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From DoubleLine:
Mathematically certain. 100%.
jog on
duc
Mathematically certain. 100%.
jog on
duc
Duc's Daily Dozen
- Thread starter ducati916
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is that the 'old maths' or the new maths where very low numbers of students are proficient ?
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Monday
This next set are important:
So +/- $21B in sales stabilised the Yuan.
But look what it did to the US Treasury market at the long end
It crushed the long end, pushing it up 80bp.
Which is why the TLT chart that I posted all week went down relentlessly.
China is an interesting phenomenon. It is a Mercantilist nation, that concurrently tries to protect its citizens from the worst effects of mercantilism. How? Individuals for 20+ years have been encouraged to save in gold.
When a mercantilist devalues its currency to build exports, usually the citizens are robbed. If however you hold your savings in gold, you are not robbed (as badly): only the cash that you hold for daily transactions (is) are devalued. Interesting.
So $21B collapsed the UST market. How much more does China hold in the UST war chest? Only another $3T +/-.
Who can last longer: the Fed or China?
Without a doubt, China.
jog on
duc
This next set are important:
So +/- $21B in sales stabilised the Yuan.
But look what it did to the US Treasury market at the long end
It crushed the long end, pushing it up 80bp.
Which is why the TLT chart that I posted all week went down relentlessly.
China is an interesting phenomenon. It is a Mercantilist nation, that concurrently tries to protect its citizens from the worst effects of mercantilism. How? Individuals for 20+ years have been encouraged to save in gold.
When a mercantilist devalues its currency to build exports, usually the citizens are robbed. If however you hold your savings in gold, you are not robbed (as badly): only the cash that you hold for daily transactions (is) are devalued. Interesting.
So $21B collapsed the UST market. How much more does China hold in the UST war chest? Only another $3T +/-.
Who can last longer: the Fed or China?
Without a doubt, China.
jog on
duc
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now what i see rarely discussed is the ( US ) Municipal Bonds China holds , how are they going ( i suspect several are struggling )
we already know some cities/counties are bankrupt , but are they a few or in reality dozens ( just too small to be worth a headline )
Garpal Gumnut
Ross Island Hotel
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I did read an article about this very matter within the last month but am unable to recollect where.
Perhaps google it divsie @divs4ever .
gg
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US oil major Chevron has counteracted Exxon’s acquisition of Pioneer Natural Resources by purchasing Hess Corp. in an all-stock deal, paying $171 per share for the US upstream firm.
- The fact that both Exxon and Chevron went for crude-focused oil producers with little exposure to renewable energy highlights the difference between US companies and their European peers, increasingly bearing the burden of higher ESG pressure and less profitable operations.
- Both Shell and BP, seeing their P/E ratios at almost half the levels of Exxon and Chevron, were believed to be big buyers in the E&P landscape, but now they’re left with little to no choice if they want to purchase a mid-tier established producer.
- In less than a month, the total value of M&A activity in the United States doubled from the H1 reading of $69.1 billion, with several more deals expected along the lines, such as the mooted Devon Energy-Marathon Oil deal or Chesapeake’s merger with Southwestern Energy.
Market Movers
- UK oil major BP (NYSE:BP) is considering selling its stake in the Yakaar-Teranga offshore natural gas field in Senegal, hailed as a huge gas find, saying it no longer aligns with its strategic objectives.
- US oil major ExxonMobil (NYSE:XOM) sold its 25% stake in Germany’s Miro refinery located in Karlsruhe to a largely unknown Austria-based midstream firm Alcmene for an undisclosed sum.
- Algeria’s national oil company Sonatrach took a different approach to carbon storage, pledging to invest $1 billion to plant 420 million trees over the next 10 years.
Tuesday, October 23, 2023
Crude prices have been fighting off the risk of a downward correction for several days now, with ICE Brent having fallen below the $90 per barrel mark. The prospect of more crude from Venezuela and higher US crude inventories has been ratcheting up pressure on the physical side, while the first signs of aid reaching Palestinians in Gaza appear to be eating away at the geopolitical risk premia baked into the flat price. Eurozone macroeconomic figures have been borderline recessionary, but it seems that there would need to be a string of bad news from the US or China for the oil markets to react.
Chevron Buys Hess in $53 Billion Megadeal. US oil major Chevron (NYSE:CVX) announced the purchase of Hess Energy (NYSE:HES) for $53 billion in stock, opening up ExxonMobil’s Guyana portfolio and bringing its total oil and gas production to 3.7 million b/d of oil equivalent.
Majors Declare Their Venezuela Interest. Oil companies are planning to return to sanctions-free Venezuela as soon as possible, with services major SLB (NYSE:SLB) already mobilizing resources whilst Brazilian firm Petrobras (NYSE
BR) is “seriously” considering upstream investments.
IEA Sees No Need for SPR Replenishment. The International Energy Agency believes the current level of oil storage in member states is enough to take action in case of supply disruptions, despite the agency’s total inventories shedding 182.7 million barrels over the course of 2022.
Qatar Clinches 27-Year Term Deal with ENI. Following recent deals with TotalEnergies and Shell, Qatar’s NOC QatarEnergy signed a 27-year term supply deal to deliver up to 1 million tonnes of LNG per year to the Tuscan port of Piombino from 2026, to be sourced from the North Field expansion.
Dependent on Imports, Japan Calls for More Oil. Completely dependent on oil imports, Japan has been urging Saudi Arabia and other OPEC members to bring back more crude supply into the global markets as high oil prices are taking a toll on its governments’ finances.
China Curbs Graphite Exports. In addition to its rare earth metal export curbs, China announced it would require export permits on graphite, a critical mineral for electric vehicles as almost all use it in their battery anodes, boosting prices as graphite is down 25% on the year at $540 per metric ton.
Conventional Drilling Soars in Canada. The Waseca formation in the eastern part of Canada’s Alberta province has become a hotspot for drillers as companies applied for 81 licenses to drill it this year, the biggest increase in any play, as conventional drilling saves on emissions and time.
EU Eyes Gas Price Caps into Winter. With Europe’s TTF prices still hovering above €50 per MWh ($17 per mmBtu), the European Union wants to extend its emergency price cap introduced in February 2023 amid fears of spikes on the back of sabotage in the Baltic Sea and the Israel-Palestine conflict.
Guyana-Exxon Standoff Gets More Evident. As Guyana increased its government take from oil production at the recently auctioned offshore acreage, the first competitively held lease in the country, ExxonMobil (NYSE:XOM) announced it would not sign the PSA in its current form.
