Economic implications of a SARS/Coronavirus outbreak

over9k said:

American oil supply is a non-subject. Like I said, they're actually now net exporters of oil.

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At the moment true although the US government's forecasts don't expect the situation to persist.

Selected data as follows for 2020:
Crude oil net imports = 2.75 mmbpd
Product net imports = -3.36 mmpbd
So a net export of 0.61 mmbpd

Forecast for 2021:
Crude oil net imports = 4.12 mmbpd
Product net imports = -3.37 mmbpd
So a net import of 0.75 mmbpd

Not a major level of import but a net importer nonetheless is what they're forecasting.

On the US domestic production side, for 2019, 2020, 2021 (all figures in million barrels per day):
US Domestic crude oil production: 12.25, 11.34, 11.10
Refinery processing gain = 1.07, 0.95, 1.07
Natural gas plant liquids = 4.82, 5.10, 5.27
Renewables and oxygenates = 1.12, 0.99, 1.08

So basically crude oil is trending down, natural gas liquids (condensate and LPG) is trending up on the domestic production side.

A particular complication with all US petroleum supply and consumption data is the US practice of including things which aren't oil, namely biofuels. My point there isn't to argue for or against the use of biofuels but simply that they are not oil. So if the aim is to count only actual oil then you need to take the biofuels out of the figures.

The original full data I'm quoting from is here: https://www.eia.gov/outlooks/steo/data/browser/#/?v=9

PS - In case anyone's wondering what "refinery processing gain" is, the short answer is that the density of petroleum products coming out of the refinery is, as a whole, lower than the density of the crude oil going in. So 1 barrel of crude oil yields more than 1 barrel of products. No laws of physics are being broken there, mass hasn't increased and nor has energy content, just lower density and thus greater volume brought about by some clever chemistry and the use of catalysts. Hence volume gain in processing needs to be counted in order to make the figures add up.

I'm not counting on them becoming importers again. Between the gulf of mexico, the canadian oil sands (which can only sell into canada and the U.S market due to simple economics) and fracking tech progress...

"Mutant" strain of the virus (lol) discovered in the U.K, hence the lockdowns and the markets all shitting themselves. All of europe's been massacred. Zoom's about the only thing into the green (and it's WELL into the green) premarket. Glad I held onto it. Also glad I kept some cash as it's time to deploy some cash as the moderna vaccine is going to be rolled out very soon.

Both the moderna & pfizer vaccines are the mRNA type that we were talking about earlier that can be easily modified/tweaked/whatever it's called to work on mutations of the virus too so it's not like we have to start the whole vaccine process again.

Here's how quick the reaction was, this is just sp500 futures and everything's followed the same trajectory so there's no need to post 10 graphs all showing the same thing:


And the talking heads are already saying to buy the dip:


I might sell zoom and buy the dip today. My zoom position's been my hedge against something like this happening. I can't see the "mutated" virus making it anywhere else as the U.K is an island and everyone's borders have been closed to them basically immediately. Flights are all grounded etc etc.

Related to all of this:

over9k said:

Here's how quick the reaction was, this is just sp500 futures and everything's followed the same trajectory so there's no need to post 10 graphs all showing the same thing:

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And the talking heads are already saying to buy the dip:
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I might sell zoom and buy the dip today. My zoom position's been my hedge against something like this happening. I can't see the "mutated" virus making it anywhere else as the U.K is an island and everyone's borders have been closed to them basically immediately. Flights are all grounded etc etc.

Related to all of this:

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The virus has been mutating from the start, there are now many strains, nothing new, and with age will necome more widesoread, more contagious and even less deadly than it is..a cold ultimately...
So i doubt this would be a real cause for a down day

It's the lockdowns etc that cause down days, hence why when the americans stopped using case numbers and instead started using hospitalistion numbers to dicktate lockdown policy I started posting the hospitalisation numbers rather than the virus numbers.

So far, we have london in tier 4 lockdown (which is a big one), all the flights out of the U.K grounded, basically all of europe has closed its borders to the U.K, and most of europe was already in a pretty decent lockdown as it is.

Ugh. Dicktate.

Dictate. It's dictate. And I can't edit the post now.

There you go. Told you the whole thing was a storm in a teacup. R2k futures were down nearly 4% at one point and then ended flat.

Stimulus is actually passed now too:



Back to normality tomorrow.

Trump's already said he'd sign it if it passed so the months-overdue package is now FINALLY on the way.

https://www.reuters.com/article/us-health-coronavirus-variant-idUSKBN28W1M8

Drug makers including BioNTech and Moderna are scrambling to test their COVID-19 vaccines against the new fast-spreading variant of the virus that is raging in Britain, the latest challenge in the breakneck race to curb the pandemic.

Moderna & pfizer can both mod theirs relatively easily apparently.

Real estate.

Offices:


Apartments:

Projections:

And debt riding on all of this:


"That damage has the potential to ripple far beyond building owners and their tenants. Commercial property underpins the tax base in many cities across the U.S., and a downturn could pummel local budgets".




