November 2024 DDD

[ducati916]

So this is the second MSTR. All they are doing is issuing debt and buying BTC. AKA a 'pureplay'.

How many more useless companies adopt the BTC strategy? Is this the ultimate bootstrap operation on a limited asset? Most Wall St. firms that flood the market with copycat ideas, for example Covered Call strategies or x3 leveraged ETF's etc, have no limit to their creation.

Interesting.





jog on
duc

 

[ducati916]

Oil News:

Friday, November 22nd, 2024

Brent futures have been trading within a narrow bandwidth of $73-74 per barrel, but the return of geopolitical risk has pushed oil prices higher - recouping most of November’s losses to date. Whilst Russia’s launch of hypersonic missiles into Ukraine is keeping the markets busy for now, the contours of an OPEC+ meeting taking place next weekend are looming large for oil. Expect a lot of OPEC+ policy speculation in the coming week.

IAEA Pushes for New Iran Nuclear Talks. The International Atomic Energy Agency passed a resolution urging Iran to improve cooperation with the global nuclear community and requesting a comprehensive assessment of its arsenal, with Tehran defying to comply but suggesting capping its stock of uranium.

COP29 Starts to Disintegrate Again. The latest COP29 draft on climate finance commitments has been lambasted for lacking hard figures and providing no pathway for bridging the funding gap between developed and developing countries, with all participating countries rejecting the draft this week.

ExxonMobil Gives Up on Guyana Ambition. US oil major ExxonMobil (NYSE:XOM) and its project partners have pulled out of negotiations with Guyana over potential exploration terms in the country’s most recent licensing bid for shallow-water blocks, relinquishing the right to operate block S8.

US Targets Russia’s Top Energy Bank. The US Treasury Department tightened energy sanctions on Russia after it imposed new sanctions on Gazprombank, the largest facilitator of energy payments for Russian fossil fuels as it is used by Gazprom to receive natural gas payments for deliveries to Europe.

Saudi Aramco Focuses on Dividend Growth. The largest oil company in the world, Saudi Arabia’s Saudi Aramco (TADAWUL:2222), is seeking to take on more debt for capital, sticking to ambitious dividend payments to the state, as it continues to contain the country’s fiscal benefit by means of its own debt.

Mexico to Scrap Independent Regulators. The Mexican Congress has voted in favor of a bill that would eliminate seven of the 11 independent regulators in Mexico, seeing the country’s National Hydrocarbons Commission, as well as the CRE regulatory commission, absorbed by the Energy Ministry.

Iraq Clamps Down on Fuel Smuggling to Iran. The Iraqi government has claimed to be clamping down on the illegal smuggling of crude oil, bitumen, and other products to Iran through the semi-autonomous Kurdistan region, asking Tehran to block any delivery unless it is licensed by the state export firm Somo.

Activist Investors Target Japan’s Gas Firms. Activist investor Elliott Investment Management reported a 5.03% stake in one of Japan’s largest utility firms Tokyo Gas (TYO:9531), following similar moves with trading house Sumitomo, advocating to sell large amounts of real estate it owns for capital efficiency.

Despite Austria Row, Russia’s Pipeline Gas Keeps on Flowing. Gazprom’s pipeline flows to Europe via Ukraine have been stable this week despite the Russian firm’s contractual dispute with OMV and its subsequent halting of deliveries to the company, indicating others have stepped in to buy more gas.

Brazil Can’t Stop Distributing Dividends. Brazil’s state-controlled oil firm Petrobras (NYSEBR) approved the payout of $3.4 billion in extraordinary dividends to shareholders, all the while greenlighting its $111 billion investment plan for 2025-2029, of which 70% will be geared towards E&P.

Trump Eyes Rollback of Biden Standards. US President-elect Donald Trump will seek to weaken the Biden-era vehicle efficiency and tailpipe emission standards, whilst also considering the scrapping of a $7,500 tax credit for EV buyers introduced in 2022 as part of the IRA stimulus package.

Egypt Starts Talks on Long-Term LNG Imports. Egypt is reportedly negotiating potential long-term LNG supply deals with US and other foreign majors, preferring them over costlier spot deals, as domestic production of gas fell to a seven-year low in September on the back of lower Zohr output volumes.

China Reports Supergiant Gold Discovery. China’s state outlet Xinhua reported that the country discovered gold reserves worth $83 billion in central Hunan province, the equivalent of more than 300 tonnes of highest-grade ore, further boosting its standing as the world’s largest gold producer.

