher and how much of a beat would be required?
Consensus: this is the big unknown, consensus is for higher, but the reaction could be far more muted than previous beats.
So I'm still short @ $125 Puts. Of course, it's an after hours announcement, so no chance to get out if the thing beats in a huge way.
In totally unrelated matters, I touched base with Mr fff
jog on
duc
One of the two rival powers in Libya, the Benghazi government run by Field Marshal Khalifa Haftar said it would shut down all crude output and exports in the country, declaring a nationwide force majeure.
- The decision comes amidst an escalating dispute over who should appoint NOC officials and control oil revenues, aggravated by the kidnapping of Central Bank officials and growing calls to investigate potential misuse of Libya’s financial resources.
- Even the Tripoli-based government has called for institutional change, demanding that central bank governor Sadiq al-Kabir be replaced, a key position given that all crude oil revenues flow into the central bank.
- Having recovered from the oil blockades of 2020 and 2022, Libya’s production has been relatively stable at 1.2 million b/d lately, with a little more than 1 million b/d exported to the global markets.
Market Movers
- Saudi Arabia’s shipping company Bahri has agreed to purchase nine scrubber-fitted VLCCs from Greece-based firm Capital Maritime & Trading for $1 billion, boosting its current fleet of 40 super-large tankers.
- Norway’s state energy company Equinor (NYSE:EQNR) will be closing down its Vietnamese office and canceling plans to invest in the Asian country’s offshore wind sector due to regulatory hurdles.
- Global oil trader Vitol is under investigation in the Netherlands pertaining to alleged bribery in Kazakhstan, with the country’s prosecutor’s office claiming it failed to disclose suspicious transactions to consultants.
Tuesday, August 27, 2024
Khalifa Haftar has become the savior of oil bulls this week, with Libya’s Benghazi-based eastern government announcing a nationwide shutdown of oil production and exports. Seeking to wrest control of the central bank and the national oil company from the Tripoli government, the current standoff could become the next phase in Libya’s high-stakes civil war. ICE Brent futures surged above $81 per barrel on Monday, but have since fallen back slightly.
UN Calls for Global Phaseout of Oil & Gas. UN Secretary-General Antonio Guterres has called on world leaders to phase out oil and gas and stop all new exploration in hydrocarbons, speaking on the Pacific island of Tonga and arguing that greenhouse gases are cooking our planet.
China Flags M&A Interest in Oil Projects. China’s national oil company CNPC said it is reviewing its global strategy and would seek to sign new deals, focusing on gas liquefaction capacity and deepwater offshore projects as it faces an uphill battle with maturing domestic production.
Kuwait Signs Long-Term LNG Deal with Qatar. Kuwait signed a 15-year term contract with Qatar to supply up to 3 million tonnes of LNG per year from 2025 onwards, to be delivered to the port of Al Zour as meeting Kuwaiti power generation became even harder amidst recurring power outages.
Brazil Allows Producers to Inject Less Natural Gas. Brasil’s President Lula da Silva signed a decree authorizing oil regulator ANP to mandate reductions in natural gas reinjection into new oil wells, seeking to make more gas available for the domestic power generation market and make power cheaper.
Canada to Impose Punitive Tariffs on Chinese Goods. The Trudeau administration has slapped a 100% tariff on imports of Chinese electric vehicles as well as a 25% levy on steel and aluminum produced in China, with Beijing calling the measure protectionist and defying WTO trade rules.
California’s Refiners Revolt Against Newsom Bill. California’s refiners are dissenting against Governor Newsom’s proposal that would allow the state to compel refiners to sell their gasoline inventories in times of undersupply, saying it misdiagnoses the problem instead of focusing on weak infrastructure and restrictive quality specifications.
Quality Switch Left Lead Sellers Confused. Sellers of battery metal lead on the Shaghai Futures Exchange are forced to change trading strategies after ShFE lowered the content of bismuth in the metal that can be delivered in its contracts, reflecting tighter emission standards in China.
ExxonMobil Calls for Oil Investment. The global outlook of US oil major ExxonMobil (NYSE:XOM) has oil production declining at a rate of 15% per year without new investment, double the IEA’s estimate of 8%, believing oil demand will plateau beyond 2030 and hold more or less steady until 2050.
