June 2024 DDD

[ducati916]

So early start to work today:



I wouldn't pay 1oz gold for 1 BTC.



So I finally managed to get short NVDA at slightly higher than the chart indicates (short @ $124.43). The stock split enables retail to play more easily in the stock now. Even buying PUTS previously set you back $10,000 odd a contract.

NVDA is such a significant % of SMH or any other semiconductor ETF, you might as well go short NVDA (actually cheaper). It is the stock de jour, so might as well play it.



So as Mr fff alludes, the semi's and QQQ are bouncing, everything else pretty much, selling off again. This market is really bifurcated. There is actually no point in looking at SPY currently. You need to look at RSP:



Unless you are trading NVDA, MSFT, AAPL, GOOG, AMZN:



So now you need to hedge your hedge. If you are short the big 5 you need to be long the sectors individually (more or less not XLK). With my NVDA short I can play the sectors with better balance. Check out yesterday's heatmap.

Off to work!

jog on
duc

 

[ducati916]

Oil News:

As Brent futures have moved above $85 per barrel again, geopolitics have started to come to the forefront of market concerns as Houthi militias are intensifying strikes on commercial tankers and Israel-Lebanon tensions fly high.

- Oil prices remain in expansionary mode as Brent remains above the 50-day average of $83.75 per barrel, with expected inventory draws in the summer providing fundamental support for a move higher.

- The product markets are also adding to the bullish drive, with investors increasingly taking long positions in diesel futures and options and ICE gasoil futures seeing the biggest-ever addition in long bets last week.

- US crude inventories in the week ending June 21 are expected to shrink by a couple of million barrels, most probably providing further upside for oil prices, and only underwhelming US inflation data could sour the current bullish sentiment.

Market Movers

- Less than a week after it landed two new Angolan blocks, US oil major Chevron (NYSE:CVX) signed production-sharing contracts with Equatorial Guinea to explore two previously untapped offshore blocks.

- Brazilian state oil company Petrobras (NYSEBR), partnering with Ecopetrol (NYSE:EC), began drilling the Uchuva-2 appraisal well that could confirm huge gas deposits in the Tayrona block.

- ADNOC, the national oil company of the United Arab Emirates, has reportedly moved to final-stage negotiations with German chemicals firm Covestro over a proposed $12.5 billion takeover deal.

Tuesday, June 25, 2024

As both Brent and WTI are poised to post a robust 6% month-over-month increase, the oil markets seem to have temporarily shed their demand concerns and are riding the bullish wave. With Israeli President Netanyahu pledging to boost military presence along the country’s border with Lebanon, war risks are becoming a talking point again.

EU Formalizes 14th Russia Sanctions Pack. The European Union has formally adopted a 14th package of sanctions on Russia that bans trans-shipments of Russian LNG off EU ports over a nine-month transition period, also sanctioning 27 tankers and Russia’s shipping firm Sovcomflot.

Landslides Halt Ecuadorian Exports. Petroecuador, the state oil firm of Ecuador, was forced to halt transportation along the 450,000 b/d OCP pipeline amidst rain-induced erosion near its path in Napo province, declaring force majeure on exports of heavy sour Napo crude.

Nigeria Sees Huge Interest in New Blocks. Nigeria’s upstream regulator stated that it will expand the number of oil blocks slated for auctioning in its 2024 licensing round, from 19 to a whopping 36 blocks with the addition of 17 deepwater licenses, citing “tremendous interest”.

US Labour Costs Become Threat to LNG. A shortage of skilled labor has been weighing on LNG developers as strong wage growth in the US Gulf Coast has already led to some delays, with labor costs rising more than 20% since 2021 and contractors often paying skilled workers additional per diems to retain them.

Can Lithium Prices Overcome Their Blues? Spot prices of lithium carbonate in China have dropped to their lowest since August 2021, down 12% on the month at a mere ¥93,100 per metric tonne ($12,825/mt), with producers hoping that prices will start to recover into the fall-winter season.

Japan Restores Power and Gas Subsidies. Seeking to shield consumers from rising energy costs, the Japanese government restored subsidies for retail electricity and city gas in August-October, also extending gasoline subsidies until year-end 2024 as Tokyo keeps the price around ¥175/l ($174/barrel).