Treasury yield have moved higher while the Fed has lowered interest rates. This was not supped to happen. The question now is determining what is the fair value for Treasury yield out the curve. The usual method is to determine the real rate of interest which usually is about 2% plus some estimate of expected inflation which can be argued to be at level above 2%. So, if we use a real rate of 2% and an inflation rate of 2.5% we are at 4.5% as a good starting point; however, we need to add a term premium for the risk from holding these bonds out the curve. That number has been negative for an extended period but is now positive and rising. The current term premium is at the highest level in over a year; however, a longer history suggests that it can increase by a multiple of the current levels. One reason could be the lower liquidity in Treasuries, yet the recent fall is not seen in the term premium. Forecasting the term premium is now the Treasury yield forecast will card.















Musk: https://www.msnbc.com/opinion/msnbc-opinion/elon-musk-trump-doge-silicon-valley-rcna180646



Full: https://sherwood.news/crypto/microstrategy-bitcoin-valuation-premium/

As I said yesterday, bootstrap operation. LOL.

So yesterday's spike to $540 +/- must have been 'short covering'. Today stabilised at +/- $430. But, that could well have been a short term sell signal.

Speculation and FOMO are running hot currently. Always difficult to navigate. From a risk and valuation (entire market) this is a sell. The problem of course is that stocks could easily trade much, much higher. You then agonise over your lost profits. Of course, even more dangerous is selling 'short' and having the market continue to explode higher.

The closer to the top we actually are, the faster will prices rise.

jog on
duc

 

[qldfrog]

Oil News:

Friday, November 22nd, 2024

Brent futures have been trading within a narrow bandwidth of $73-74 per barrel, but the return of geopolitical risk has pushed oil prices higher - recouping most of November’s losses to date. Whilst Russia’s launch of hypersonic missiles into Ukraine is keeping the markets busy for now, the contours of an OPEC+ meeting taking place next weekend are looming large for oil. Expect a lot of OPEC+ policy speculation in the coming week.

IAEA Pushes for New Iran Nuclear Talks. The International Atomic Energy Agency passed a resolution urging Iran to improve cooperation with the global nuclear community and requesting a comprehensive assessment of its arsenal, with Tehran defying to comply but suggesting capping its stock of uranium.

COP29 Starts to Disintegrate Again. The latest COP29 draft on climate finance commitments has been lambasted for lacking hard figures and providing no pathway for bridging the funding gap between developed and developing countries, with all participating countries rejecting the draft this week.

ExxonMobil Gives Up on Guyana Ambition. US oil major ExxonMobil (NYSE:XOM) and its project partners have pulled out of negotiations with Guyana over potential exploration terms in the country’s most recent licensing bid for shallow-water blocks, relinquishing the right to operate block S8.

US Targets Russia’s Top Energy Bank. The US Treasury Department tightened energy sanctions on Russia after it imposed new sanctions on Gazprombank, the largest facilitator of energy payments for Russian fossil fuels as it is used by Gazprom to receive natural gas payments for deliveries to Europe.

Saudi Aramco Focuses on Dividend Growth. The largest oil company in the world, Saudi Arabia’s Saudi Aramco (TADAWUL:2222), is seeking to take on more debt for capital, sticking to ambitious dividend payments to the state, as it continues to contain the country’s fiscal benefit by means of its own debt.

Mexico to Scrap Independent Regulators. The Mexican Congress has voted in favor of a bill that would eliminate seven of the 11 independent regulators in Mexico, seeing the country’s National Hydrocarbons Commission, as well as the CRE regulatory commission, absorbed by the Energy Ministry.

Iraq Clamps Down on Fuel Smuggling to Iran. The Iraqi government has claimed to be clamping down on the illegal smuggling of crude oil, bitumen, and other products to Iran through the semi-autonomous Kurdistan region, asking Tehran to block any delivery unless it is licensed by the state export firm Somo.

Activist Investors Target Japan’s Gas Firms. Activist investor Elliott Investment Management reported a 5.03% stake in one of Japan’s largest utility firms Tokyo Gas (TYO:9531), following similar moves with trading house Sumitomo, advocating to sell large amounts of real estate it owns for capital efficiency.

Despite Austria Row, Russia’s Pipeline Gas Keeps on Flowing. Gazprom’s pipeline flows to Europe via Ukraine have been stable this week despite the Russian firm’s contractual dispute with OMV and its subsequent halting of deliveries to the company, indicating others have stepped in to buy more gas.

Brazil Can’t Stop Distributing Dividends. Brazil’s state-controlled oil firm Petrobras (NYSEBR) approved the payout of $3.4 billion in extraordinary dividends to shareholders, all the while greenlighting its $111 billion investment plan for 2025-2029, of which 70% will be geared towards E&P.

