This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

January 2024 DDD

Jump to new




Re. the BTC: some money managers (most) see BTC volatility as a risk. The US Federal debt has grown at 8%CAGR for 15yrs. UST yields during that time have been at or close to ZIRP. So negative returns on low volatility is what they have achieved.

Am I a big BTC fan? No. But those charts above demonstrate that the vast majority of BTC is being held by individuals. Volatility is not risk. Volatility is simply an opportunity. Now of course, ultimately anything with high volatility, to negate the risk, must move higher and not blow-up to fall to zero. Otherwise it is indeed risk.

jog on
duc
 



So how accurate are the CPI calculations?

If you took the minimum wage in 1963, the year of my birth, it was $1.25 or 5x silver quarters.
Those 5x silver quarters are now worth $25
The CPI says they are only worth $10.81
That's a $14.91 discrepancy. Hmmm.

Of course the CPI gets a new calculation every couple of years or so, just to make sure you can continue to be ripped off if you are unaware or not paying attention.

Naysayers will point out that stocks, BTC, whatever have provided far sexier returns. Correct. We are talking about protecting the value of you 'money' not picking the next COST, MSFT, BTC or whatever. You think you have found the next 30,000% return, cash in your gold silver and buy that staock. You will get more shares than if you had held your nest egg in cash. Inflation is an ongoing POLICY.

jog on
duc
 
Of interest: https://www.realclearscience.com/bl..._has_fallen_17_points_since_1939_1006608.html

So my team, Dallas, went out with a wimper. I'll go with Kansas: https://www.insidehook.com/sports/top-storyline-potential-super-bowl-matchup

Oil News:

The continued rerouting of ships from Asia to Europe has been greatly reducing the availability of spot tankers that could be chartered, lifting the price of shipping, especially when it comes to clean products.

- As Bloomberg reports, the day rate for shipping a cargo of gasoline from northwest Europe to the US East Coast has tripled since the start of the year, nearing $38,000 per day this week.

- US and UK forces conducted strikes on eight Houthi targets late Monday, making it even more likely that Red Sea disruptions will be longer than expected as the previous attack on January 11 had triggered a round of retaliatory strikes.

- Routing tankers carrying refined products through the Cape adds $1 million to freight costs, equivalent to a $1.5/bbl premium, despite the fact there is no canal passing along the way (the Suez Canal has just hiked its 2024 prices to roughly $500-600,000 per passage).

Market Movers

- US oil major Chevron (NYSE:CVX) has reportedly put its natural gas business in Canada’s Duvernay shale for sale, expecting up to $900 million for the 40,000 boed of oil and gas production there.

- PE-backed Norwegian oil producer Sval Energi, producing 70,000 b/d from stakes in 15 fields, is believed to be up for grabs as owner HitecVision intends to generate $300-400 million from its sale.

- Brazil’s national oil firm Petrobras (NYSEBR) said it will seek to start buying stakes in domestic onshore wind and solar projects in 2024 already, aiming to build a 2 GW portfolio.

Tuesday, January 23, 2024

The slow recovery of North Dakotan oil output, US strikes on the Houthis in the Red Sea, and drone attacks on Russia sent Brent oil prices up above $80 per barrel early on Tuesday, but new supply from Norway and Libya soon sent prices falling again. Macroeconomic factors are adding to the headwinds for oil prices, with China posting Q4 GDP figures below expectations and the US set to see a cooling in growth. Friday might be the most entertaining day this week as US inflation data might swing pricing dynamics either way.

ExxonMobil Takes Activist Investors to Court. US oil major ExxonMobil (NYSE:XOM) filed a complaint in a Texas court against an "extreme” climate proposal by activist investors Arjuna Capital and Follow This, seeking to block it before the company’s shareholder meeting in May.

Libya’s Key Field Restarts After Protests. Libya’s largest oil field, the 300,000 b/d Sharara, has restarted production after a three-week shutdown that was prompted by large-scale protests demanding affordable fuel prices and better public services in the country.

US Buys 3 Million SPR Barrels in April. In its latest monthly SPR replenishment plan, the US Department of Energy bought 3.2 million barrels of crude totaling $243 million, with ExxonMobil (NYSE:XOM) supplying 1.4 MMbbls, with BP, Macquarie, Phillips 66 and Sunoco joining, too.

Ukraine Strikes Shut Russian Terminal. Russia’s energy major Novatek has been forced to suspend operations at its Baltic Sea export terminal in Ust Luga due to a fire after a Ukrainian drone attack, shutting in a third of the country’s naphtha exports for at least several weeks of repairs.