Canada’s Rail Unions Mull Restart of Strike. Defying the government’s binding arbitration proceedings, Canadian labor unions of rail workers continue to issue strike notices to Canadian National as they believe Ottawa’s mandate sidestepped the collective bargaining process and jeopardized workers’ rights.
Improving Iron Ore Eases China Worries. Inventories of iron ore held at Chinese ports have been declining for four straight weeks, indicating that a period of severe oversupply might be easing soon as steel demand improves, lifting iron ore futures back above the $100 per metric tonne threshold.
Ukraine’s Power Sector Damaged from Russian Strikes. In one of the largest strikes ever in the Russia-Ukraine war, Russia launched more than 100 missiles on Ukraine’s energy infrastructure, triggering nationwide blackouts and damaging Kyiv’s hydroelectric plant and water supplies.
US Slaps Sanctions on Russia’s Next Big Project. The US Treasury Department announced further sanctions on Russia’s flagship Arctic upstream project Vostok Oil, targeting 10 companies associated with building pipelines and the export terminal, as Rosneft seems to be falling behind its 2024 commissioning target.
Brazil Wants a Bigger Share of Argentina’s Shale. Brazil’s national oil firm Petrobras (NYSE
BR) is actively seeking out shale gas deals in Argentina as part of a bigger plan to increase the company’s exposure to the Vaca Muerta shale play, potentially by acquiring a stake in upstream firm Tecpetrol. NVDA Options are still showing an expected move of 10% which is +/- a $300 Billion move. LOL. What that actually tells you is that no-one really has a clue how this will play out.
Miss: will take you lower.
Beat: may take you higher, but how much higher and how much of a beat would be required?
Consensus: this is the big unknown, consensus is for higher, but the reaction could be far more muted than previous beats.
So I'm still short @ $125 Puts. Of course, it's an after hours announcement, so no chance to get out if the thing beats in a huge way.
In totally unrelated matters, I touched base with Mr fff
jog on
duc
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The Fly, the Mini Me of the trading world has found his OG villain 
I enjoy Mr The Fly rants, and there are always some gems in his quotes
More trading than trending but instructive
I enjoy Mr The Fly rants, and there are always some gems in his quotes
More trading than trending but instructive
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Backtesting: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4897573
All waiting on Godot.
jog on
duc
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So the NVDA results are out:
So I'll put in an order at $100. Not sure if it will panic trade that low as stops are hit or even if it continues lower.
I'm sure there will be BTD buyers out there nice and early, but they will get steamrollered more than likely. Let the dust settle first. It's a massively traded stock and there are always bag-holders. The vol. will be high at the open, that's where I may get a random fill as orders will be all over the place.
The SMCI issue could further spook markets and NVDA when it opens. Memories of dot.com.
The only way to get a chance at a fill, at a price that you like, is to sit overnight with an order. I cannot be arsed to get up or sit up to the open, I have a busy day tomorrow. I'll see what it looks like (if not filled) at about 4am NZ time.
jog on
duc
So I'll put in an order at $100. Not sure if it will panic trade that low as stops are hit or even if it continues lower.
I'm sure there will be BTD buyers out there nice and early, but they will get steamrollered more than likely. Let the dust settle first. It's a massively traded stock and there are always bag-holders. The vol. will be high at the open, that's where I may get a random fill as orders will be all over the place.
The SMCI issue could further spook markets and NVDA when it opens. Memories of dot.com.
The only way to get a chance at a fill, at a price that you like, is to sit overnight with an order. I cannot be arsed to get up or sit up to the open, I have a busy day tomorrow. I'll see what it looks like (if not filled) at about 4am NZ time.
jog on
duc
Last edited:
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i will be watching closely , i have my eye on a China-focused ETF that MIGHT be smashed in a tech-wreck' contagion
good luck
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Well this is a bit boring. Thought there would be more excitement.
In the UST market the Treasury has been:
- Shifting a larger portion of issuance of new debt to short-term Treasury bills, instead of longer-term notes and bonds, thereby increasing the proportion of T-bills outstanding.