UK Renewable Projects Can’t Break into Profits. According to industry consultants Cornwall Insight, only 20% of all renewable projects in the UK that applied for planning permission in 2018-2023 are still viable, with two-thirds of applications already abandoned, as speculative bids abound.

Solitary LNG Carrier Risks A Red Sea Transit. Brushing aside the risk of being targeted by Houthi militants, the Asya Energy LNG carrier became the first vessel to sail through the Red Sea this year as shippers have been avoiding Suez Canal transits for fear of explosion.

California Refining Margins Feel the Squeeze. Residents of Richmond, California are set to vote in November on whether to place an additional $1 per barrel tax on refining at Chevron’s (NYSE:CVX) 245,000 b/d refinery for the next 50 years, potentially squeezing margins in PADD5 even further.

Gabon Pre-empts Oil M&A Deals. Gabon’s national oil company GOC pre-empted Carlyle Group’s sale of its oil assets in the country, including the Rabi field, to French upstream firm Maurel & Prom for 1.3 billion, with Swiss-based trading house Gunvor reportedly providing financing for the deal.

Finland Stops Russian LNG Imports. Finland’s main gas importer Gasum will halt purchases and imports of Russian LNG from July 26 in line with the latest round of EU sanctions on Russia that prohibit LNG imports for European terminals that are not connected to the EU gas network.

Trinidad Is Looking for Refinery Buyers. The island nation of Trinidad and Tobago is looking for an operator for its 165,000 b/d Guaracara refinery, mothballed since 2018, with the government claiming it received eight expressions of interest with Indian steel giant Jindal reportedly interested.

Houthi Attacks Intensify in the Summer. Houthi rebels have stepped up their attacks against commercial ships near Yemen this week, claiming a hit on the Greek-owned bulker Trans World Navigator and even attempting to target the Israeli port of Haifa with long-range missiles.

Ex-Pertamina CEO Jailed for Graft. Indonesia has sentenced a former chief executive of the country’s state-controlled energy firm Pertamina to nine years in jail for graft, alleging that a contract she signed with Cheniere (NYSE:LNG) caused state losses of $113.8 million in 2011-2014.

So 2 pages of charts today:





The next series of charts make the argument that this bull market is nothing like the irrational exuberance of the 2000 dot.com bubble:







The short point is: this 'bubble' is not a stock bubble per se, it is a government debt bubble. That is equivalent to a UST market bubble. This is far more serious.



pg. 2

 

[ducati916]

Mr fff



This is a bifurcated market. SPY & QQQ are distorted by the Big 5. To see the actual market, look at an evenly weighted index (as shown yesterday).

Now alternate arguments to whether this current bull market is a bubble (whether smaller or not to 2000):



A 50/50 bet. WTF



Now this is interesting because it indicates (infers) that bets are being made that the bond market will react in the same manner as when the Fed cut for covid.

A rate cut (if) when it arrives will be highly inflationary. High inflation is bad for bonds. Very, very bad. You do not want to HOLD bonds in an inflationary environment. Nominally, prices may rise...so for a short trade, maybe.

Who is buying?



Same story: when rate cuts came in 2020 to covid, stocks exploded higher. Rate cuts will cause inflation and lots of it. Stocks are an ok hedge against inflation, but you need to be selective. This isn't a tide that raises ALL boats.

My NVDA position certainly adds a bit of excitement:



Late longs are sweating. A break down to re-test the B/O area? Somewhere between $100 & $90? Or straight back towards the $1000/share? LOL. In this market, who knows.

Technicals suggest lower. But as indicated, the Tarot cards may say higher. This is when you wished you had paid more attention to the astrological ramblings of that poster on Reefcap, I forget his tag-name, but he used to do all that astro stuff. Possibly as I drive to work later his name will come back to me.

jog on
duc

 

[ducati916]

So



Full: https://sherwood.news/markets/us-stocks-sp500-setting-new-records-even-as-they-do-nothing/



Anything to worry about this week?

jog on
duc

 

[ducati916]

For the math geeks out there:

A one-factor model to explain asset returns

I recently came across a paper that claimed to explain asset returns with a single factor.

klementoninvesting.substack.com

Fit Fourier Models - MATLAB & Simulink

Fit Fourier series models in the Curve Fitter app or with the fit function.

www.mathworks.com

I use the Fourier model. The new one looks good.