Saudi Arabia Seals South Korea Storage Deal. Simultaneously to Saudi Aramco’s storage negotiations with India, South Korea’s KNOC signed a deal with Saudi Aramco (TADAWUL:2222) to store 5.3 million barrels of crude at its storage facility in Ulsan, to be used in force majeure events.
Argentina Elections Scare Off Markets. Argentina’s oil stocks have tumbled after the current economy minister Sergio Massa emerged as the frontrunner of the presidential ballot against Javier Milei, with YPF (NYSE:YPF) down 7% on Monday and Pampa Energia shedding 4% the same day.
Copper Keeps on Falling Amidst Meagre Demand. Prices of copper plunged to $7,850 per metric tonne this week, the lowest since November 2022, amidst spiking US Treasury yields foreshadowing manufacturing woes as well as rising stockpiles of the transition metal in LME-tracked warehouses.
Chinese Yuan Creeps into Oil Trade. China’s national oil and gas company PetroChina (SHA:601857) completed the oil market’s first cross-border transaction in Chinese yuan, settled through the Shanghai OGTC, buying a 1-million-barrel cargo from an undisclosed seller.
And yet, at 5% buyers stepped in:
LOL.
Now you know why he is known as flippe-floppe-flye!
As I prepare to leave for work:
jog on
duc
- The fact that both Exxon and Chevron went for crude-focused oil producers with little exposure to renewable energy highlights the difference between US companies and their European peers, increasingly bearing the burden of higher ESG pressure and less profitable operations.
- Both Shell and BP, seeing their P/E ratios at almost half the levels of Exxon and Chevron, were believed to be big buyers in the E&P landscape, but now they’re left with little to no choice if they want to purchase a mid-tier established producer.
- In less than a month, the total value of M&A activity in the United States doubled from the H1 reading of $69.1 billion, with several more deals expected along the lines, such as the mooted Devon Energy-Marathon Oil deal or Chesapeake’s merger with Southwestern Energy.
Market Movers
- UK oil major BP (NYSE:BP) is considering selling its stake in the Yakaar-Teranga offshore natural gas field in Senegal, hailed as a huge gas find, saying it no longer aligns with its strategic objectives.
- US oil major ExxonMobil (NYSE:XOM) sold its 25% stake in Germany’s Miro refinery located in Karlsruhe to a largely unknown Austria-based midstream firm Alcmene for an undisclosed sum.
- Algeria’s national oil company Sonatrach took a different approach to carbon storage, pledging to invest $1 billion to plant 420 million trees over the next 10 years.
Tuesday, October 23, 2023
Crude prices have been fighting off the risk of a downward correction for several days now, with ICE Brent having fallen below the $90 per barrel mark. The prospect of more crude from Venezuela and higher US crude inventories has been ratcheting up pressure on the physical side, while the first signs of aid reaching Palestinians in Gaza appear to be eating away at the geopolitical risk premia baked into the flat price. Eurozone macroeconomic figures have been borderline recessionary, but it seems that there would need to be a string of bad news from the US or China for the oil markets to react.
Chevron Buys Hess in $53 Billion Megadeal. US oil major Chevron (NYSE:CVX) announced the purchase of Hess Energy (NYSE:HES) for $53 billion in stock, opening up ExxonMobil’s Guyana portfolio and bringing its total oil and gas production to 3.7 million b/d of oil equivalent.
Majors Declare Their Venezuela Interest. Oil companies are planning to return to sanctions-free Venezuela as soon as possible, with services major SLB (NYSE:SLB) already mobilizing resources whilst Brazilian firm Petrobras (NYSE
BR) is “seriously” considering upstream investments.IEA Sees No Need for SPR Replenishment. The International Energy Agency believes the current level of oil storage in member states is enough to take action in case of supply disruptions, despite the agency’s total inventories shedding 182.7 million barrels over the course of 2022.
Qatar Clinches 27-Year Term Deal with ENI. Following recent deals with TotalEnergies and Shell, Qatar’s NOC QatarEnergy signed a 27-year term supply deal to deliver up to 1 million tonnes of LNG per year to the Tuscan port of Piombino from 2026, to be sourced from the North Field expansion.
Dependent on Imports, Japan Calls for More Oil. Completely dependent on oil imports, Japan has been urging Saudi Arabia and other OPEC members to bring back more crude supply into the global markets as high oil prices are taking a toll on its governments’ finances.
China Curbs Graphite Exports. In addition to its rare earth metal export curbs, China announced it would require export permits on graphite, a critical mineral for electric vehicles as almost all use it in their battery anodes, boosting prices as graphite is down 25% on the year at $540 per metric ton.
Conventional Drilling Soars in Canada. The Waseca formation in the eastern part of Canada’s Alberta province has become a hotspot for drillers as companies applied for 81 licenses to drill it this year, the biggest increase in any play, as conventional drilling saves on emissions and time.
EU Eyes Gas Price Caps into Winter. With Europe’s TTF prices still hovering above €50 per MWh ($17 per mmBtu), the European Union wants to extend its emergency price cap introduced in February 2023 amid fears of spikes on the back of sabotage in the Baltic Sea and the Israel-Palestine conflict.
Guyana-Exxon Standoff Gets More Evident. As Guyana increased its government take from oil production at the recently auctioned offshore acreage, the first competitively held lease in the country, ExxonMobil (NYSE:XOM) announced it would not sign the PSA in its current form.
Saudi Arabia Seals South Korea Storage Deal. Simultaneously to Saudi Aramco’s storage negotiations with India, South Korea’s KNOC signed a deal with Saudi Aramco (TADAWUL:2222) to store 5.3 million barrels of crude at its storage facility in Ulsan, to be used in force majeure events.
Argentina Elections Scare Off Markets. Argentina’s oil stocks have tumbled after the current economy minister Sergio Massa emerged as the frontrunner of the presidential ballot against Javier Milei, with YPF (NYSE:YPF) down 7% on Monday and Pampa Energia shedding 4% the same day.
Copper Keeps on Falling Amidst Meagre Demand. Prices of copper plunged to $7,850 per metric tonne this week, the lowest since November 2022, amidst spiking US Treasury yields foreshadowing manufacturing woes as well as rising stockpiles of the transition metal in LME-tracked warehouses.
Chinese Yuan Creeps into Oil Trade. China’s national oil and gas company PetroChina (SHA:601857) completed the oil market’s first cross-border transaction in Chinese yuan, settled through the Shanghai OGTC, buying a 1-million-barrel cargo from an undisclosed seller.