- Buying back older longer-term Treasury securities with the proceeds from issuing new Treasury securities, so essentially replacing old securities with new securities, which doesn’t involve money creation and is not QE, but a swap of securities. It does put a big regular buyer into the harder-to-trade end of the bond market.
Which seeks to lower rates at the long end of the curve, which includes mortgages etc. This has become necessary because China and others are no longer buying UST 10yr in sufficient quantities to fund US spending.
By lowering 10yr rates, pressure is taken off of the Banks' underwater UST position improving their balance sheets. The banks are however locking in significant losses in selling their underwater bonds.
There is demand for 3mth Bills as they are almost cash.
The idea being that as the Fed cuts rates, so the rollover in new Bills reduces interest payments.
It works if inflation stays low.
They want cash.
Mr fff
Technically, looks very weak. I don't think this level holds. $100 is a good target.
The analysts don't think so: https://www.marketwatch.com/story/a...to-buy-the-dip-59cb2d16?mod=mw_rss_topstories
So I hold short.
jog on
duc
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The debt has ballooned at a mindboggling pace in recent years, and at the end of Q2 had reached $34.8 trillion. Since then, it has further ballooned to $35.3 trillion. This is what the government has to pay interest on.
The higher interest rates are filtering into the debt as old lower-interest-rate Treasury notes and bonds mature and are replaced with new Treasury securities that carry a higher interest rate.
Short-term Treasury bills have ballooned from $4 trillion a year ago to $6 trillion now, as the government has shifted issuance from longer-term notes and bonds to T-bills. Now, about 22% of the $27.8 trillion in marketable Treasury securities are T-bills, up from 16% a year ago.
Oil News:
Friday, August 30th, 2024
It's been a volatile week for oil markets, with Libya's oil blockade sending a supply shock through markets before traders refocused on concerns around Chinese demand. At the same time, Iraq has been ratcheting up pressure on Kurdish producers to cut output, and the US has released some constructive macroeconomic data. Early on Friday morning, oil prices had swung back into the red, with Brent trading at $78.54 and WTI below $75.
US Oil Major Eyes Permian Divestment. Seeking to focus on higher-growth assets, top US producer ExxonMobil (NYSE:XOM) is reportedly looking to sell some $1 billion worth of non-core assets in the Permian Basin, offering 14 asset groups of which 8 are currently operated by Exxon.
Libya’s Oil Output Falls as Fields Get Shut. More than half of Libya’s crude production, some 700,000 b/d, was offline by the end of this week after the eastern Benghazi government halted production at key fields such as Sharara, Sarir, Abu Attifel, and Amal and blocked most export terminals in the country.
US Midstream Giant Gets Even Bigger. US pipeline operator ONEOK (NYSE:OKE) said it would buy midstream assets across the country worth $5.9 billion from Global Infrastructure Partners, less than a year after it purchased Magellan Midstream for $19 billion, boosting its standing in the Permian.
Baghdad Calls For Kurdish Compliance. The federal Iraqi government has presented an ultimatum to Kurdistan’s Regional Government to reduce its crude production after market reports indicated output in the region is as high as 350,000 b/d, undermining Iraq’s commitments under the OPEC+ compensation plan.
Golden Pass LNG Asks for 3-Year Extension. The 18 mtpa Golden Pass LNG project, jointly developed by ExxonMobil (NYSE:XOM) and QatarEnergy, asked for a regulatory extension until November 2029 after its contractor Zachry Industrial filed for bankruptcy after a row over $2.4 billion in cost overruns.
Shell Seeks to Curb Exploration Spending. According to Reuters, UK-based energy major Shell (LON:SHEL) is considering cutting oil and gas exploration and development workforce by 20% after curbing investment in renewables and low-carbon businesses, eyeing cost reductions of $2-3 billion.
Red Sea Insurance Surges on Sinking Tanker. After Houthis attacked the Greek-flagged Sounion tanker in the Red Sea last week, still leaking into the sea, the cost of additional war risk insurance for ships sailing through the Red Sea more than doubled to 1% of the vessel’s value from 0.4% before the attack.