So I have highlighted Treasury market liquidity is not looking great:



The Yen is having issues again. Japan has $1.2 Trillion in UST that they can sell to buy Yen and support the Yen (in the short term). Last year when they sold about $30B the UST market went into liquidity spasms necessitating another Fed intervention. Hmmm.



WTF. Who trades this way?



So kinda missing the point. Gold is money. The liquid (cash) aspect of your portfolio can be held in gold to offset the inflation that eats cash for breakfast. You can even hold an investment (trading) position. So holding land, stocks, wine, art, whatever...



Worth spending some time to understand.





So our bifurcated market continues its merry way via the semi's.

Overall:



The market capitalisation, which obviously heavily influenced by the mega-caps, is pretty overvalued.

Re. deficits moving forward:



No end in sight for expanding deficits.



jog on
duc

 

[qldfrog]

For the math geeks out there:

A one-factor model to explain asset returns

I recently came across a paper that claimed to explain asset returns with a single factor.

klementoninvesting.substack.com

Fit Fourier Models - MATLAB & Simulink

Fit Fourier series models in the Curve Fitter app or with the fit function.

www.mathworks.com

I use the Fourier model. The new one looks good.

So I have highlighted Treasury market liquidity is not looking great:

View attachment 179433View attachment 179431

The Yen is having issues again. Japan has $1.2 Trillion in UST that they can sell to buy Yen and support the Yen (in the short term). Last year when they sold about $30B the UST market went into liquidity spasms necessitating another Fed intervention. Hmmm.

View attachment 179434

WTF. Who trades this way?

View attachment 179432

So kinda missing the point. Gold is money. The liquid (cash) aspect of your portfolio can be held in gold to offset the inflation that eats cash for breakfast. You can even hold an investment (trading) position. So holding land, stocks, wine, art, whatever...

View attachment 179430

Worth spending some time to understand.

View attachment 179429View attachment 179428

View attachment 179427View attachment 179426

So our bifurcated market continues its merry way via the semi's.

Overall:

View attachment 179425View attachment 179424

The market capitalisation, which obviously heavily influenced by the mega-caps, is pretty overvalued.

Re. deficits moving forward:

View attachment 179423

No end in sight for expanding deficits.



jog on
duc

I like the Fourier article.
Why indeed would market curves be different from the whole natural/physical world .
That is a very obvious yet hardly discussed/used in TA ..
Looking forward to beeing able to play with system trading

 

[ducati916]

Heading into last trading day of June:



jog on
duc

 

[ducati916]

Start with:

The rise of the robots: charted

Morgan Stanley gets metaphysical

www.ft.com

Oil:

Friday, June 28, 2024

All eyes are fixed on US inflation data as crude oil prices have maintained their hot streak and are set to end this week with a third weekly gain. Surging geopolitical tensions around Israel and Lebanon have overshadowed slackening economic data from the US in May, with every single day this week posting a day-on-day increase and Brent set to finish the week at $87 per barrel.

Calcasieu Pass 2 Given the Green Light. The US Federal Energy Regulatory Commission voted 2-1 to allow the construction and operation of the 20 mtpa Calcasieu Pass 2 liquefaction plant in Louisiana, paving the way for operator Venture Global to become the second-largest US LNG exporter.

Not Every M&A Can Impress Oil Investors. After Eagle Ford-focused upstream firm SM Energy (NYSE:SM) bought the shale assets of private equity-backed XCL Resources in the Uinta region of Utah for some $2 billion, its shares plunged by a whopping 10% in the Thursday trading session.

Hedge Funds Make U-Turn on Oil Futures. Hedge funds and other money managers have boosted their exposure in Brent futures and options, buying the equivalent of 69 million barrels in the week ending June 18, the fourth fastest week-on-week increase since 2013.

Nigeria’s Refining Dreams Quashed by Fire. Nigeria’s 650,000 b/d Dangote refinery has caught fire this week with the effluent treatment plant sending dark plumes of smoke across the port of Lekki, whilst gasoline deliveries from the refinery were delayed at least until July.