And yet, at 5% buyers stepped in:
LOL.
Now you know why he is known as flippe-floppe-flye!
As I prepare to leave for work:
jog on
duc
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Some crypto:
nextbigideaclub.com
www.wired.com
Music:
www.bloomberg.com
Unemployment as an issue driving markets:
The major issue driving returns for markets from unemployment are deficits.
Deficits rise into higher unemployment. The US already has a deficit problem. HUGE.
The last 3 recessions drove deficits by 6%, 8% and 12%.
They are highly correlated because the US is a financialized economy.
Higher interest rates + higher deficits = an acceleration in the timeline that the Fed has to throw in the towel and move to outright inflation, threatening the USD and tanking the UST market.
Not a good thing.
jog on
duc
Number Go Up: Inside Crypto's Wild Rise and Staggering Fall
Author Ben Goldfarb shares 5 key insights from his new book, Number Go Up: Inside Crypto's Wild Rise and Staggering Fall.
They Cracked the Code to a Locked USB Drive Worth $235 Million in Bitcoin. Then It Got Weird
Stefan Thomas lost the password to an encrypted USB drive holding 7,002 bitcoins. One team of hackers believes they can unlock it—if they can get Thomas to let them.
Music:
Springsteen Shows Private Equity Who's Boss
If you’re going to sell out, do it at the top of the market.
www.bloomberg.com
Unemployment as an issue driving markets:
The major issue driving returns for markets from unemployment are deficits.
Deficits rise into higher unemployment. The US already has a deficit problem. HUGE.
The last 3 recessions drove deficits by 6%, 8% and 12%.
They are highly correlated because the US is a financialized economy.
Higher interest rates + higher deficits = an acceleration in the timeline that the Fed has to throw in the towel and move to outright inflation, threatening the USD and tanking the UST market.
Not a good thing.
jog on
duc
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Currently USD slightly higher, but looking to go higher?
Definitely problems ahead if that happens. China defended the Yuan v USD, as will Japan and both have huge war chests of UST to sell. Last time China dumped a mere $21B and 30yr UST went up 80bp.
Another move like that takes the 30yr to +/- 6% yield. If that happens, the stock market will have some really bad days.
Meanwhile:
jog on
duc
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i note Market Watch ( behind a paywall ) has a positive article on the 7 year bond auction ( for $38 billion ) calling that auction 'solid '
given there is a bill trying to get through the House giving away $100 billion to two conflict areas , is MW really serious ?
meanwhile
finance.yahoo.com
given there is a bill trying to get through the House giving away $100 billion to two conflict areas , is MW really serious ?
meanwhile
The record-breaking crash in bonds is a threat to stock prices and American jobs. Here's everything you need to know about the Treasury-market turmoil.
The record-breaking crash in bonds is a threat to stock prices and American jobs. Here's everything you need to know about the Treasury-market turmoil.
Insider breaks down what you need to know about the bond-market meltdown, even if you've got no idea what a Treasury or a yield is.
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Yields Slide After Stellar 7Y Auction With Highest Bid-To-Cover Since March 2020
Yields Slide After Stellar 7Y Auction With Highest Bid-To-Cover Since March 2020 | ZeroHedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
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Friday, October 27th, 2023
Oil prices have been relatively rangebound this week, with ICE Brent trending between $88 and $90 per barrel, but the constant ebb and flow of geopolitical fears has created a seesaw pattern in day-to-day trading. US military airstrikes on Syrian territory lifted Brent above $90 per barrel again on Friday market before falling back slightly. Market watchers are now anticipating an Iranian retaliation and a potential escalation into the wider region as Israel begins raids into northern Gaza. Yet even with this, oil prices are set for the first week-on-week decline since early October.
ConocoPhillips Eyes Third M&A Megadeal of the Year. According to media reports, US oil major ConocoPhillips (NYSE:COP) is considering an offer for privately-owned shale producer CrownRock LP, a Permian Basin specialist, in a deal that is valued between $10 billion and $15 billion.
India’s ONGC Mulls Venezuela Return. India’s state-owned oil firm ONGC (NSE:ONGC) aims to recover some 500 million in dividends pending since 2014 for its stake in two Venezuelan projects it co-operates with PDVSA, the San Cristobal field and the Carabobo production area.
EU to Set Methane Limits on Gas Imports. The European Union proposed imposing methane emission limits on EU gas imports starting from 2030, potentially impacting suppliers with frequent methane leaks such as Algeria or even the United States.
Shell Scales Back Low-Carbon Shift Ambition. UK-based energy major Shell (LON:SHEL) is considering cutting 15% of its workforce at the low-carbon solutions division and phasing down its hydrogen plans as CEO Wael Sawan seeks to focus on much more profitable oil and gas projects.
Australia Billionaire to Derail Another Merger. Having stymied Albemarle’s (NYSE:ALB) takeover of Liontown Resources (ASX:LTR), Australian billionaire Gina Rinehart is now looking to block Chile’s lithium champion SQM (NYSE:SQM) from buying Azure Minerals (ASX:AZS) for $1 billion.
Chinese Coal Prices Plunge on High Imports. As China’s power generators ramped up imports and replenished coal stocks for the winter, prices for thermal coal at the Asian country’s key Qinhuangdao trading hub dropped below ¥1,000 per metric tonne ($137/mt), halting a month-long rally.
Saudi Aramco Doubles Down on Gas Projects. Saudi Arabia’s national oil company Saudi Aramco (TADAWUL:2222) signed a $2.4 billion deal with South Korea’s Hyundai to develop the second phase of the 200 TCf Jafurah gas field, the largest non-associated gas field in the Middle Eastern country.
White House to Curb Aviation’s Lead Emissions. The US Environmental Protection Agency seeks to phase out the usage of leaded aviation fuel used in piston-engine aircraft and accounting for 1% of the country’s total jet fuel demand, having confirmed its adverse effects on public health.
China Boosts Coalbed Methane Reserves. China’s national oil company CNOOC (HKG:0883) announced the discovery of the country’s largest deep coalbed methane field, with the Shenfu coal seem in Shaanxi province believed to have natural gas reserves of some 100 bcm.
Canada’s Teck Reiterates Restructuring Interest. Canada’s leading mining company Teck Resources (NYSE:TECK) said it was progressing expeditiously on the mulled split of its coal and copper businesses, promising a deal by end-2023 after twice rejecting Glencore’s (LON:GLEN) $22.5 billion bid.