China Maximizes Summer Coal Production. Despite much more robust hydro and solar generation this year, China has boosted its coal production to all-time highs as its July output reached 390 million tonnes, seeking to avoid blackouts at a period of peak air conditioning demand.
Baltimore Sues Shale Producers over Alleged Fixing. The city of Baltimore sued US shale oil producers Occidental, Hess, Pioneer, Diamondback, and others for conspiring to lower production and boost petroleum product prices even if most are not refiners, mostly stemming from the FTC’s Pioneer probe.
UK Will Not Defend Future Oil Projects. The UK government stated it would not defend its largest upcoming oil projects Rosebank and Jackdaw after Greenpeace won a Supreme Court case, seeking to overturn their development approvals on the grounds that emission impacts were not assessed properly.
Qatar Mulls Taking Over a German Refinery. Qatar is in talks with the German government over possibly purchasing Russian state oil firm Rosneft’s 54.17% stake in the Schwedt refinery that feeds the capital city Berlin, after Berlin put the assets under a government trusteeship two years ago.
White House Finalizes Solar Expansion Plan. The Biden administration said it had finalized a plan to accelerate the development of solar energy on 31 million acres in federal lands in 11 western states, eyeing high solar radiation and low conflicts with wildlife and plant habitats.
Drought Hinders European Navigation Again. Dry weather across Germany has led to low water levels in the River Rhine, preventing cargo vessels from sailing fully loaded and boosting freight rates as drought surcharges kicked in, but the impact is not expected to be as substantial as in 2022-2023.
So (below) from the Ritholtz crew:
Obviously mocking the drawing of the current chart over the historical chart.
Have they actually thought about the fundamentals underlying the two charts: are they similar also?
The answer is yes: both charts have as underlying fundamentals a sovereign debt crisis. The 1929 chart depicts the ongoing debt crisis and overhang from WWI debts that plagued Europe and spread to America.
Today, there is again a world debt crisis of some $350 Trillion and the US (as the above charts demonstrate) has major issues.
If the US defaults (direct default) would the charts look similar? Oh yes.
No-one actually expects a direct default. What is expected is a slow motion default (lots of inflation) to default over time, which is why buying Bonds is such a bad idea.
Stocks will likely fluctuate widely, but ending in real terms pretty much nowhere. Nominally we could be higher. Gold and real assets will appreciate in real terms.
Mr fff
So August is in the books:
So pretty good month for the bulls, but, warning signs ahead for September.
Another take on the 1929 thing:
From the standpoint of full-cycle investment prospects and risks, little has changed since July. Valuations remain near record extremes. Certain elements of market internals have improved somewhat despite a slight decline in the S&P 500 from its peak, but our key gauge remains in an unfavorable condition. While recent economic data have been comfortable, many reliable leading gauges remain just at the border that distinguishes expansion from recession (though we would need more evidence to expect a recession with confidence). Meanwhile, we see numerous stocks being taken behind the shed and clobbered by 10%-30% on earnings reports that are quite good but notch down guidance even slightly. When you see that behavior at extreme valuations, it tends to be a sign of underlying skittishness and risk aversion. When valuations are setting record extremes because the news can’t get any better, even a slightly less optimistic outlook becomes a risk.
As Jeremy Grantham observed a few months ago: “We have totally full employment, totally wonderful profit margins. All the things you would not want to start a bull market from. This is where you start bear markets from. Great bull markets start with exactly the opposite. You’ve got the peak P/E, so you feel wonderful, the stock market has gone up and up and up and up. So everyone feels great, and that’s how you get to a market peak. You feel great about everything. Of course, almost by definition. When do you start going down? You still feel great. You just don’t feel quite as great as you felt the day before.”
While the current level of the Federal funds rate remains consistent with systematic benchmarks that consider inflation, unemployment, real sales, economic slack, and other conditions, we do expect the Federal Reserve to cut interest rates beginning in September. Still, as I noted last month (see the section titled “Unfavorable internals dominate monetary easing, favorable internals amplify it”), even if one knew for certain that the Federal Reserve would cut interest rates over the coming 6-month period, that knowledge would not have historically justified taking a pre-emptive bullish position in the face of unfavorable internals.