Trump Eyes Rollback of Biden Standards. US President-elect Donald Trump will seek to weaken the Biden-era vehicle efficiency and tailpipe emission standards, whilst also considering the scrapping of a $7,500 tax credit for EV buyers introduced in 2022 as part of the IRA stimulus package.

Egypt Starts Talks on Long-Term LNG Imports. Egypt is reportedly negotiating potential long-term LNG supply deals with US and other foreign majors, preferring them over costlier spot deals, as domestic production of gas fell to a seven-year low in September on the back of lower Zohr output volumes.

China Reports Supergiant Gold Discovery. China’s state outlet Xinhua reported that the country discovered gold reserves worth $83 billion in central Hunan province, the equivalent of more than 300 tonnes of highest-grade ore, further boosting its standing as the world’s largest gold producer.

Treasury yield have moved higher while the Fed has lowered interest rates. This was not supped to happen. The question now is determining what is the fair value for Treasury yield out the curve. The usual method is to determine the real rate of interest which usually is about 2% plus some estimate of expected inflation which can be argued to be at level above 2%. So, if we use a real rate of 2% and an inflation rate of 2.5% we are at 4.5% as a good starting point; however, we need to add a term premium for the risk from holding these bonds out the curve. That number has been negative for an extended period but is now positive and rising. The current term premium is at the highest level in over a year; however, a longer history suggests that it can increase by a multiple of the current levels. One reason could be the lower liquidity in Treasuries, yet the recent fall is not seen in the term premium. Forecasting the term premium is now the Treasury yield forecast will card.

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Musk: https://www.msnbc.com/opinion/msnbc-opinion/elon-musk-trump-doge-silicon-valley-rcna180646

View attachment 188364

Full: https://sherwood.news/crypto/microstrategy-bitcoin-valuation-premium/

As I said yesterday, bootstrap operation. LOL.

So yesterday's spike to $540 +/- must have been 'short covering'. Today stabilised at +/- $430. But, that could well have been a short term sell signal.

Speculation and FOMO are running hot currently. Always difficult to navigate. From a risk and valuation (entire market) this is a sell. The problem of course is that stocks could easily trade much, much higher. You then agonise over your lost profits. Of course, even more dangerous is selling 'short' and having the market continue to explode higher.

The closer to the top we actually are, the faster will prices rise.

jog on
duc

Mstr at least has some BTC, one ship I missed is xrp
Note: my phone suggesting "crap", is that AI?

 

[ducati916]

MSTR:

