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Inflation

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Here's an absolutely beautiful screencap, a perfect summary of the state of the oil market currently:

345737356735673567.jpg

The entire supply side is stacked in america's favour with the demand side having nowhere to go but up (eventually, after china gives up on their lockdowns or whatever they end up doing).

This is why I'm so bullish on U.S energy companies going forward.
 
NZ CB raised interest rates by another 50 basis points to 3%, with indications they expect to get to 4% before resting.
NZ leading the way.
Mick
 
waterbottle said:
oilprice.com

Germany Will Have Less Than 3 Months Of Gas If Russia Halts Supply | OilPrice.com

Despite faster storage builds than usual, Germany will only have enough natural gas to cover two and a half months of consumption this winter if Russia completely suspends deliveries
oilprice.com oilprice.com
Click to expand...



"The good news is the country’s challenges are manageable. Take energy. When Mr Putin invaded, Germany relied on Russia for 55% of its gas. Doomsayers warned that supplies would be choked off, German factories would close and families would shiver in their kitchens. In fact, even as Russia’s share of the German gas market has halved, stores of gas for winter are building at a normal pace. Industry says it can cut back use more than expected. Faced with higher prices and conservation campaigns, households will do the same. Germany is restarting mothballed coal-fired power plants. It will invest in renewables. It should (and probably will) extend the life of three nuclear plants that had been rashly scheduled to close. It should also lift a ban on fracking that has put its hefty reserves of shale gas out of reach."

Thanks to Vladimir Putin, Germany has woken up
Less starry-eyed policies on security and energy should help it lead Europe

To borrow a phrase from the late Emperor Hirohito, the war in Ukraine has developed not necessarily to Vladimir Putin’s advantage. It has sent Finland and Sweden bolting for the cover of nato membership. It has deepened Ukrainian nationalism, strengthened the democratic alternative Ukraine offers to Mr Putin’s own tyranny, and led customers for Russia’s energy to look elsewhere. It has also prodded a sleepy giant, Germany, rousing a country that has been both Russia’s best partner and its worst enemy. Mr Putin’s warmongering may prove to be the catalyst that turns Germany into his own nightmare: a stronger, bolder, more determined leader of a more united Europe.

Germany badly needed that prod. Complacent and just a little self-satisfied, it was late to realise how fast the world was changing around it. Now, however, a remarkable opportunity is within its grasp, as Germans experience a rare thing in a democracy: a consensus about the need for broad, sweeping change to the economy and security.

The clouds were long gathering. Yes, Germany boasts an enviable record as Europe’s strongest economy, most stable polity and, Germans like to think, most responsible citizen. But Germany’s dependence on cheap Russian fuel, carefully cultivated by Russia, has been exposed by the Ukraine war. Germans are not only vulnerable to the Kremlin’s energy blackmail, but have also been bankrolling Mr Putin’s invasion.

That wretched situation was a product of another of Germany’s failings: a reluctance to question rosy assumptions rooted in its own happy recent history. Comforting notions, such as that trading with Russia would tame its belligerence, a theme beloved of Angela Merkel, a long-serving chancellor, allowed Germany to turn a deaf ear for too long to pleas from allies for more robust investment in its own and Europe’s defence.

Germany has shied away from other challenges, too. Its economy remains over-reliant on the export of traditional engineering products where there is little room for growth, and over-reliant on one country, China, as a source of inputs and a market for its goods. Partly because of strict rules on public spending, Germany has underinvested in infrastructure; all too often its trains do not run on time. The public and private sectors are held back by the slow digitisation of services as well as a shortage of skilled workers—a harbinger of a demographic danger, as over the next decade more Germans will retire than enter the workforce.

Now a new Germany is hatching. Three days after the invasion, Olaf Scholz, then a new chancellor heading an untested coalition, gave his much-applauded Zeitenwende speech to the Bundestag, signalling a break with the country’s post-war tendency towards pacifism. He has set the agenda for years to come.

The good news is the country’s challenges are manageable. Take energy. When Mr Putin invaded, Germany relied on Russia for 55% of its gas. Doomsayers warned that supplies would be choked off, German factories would close and families would shiver in their kitchens. In fact, even as Russia’s share of the German gas market has halved, stores of gas for winter are building at a normal pace. Industry says it can cut back use more than expected. Faced with higher prices and conservation campaigns, households will do the same. Germany is restarting mothballed coal-fired power plants. It will invest in renewables. It should (and probably will) extend the life of three nuclear plants that had been rashly scheduled to close. It should also lift a ban on fracking that has put its hefty reserves of shale gas out of reach.

With enough determination, other troubles have fixes, too. Mr Scholz has pledged to boost defence spending by a third—though the core budget this year is flat. New outlays will fund a sweeping equipment upgrade. He has also promised a less starry-eyed approach to foreign affairs, sending heavy weapons to Ukraine in defiance of the old pacifist taboo. His government has initiated a thorough review of relations with China, and is soon to issue a national-security strategy. Tellingly, that is Germany’s first such effort at framing its own geostrategic goals.

Digitising and greening its industry and adding high-end services to the mix will be harder. The myriad companies in its Mittelstand could remain the bedrock of Germany’s economic strength if they embraced the digital challenge. Luckily, business leaders and Mr Scholz’s government both appear pragmatic. Immigration rules are being tweaked to entice more skilled workers into the country. Germany is also much more open towards deficit spending, not only at home but in Europe, too.