As always, our investment discipline is to align our market outlook with measurable, observable market conditions. In 2021, with investors drowning in zero-interest Fed liquidity amounting to 36% of GDP, we abandoned the “ensemble methods” that embraced historically-reliable “limits” to speculation, and shifted greater emphasis to the uniformity and divergence of market internals, which since 1998 have proved to be our most reliable gauge of broad speculation versus risk-aversion.
Presently, I don’t expect a constructive shift in market internals, but as is always true, we can’t rule one out. Given current valuation extremes, any constructive shift would demand position limits and safety nets. A favorable shift in internals would not amount to a bullish “buy signal,” but it would increase our exposure to local market fluctuations without removing our defense against major downside risk. In any event, we’ll respond to market conditions as they shift. No forecasts or scenarios are required.
The chart below shows our most reliable gauge of market valuation, based on its correlation with actual subsequent 10-12 year S&P 500 total returns in market cycles across history. MarketCap/GVA is the ratio of market capitalization of U.S. nonfinancial companies to their gross-valued added, including our estimate of foreign revenues. The current level exceeds both the 1929 and 2000 market extremes.
I realize that any reference to 1929 is immediately dismissed as preposterous. On that point, I certainly don’t expect a market loss anywhere near what stocks experienced between 1929 and 1932. Rather, I think it’s useful to think of that 89% market loss as having two parts. The first initial loss of two-thirds of the market’s value restored historically run-of-the-mill valuations. Policy errors and bank failures then resulted in a loss of two-thirds of what remained. That’s how the market lost 89% of its value (1/3 x 1/3 – 1 = -89%). Presently, I view the first bit as more likely than the second.
The chart below shows a variant of a chart I’ve periodically shared. Here, the blue line is the estimated loss in the S&P 500 that would be needed for MarketCap/GVA to reach run-of-the-mill valuation norms historically associated with subsequent total returns averaging 10% annually. At present, that potential loss (not a forecast) is about -70%. The red shading shows the deepest actual percentage loss in the S&P 500 index over the subsequent 10-year period.
In practice, these losses often emerged in the first three years following a valuation extreme, but it’s essential to understand that valuations are not timing tools and can remain elevated for extended periods of time (which is why market internals are important as well). There’s often a good deal of “white space” between the blue potential and red actual market losses. This white space represents risk with no apparent consequence.
Clearly, more than a decade of zero-interest monetary policy, coupled with the recent exuberance surrounding mega-cap technology stocks, has deferred the full-cycle consequences of extreme valuations. Still, the deferral of consequences is not the same as the absence of consequences.
jog on
duc
The higher interest rates are filtering into the debt as old lower-interest-rate Treasury notes and bonds mature and are replaced with new Treasury securities that carry a higher interest rate.
Short-term Treasury bills have ballooned from $4 trillion a year ago to $6 trillion now, as the government has shifted issuance from longer-term notes and bonds to T-bills. Now, about 22% of the $27.8 trillion in marketable Treasury securities are T-bills, up from 16% a year ago.
Oil News:
Friday, August 30th, 2024
It's been a volatile week for oil markets, with Libya's oil blockade sending a supply shock through markets before traders refocused on concerns around Chinese demand. At the same time, Iraq has been ratcheting up pressure on Kurdish producers to cut output, and the US has released some constructive macroeconomic data. Early on Friday morning, oil prices had swung back into the red, with Brent trading at $78.54 and WTI below $75.
US Oil Major Eyes Permian Divestment. Seeking to focus on higher-growth assets, top US producer ExxonMobil (NYSE:XOM) is reportedly looking to sell some $1 billion worth of non-core assets in the Permian Basin, offering 14 asset groups of which 8 are currently operated by Exxon.
Libya’s Oil Output Falls as Fields Get Shut. More than half of Libya’s crude production, some 700,000 b/d, was offline by the end of this week after the eastern Benghazi government halted production at key fields such as Sharara, Sarir, Abu Attifel, and Amal and blocked most export terminals in the country.