Siemens Value Plunges on State Aid Talks. Stocks of Germany’s leading renewable energy developer Siemens Energy (ETR:ENR) plummeted by more than 35% on Thursday after it acknowledged that it is in talks with the German government about securing a $17 billion state guarantee to stay afloat.
Surprising No One, Guyana Finds Oil Again. The Lancetfish-2 appraisal well drilled by the ExxonMobil-led (NYSE:XOM) consortium in Guyana wielded another significant discovery of oil and gas, hitting a sandstone net pay of 81 meters and marking the 46th offshore discovery in the country since 2015.
Auditor Flags TMX Financing Problems. The Auditor General of Canada reported that the Trans Mountain Pipeline (TMX) might need more cash as it might exhaust its $11.6 billion credit facility over the upcoming months, just as the federally-owned pipeline aims for a launch in April 2024.
jog on
duc
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Full story: https://www.wsj.com/finance/investi...8h4rla86mxs&reflink=desktopwebshare_permalink
Think you have what it takes?
11 Things I Learned About Investing
You don’t become a great investor by reading about great investors. But it's Friday. Why not indulge a little?
alchemy.substack.com
Mechanical or discretionary?
why you shouldn't trust your gut
Have you ever heard of a math problem called the Birthday Paradox? I know, I know, there are probably few words in the English language that make you cringe more than the words "math" and "birthday", especially in the s...
Anyone actually believe that Friday's GDP report was actually a good thing?
US GDP growth is simply an increase in debt (deficit) spending.
The only way the US avoids an outright default, is a slow motion default via much higher levels of inflation. Given this dynamic, why the f**k would you want to own UST or USD? Or any fiat currency for that matter. Sure you have to hold some to pay the bills/tax etc. but after that, no thanks.
Stocks in an (hyper) inflation are denominated in the home currency. Not a good thing. They will rise, but are worth X in fiat currency. Not what I am looking for really. Two ETFs that pay you in gold or silver: PHYS and PSLV. Worth thinking about. If the fiat is still functional, then you have the ability to sell for currency.
We have the employment job numbers out this week on Friday. LOL. Of course it is.
Schedule for Week of October 29, 2023
Boo! The key report this week is the October employment report on Friday. Other key indicators include the Case-Shiller house prices for...
Now those numbers will be known to the 'big players'. Oh yes. Will they game those numbers? Of course.
Possibly a plunge to open on Monday and then trade up hard into Friday's numbers. Watch out for any high volume selling on Thursday, which could indicate horrible employment numbers.
Employment is the last shoe to drop before the market goes into 'recession' mode.
For those that have the book: 'Alchemy of Finance' by Soros, read Chap. 6 and 'Reagan's Imperial Circle'. The world markets are caught in this cycle, but with some serious differences, which are (again) playing out.
jog on
duc
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So Soros wrote:
"The large and growing US Budget deficit emerged as the unintended consequence of conflicting policy objectives. On one hand President Reagan sought to reduce the role of the Federal Government by reducing taxes; on the other, he wanted to assume a strong military posture in confronting what he considered the Communist menace." (pg. 115).
"Since the budget deficit had to be financed within the limits of strict money supply targets, interest rates rose to unprecedented heights. Instead of economic expansion, the conflict between fiscal and monetary policy brought on a severe recession." (pg. 116).
"The strong USD attracted imports which helped satisfy excess demand and keep down the price level. A self reinforcing process was set in motion in which a strong economy, a strong currency, a large budget deficit and a large trade deficit mutually reinforced each other to produce noninflationary growth. I have called this circular relationship Reagan's Imperial Circle." (pg. 117).
The 'difference' is the level of debt in the system. In the 1980's Debt/GDP = 30%+/-
Today Debt/GDP = 120%+/-
Japan was a key exporter to the US and held UST to finance the US deficits. As US deficits rose, so did UST interest rates which drove a strong USD. Eventually this strong USD had to be dealt with via the Plaza Accord (see later).
Japan a key player in the mid 1980's is today:
Going to be an issue. In the 1980's we had the Plaza Accord to deal with high interest rates driving a strong USD (in which oil was priced). All needed USD to buy oil and other commodities.
Today another tactic?
www.zerohedge.com
Today Japan will sell UST to buy USD to buy oil. This will drive the USD even higher, the complete opposite of what is actually required.
USD are increasingly hard (expensive) to obtain.
Reagan broke the Wage push cycle. Biden is strengthening it.
The employment numbers this Friday will not be 'terrible'. Rather, they will likely show the beginnings of trouble which will manifest into the new year. Q2 2024 will be when the recession becomes horribly obvious to all.
jog on
duc
"The large and growing US Budget deficit emerged as the unintended consequence of conflicting policy objectives. On one hand President Reagan sought to reduce the role of the Federal Government by reducing taxes; on the other, he wanted to assume a strong military posture in confronting what he considered the Communist menace." (pg. 115).
"Since the budget deficit had to be financed within the limits of strict money supply targets, interest rates rose to unprecedented heights. Instead of economic expansion, the conflict between fiscal and monetary policy brought on a severe recession." (pg. 116).
"The strong USD attracted imports which helped satisfy excess demand and keep down the price level. A self reinforcing process was set in motion in which a strong economy, a strong currency, a large budget deficit and a large trade deficit mutually reinforced each other to produce noninflationary growth. I have called this circular relationship Reagan's Imperial Circle." (pg. 117).
The 'difference' is the level of debt in the system. In the 1980's Debt/GDP = 30%+/-
Today Debt/GDP = 120%+/-
Japan was a key exporter to the US and held UST to finance the US deficits. As US deficits rose, so did UST interest rates which drove a strong USD. Eventually this strong USD had to be dealt with via the Plaza Accord (see later).
Japan a key player in the mid 1980's is today:
Going to be an issue. In the 1980's we had the Plaza Accord to deal with high interest rates driving a strong USD (in which oil was priced). All needed USD to buy oil and other commodities.
Today another tactic?
BOJ Has Greater Capacity To Surprise Than Treasury Or Fed | ZeroHedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
Today Japan will sell UST to buy USD to buy oil. This will drive the USD even higher, the complete opposite of what is actually required.
USD are increasingly hard (expensive) to obtain.
Reagan broke the Wage push cycle. Biden is strengthening it.