Norway to Launch Seabed Mining in 2025. The government of Norway said it would open vast areas of its Arctic in its first seabed mining licensing round, to be held in the first half of 2025, offering 386 blocks across 280,000 km2 as two companies have already applied for licenses.

Dallas Fed Sees Little Improvement in US Upstream. The quarterly survey of the Federal Reserve Bank of Dallas has shown that oil and gas activity in Texas, Louisiana and New Mexico rose only modestly in Q2, with most polled upstream executives expecting a sideways trend further on.

Russia Eyes Pipeline Gas Deliveries to Iran. Russia’s natural gas giant Gazprom has signed a memorandum of understanding with the Iranian national gas firm NIGC to supply pipeline gas to Iran, despite Tehran sitting on the world’s second-largest gas reserves after Russia.

European Airlines Start Charging for Clean Fuel. Europe’s largest airline group Lufthansa (FRA:LHA) will introduce a surcharge of up to $77 per flight starting early 2025 to cover the rising costs of alternative fuels, coinciding with the EU’s requirement to use at least 2% SAF from next year.

Investment Appeal of Alaska’s Offshore Wanes. Italy’s oil major ENI (BIT:ENI) has agreed to sell its upstream oil operations in Alaska to US producer Hilcorp for an undisclosed fee, boosting the latter’s 135,000 boe/d production, two months after the Biden administration limited Alaska drilling.

Argentina Still Yet to Find Offshore Oil. Norway’s state oil company Equinor (NYSE:EQNR) disclosed that the first offshore well drilled in Argentina’s territorial waters, the Argerich-1 exploration well, failed to find any clear signs of hydrocarbon deposits.

Saudi Aramco on the Lookout for More LNG. The national oil firm of Saudi Arabia has signed a non-binding deal with US energy developer Sempra (NYSE:SRE) for the supply of 5 mtpa LNG over 20 years and is preparing to make a 25% equity investment in phase 2 of the Port Arthur LNG project.

TMX Desperately Needs Spot Shippers. The recently launched TMX pipeline in Canada might take years to break into profit as the operator needs full utilization of the spot toll, equivalent to 20% of nameplate capacity, for equity to turn positive in 2026; in a worst-case scenario, it might take 8-9 years.

Trafigura Seeks Glencore Displacement in Congo. Global trading giant Trafigura has locked in a supply deal with the Kipushi zinc mine in DR Congo, operated by Ivanhoe Mines (TSE:IVN), cementing its position in zinc concentrates after rival Glencore refused to extend its exclusive offtake rights.

So at the beginning of the week:



How it played out: about 50/50. Range was very tight.



For June:



There was a statistic: SPY has never topped in June. Records are made to be broken.

Mr fff:




What can we expect in July?







The consensus is for:

(i) lower yields;
(ii) stronger USD

How about:

Increased Federal spending financed via T-Bills leads to:

(i) weaker USD;
(ii) higher yields in 10yr



jog on
duc

 

[divs4ever]

Start with:

View attachment 179539View attachment 179538

The rise of the robots: charted

Morgan Stanley gets metaphysical

www.ft.com

Oil:

Friday, June 28, 2024

All eyes are fixed on US inflation data as crude oil prices have maintained their hot streak and are set to end this week with a third weekly gain. Surging geopolitical tensions around Israel and Lebanon have overshadowed slackening economic data from the US in May, with every single day this week posting a day-on-day increase and Brent set to finish the week at $87 per barrel.

Calcasieu Pass 2 Given the Green Light. The US Federal Energy Regulatory Commission voted 2-1 to allow the construction and operation of the 20 mtpa Calcasieu Pass 2 liquefaction plant in Louisiana, paving the way for operator Venture Global to become the second-largest US LNG exporter.

Not Every M&A Can Impress Oil Investors. After Eagle Ford-focused upstream firm SM Energy (NYSE:SM) bought the shale assets of private equity-backed XCL Resources in the Uinta region of Utah for some $2 billion, its shares plunged by a whopping 10% in the Thursday trading session.

Hedge Funds Make U-Turn on Oil Futures. Hedge funds and other money managers have boosted their exposure in Brent futures and options, buying the equivalent of 69 million barrels in the week ending June 18, the fourth fastest week-on-week increase since 2013.