"Unlike the last property market downturn, which was caused by excesses and exuberance in the financial markets, Covid-19 has upset real estate fundamentals by changing how we lead our lives.

Travel will be slow to come back, leaving millions of hotel rooms empty. Companies are already deciding they’ll need less office space than before, either because of staff cutbacks or because more of their employees will permanently work from home. And the rise of e-commerce—along with small business closures—will create a glut of retail space in a country that already had too much of it.

By one measure, about a billion hotel room nights will go unsold this year. Foot traffic on Black Friday, the traditional start of the holiday shopping season, plunged more than 70% at shopping malls as consumers bought Christmas gifts online, according to S&P Global. More than 100,000 restaurants are closed permanently or long-term".


Read the whole piece at https://www.bloomberg.com/graphics/...ocialflow-facebook-business&utm_medium=social



All I can say is that I think some of these projections are pretty bloody optimistic and moreover, are based on a pure guess of pent up demand vs human fear, neither of which anybody has the slightest clue how to quantify.

Quantitative projections of qualitative factors aren't worth the paper they're printed on.

over9k said:

https://www.reuters.com/article/us-health-coronavirus-variant-idUSKBN28W1M8

Drug makers including BioNTech and Moderna are scrambling to test their COVID-19 vaccines against the new fast-spreading variant of the virus that is raging in Britain, the latest challenge in the breakneck race to curb the pandemic.

Moderna & pfizer can both mod theirs relatively easily apparently.

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Even if they can, who is going to be vaccinated every 3 months for an hypothetical risk (90pc of people), not to mention the production and logistical nightmare of a vaccine which may not even work better than simple exposure.i did not use fake vaccine so the gestapo should leave us alone.
Sooner or later, the narrative will need to deflate, we can not push facts away forever, and then i thought what about QE since 2008..so maybe it is possible to live in a virtual made world, maybe Tesla is by far the biggest car maker, and biden won by a landslide, and taxing my fossil fuels usage will reduce chinese smokestacks.
It will be hard mentally but should we not play the market like headless chooks, jump on any trend like a maniac.be it BTC, zoom and EV,basically invest like a Kim k fan.
VERY very seriously,
is there a fund somewhere trying that: a kind of follow the trendie fund.
I am NOT kidding.
this is a serious question, just data analysis on twitter FB, headlines, find keywords and so detect ipo going that way?
Think about it...

over9k said:

Ok now for semiconductors, because we got some economic data that explains what's going on there.

I've mentioned quite a few times how semiconductors have just pulled and pulled and pulled and pulled through this pandemic, even on vaccine announcements, and I should hope the reason why would be pretty obvious: People stuck at home buying all kinds of electronic goods to keep themselves occupied: TV's, computers, thermomixes, playstations, so on and so forth.

Well we have a bit of data on this now.

For starters, it's one of the few things that the yanks actually import a bit of (pretty much entirely from asia), so the balance of trade has been thrown waaaaay off normal, which is only logical - an increase in demand for something you import:

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Gets you a trade deficit in it:

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But of course, nobody's actually going out and physically buying, well, anything any more are they?

Result:

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And, of course, someone has to actually produce (mine) all the stuff that goes into those circuit boards, so metals (copper in particular) are doing very well at three-year highs:

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Result of all this?

The U.S west coast, the port/places of entry for microchips/tech/gadgets for most of the rest of the country (on account of asia being, you know, across the pacific, not the atlantic) cannot unload the ships fast enough:

Boatloads of cargo are waiting in the waters off Los Angeles

A flotilla of almost a dozen cargo vessels sits anchored just south of Los Angeles this weekend, waiting for berth space.

www.latimes.com

View attachment 115323


And so we're now seeing flotillas of container ships now joining the oil tanker flotillas which have been backed up for weeks with nowhere to actually put their oil on account of the storage tanks etc we spoke about earlier all being full. A flotilla of almost a dozen cargo vessels sits anchored just south of Los Angeles this weekend, waiting for berth space. Around the twin ports of L.A. and Long Beach, shipping containers are already stacked five and six high -- the maximum the fire department will allow.

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Back in april-march-june when the saudi's just bought up/leased every tanker they could find tanker rates cracked $250,000 a day.

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Update to this post:


Container shipping, the backbone of the global trading system, is showing signs of fatigue as the pandemic descends into its darkest days.

Carriers reaping the biggest profits in at least a decade are struggling to operate reliably as bottlenecks worsen around ports from southern England to Shanghai, contorting supply chains for everything from car parts to cosmetics and medical equipment.

Just 50.1% of container vessels arrived on time in November, down from 80% a year earlier and the lowest level in records dating back to 2011, according to a service reliability index compiled by Copenhagen-based Sea-Intelligence. From Asia to North America, on-time arrivals dropped below 30%, less than half the long-run average globally.

Spot rates to transport goods, which typically fade in the final weeks of the year, are still soaring despite the service disruptions. The rate to ship a container of goods from China to Europe jumped 17% last week, tripling from a year ago to more than $4,400.