Bakken Output Will Take Time to Recover. The North Dakota Pipeline Authority warned that it might take another month until Bakken production recovers to 1.24 million b/d after halving on the back of the cold snap, requiring several more weeks to repair frozen wells and clean up oil spills.

Uranium Continues to Soar on a Buying Frenzy. Uranium prices continued their surge and reached $106 per pound this week, the highest since November 2007, as supply disruptions from Kazatomprom (FRA:0ZQ) and Cameco (NYSE:CCJ) lowered the 2024 production outlook.

Citgo Claim Auction Tops $20.8 Billion. A Delaware court approved claims by 17 Venezuela-linked creditors including ConocoPhillips and Kock Industries for proceeds from the upcoming auction of US refiner Citgo Petroleum, owned by Venezuela, with the scope of claims moving up to $20.8 billion.

Bosphorus Scare Keeps Black Sea Tankers Waiting. Transit through the Bosphorus Strait was restricted over the weekend after the Liberia-flagged oil tanker Peria self-discharged its anchor due to bad weather, carrying Russian Urals to one of the Turkish refiners in Aliaga.

Pipeline Leak Mars Tests Shell’s Nigeria Departure. As Shell (LON:SHEL) saw its strategic decision to sell all onshore assets in Nigeria approved by the government, an investigation into a pipeline leak along the Bonny Light-carrying Obolo-Ogale pipeline in the southern Rivers State might derail that process again.

Congo In Metals Megadeal Talks with China. China and the Democratic Republic of Congo are discussing a $7 billion financing deal as part of a renegotiated minerals-for-infrastructure covenant, with re-elected President Felix Tshisekedi mentioning the talks in his inaugural address.

Shares of Grain Major Collapse on Probe News. Shares of Archer-Daniels-Midland (NYSE:ADM) plunged by 23% Monday after CFO Vikram Luthar was placed on administrative leave and Q4 results were delayed due to an investigation into accounting practices, as flagged by the SEC.

US Govt Launches Inquiry into CrownRock Deal. The US Federal Trade Commission (FTC) has asked for more information into Occidental Petroleum’s $12 billion takeover of Permian shale producer CrownRock, having already sought more data on the Exxon-Pioneer deal.

Angola’s Licensing Round Disappoints. Angola announced the results of its 2023 onshore licensing round, having received successful bids on four out of the 12 blocks on offer, unable to attract international players and allotting the blocks to local Angolan firms.

So while the SPY makes a new ATH last week and struggles a little this week (so far) the plots (as usual) are all in the UST market:



Last week the Logan, one of the Fed's gov's. gave an article that was hinting at all manner of things. Essentially the Fed NEEDS a lower USD and lower real rates to support the UST market (which underpins the stock markets and tax revenues).

What they can't have is this sh*t:



UST dysfunction seems to be occurring earlier at ever lower USD values. Currently the MOVE index is signalling nothing amiss:



But I'll be keeping an eye on this.

Mr flippe-floppe-flye:







The bulls are bullish.

A list of 'hot' stocks:



For the moment at least, the bulls are happy.

Uranium about to have a period of weakness?



It's had a good run. BTD?

jog on
duc
 

Fly on fire.

Is the font getting smaller or do I need to get new glasses?
 
Stablecoins (Tether): https://arstechnica.com/information...ypto-crime-enabled-by-stablecoins-since-2022/










USD goes up, everything else except gold, goes down. This is a consequence of the -65% NIIP position that pertains in the US. This is why Yellen is committed to a weak USD.

Meanwhile, general sentiment is concerned with data around what happens when the market hits an ATH? This is classic 'past is prologue'. Of course you need to look at the data of new ATH in a context that resembles the current situation. There are hundreds of data points around ATH's. Some are relevant, most are not.

The lesson from Mr flippe-floppe-flye: be nimble.

jog on
duc
 
For those who love technicals:




Re. the: BTFP:

“As the program ends, the interest rate applicable to new BTFP loans has been adjusted such that the rate on new loans extended from now through program expiration will be no lower than the interest rate on reserve balances in effect on the day the loan is made.

“This rate adjustment ensures that the BTFP continues to support the goals of the program in the current interest rate environment. This change is effective immediately. All other terms of the program are unchanged.”
“The rate for term advances will be the one-year overnight index swap rate plus 10 basis points, provided that the rate may not be lower than the IORB rate in effect on the day the advance is made; the rate will be fixed for the term of the advance on the day the advance is made."

The 'free money' for the banks is over. We have already had bank earnings this reporting. Probably 3'rd Q earnings will start to show up any deficiencies.