Financial markets are the ultimate arena. And right now, one gladiator stands head and shoulders above them all. His name is Michael Saylor.​ Michael Saylor is the executive chairman and co-founder of MicroStrategy, a company that issues equity and debt to buy Bitcoin. It also happens to run a software business.​ The President and CEO of the company opened the recent earnings call by talking about their Bitcoin accumulation strategy. They didn’t mention the results of the software business until nine minutes into the call, when they revealed that it generated $116 million in revenue, which was dwarfed by $134 million of expenses. So how did a company that lost $18 million in revenue in the most recent quarter manage to generate one of the greatest runs in the history of capital markets? Let’s dive in.​ I asked Chart Kid to make this on Wednesday morning, comparing the market cap of MicroStrategy to some other huge companies like Starbucks and Nike. It’s since pulled back to ~$95 billion, but either way, something really wild is happening.​ ​ Michael Saylor deserves a lot of credit for this. You might think he’s crazy. You might not believe he deserves any credit at all for “getting lucky.” And that’s fine. But, he called his shot and then hit a home run. You have to tip your cap.​ ​ MicroStrategy started buying Bitcoin on August 10, 2020. BTC is up 720% since then. MSTR is up 3,313% over the same time. Needless to say, no stock in the S&P 500 has come close to matching those returns. So how did he do it?​ “Intelligent leverage” is what they’re calling it.​ In the first nine months of the year, their diluted shares outstanding rose 13.2%. Their total Bitcoin holdings rose 33.3% over the same time. Here’s how they described their strategy on their most recent earnings call:​ “Our objective continues to be to accumulate Bitcoin holdings at a faster rate than we issue shares, and we have demonstrated a solid track record of doing so. To assess our performance in achieving this strategic objective, we introduced a new key performance indicator last quarter, which we refer to as BTC Yield. To reiterate again, we define BTC Yield as a period-to-period percentage change in the ratio of our total bitcoin holdings to our assumed diluted shares outstanding.”​ That’s it. That’s the whole game. And right now, they’re winning 28-3 (I kid).​ The stock is up 3,313% since they started buying bitcoin, but the market cap is up 7,820% over the same time. Wait, what? How? Isn’t diluting existing shareholders bad? Yes, almost always. Unless you’re using the fresh capital as leverage to buy an asset that has explosive growth. Here’s Saylor describing it:​ “The more capital that we gather, the more powerful we become and the more we enrich our own shareholders. This is -- it's totally counterintuitive because everybody else in the world thinks if you sell equity, you dilute the shareholders. That's true if you don't have a use of proceeds that grows faster and yields more than the S&P 500 Index. The cost of capital is the S&P 500.”​ ​ MicroStrategy holds 331,200 Bitcoin with a current market value of ~$32 billion. The market cap is $94 billion. I’d say his game plan is working, and then some. The question is, what are the limits of this strategy? How long will it keep working? If the 264% growth in its market cap over the last three months continues, it will cross $1 trillion by the end of April. It would blow past where the largest stock is today (Nvidia) in July.​ I guess anything’s possible, but this would be the craziest thing to ever happen in the history of financial markets.​ So that’s the story more or less with MicroStrategy.​ Now, let’s look at the mania happening with the stock and some of its derivatives.​ On Wednesday, MicroStrategy became the most traded stock in the country. Ahead of Nvidia, Tesla, Amazon, and double SPY! This. Is. Crazy. And you can’t just trade MicroStrategy. That’s for whimps. You gotta sprinkle some leverage on that leverage. MSTU (T-REX 2X long MSTR) and MSTX (Defiance 2X Long MSTR) were # 5 and #8 in volume that day. Credit to my friend Eric Balchunas and his amazing team for all this data.​ Remember how crazy GameStop was? That seems quaint by comparison. Look at that volume!​ ​ A massively important factor in all of this is Bitcoin, which we haven’t addressed yet.​ The biggest thing Bitcoin has going for it is also the same thing that gets its haters all up in arms. “It has no use case. It doesn’t do anything. IT DOESN’T HAVE ANY FUNDAMENTAL VALUE.”​ Exactly! That’s part of what makes the story work. It doesn’t report earnings. It can’t beat expectations and still drop 30%. Bitcoin is a supply and demand story, and right now, thanks to Michael Saylor and the ETFs and the deregulation via the incoming administration, there is way more demand than supply. I’m not saying that will always be the case, but it certainly is for now and the foreseeable future.​ So how does this end? What stops the madness? I have a few ideas. Bitcoin falls, in which case MSTR will fall more. MSTU and the other leveraged vehicles will fall even more. That’s obvious.​ Maybe the derivatives will blow this whole thing up, independent of the price of BTC. The Defiance and T-REX products were launched in August and September, and already they have a combined ~$5 billion in total assets. And the leverage being used to support these things is starting to shake the foundations of what markets can handle. We got a preview last week of what can end the party.​ Bloomberg reports:​ “Amid a red-hot run in the shares of MicroStrategy Inc. last month, Matt Tuttle got some bad news from the prime brokers for his booming leveraged ETF linked to the shares of the crypto-centric company.​ The prime brokers — units within banks that work with their clients on activities like securities lending — had reached their limits on how much swap exposure they were willing to offer for his roughly month-old fund, the T-Rex 2X Long MSTR Daily Target ETF, which by some measures was the most volatile exchange-traded fund to ever hit Wall Street at the time of its launch.”​ My friend Dave Maze, CEO at Roundhilll, was quoted in the story, saying, “It should be making us question: Has the ETF jumped the shark? We’re at a point where we’re pressing the boundaries of what the marketplace will allow.”​ All credit to Michael Saylor and anyone who understood what was happening enough to profit from this. I know they get mad when TradFi people like me say anything negative. I get it. Who are we to mock something that made you so much money? Again, I get it. But, you have to admit. Ah, nevermind.​ I don’t see how this is sustainable. But I’m also not smart enough to know what breaks this.​ If you’re new to this game, please play responsibly with money you can afford to lose, should the music stop. But while it’s playing, it remains the greatest show on earth.​

jog on
duc

 

[divs4ever]

AEA Pushes for New Iran Nuclear Talks. The International Atomic Energy Agency passed a resolution urging Iran to improve cooperation with the global nuclear community and requesting a comprehensive assessment of its arsenal, with Tehran defying to comply but suggesting capping its stock of uranium

given the history here , i am surprised that Iran would continue to communicate with these people at all .

it has complied , and complied and complied , and all these people do is the bidding of other global powers that flout precisely the laws that Iran has complied with for over a decade .

meanwhile ... North Korea has waved a couple of digits at ( almost ) everybody , and has several nuclear weapons AND the means to deliver them ( but probably not much further than Japan/Philippines )

 

[ducati916]

Noise or information?

jog on
duc

 

[ducati916]

What are the features of an asset or the themes supporting it that increase the risk of a bubble?