The problem has gotten so bad that the U.S federal maritime commission is now investigating practices in the country's biggest ports: https://www.bloomberg.com/news/arti...atchdog-to-probe-bottlenecks-at-biggest-ports




October’s result was the port’s third record this year. Imports rose 19.4% compared to October 2019, while exports were down 12.9%. Empty containers headed back overseas jumped 31.8% and also reached a record:



As you can see, there's never been such a large divergence between inbound & outbound and the U.S trade deficit data reflect it (which is obviously superfluous to this post to make its point).

The reason why this is a concern is because the number of empty containers being sent back to asia to pick up more stuff has caused an absolutely chronic container shortage for america's food exports:



That's right, you can make more money sending an empty container across the pacific to pick up all the electronic gadgets etc that americans are buying than you can sending one full of food down to south america.



In other words, this insatiable demand for gadgets from china combined with the unprecedented trade imbalance it has caused has actually started to seriously effect the world's ability to transport its food supply.

In case you hadn't already guessed the result, here's the data:


Soybeans:


Corn:


Oats:


Wheat:



I could go on, but you get the point.

over9k said:

The really depressing part is that the U.S's debt is actually pretty good compared to most of the first world.

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Not something to be forgotten.
When that can that gets kicked falls into the drain, it's going to make the GFC look pretty.
Just another warning bell, carry on.
As you were.

The thing is the americans have the world's reserve currency, which puts them in an absolutely unique position in this aspect. They really can just print the daylights out of it and be basically fine because there's just so much USD floating around the world that it becomes a minimal difference to the overall money supply, even if it's a large chunk of U.S GDP.

This is in stark contrast to literally everyone else however, unless you count the euro (whose days are numbered anyway).

Meanwhile, after all the carryon about the "mutant" virus strain yesterday, things are totally back to their previous trend:



Despite hospitalisations being on the up again:

frugal.rock said:

Not something to be forgotten.
When that can that gets kicked falls into the drain, it's going to make the GFC look pretty.
Just another warning bell, carry on.
As you were.

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The USA, with about 5% of the world's population, ranked 12th in debt to GDP in 2018:


Biden will add to this week's stimulus package once inaugurated next month, and clearly has plans to reshape US direction on energy and climate. So, with additional debt and this year's negative GDP its predicament going forward is not rosy.
I expect the Goldilocks effect of the US emergency vaccine use to have worn off by the end of the first quarter, and will not be surprised to see US markets in exceptionally poor shape by end-2021. They currently seem to be running on irrational exuberance when placed alongside what is physically occurring.

over9k said:

Meanwhile, after all the carryon about the "mutant" virus strain yesterday, things are totally back to their previous trend:

View attachment 116978

Despite hospitalisations being on the up again:

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yes more BS and lockdown fully demonstrated to not being of any help, etc; but look here...

One area we discussed earlier and with plenty of data from @over9k was the move out of cities..
Look who is talking ?Qldfrog left Brisbane hinterland for the greener grasses of the Noosa hinterland 3 month ago, and something planned a year earlier
Another articel about that and the role of Covid as the last straw:https://thehill.com/opinion/finance/530040-is-this-the-end-of-cities-in-america?bsft_eid=7aab17a8-5bbd-4767-962e-8038264ea030&bsft_aaid=6cecc182-bc17-40ae-993a-af857640c9d5&utm_campaign=rsi20201118&utm_source=blueshift&utm_medium=email&utm_content=rsi20201223&bsft_clkid=c5cf33b1-e017-4a7f-8125-db033ff161e6&bsft_uid=98e61677-3c2d-4623-938b-0701f75e454d&bsft_mid=99134f9d-bc50-434e-bc45-2d05e95100b9&bsft_utid=98e61677-3c2d-4623-938b-0701f75e454d-000029341811-001&bsft_link_id=230&bsft_mime_type=html&bsft_ek=2020-12-23T06:10:42Z&bsft_lx=5&bsft_tv=9
but we should not forget cities are the greatest wealth-creating engines in the history of civilisation ;
I am not a city person but I will not deny that all the creativity, mind exchange and leverage that I experience in startup nodes can NOT be accessed thru Zoom, teleconf or phone video call.
We in Australia were even at a disadvantage with a lack of critical mass even before COVID.
When you destroy cities, you destroy wealth creation, tomorrow's star businesses and inventions and ultimately destroy the economy. This is one trend that markets have not priced in and where China is once again laughing:
I am not allowed to travel back to SZ but the startup there are still running at 100%: building the 50k drones which will sink our billion dollars submarines at will or shot down our 10 millions a pop fighters; stealing and improving new EV technology, building airspace projects and obviously your phones and AI chips and maybe even manufacturing our next covid if we manage to survive this one.
Here and in the west, we lockdown and the emulation is inZoom teleconf for rapidly getting overweight workers in bathrobe and slippers

We are assisting live to the West self destruction, and i stupidly thought we would fall to the green plague or Mr Xi attacks.