The employment numbers this Friday will not be 'terrible'. Rather, they will likely show the beginnings of trouble which will manifest into the new year. Q2 2024 will be when the recession becomes horribly obvious to all.
jog on
duc
Last edited:
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Oil:
www.phenomenalworld.org
www.phenomenalworld.org
www.vox.com
Uranium prices have soared in recent days to $74 per pound, a 50% increase in 2023 to date, as lower production guidance from Cameco and production disruptions in Niger added to worries about the world producing enough U308 to meet the industry’s growing needs.
- Global nuclear capacity currently consists of 440 nuclear reactors in 33 jurisdictions, however by 2030 there will be some 60 reactors more due to a vast build-up in Asian nuclear plants, lifting demand for mined uranium.
- As mines take years to produce at scale and breakeven costs for new mining projects in the West rose to $90 per pound, analysts expect the uranium market to see a supply shortage of some 60-70 million pounds.
- Several hedge funds – Terra Capital, Segra Capital, or Argonaut – have been ramping up their exposure to uranium stocks recently, buoyed by Cameco gaining more than 70% this year to date.
Market Movers
- UK oil major BP (NYSE:BP) is seeking to form joint ventures with US energy companies to ramp up natural gas production around its assets, eyeing the Haynesville gas basin and Eagle Ford for potential positions.
- Canada’s leading midstream firm TC Energy (TSE:TRP) is reportedly exploring asset sales worth several billion dollars to lower debt, working on the sale of a minority stake in the ANR pipeline.
- Bailed-out German utility giant Uniper (ETR:UN01) posted a $10.4 billion net profit in January-September, a sea change compared to the $45 billion loss in the same period in 2022.
Tuesday, October 31, 2023
Bearish sentiment around China's economy dropped away in recent months, but October's manufacturing activity data will undoubtedly bring back the issue of weaker Chinese demand to the global crude agenda. Surprising virtually everyone, China’s manufacturing PMI index dropped to 49.5 from 50.2 in September, whilst non-manufacturing PMI indicated a slowdown in services growth. With Brent trending around $88 per barrel, it seems it would take a serious escalation in the Middle East to send oil prices spiking.
BP Shares Drop After Lukewarm Q3 Result. Adversely impacted by a $540 million write-down on offshore wind projects in New York as well as weak natural gas results, BP (NYSE:BP) reported third-quarter earnings of $3.3 billion, missing analysts’ 4$ billion forecast and prompting a 5% share drop on Tuesday.
Venezuelan Refining Collapses. Just as Venezuela prepares to ramp up crude exports amidst a 6-month sanctions clearance, the country’s 955,000 b/d Paraguana refining complex saw the closure of two CDUs due to fires and lack of feedstock, lowering its utilization rate to as little as 10%.
Investors Start Shorting Crude Futures. Hedge funds and other money managers sold the equivalent of 14 million barrels in the six most important oil futures and options contracts in the week ending October 24, marking the fourth time in five weeks that funds were net sellers.
Chevron Settles Australia Labor Row. Workers at Chevron’s (NYSE:CVX) Wheatstone and Gorgon LNG terminals have endorsed a new trade union-backed pay deal brokered by Australia’s Fair Work Commission, eliminating the risk of further strikes this year to Europe’s great relief.
China Braces for Peak Winter Power Usage. China’s National Energy Administration has warned that the country’s maximum power demand this winter might increase by 140 GW or 12% from last year’s 1,159 GW peak, warning of potential power shortages in Yunnan and Inner Mongolia.
FERC Approves Venture Global LNG Launch. The US Federal Energy Regulatory Commission approved a revised commissioning plan for the Calcasieu Pass LNG facility that has not yet seen full operation, arguing that 3 processing trains can be turned on while work on others continues.
Germany Courts Nigeria for More Gas. With Chancellor Olaf Scholz visiting Nigeria, Germany has been expressing its readiness to invest in natural gas projects in the African country, with Berlin nudging German companies to consider funding pipeline projects and new LNG capacity.
Exxon Wants to Expand Guyana Clout. An Exxon-led consortium bid on the 1,707 km2 S8 shallow water block in Guyana’s first-ever competitive auction, seeking to expand its acreage in the country and joining ranks with a TotalEnergies-QatarEnergy-Petronas consortium that bid for the S4 block.
Mexico Keeps on Subsidizing Pemex. Mexico’s government statistics show that national oil company Pemex received $3.2 billion in October alone, via cash injections and tax cuts, to keep the company afloat, on top of a hefty $5.8 billion in aid received last month to launch the Dos Bocas refinery.
Panama’s Protests Halt Copper Mining. As widespread protests continue to rattle the streets of Panama, the country’s government pledged to reject all new mining projects in the country but keep First Quantum’s Cobre Panama deal extension intact, accounting for 5% of Panama’s GDP currently.
Israel Fast-Tracks New Exploration Deals. Israel’s Energy Ministry awarded 12 offshore exploration licenses to six companies including the BP-Socar-NewMed consortium that will appraise areas to the north of the Leviathan gas field, whilst ENI (BIT:ENI) will explore waters west of the same field.
Argentina Threatens to Cut Oil Exports. Confronted with persistent fuel shortages that spiraled out of control ahead of Argentina’s second round of presidential elections, Economy Minister Sergio Massa warned the country might suspend exports of crude oil if fuel supply doesn’t normalize.
China Doubles Down on Offshore Production. Simultaneously to CNOOC’s (HKG:0883) lifting of its 2023 capex budget to $12.2 billion, China’s state-owned oil firm launched the Penglai 19-3 oil field in the country’s Bohai Sea, in tandem with ConocoPhillips (NYSE:COP) that owns 49% of the project.
I hold DNN.
Treasury figures:
I'll be at work by the time that is released to the market so might miss any volatility.
The general feel is no more rate hikes. The far bigger number this week will be the employment numbers. They need to be rock solid or else the market will start to panic and sell-off. I would expect to see a continued weakening in them.
Off to work.
jog on
duc
Oil and Politics in the Mid-Transition | The Polycrisis
Adam Tooze, Amy Jaffe, Alex Turnbull, William Oman, and Morgan Bazilian on the geopolitics of a transitioning global energy system.
www.phenomenalworld.org
The Oil Revolution | Duccio Basosi and Giuliano Garavini
The myths and realities of the oil price shock of 1973
www.phenomenalworld.org
Why more fossil fuel workers aren’t joining the clean energy revolution
The auto industry strike is the latest tension point between the energy transition and workers who could lose their jobs.
www.vox.com
Uranium prices have soared in recent days to $74 per pound, a 50% increase in 2023 to date, as lower production guidance from Cameco and production disruptions in Niger added to worries about the world producing enough U308 to meet the industry’s growing needs.