The bulls are all over the place, well except the majority of stocks. The leadership is becoming ever more narrow as the major indices continue to rise (SPY, QQQ, DIA).

jog on
duc
 
Lithium: https://www.semafor.com/article/01/25/2024/global-lithium-price-tumbles-by-80

Hedge Funds: https://www.straitstimes.com/business/hedge-fund-stars-who-got-china-wrong-are-paying-a-big-price

All about M2: https://www.carsongroup.com/insights/blog/please-dont-stress-yourself-about-m2/

All time highs: https://www.carsongroup.com/insights/blog/six-things-to-know-about-all-time-highs/

Books for Quants: https://pyquantnews.com/46-books-quant-finance-algo-trading-market-data/

Oil News:

Friday, January 26, 2024

The stronger-than-expected performance of the US economy has boosted oil prices to their highest level this year, not many analysts were expecting a 3.3% GDP growth in Q4. Continuous Houthi strikes in the Red Sea and surging product freight rates have added impetus to the bullish cause, and even China’s timid reaching out to Iran to rein in the Yemeni attacks failed to scale back geopolitical tensions. With Brent breaking through the $80 per barrel threshold and reaching $82 per barrel, prices cleared an important psychological barrier.

White House Asks China to Help with Houthis. According to the Financial Times, the White House has asked China to help rein Houthi rebels attacking commercial tankers in the Red Sea as two Maersk container ships were targeted this week despite US warship escorts.

TMX Pipeline Eyes April Start. Canada’s $23 billion Trans Mountain Expansion (TMX) pipeline is set to begin line fill by the end of this quarter, with first commercial flows starting from April and ramping up to full capacity by December, easing oil sands’ huge double-digit discounts.

UAE Mulls African Oil Expansion. The government of Uganda has chosen an investment firm from the UAE, led by a member of the Dubai royal family, to build a 60,000 b/d refinery in the country after a deal with an international consortium fell apart in 2023.

UK Waits for World’s Most Expensive Nuclear Plant. French nuclear developer EDF announced that the construction of the UK’s Hinkley Point C nuclear plant will cost an extra $13 billion, taking the total to $46 billion, and will be delayed by several years to at least 2029.

US Refiners Seek Limits to Fuel Credit Market. US oil refiners have asked the Biden administration to restrict participation in the US renewable fuel credit program (RINs), claiming the current EPA mechanisms allow any person to participate, paving the way for manipulation.

Consolidation Extends into US Midstream Market. US fuel distributor Sunoco (NYSE:SUN) agreed to buy pipeline and terminal operator NuStar Energy in an all-equity deal for $7.3 billion, opening up the logistics and infrastructure segment for the Energy Transfer (NYSE:ET) subsidiary.

Defying Peers, Chevron Sees A Future in Nigeria. As European peers such as Shell are leaving Nigeria, US oil major Chevron (NYSE:CVX) unveiled a plan to expand its presence in the African country, signing a 20-year renewal on three deepwater leases and acquiring a stake in the OPL 215 block.

Clean Tanker Freight Hits 4-Year Highs. Freight rates for oil product tankers to Europe hit their highest level since April 2020, with a Persian Gulf-UK Continent voyage via the Cape of Good Hope costing 8.25 million now, up 60% compared to the conventional Suez Canal route.

Rosneft Refinery Hit by Ukrainian Drones. Less than a week after Ukrainian drones hit a Novatek naphtha tank farm in Ust Luga, the vacuum distillation unit of Rosneft’s (MCX:ROSN) 240,000 b/d Tuapse oil refinery was struck in a new attack, causing a fire.

Copper Starts to Lose Investment Appeal. Hedge fund positioning on copper has swung from a vast net long in early January to the largest net short since mid-2022, to the tune of 25,000 contracts, with investors wary of China’s ailing manufacturing activity and European recession.

Equinor and BP Swap NY Wind Farms. European oil majors BP (NYSE:BP) and Equinor (NYSE:EQNR) are splitting their New York wind farm joint venture, with each assuming full control of their respective wind farms, resulting in a $600 million pre-tax impairment for BP.

Fortescue Hits the Wall in China. Two iron ore cargoes supplied by Fortescue (ASX:FMG) to China have been denied customs clearance due to an ongoing probe, just as the Australian miner is trying to renegotiate a 2024 procurement deal with the state-run iron ore buyer CMRG.

Chinese Jet Fuel Demand to Hit New Highs. Chinese jet fuel demand is expected to surpass pre-pandemic levels over the upcoming Lunar New Year celebrations, hitting 860,000 b/d, as Chinese travelers are expected to make 80 million domestic flights over that period.