1) True and simple stories: Although the underlying narrative supporting a bubble does not have to be true (sometimes they can be nonsense) the most dangerous are those which are supported by a valid and simple story. This allows investors in the bubble to answer easy questions such as (in the case of the Dot-Com bubble): Will the internet change our lives? Rather than more difficult ones such as: Which companies will benefit and what is already reflected in valuation? There is far more money to be lost when a story used to justify an investment bubble is true.

2) Transformative stories: For bubbles to successfully emerge it needs to be easy for investors to disregard traditional approaches to fundamental investment valuation. It pays therefore for the narrative underpinning the bubble to be about a seismic change, which makes it easy to ignore the warnings of naysayers as their anachronistic methods simply do not incorporate the revolution that is taking place.

3) Everyday impact: The most powerful bubbles draw in incredibly wide participation, even from individuals who would not normally make active investment decisions. The more that the story supporting a bubble in an asset relates to how we experience everyday life, the more people that are likely to become involved. If we can see and experience the story unfolding then we are more likely to buy into it.

4) Unquantifiable scale: Big bubbles need a big story. If there are obvious limits to growth then it puts a lid on speculation. A genuine bubble needs an asset where the transformation taking place means that it is difficult to limit the upside potential (in theory).

5) Difficult to value: Although most bubbles involve a yawning disconnect between the price of an asset and any prudent approach to valuation, the most significant bubbles can occur in assets that are either difficult or impossible to value. While equity market bubbles can be extreme at some point there will be a gravitational pull from fundamental realities of the asset class, but assets which are impossible to value because they have no cash flows – such as gold and cryptocurrencies – are perfect. If you cannot value an asset, who is to say what the upside could be?

This distinction leaves us with two types of assets: fundamental assets and belief assets. Fundamental assets have cash flows which means that (in theory at least) we can value it in some sensible fashion. By contrast, belief assets have no practical means of valuation, so they are priced based on what others are willing to pay. The easiest way to judge where an asset sits based on this delineation is to ask yourself – if an asset’s price was up 100% or down 50% tomorrow (other things equal) would that change my view? For fundamental assets this should dramatically alter its attractiveness, but for belief assets large price moves don’t really change anything apart from sentiment. This feature gives them a huge potential range of outcomes (from staggeringly good to disastrous) – ideal for bubble formation.

The more that an asset possesses these five features, the greater the propensity is for bubbles to develop. It is not simply about the asset, however. As Shiller’s quote highlighted, speculative bubbles are formed by people and their behaviour. The makeup of market participants matters, in the simplest of terms we can think of three groups involved in a bubble: Believers, Chasers and Luddites:

Believers: This group have fully adopted the story underpinning the bubble and approach it with almost religious fervour. Rather than being an investment view it often becomes part of their identity. They will never sell, never criticise and are able to justify any valuation. Their ardent belief either comes from developing a genuine confidence or faith in the asset and its supporting narrative, or because their financial incentives have become inextricably entwined with the continuation of the bubble.

Chasers: This group are agnostic on the story and its validity – they just care about the price movements. They buy into a bubble because performance is strong. Like believers they have little regard for valuation, but are not wedded to the asset – they will own it while it is going up because it is in their financial interest to do so. A classic member of this group are asset managers launching products based around an emerging bubble asset, they don’t believe in it – they want to make money from it. Being a Chaser can be an explicit strategy but often it is simply the strength of performance from the bubble asset that draws them in for fear of missing out or maybe losing their job. Although this is the largest group, few will admit to being a member of it – momentum investing has a bad reputation, unless you are a quant.

Luddites: This group may believe in the story supporting the asset and almost certainly consider it to be grossly overvalued. They will inevitably endure poor performance as the bubble develops and be regarded as stubborn and out of touch. Professional investors in this group will risk dwindling assets and eventually their careers.

Both the relative size and movement of these groups will be crucial to bubble formation. While Believers are important in spreading the supporting stories they will be in the minority (although their flock will increase the more extreme the performance). The size of the Luddite group will shrink as the bubble grows as some capitulate to become Chasers and others give up.

It is the Chasers, however, that are most important. This will be the largest group and dictate both the size and persistence of the bubble. Their eventual exit from the asset will also precipitate its end.

—-

Although difficult to validate, my base case would be that the potential for bubbles or prolonged periods of very extreme asset class performance is greater than ever before. Increasing connectedness through the rise of social media makes for easier amplification and transmission of stories, while I would also argue that investor time horizons are contracting – making us more prone to chase the performance of whatever is working.

However we approach speculative investment bubbles – whether we choose to embrace them, chase them or ignore them – their emergence presents profound risks both in terms of the asset in question and our behavioural response to it. As a bubble inflates and the story becomes evermore persuasive, the increasing cost of missing out is likely to overwhelm the increasing risk of disastrous losses.