- Global nuclear capacity currently consists of 440 nuclear reactors in 33 jurisdictions, however by 2030 there will be some 60 reactors more due to a vast build-up in Asian nuclear plants, lifting demand for mined uranium.
- As mines take years to produce at scale and breakeven costs for new mining projects in the West rose to $90 per pound, analysts expect the uranium market to see a supply shortage of some 60-70 million pounds.
- Several hedge funds – Terra Capital, Segra Capital, or Argonaut – have been ramping up their exposure to uranium stocks recently, buoyed by Cameco gaining more than 70% this year to date.
Market Movers
- UK oil major BP (NYSE:BP) is seeking to form joint ventures with US energy companies to ramp up natural gas production around its assets, eyeing the Haynesville gas basin and Eagle Ford for potential positions.
- Canada’s leading midstream firm TC Energy (TSE:TRP) is reportedly exploring asset sales worth several billion dollars to lower debt, working on the sale of a minority stake in the ANR pipeline.
- Bailed-out German utility giant Uniper (ETR:UN01) posted a $10.4 billion net profit in January-September, a sea change compared to the $45 billion loss in the same period in 2022.
Tuesday, October 31, 2023
Bearish sentiment around China's economy dropped away in recent months, but October's manufacturing activity data will undoubtedly bring back the issue of weaker Chinese demand to the global crude agenda. Surprising virtually everyone, China’s manufacturing PMI index dropped to 49.5 from 50.2 in September, whilst non-manufacturing PMI indicated a slowdown in services growth. With Brent trending around $88 per barrel, it seems it would take a serious escalation in the Middle East to send oil prices spiking.
BP Shares Drop After Lukewarm Q3 Result. Adversely impacted by a $540 million write-down on offshore wind projects in New York as well as weak natural gas results, BP (NYSE:BP) reported third-quarter earnings of $3.3 billion, missing analysts’ 4$ billion forecast and prompting a 5% share drop on Tuesday.
Venezuelan Refining Collapses. Just as Venezuela prepares to ramp up crude exports amidst a 6-month sanctions clearance, the country’s 955,000 b/d Paraguana refining complex saw the closure of two CDUs due to fires and lack of feedstock, lowering its utilization rate to as little as 10%.
Investors Start Shorting Crude Futures. Hedge funds and other money managers sold the equivalent of 14 million barrels in the six most important oil futures and options contracts in the week ending October 24, marking the fourth time in five weeks that funds were net sellers.
Chevron Settles Australia Labor Row. Workers at Chevron’s (NYSE:CVX) Wheatstone and Gorgon LNG terminals have endorsed a new trade union-backed pay deal brokered by Australia’s Fair Work Commission, eliminating the risk of further strikes this year to Europe’s great relief.
China Braces for Peak Winter Power Usage. China’s National Energy Administration has warned that the country’s maximum power demand this winter might increase by 140 GW or 12% from last year’s 1,159 GW peak, warning of potential power shortages in Yunnan and Inner Mongolia.
FERC Approves Venture Global LNG Launch. The US Federal Energy Regulatory Commission approved a revised commissioning plan for the Calcasieu Pass LNG facility that has not yet seen full operation, arguing that 3 processing trains can be turned on while work on others continues.
Germany Courts Nigeria for More Gas. With Chancellor Olaf Scholz visiting Nigeria, Germany has been expressing its readiness to invest in natural gas projects in the African country, with Berlin nudging German companies to consider funding pipeline projects and new LNG capacity.
Exxon Wants to Expand Guyana Clout. An Exxon-led consortium bid on the 1,707 km2 S8 shallow water block in Guyana’s first-ever competitive auction, seeking to expand its acreage in the country and joining ranks with a TotalEnergies-QatarEnergy-Petronas consortium that bid for the S4 block.
Mexico Keeps on Subsidizing Pemex. Mexico’s government statistics show that national oil company Pemex received $3.2 billion in October alone, via cash injections and tax cuts, to keep the company afloat, on top of a hefty $5.8 billion in aid received last month to launch the Dos Bocas refinery.
Panama’s Protests Halt Copper Mining. As widespread protests continue to rattle the streets of Panama, the country’s government pledged to reject all new mining projects in the country but keep First Quantum’s Cobre Panama deal extension intact, accounting for 5% of Panama’s GDP currently.
Israel Fast-Tracks New Exploration Deals. Israel’s Energy Ministry awarded 12 offshore exploration licenses to six companies including the BP-Socar-NewMed consortium that will appraise areas to the north of the Leviathan gas field, whilst ENI (BIT:ENI) will explore waters west of the same field.
Argentina Threatens to Cut Oil Exports. Confronted with persistent fuel shortages that spiraled out of control ahead of Argentina’s second round of presidential elections, Economy Minister Sergio Massa warned the country might suspend exports of crude oil if fuel supply doesn’t normalize.
China Doubles Down on Offshore Production. Simultaneously to CNOOC’s (HKG:0883) lifting of its 2023 capex budget to $12.2 billion, China’s state-owned oil firm launched the Penglai 19-3 oil field in the country’s Bohai Sea, in tandem with ConocoPhillips (NYSE:COP) that owns 49% of the project.
I hold DNN.
Treasury figures:
I'll be at work by the time that is released to the market so might miss any volatility.
The general feel is no more rate hikes. The far bigger number this week will be the employment numbers. They need to be rock solid or else the market will start to panic and sell-off. I would expect to see a continued weakening in them.
Off to work.
jog on
duc
Sean K
Moderator
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- 21 April 2006
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- 22,017
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But, #BlackOutBowen says nuclear is the most expensive form of energy?
- Joined
- 8 June 2008
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- 18,064
it is by far, well of course not as expensive as solar or wind farm plus batteries....
- Joined
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Crypto:
www.coindesk.com
The original White Paper:
https://www.ussc.gov/sites/default/...seminar/2018/Emerging_Tech_Bitcoin_Crypto.pdf
The fun stuff with Mr flippe-floppe-flye:
Now the serious stuff:
That is certainly the mainstream view. More broadly it is now starting to be understood just how serious a quandary the Fed has placed itself.
The above comes from: https://ritholtz.com/2023/11/the-fed-is-finished/
This chap is pretty much a perma-bull due to his business interests as a financial advisory firm. What is less recognised is that the Fed is leading the financial war being waged against Russia & China. This war is real and is being waged in deadly earnest. High interest rates are central to that war. The Fed, Treasury both are thinking of Soros and his Imperial Circle.