US Midstream Giant Gets Even Bigger. US pipeline operator ONEOK (NYSE:OKE) said it would buy midstream assets across the country worth $5.9 billion from Global Infrastructure Partners, less than a year after it purchased Magellan Midstream for $19 billion, boosting its standing in the Permian.
Baghdad Calls For Kurdish Compliance. The federal Iraqi government has presented an ultimatum to Kurdistan’s Regional Government to reduce its crude production after market reports indicated output in the region is as high as 350,000 b/d, undermining Iraq’s commitments under the OPEC+ compensation plan.
Golden Pass LNG Asks for 3-Year Extension. The 18 mtpa Golden Pass LNG project, jointly developed by ExxonMobil (NYSE:XOM) and QatarEnergy, asked for a regulatory extension until November 2029 after its contractor Zachry Industrial filed for bankruptcy after a row over $2.4 billion in cost overruns.
Shell Seeks to Curb Exploration Spending. According to Reuters, UK-based energy major Shell (LON:SHEL) is considering cutting oil and gas exploration and development workforce by 20% after curbing investment in renewables and low-carbon businesses, eyeing cost reductions of $2-3 billion.
Red Sea Insurance Surges on Sinking Tanker. After Houthis attacked the Greek-flagged Sounion tanker in the Red Sea last week, still leaking into the sea, the cost of additional war risk insurance for ships sailing through the Red Sea more than doubled to 1% of the vessel’s value from 0.4% before the attack.
China Maximizes Summer Coal Production. Despite much more robust hydro and solar generation this year, China has boosted its coal production to all-time highs as its July output reached 390 million tonnes, seeking to avoid blackouts at a period of peak air conditioning demand.
Baltimore Sues Shale Producers over Alleged Fixing. The city of Baltimore sued US shale oil producers Occidental, Hess, Pioneer, Diamondback, and others for conspiring to lower production and boost petroleum product prices even if most are not refiners, mostly stemming from the FTC’s Pioneer probe.
UK Will Not Defend Future Oil Projects. The UK government stated it would not defend its largest upcoming oil projects Rosebank and Jackdaw after Greenpeace won a Supreme Court case, seeking to overturn their development approvals on the grounds that emission impacts were not assessed properly.
Qatar Mulls Taking Over a German Refinery. Qatar is in talks with the German government over possibly purchasing Russian state oil firm Rosneft’s 54.17% stake in the Schwedt refinery that feeds the capital city Berlin, after Berlin put the assets under a government trusteeship two years ago.
White House Finalizes Solar Expansion Plan. The Biden administration said it had finalized a plan to accelerate the development of solar energy on 31 million acres in federal lands in 11 western states, eyeing high solar radiation and low conflicts with wildlife and plant habitats.
Drought Hinders European Navigation Again. Dry weather across Germany has led to low water levels in the River Rhine, preventing cargo vessels from sailing fully loaded and boosting freight rates as drought surcharges kicked in, but the impact is not expected to be as substantial as in 2022-2023.
So (below) from the Ritholtz crew:
Obviously mocking the drawing of the current chart over the historical chart.
Have they actually thought about the fundamentals underlying the two charts: are they similar also?
The answer is yes: both charts have as underlying fundamentals a sovereign debt crisis. The 1929 chart depicts the ongoing debt crisis and overhang from WWI debts that plagued Europe and spread to America.
Today, there is again a world debt crisis of some $350 Trillion and the US (as the above charts demonstrate) has major issues.
If the US defaults (direct default) would the charts look similar? Oh yes.
No-one actually expects a direct default. What is expected is a slow motion default (lots of inflation) to default over time, which is why buying Bonds is such a bad idea.
Stocks will likely fluctuate widely, but ending in real terms pretty much nowhere. Nominally we could be higher. Gold and real assets will appreciate in real terms.
Mr fff
So August is in the books:
So pretty good month for the bulls, but, warning signs ahead for September.