Its solid relations with Europe are another advantage, the result of decades of nurturing allies, including an occasionally obstreperous America. In the future, as firms look for ways to make their supply chains more robust, reliable Germany will be an attractive place to invest.

Dangers still lurk. Turkey or a second Trump administration could “defect” from the nato alliance. Germany would then face a far more burdensome security challenge as the alliance’s second-biggest, but militarily most underpowered, member. Ramping up spending should be just the first step in a radical overhaul of a squeamish and bureaucratised army that is poorly geared to defend the more exposed countries on nato’s periphery.

Germany has wisely and consistently put Europe at the centre of its concerns. But in the face of political challenges to the eu from Poland, Hungary and, potentially, a new right-wing government in Italy, Germany has a vital role to play in holding the project together. On this, and matters such as a deeper single market, Mr Scholz should get off the back seat and sit up front.

Which came first, the eagle or the egg?​

The greatest danger, though, is that this moment is lost and Germany slips back into caution and stasis. Comprehensive change takes years and Mr Scholz is not especially popular.

Ukraine will be an early test of Germany’s mettle. Though Mr Scholz’s tough stance against Mr Putin still convinces most Germans, support has been softening and the cost of the war has yet to hit heating bills. If Germany were to abandon Ukraine, that would be a tragedy, for Germans as well as Ukrainians. This is a conflict over the future of a continent. It is also an opportunity for Germany to reclaim its place at the heart of Europe. ■
Click to expand...

​

 
waterbottle said:
oilprice.com

Germany Will Have Less Than 3 Months Of Gas If Russia Halts Supply | OilPrice.com

Despite faster storage builds than usual, Germany will only have enough natural gas to cover two and a half months of consumption this winter if Russia completely suspends deliveries
oilprice.com oilprice.com
Click to expand...
it won't be Russia that stops the gas , it will either be German non-payment or Ukraine trying to use extortion

( there is an uncertified Nordstream II waiting for official clearance )

besides i bet Putin just loves watching these Greens squirm
 
PBOC cut rates, and now the Turks have too - by 100bps.

Not sure if these are outliers or the start of some other global trend.

Meanwhile, 2x fed speeches overnight indicating that IRs likely to continue upwards. Bullard leaning towards 75bps in September. CME fed watch tool puts this at 40% chance.
 
waterbottle said:
Big movements in crypto, ETH down 7%, BTC down 6%. Nasdaq futures down 0.9%

Turning point?
Click to expand...
Certainly risk-off day. Also friday though, there's no way the jitters have gone enough to not see a friday selloff.

Good cash deployment day IMHO, just like on the 9th where all the chip manufacturers nosedived:

2346243624362436.jpg
 
over9k said:
Certainly risk-off day. Also friday though, there's no way the jitters have gone enough to not see a friday selloff.

Good cash deployment day IMHO, just like on the 9th where all the chip manufacturers nosedived:

View attachment 145674
Click to expand...
Jackson hole is next week, apparently FED might stick to another 0.75% rate rise to be on the safe side. Powell has recently said he doesnt want to be the next arthur burns and is likely going to raise rates ala paul volcker style as he has mentioned that he knew Volcker and praised volcker for what he did raising rates to 20% and smashing inflation.

With the elections coming soon and democrats highly likely to lose, powell who has been reelected for second term till 2026, will be able to do whatever he deems fit without too much pressure from washington. And i am pretty sure he will keep raising rates to fight inflation just so he gets back his credibility after losing it on "transitory inflation"(but then again back in 2021 he wasnt confirmed for his second term yet)

Hence I believe FED will raise rates till the election period despite US economy tanking and will not pivot until maybe a recession is confirmed in october numbers. Together with increasing paring down of fed balance sheets, Thats when we may see the big crash in markets globally as liquidity tightens and everyone panics. The inflation print will likely still be 6-7% vs fed rates of ~3% in USA and globally we all know the "real inflation" is probably from 15-20%
 
bluekelah said:
Jackson hole is next week, apparently FED might stick to another 0.75% rate rise to be on the safe side. Powell has recently said he doesnt want to be the next arthur burns and is likely going to raise rates ala paul volcker style as he has mentioned that he knew Volcker and praised volcker for what he did raising rates to 20% and smashing inflation.

With the elections coming soon and democrats highly likely to lose, powell who has been reelected for second term till 2026, will be able to do whatever he deems fit without too much pressure from washington. And i am pretty sure he will keep raising rates to fight inflation just so he gets back his credibility after losing it on "transitory inflation"(but then again back in 2021 he wasnt confirmed for his second term yet)

Hence I believe FED will raise rates till the election period despite US economy tanking and will not pivot until maybe a recession is confirmed in october numbers. Together with increasing paring down of fed balance sheets, Thats when we may see the big crash in markets globally as liquidity tightens and everyone panics. The inflation print will likely still be 6-7% vs fed rates of ~3% in USA and globally we all know the "real inflation" is probably from 15-20%
Click to expand...
Sounds logical. The minutes suggest conflicting messages. That might be precisely why markets are risk-off today: Uncertainty from the fed.

If I was trading fixed income I'd be betting on 75 points too.
 

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