The difficulty and why this tactic is failing is Debt/GDP = 120%, Trade deficit = 6%/GDP and NIIP = (-65%).
Inflation is creeping higher again on CORE. What does CORE actually measure with Energy, Food and Shelter all removed? Who the fu*k knows, but it's still moving higher. Therefore is it 100% no more hikes? We'll find out at 2pm.
The point is: who cares? It makes no difference either way.
jog on
duc
On Bitcoin White Paper's 15th Anniversary, Wall Street Threatens to Swallow Its One-Time Challenger
The titans of finance are increasingly driving a space that, to many, was designed to put them out of business.
The original White Paper:
https://www.ussc.gov/sites/default/...seminar/2018/Emerging_Tech_Bitcoin_Crypto.pdf
The fun stuff with Mr flippe-floppe-flye:
Now the serious stuff:
That is certainly the mainstream view. More broadly it is now starting to be understood just how serious a quandary the Fed has placed itself.
The above comes from: https://ritholtz.com/2023/11/the-fed-is-finished/
This chap is pretty much a perma-bull due to his business interests as a financial advisory firm. What is less recognised is that the Fed is leading the financial war being waged against Russia & China. This war is real and is being waged in deadly earnest. High interest rates are central to that war. The Fed, Treasury both are thinking of Soros and his Imperial Circle.
The difficulty and why this tactic is failing is Debt/GDP = 120%, Trade deficit = 6%/GDP and NIIP = (-65%).
Inflation is creeping higher again on CORE. What does CORE actually measure with Energy, Food and Shelter all removed? Who the fu*k knows, but it's still moving higher. Therefore is it 100% no more hikes? We'll find out at 2pm.
The point is: who cares? It makes no difference either way.
jog on
duc
- Joined
- 13 February 2006
- Posts
- 4,995
- Reactions
- 11,213
Fun with Mr flippe-floppe-flye:
The serious stuff:
Global liquidity is contracting. At a significant pace. Low liquidity means big trouble.
Meanwhile stocks are having a good day/week.
Tomorrow we have the employment data. It needs to be good.
The big boys already have the data. Look for a sell-off at the close if it's likely to be bad. Strong into the close if the numbers are still pretty good.
jog on
duc
The serious stuff:
Global liquidity is contracting. At a significant pace. Low liquidity means big trouble.
Meanwhile stocks are having a good day/week.
Tomorrow we have the employment data. It needs to be good.
The big boys already have the data. Look for a sell-off at the close if it's likely to be bad. Strong into the close if the numbers are still pretty good.
jog on
duc
Sean K
Moderator
- Joined
- 21 April 2006
- Posts
- 22,017
- Reactions
- 11,000
Was the twelve? I think you owe us a couple more.
- Joined
- 13 February 2006
- Posts
- 4,995
- Reactions
- 11,213
Oil News:
Friday, November 3rd, 2023
Sometimes no action is the best action. That was certainly the case for oil markets this week when it came to interest rate hikes. After falling for three straight days, oil prices received some much-needed support from federal banks. With neither the Federal Reserve nor the Bank of England hiking interest rates this week, Brent jumped back to $87 per barrel, buoyed by the prospect of hitting peak monetary tightening.
US Oil Production Hits All-Time High. Crude and condensate production in the US climbed to a record 13.1 million b/d in August, surpassing the previous 13.0 million b/d record from November 2019, with EIA reporting a 955,000 b/d year-on-year surge in production from the Lower 48 states.
EU Prepares 12th Russia Sanctions Package. The European Union is in talks to adopt a 12th round of sanctions against Russia, potentially imposing restrictions on welding machines, chemicals, military technologies, and diamonds, targeting some $5.3 billion in trade but steering clear of oil.
Senators Call for US Megadeal Probe. US Senate Majority Leader Charles Schumer and 22 other Democratic senators called on the US Federal Trade Commission to investigate the Exxon-Pioneer and Chevron-Hess deals, claiming they could lead to higher retail prices for customers.
White House Sanctions Myanmar’s Oil. The US Treasury Department imposed sanctions on Myanma Oil and Gas Enterprise, Myanmar’s national oil company, banning US entities from providing financing and other services, however stopped short of including MOGE from its SDN list.
Pope to Attend COP28 Climate Summit. As the United Arab Emirates ratchet up support for the COP28 climate conference starting next month in Dubai, Pope Francis vowed to attend the summit, saying that a failure to set stringent emissions-cutting targets would be a “great disappointment”.
BP Laments US Wind Sector Is “Broken”. After this week’s Orsted mooted write-down of $5.6 billion, the renewables boss of BP said the US offshore wind market is fundamentally broken as power purchase agreements don’t reflect current prices and lack inflationary adjustment mechanisms.
China Eyes Russian Upstream Projects. China’s state oil company CNPC (HKG:0857) indicated it is in talks with Russia’s Rosneft, Gazprom, and Novatek to jointly develop oil and gas fields, as well as getting into new midstream opportunities such as building a new gas pipeline from Sakhalin.
Iran Boasts of Rising Production. Iran’s oil minister Javad Owji said the Middle Eastern country has increased its crude production to 3.4 million b/d and expects output to grow further over the upcoming months, marking a 100,000 b/d increase since the minister’s previous estimate in August.
Vitol Takes Over Uganda Oil Supply. Uganda’s Energy Minister Ruth Nankabirwa announced the African country would hand over exclusive rights for the supply of all petroleum products to global energy trader Vitol, with 2022 central bank data pegging the deal’s worth at an annual $1.6 billion.
After Europe, US Starts to Shut Zinc Plants. Netherlands-based smelting giant Nyrstar (EBR:NYR) plans to temporarily close two zinc mines in the US state of Tennessee, a third shutdown of zinc operations in the country in recent months, citing weak prices and the impact of inflation.
Nigerian Refinery Readies for 2024 Start. Nigeria’s state-owned oil firm NNPC will supply the 650,000 b/d Dangote mega refinery with up to six cargoes of crude in December, to be used in preliminary test runs, as the African country eyes eliminating its dependence on imported fuels.
Canadian Crudes Suffer from TMX Delays. Delays in the commissioning of Canada’s Trans Mountain pipeline just as the country’s producers are ramping up production have been squeezing WCS differentials, with the Canadian grade falling to a $27 per barrel discount to WTI, the lowest in 2023.