Another take on the 1929 thing:
From the standpoint of full-cycle investment prospects and risks, little has changed since July. Valuations remain near record extremes. Certain elements of market internals have improved somewhat despite a slight decline in the S&P 500 from its peak, but our key gauge remains in an unfavorable condition. While recent economic data have been comfortable, many reliable leading gauges remain just at the border that distinguishes expansion from recession (though we would need more evidence to expect a recession with confidence). Meanwhile, we see numerous stocks being taken behind the shed and clobbered by 10%-30% on earnings reports that are quite good but notch down guidance even slightly. When you see that behavior at extreme valuations, it tends to be a sign of underlying skittishness and risk aversion. When valuations are setting record extremes because the news can’t get any better, even a slightly less optimistic outlook becomes a risk.
As Jeremy Grantham observed a few months ago: “We have totally full employment, totally wonderful profit margins. All the things you would not want to start a bull market from. This is where you start bear markets from. Great bull markets start with exactly the opposite. You’ve got the peak P/E, so you feel wonderful, the stock market has gone up and up and up and up. So everyone feels great, and that’s how you get to a market peak. You feel great about everything. Of course, almost by definition. When do you start going down? You still feel great. You just don’t feel quite as great as you felt the day before.”
While the current level of the Federal funds rate remains consistent with systematic benchmarks that consider inflation, unemployment, real sales, economic slack, and other conditions, we do expect the Federal Reserve to cut interest rates beginning in September. Still, as I noted last month (see the section titled “Unfavorable internals dominate monetary easing, favorable internals amplify it”), even if one knew for certain that the Federal Reserve would cut interest rates over the coming 6-month period, that knowledge would not have historically justified taking a pre-emptive bullish position in the face of unfavorable internals.
As always, our investment discipline is to align our market outlook with measurable, observable market conditions. In 2021, with investors drowning in zero-interest Fed liquidity amounting to 36% of GDP, we abandoned the “ensemble methods” that embraced historically-reliable “limits” to speculation, and shifted greater emphasis to the uniformity and divergence of market internals, which since 1998 have proved to be our most reliable gauge of broad speculation versus risk-aversion.
Presently, I don’t expect a constructive shift in market internals, but as is always true, we can’t rule one out. Given current valuation extremes, any constructive shift would demand position limits and safety nets. A favorable shift in internals would not amount to a bullish “buy signal,” but it would increase our exposure to local market fluctuations without removing our defense against major downside risk. In any event, we’ll respond to market conditions as they shift. No forecasts or scenarios are required.
The chart below shows our most reliable gauge of market valuation, based on its correlation with actual subsequent 10-12 year S&P 500 total returns in market cycles across history. MarketCap/GVA is the ratio of market capitalization of U.S. nonfinancial companies to their gross-valued added, including our estimate of foreign revenues. The current level exceeds both the 1929 and 2000 market extremes.
I realize that any reference to 1929 is immediately dismissed as preposterous. On that point, I certainly don’t expect a market loss anywhere near what stocks experienced between 1929 and 1932. Rather, I think it’s useful to think of that 89% market loss as having two parts. The first initial loss of two-thirds of the market’s value restored historically run-of-the-mill valuations. Policy errors and bank failures then resulted in a loss of two-thirds of what remained. That’s how the market lost 89% of its value (1/3 x 1/3 – 1 = -89%). Presently, I view the first bit as more likely than the second.
The chart below shows a variant of a chart I’ve periodically shared. Here, the blue line is the estimated loss in the S&P 500 that would be needed for MarketCap/GVA to reach run-of-the-mill valuation norms historically associated with subsequent total returns averaging 10% annually. At present, that potential loss (not a forecast) is about -70%. The red shading shows the deepest actual percentage loss in the S&P 500 index over the subsequent 10-year period.
In practice, these losses often emerged in the first three years following a valuation extreme, but it’s essential to understand that valuations are not timing tools and can remain elevated for extended periods of time (which is why market internals are important as well). There’s often a good deal of “white space” between the blue potential and red actual market losses. This white space represents risk with no apparent consequence.
Clearly, more than a decade of zero-interest monetary policy, coupled with the recent exuberance surrounding mega-cap technology stocks, has deferred the full-cycle consequences of extreme valuations. Still, the deferral of consequences is not the same as the absence of consequences.
jog on
duc