Currently trying to open a position in EWA. Have a contingent order in the market. Still waiting.

So looking at the GDP:



So debt grew by $2.581 trillion last year. This means that every dollar in GDP growth cost $1.69 in new debt. LOL.

An interesting 'employment' stat:



I have no idea if this is true/accurate, but that it's even a thing is a bit of a concern.


*

Just got filled:



So now I will be following along in your chap's market much more so.



jog on
duc
 
Last edited:
Will be pretty quick all week due to a very busy work week:



From the bank data (Revenue and Interest income) you get an idea of the leverage being employed.

All across blogoland, the bulls are full of confidence. There is definitely no climbing a wall of worry. Always concerning.

No space for Mr fff today, no new posts anyway.

jog on
duc
 
Oil News:

Saudi Arabia’s government ordered the state oil company Saudi Aramco (TADAWUL:2222) to halt its oil expansion plan and maintain a production capacity of 12 million b/d, almost 10% lower than the current target of 13 million b/d.

- The Saudi economy posted one of the steepest contractions in the 21st century, with its 2023 GDP falling by 1.1% year-on-year, and even though the IMF expects it to grow again in 2024-2025, Riyadh needs oil revenues in other segments of the economy, too.

- The oil sector still accounts for 40% of Saudi Arabia’s GDP, so the country’s voluntary production cuts in 2023 that lowered total crude production to 9 million b/d have reversed Riyadh’s fortunes after a stellar 2022 when the economy grew 9% and the budget ran a surplus for the first time in a decade.

- Endowed with the world’s largest spare capacity right now, some 3 million b/d, Saudi Aramco planned to expand its ambition by boosting output from the Marjan, Berri, and Zuluf fields, targeting 2026-2027 for completion.

Market Movers

- Brazil’s courts have ordered mining giants Vale (NYSE:VALE) and BHP (NYSE:BHP) to pay $9.7 billion in damage repairs over the 2015 Samarco Fundao dam burst in 2015, Brazil’s worst environmental disaster to date.

- Albemarle (NYSE:ALB), the world’s largest lithium producer, will cut 4% of its workforce as plunging lithium prices force the US firm to get leaner, as Li carbonate prices in China plunged to $1,900/mt.

- UK-based energy major Shell (LON:SHEL) plans to convert its 150,000 b/d capacity Wesseling refinery in Germany into a production unit for base oils, ending crude refining there by 2025.

Tuesday, January 30, 2024

The potential for a larger conflagration in the Middle East lifted Brent well above 80 per barrel earlier this week, but weak Chinese data poured some cold water on that bullish sentiment, with domestic consumption coming in below expectations and the property market remaining on tenterhooks as Evergrande is finally mandated to liquidate. Potentially offsetting the Chinese malaise, the Federal Reserve meeting and US inventories will be the leading pricing signals this week.

White House Revisits Venezuela Sanctions. Following Venezuela’s Supreme Tribunal banning Maria Corina Machado from registering her candidacy for the 2024 presidential elections, the US State Department stated that it is reviewing its sanctions policy, 3 months after lifting the ban on crude.

Indian Diesel Flows to Europe Dry Up. India has become one of the key suppliers of diesel to the European market after Russian volumes pivoted away to Asia, but the Red Sea disruptions and high freight led to India’s exports slumping by a hefty 80% month-on-month, a mere 50,000 b/d.

Trafigura Reports Tanker Hit and Fire. A Trafigura-controlled tanker carrying naphtha was struck by Houthi missiles Friday late evening, en route to Southeast Asia after several ship-to-ship transfers in Greece’s Kalamata, and it took the crew two days to extinguish the fire aboard.

Russia’s China Pipeline Faces Delays. In an interview with the Financial Times, Mongolian Prime Minister L. Oyun-Erdene said construction of the 50 bcm Power of Siberia 2 gas pipeline to China may be delayed into 2025 as Moscow and Beijing are still ironing out their differences on the commercial side of supplies.

TMX Runs into Construction Delays Again. Canada’s Trans Mountain Expansion pipeline will now be completed only in Q2 2024 after the project operator ran into technical issues whilst pulling the pipeline through a tunnel, leading to a two-month delay in the start of line fill, planned for February.

Bakken Rebounds Quicker than Expected. Crude production in North Dakota has recovered quicker than initially assumed after the cold snap shut some 700,000 b/d of output, with current production levels only 30,000-80,000 b/d below normal readings according to the ND Pipeline Authority.