Suriname Drilling Keeps Apace with Guyana. Malaysia’s state oil company Petronas discovered several oil-bearing layers offshore Suriname with its recently spudded Roystonea-1 exploration well, located in the same Block 52 that saw a natural gas discovery back in 2020.
The jobs number is bad set to get worse.
The stock market, following the bond market (up), following USD (down), is thinking all will be fine.
The USD down is critical to slow selling UST by Japan et al. The issue is: will POO remain with an 8-handle? LOL. If POO goes 9-handle into 10-handle, that UST selling will return quickly. This will also drive inflation higher. Not CORE because energy is excluded. LOL.
The employment issue is an issue because high unemployment drives increased deficits while concurrently reducing tax receipts. This is the last thing the fiscal situation needs. It will drive inflation higher.
The Yen issue was flagged way back in May this year. It should not be a surprise:
Japan has been (no longer) a huge purchaser of UST. Japan are now sellers of UST.
Who is buying the dip?
Well it's not Japan, China or the Arabs.
It is those now 'expecting' the Fed to reverse rates on the weak employment data that will get weaker as we head into Q2 2024 driving a recession.
The Fed will have to reverse rates at some point, the deficits are going to grow and at a 5% rate, the compounding effect will leave no private balance sheets with the capacity to soak it all up. The buyer of last resort, the Fed will shift to outright monetization.
Inflation will explode.
The indices are only moving higher on a very small number of mega-caps. Inflation hurts most. Bear market rallies are explosive. They are difficult to time well.
jog on
duc
Friday, November 3rd, 2023
Sometimes no action is the best action. That was certainly the case for oil markets this week when it came to interest rate hikes. After falling for three straight days, oil prices received some much-needed support from federal banks. With neither the Federal Reserve nor the Bank of England hiking interest rates this week, Brent jumped back to $87 per barrel, buoyed by the prospect of hitting peak monetary tightening.
US Oil Production Hits All-Time High. Crude and condensate production in the US climbed to a record 13.1 million b/d in August, surpassing the previous 13.0 million b/d record from November 2019, with EIA reporting a 955,000 b/d year-on-year surge in production from the Lower 48 states.
EU Prepares 12th Russia Sanctions Package. The European Union is in talks to adopt a 12th round of sanctions against Russia, potentially imposing restrictions on welding machines, chemicals, military technologies, and diamonds, targeting some $5.3 billion in trade but steering clear of oil.
Senators Call for US Megadeal Probe. US Senate Majority Leader Charles Schumer and 22 other Democratic senators called on the US Federal Trade Commission to investigate the Exxon-Pioneer and Chevron-Hess deals, claiming they could lead to higher retail prices for customers.
White House Sanctions Myanmar’s Oil. The US Treasury Department imposed sanctions on Myanma Oil and Gas Enterprise, Myanmar’s national oil company, banning US entities from providing financing and other services, however stopped short of including MOGE from its SDN list.
Pope to Attend COP28 Climate Summit. As the United Arab Emirates ratchet up support for the COP28 climate conference starting next month in Dubai, Pope Francis vowed to attend the summit, saying that a failure to set stringent emissions-cutting targets would be a “great disappointment”.
BP Laments US Wind Sector Is “Broken”. After this week’s Orsted mooted write-down of $5.6 billion, the renewables boss of BP said the US offshore wind market is fundamentally broken as power purchase agreements don’t reflect current prices and lack inflationary adjustment mechanisms.
China Eyes Russian Upstream Projects. China’s state oil company CNPC (HKG:0857) indicated it is in talks with Russia’s Rosneft, Gazprom, and Novatek to jointly develop oil and gas fields, as well as getting into new midstream opportunities such as building a new gas pipeline from Sakhalin.
Iran Boasts of Rising Production. Iran’s oil minister Javad Owji said the Middle Eastern country has increased its crude production to 3.4 million b/d and expects output to grow further over the upcoming months, marking a 100,000 b/d increase since the minister’s previous estimate in August.
Vitol Takes Over Uganda Oil Supply. Uganda’s Energy Minister Ruth Nankabirwa announced the African country would hand over exclusive rights for the supply of all petroleum products to global energy trader Vitol, with 2022 central bank data pegging the deal’s worth at an annual $1.6 billion.
After Europe, US Starts to Shut Zinc Plants. Netherlands-based smelting giant Nyrstar (EBR:NYR) plans to temporarily close two zinc mines in the US state of Tennessee, a third shutdown of zinc operations in the country in recent months, citing weak prices and the impact of inflation.
Nigerian Refinery Readies for 2024 Start. Nigeria’s state-owned oil firm NNPC will supply the 650,000 b/d Dangote mega refinery with up to six cargoes of crude in December, to be used in preliminary test runs, as the African country eyes eliminating its dependence on imported fuels.
Canadian Crudes Suffer from TMX Delays. Delays in the commissioning of Canada’s Trans Mountain pipeline just as the country’s producers are ramping up production have been squeezing WCS differentials, with the Canadian grade falling to a $27 per barrel discount to WTI, the lowest in 2023.
Suriname Drilling Keeps Apace with Guyana. Malaysia’s state oil company Petronas discovered several oil-bearing layers offshore Suriname with its recently spudded Roystonea-1 exploration well, located in the same Block 52 that saw a natural gas discovery back in 2020.
The jobs number is bad set to get worse.
The stock market, following the bond market (up), following USD (down), is thinking all will be fine.
The USD down is critical to slow selling UST by Japan et al. The issue is: will POO remain with an 8-handle? LOL. If POO goes 9-handle into 10-handle, that UST selling will return quickly. This will also drive inflation higher. Not CORE because energy is excluded. LOL.
The employment issue is an issue because high unemployment drives increased deficits while concurrently reducing tax receipts. This is the last thing the fiscal situation needs. It will drive inflation higher.
The Yen issue was flagged way back in May this year. It should not be a surprise:
Japan has been (no longer) a huge purchaser of UST. Japan are now sellers of UST.
Who is buying the dip?
Well it's not Japan, China or the Arabs.
It is those now 'expecting' the Fed to reverse rates on the weak employment data that will get weaker as we head into Q2 2024 driving a recession.
The Fed will have to reverse rates at some point, the deficits are going to grow and at a 5% rate, the compounding effect will leave no private balance sheets with the capacity to soak it all up. The buyer of last resort, the Fed will shift to outright monetization.
Inflation will explode.
The indices are only moving higher on a very small number of mega-caps. Inflation hurts most. Bear market rallies are explosive. They are difficult to time well.
jog on
duc