Nigeria’s Refining Dreams Quashed by Fire. Nigeria’s 650,000 b/d Dangote refinery has caught fire this week with the effluent treatment plant sending dark plumes of smoke across the port of Lekki, whilst gasoline deliveries from the refinery were delayed at least until July.

Norway to Launch Seabed Mining in 2025. The government of Norway said it would open vast areas of its Arctic in its first seabed mining licensing round, to be held in the first half of 2025, offering 386 blocks across 280,000 km2 as two companies have already applied for licenses.

Dallas Fed Sees Little Improvement in US Upstream. The quarterly survey of the Federal Reserve Bank of Dallas has shown that oil and gas activity in Texas, Louisiana and New Mexico rose only modestly in Q2, with most polled upstream executives expecting a sideways trend further on.

Russia Eyes Pipeline Gas Deliveries to Iran. Russia’s natural gas giant Gazprom has signed a memorandum of understanding with the Iranian national gas firm NIGC to supply pipeline gas to Iran, despite Tehran sitting on the world’s second-largest gas reserves after Russia.

European Airlines Start Charging for Clean Fuel. Europe’s largest airline group Lufthansa (FRA:LHA) will introduce a surcharge of up to $77 per flight starting early 2025 to cover the rising costs of alternative fuels, coinciding with the EU’s requirement to use at least 2% SAF from next year.

Investment Appeal of Alaska’s Offshore Wanes. Italy’s oil major ENI (BIT:ENI) has agreed to sell its upstream oil operations in Alaska to US producer Hilcorp for an undisclosed fee, boosting the latter’s 135,000 boe/d production, two months after the Biden administration limited Alaska drilling.

Argentina Still Yet to Find Offshore Oil. Norway’s state oil company Equinor (NYSE:EQNR) disclosed that the first offshore well drilled in Argentina’s territorial waters, the Argerich-1 exploration well, failed to find any clear signs of hydrocarbon deposits.

Saudi Aramco on the Lookout for More LNG. The national oil firm of Saudi Arabia has signed a non-binding deal with US energy developer Sempra (NYSE:SRE) for the supply of 5 mtpa LNG over 20 years and is preparing to make a 25% equity investment in phase 2 of the Port Arthur LNG project.

TMX Desperately Needs Spot Shippers. The recently launched TMX pipeline in Canada might take years to break into profit as the operator needs full utilization of the spot toll, equivalent to 20% of nameplate capacity, for equity to turn positive in 2026; in a worst-case scenario, it might take 8-9 years.

Trafigura Seeks Glencore Displacement in Congo. Global trading giant Trafigura has locked in a supply deal with the Kipushi zinc mine in DR Congo, operated by Ivanhoe Mines (TSE:IVN), cementing its position in zinc concentrates after rival Glencore refused to extend its exclusive offtake rights.

So at the beginning of the week:

View attachment 179529View attachment 179528

How it played out: about 50/50. Range was very tight.

View attachment 179531

For June:

View attachment 179530

There was a statistic: SPY has never topped in June. Records are made to be broken.

Mr fff:

View attachment 179532


What can we expect in July?

View attachment 179535View attachment 179534

View attachment 179536

View attachment 179533

The consensus is for:

(i) lower yields;
(ii) stronger USD

How about:

Increased Federal spending financed via T-Bills leads to:

(i) weaker USD;
(ii) higher yields in 10yr

View attachment 179537

jog on
duc

i was getting the impression that the issuance of T-Bills was much higher and increasing , so are traders churning them ( trading before maturity harvesting arbitrage ) ?

 

[ducati916]

i was getting the impression that the issuance of T-Bills was much higher and increasing , so are traders churning them ( trading before maturity harvesting arbitrage ) ?

T-Bill issuance is much higher. Much higher. Are they being churned?



If you are using 500:1 leverage, sure you could trade them.

But for the most part, you would just hold them to maturity.



Now this is interesting. Credit spreads are an early warning system. When they widen, bad things are afoot. Liquidity is currently bad, so this is signalling stress in the system.



Another mid-week holiday.



Last week.

Positioning for next week:



Mr fff



So the general feeling is that July will be a good month for the bulls based on seasonality. Hmmm.

Let's move to pg. 2