MSTR and BTC: Bubble?

Full: https://davidgerard.co.uk/blockchai...pposed-to-be-good-now-is-it-a-new-bubble-yet/



Full: https://nypost.com/2024/11/23/busin...ng-office-leaving-mess-behind-for-trump-team/



Meanwhile:





Full: https://www.vox.com/policy/387382/musk-trump-balance-budget-doge




jog on
duc

 

[ducati916]

Housing stuff:



Which rather implies that they will want to buy it at $100K or higher when they didn't buy it lower. The BTC story has been around a long time. They will be aware of it and obviously not impressed.

The only 'trigger' might be FOMO. But unlikely.

Bitcoin's relentless rally has pressed on. In the past 24 hours, the world's largest crypto has surpassed the $98,000 mark for the first time ever as it closes in on the $100,000 milestone. As shown below, after trending lower from the end of the first quarter through late summer, Bitcoin hit a low on September 6 and finally broke out of that downtrend by mid-October with a parabolic move upwards after the election. Currently, the crypto is up over 80% from that September low.

​

Bitcoin has seen a lot of big green candles in the past few weeks. To gauge how it has traded during the day, below we show an intraday composite of Bitcoin's action since Election Day a little over two weeks ago. This is essentially the average 24-hour path that Bitcoin has taken since Election Day. We have shaded in gray the period from 9:30 AM ET to 4 PM ET, which represents regular trading hours for US equity markets. As you can see, Bitcoin has been surging when the US stock market has been open outside of a slight sell-off from 2-4 PM ET. Is this because of all the new Bitcoin ETF buying that has been happening lately?

​

The surge in Bitcoin prices has also come at a time when seasonality hasn't exactly been at its best. In the second chart below, we show the average path of Bitcoin throughout the year for all years since 2015, over the past five years, and this year. As shown, this year in March and the second half of May, Bitcoin bucked seasonal trends as it saw much stronger runs versus a historical seasonal pattern in which prices have tended to fall. That parallels with this month in which prices have absolutely soared, whereas in the past, Bitcoin has tended to move lower in November before rebounding through the holidays. In fact, as the first days of December approach, forward one month and three month seasonality is reaching some of its strongest readings of the year. As shown in the dials below, forward one month historical median seasonal returns rank in the 85th percentile of all days of the year and forward three month returns are even better, just shy of the top decile of readings. Of course, seasonality is no guarantee of future price movements, and the recent rally already leaves Bitcoin very overbought.

​

Housing is looking bad. Housing is an important category within the US economy. High interest rates are to blame.

Oil News:

European gas prices have surged almost 45% this year and forecasts for cold weather threaten to add pressures on gas supply, further aggravated by US sanctions on Gazprom’s very own banking subsidiary, Gazprombank.

- For most of November temperatures in Northwest Europe have been trending along the 30-year average line or below, marking the first cold winter since 2021, and leading to gas inventories draws to 87.7% of capacity.

- There is very limited LNG supply capacity increases coming this winter, mostly from Plaquemines in the US, however production disruptions across the globe could offset those increments, with Woodside halting LNG liftings from Australia’s Pluto due to an unplanned outage.

- Front-month TTF natural gas prices reached their highest in a year on 21 November, reaching €48.3 per MWh (equivalent to $16.1 per mmBtu), whilst JKM lagged behind European prices, pricing only slightly above $15 per mmBtu.

Market Movers

- US midstream major ONEOK (NYSE:OKE) signed an agreement to purchase all remaining publicly held units of EnLink Midstream in a $4.3 billion transaction, boosting its 50,000-mile pipeline network.

- The US’ leading natural gas producer EQT (NYSE:EQT) will be forming a JV with US investment firm Blackstone, with the latter getting a stake in the Mountain Valley Pipeline in return for $3.5 billion in cash.

- Mining major AngloAmerican (LON:AAL) agreed to sell its remaining coking coal mines in Australia to Peabody Energy (NYSE:BTU) for up to $3.78 billion in cash, as part of its large-scale divestment drive.

Tuesday, November 26, 2024

A potential Israel-Lebanon ceasefire deal is looming large on the geopolitical front, but as we get closer to December 1, OPEC+ is becoming the main focus of oil markets. After the energy ministers of Saudi Arabia, Russia, and Iraq met in Baghdad on Tuesday, unannounced, the pendulum has swung towards postponement of production increases, with ICE Brent so far rangebound at around $73.50 per barrel.

OPEC+ Meeting No Longer Happening in Person. OPEC+ will hold its much-anticipated policy meeting online rather than in person, as the oil markets are speculating about Saudi Arabia and Russia considering postponing output increases indefinitely amidst weak global demand.