US Buys May SPRs, Signals Price Risk. The US Department of Energy bought 3.1 million barrels of crude as part of its May strategic petroleum replenishment plan at an average of $78.14 per barrel, with market watchers believing DoE is frontloading purchases amidst rising crude prices.

India Signs Up For Emirati LNG. Adnoc, the national oil and gas company of Abu Dhabi, has signed a 10-year supply deal with India’s state-controlled gas distributor GAIL to supply 0.5 million tonnes per year of LNG, to be sourced from its upcoming 5.6 mtpa capacity Das Island export terminal.

Henry Hub Plunges on Mild Weather. As the February contract of Henry Hub futures expired this week, US natural gas prices declined to $2.08 per mmBtu on the heels of forecasts of above-average warm weather across the country next two weeks, capping inventory withdrawals after a cold January.

Freeport LNG, the Unlikely Victim of the Arctic Freeze. US liquefaction company Freeport LNG said it expects one of its three liquefaction units, with a capacity of 0.7 bcf per day, to be out of service for a month after the Arctic blast damaged a refrigeration electric motor that now requires replacement.

Chinese Copper Smelters Call for Output Cuts. China’s top copper smelters have called for a joint production cut amidst collapsing prices of Cu concentrate, with spot prices as low as $25 per metric tonne, a mere quarter of the benchmark $80/mt price agreed between producers and smelters.

Petrobras Drills First Equatorial Margin Well. Brazil’s national oil company Petrobras (NYSEBR) drilled its first-ever exploration well in the frontier Equatorial Margin, finding hydrocarbons with the Pitu Oeste well but unsure of its commercial viability, potentially opening up a new upstream play.

Canada Mulls Pausing LNG Projects. The Biden administration’s decision to halt LNG project approvals has raised concerns that Canada’s province of British Columbia might follow suit, with the 12 mtpa Ksi Lisims liquefaction facility still yet to receive the green light ahead of the October election.

All of these are x10 Price to revenues





When the Fed created the BTFP lo and behold, UST liquidity improved as banks bought the ******g paper.



Debt increasing faster than GDP again.



The Treasury will be announcing the QFA this week. Once upon a time no-one was even aware of this, far less caring. Now this is front and centre of those who are aware:

The Treasury Department’s Quarterly Refunding announcements, normally cause of a global yawn, have turned into a market-moving circus: Longer-term Treasury yields surged from August through October 2023 after the Treasury Department said in its Quarterly Refunding announcement at the beginning of August that it would issue a tsunami of longer-term Treasury notes and bonds. Then three months later, at the beginning of November, the Treasury Department attempted to undo some of the damage and said that it would shift the huge borrowing needs more to short-term Treasury bills, which caused longer-term yields to fall sharply.

And today, the Treasury Department announced in its “Marketable Borrowing Estimates” that – despite the fiscal deficit that has ballooned in recent months – it would have to borrow less in Q1 than it had forecast in the October announcement, and that it would have to borrow relatively little in Q2. And yields fell again. Everyone likes a good market manipulation scheme to push up bond prices and push down longer-term yields?

Today, in its announcement, the Treasury department said that:

In Q1, it plans to add $760 billion in new debt to outstanding marketable Treasury securities, which is a huge amount, but that’s $55 billion lower that the estimate announced in October for Q1 ($816 billion), assuming a balance in its checking account – the Treasury General Account, or TGA – at the end of Q1 of $750 billion.


If the estimate of $760 billion for Q1 is on target, and the increase in total marketable securities is actually $760 billion in Q1, marketable securities will have increased in by $3.0 trillion over the nine months from July 1 2023 through March 31 2024.

As of today, marketable Treasury securities — the actual actual amounts, released by the Treasury Department daily here — are $27.0 trillion, up from $24.7 trillion at the beginning of Q3 2023. And if the “Marketable Borrowing Estimates” estimates today for Q1 are on target, marketable securities will be at $27.8 trillion by March 31.


Hmmmm.

The issue will be: will the new debt be bills or notes (short or longer term)? Yellen last time issued Bills as the market puked the Notes.

Of course, another reason for a slight reduction is that Corporations already refinanced $150B+ this month. LOL. I'll have that data for tomorrow.

jog on
duc
 
You must log in or register to reply here.

Similar threads

January 2025 DDD
5 6 7
Replies
126
Views
8K
ducati916
August 2024 DDD
2 3 4
Replies
75
Views
19K
ducati916
May 2024 DDD
2 3 4
Replies
69
Views
7K
qldfrog
September 2024 DDD
2 3 4
Replies
66
Views
10K
qldfrog
April 2024 DDD
3 4 5
Replies
98
Views
9K
ducati916
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...