China Issues Extra Quota for Independents. China has issued an additional crude import quota of 5.84 million tonnes (equivalent to almost 120,000 b/d) to independent refiners so that they can boost refinery runs in the remaining weeks of 2024, particularly independent major Hengli (SHA:600346).

Oil Service Firms Crank Up Pressure on Pemex. Oil service providers across Mexico are demanding that state-owned oil firm Pemex pay its overdue debts totaling $5.1 billion, just as the new Sheinbaum government has simplified taxation for Pemex, merging three duties into one.

Venezuela Braces for Shortages After Gas Meltdown. Propane production plunged 97% since an explosion at the Muscar gas complex debilitated Venezuela’s gas separation complex, drastically cutting the availability of cooking oil over the next four to five months until Muscar is fully repaired.

Diesel Backwardation Widest Since April. The time spread between M1 and M2 of ICE gasoil futures has moved to its widest since April, at a $7.5 per metric tonne premium, indicating that backwardation is steepening amidst lower Saudi and US incoming volumes and lower European availability.

Bangladesh to Open Exploration Next Month. Bangladesh will open its international bidding process for offshore gas exploration next month, concurrently liberalizing its LNG market, allowing any commercial entity to import LNG from the spot market.

Russian Pipeline Gas Still Flowing to Austria. The Gazprom-OMV arbitration row seems to be having no impact whatsoever on physical supplies of natural gas to Europe as this week’s nominations have been stable at 42.2 MCm/day, with Austria-bound deliveries returning to levels seen last week.

Adani Collapse Impacts French Major. French energy giant TotalEnergies (NYSE:TTE) announced it would stop any financial contributions to India’s Adani group of companies after the US SEC charged India’s second-richest businessman Gautam Adani with bribery, jointly developing 4 renewables-focused assets.

Exxon Sees No Future in Suriname. US oil major ExxonMobil (NYSE:XOM) has relinquished its 50% non-operated interest in deepwater Block 52 in Suriname, just across the border from its prolific Stabroek block in Guyana, with Malaysia’s Petronas taking over the entire acreage.

Coffee Prices Soar to 27-Year Highs on Shrinking Supply. Coffee futures skyrocketed to their highest since 1997 on weak crop concerns, with Arabica prices hitting $3.1 per pound, up almost 65% this year, as continuous drought conditions in Brazil are set to drastically reduce next year’s output.

Turkey Asks for Russia Sanction Waivers. The Turkish government is reportedly in talks with the United States to secure a Russia sanctions waiver to continue paying for its natural gas supplies through the recently sanctioned Gazprombank, with Gazprom supplying 50% of its gas imports.

Saudi Arabia Goes All In on Metals. Saudi Arabia signed 9 investment deals in metals and mining worth more than $9.3 billion with Asian mining majors such as Vedanta or Zijin Group, seeking to boost domestic capacity with a new copper smelter in Ras al-Khair, zinc and platinum smelters.

Brazil Gets The Dividend Mojo Going. Brazil’s national oil company Petrobras (NYSEBR) approved the payout of an additional $3.4 billion in extraordinary dividends to shareholders, withheld previously under the previous management, concurrently lowering the minimum cash level to $6 billion.

Dangerous idea to bring to the market?: https://thewaiterspad.com/2024/11/25/there-are-no-facts-only-feelings/

Free backtesting Option software: https://optionalpha.com/backtester-...hWpOIQKfF1E=:GvyhtBg0wwtQy04cXojsUQkrADPS/22h

Bitcoin: https://prospect.org/power/2024-11-26-crypto-plot-against-americas-gold-reserves/

Worth a read.

From Bespoke:

It's a holiday-shortened Thanksgiving week, so over the next few days, we plan on writing about some of the stocks that investors can be most thankful for. Yesterday we looked at the best performing stocks over the last five years, and in this post, we're highlighting the 30 best-performing stocks in the S&P 1500 on a total return basis over the last twenty years. In the table below we rank them from 1st to 30th and show how much a $1,000 investment in each stock twenty years ago (on 11/25/04) would be worth today. Below the table, we provide a one-sentence blurb generated by AI that describes what each company does. AI chip maker NVIDIA (NVDA) has easily been the best-performing stock over the last twenty years, and it has made a large number of investors extremely wealthy. Incredibly, a $1,000 investment in NVDA twenty years ago would have almost turned you into a millionaire today! Unbelievably, $1,000 in NVDA back on 11/25/04 would be worth roughly $944k today. (By the same math, $10k would be worth $9.44 million, while $100k would be worth $94.4 million.) Twenty-year returns for streaming giant Netflix (NFLX) haven't been too shabby either. $1,000 in NFLX twenty years ago would be worth more than $550k today. Rounding out the top five are Texas Pacific Land (TPL), Apple (AAPL), and Booking Holdings (BKNG). In total, eight stocks have turned $1,000 into more than $100k over the last twenty years. This includes the aforementioned NVDA, NFLX, TPL, AAPL, and BKNG along with Monster Beverage (MNST), Intuitive Surgical (ISRG), and Amazon.com (AMZN). Other notables on the list include Deckers Outdoor (DECK), Salesforce (CRM), Domino's Pizza (DPZ), and United Rentals (URI). For anyone out there who has been riding any of these big winners for the last twenty years, bravo to you, and Happy Thanksgiving!

​

For a quick description of each company listed above, we asked AI to give us its best one-sentence blurb: NVIDIA (NVDA): A leader in graphics processing units (GPUs) for gaming, artificial intelligence, and data centers, driving innovation in computing and visual technologies. Netflix (NFLX): A global streaming service offering a vast library of movies, TV shows, and original content, accessible on-demand across various devices. Texas Pacific Land (TPL): Manages oil and gas royalties, land leases, and water services for energy production in Texas. Apple (AAPL): Designs and sells consumer electronics like the iPhone, Mac, and iPad, along with software and services like the App Store and iCloud. Booking Holdings (BKNG): Operates online travel brands like Booking.com, Priceline, and Agoda, providing services for hotel reservations, car rentals, and flights. Monster Beverage (MNST): Produces energy drinks, including the flagship Monster Energy brand, targeting consumers looking for enhanced energy and focus. Intuitive Surgical (ISRG): Manufactures robotic-assisted surgical systems, including the da Vinci system, enhancing precision and minimally invasive procedures. Amazon.com (AMZN): A global e-commerce leader offering retail, cloud computing, and digital streaming services, alongside innovations like Amazon Web Services (AWS). XPO (XPO): Provides freight transportation and logistics services, specializing in less-than-truckload (LTL) and last-mile delivery solutions. UFP Technologies (UFPT): Designs and manufactures custom packaging, components, and engineered products for medical, automotive, and industrial applications. Regeneron Pharmaceuticals (REGN): Develops biopharmaceuticals to treat serious medical conditions, including eye diseases, cancer, and autoimmune disorders. Comfort Systems USA (FIX): Provides mechanical systems installation and services, specializing in HVAC and building systems for commercial clients. RadNet (RDNT): Operates outpatient diagnostic imaging centers offering MRI, CT scans, and other radiology services across the U.S. NeoGenomics (NEO): A cancer diagnostics company providing genetic and molecular testing for oncologists, pathologists, and researchers. Deckers Outdoor Corporation (DECK): Markets lifestyle footwear and apparel under brands like UGG, Teva, and HOKA ONE ONE, known for comfort and performance. AAON (AAON): Manufactures heating, ventilation, and air conditioning (HVAC) equipment, focusing on energy efficiency and innovative designs. Salesforce (CRM): A cloud-based customer relationship management (CRM) platform that enables businesses to manage sales, service, and marketing operations. Tyler Technologies (TYL): Provides software and technology services for local governments, focusing on public safety, tax, and financial management. Old Dominion Freight Line (ODFL): A leading less-than-truckload (LTL) carrier offering efficient freight transportation across North America. Fair Isaac Corporation (FICO): Best known for its FICO credit scoring system, it provides analytics and decision-making software for risk management. Monolithic Power Systems (MPWR): Designs power management solutions for electronics in industrial, automotive, and consumer markets. Repligen (RGEN): Develops bioprocessing technologies and materials used in the production of biologic drugs and gene therapies. O'Reilly Automotive (ORLY): A retailer and distributor of automotive parts, tools, and equipment, serving professional and DIY customers. Domino's Pizza (DPZ): A global leader in pizza delivery and carryout services, leveraging technology for fast and convenient ordering. EMCOR Group (EME): Provides construction and facilities services, specializing in mechanical and electrical systems installation and maintenance. Lennox International (LII): Produces HVAC and refrigeration equipment for residential and commercial applications. United Rentals (URI): The largest equipment rental company in the world, offering construction, industrial, and specialty equipment. Manhattan Associates (MANH): Provides supply chain and omnichannel commerce solutions to help retailers and wholesalers optimize operations. Quanta Services (PWR): Delivers infrastructure services for energy and communications, including electric power and pipeline construction. Copart (CPRT): An online vehicle auction company specializing in salvaged and used cars, serving insurance companies, dealerships, and buyers worldwide.

jog on
duc

 

[peter2]

Lots of info in that post. Home sector may be looking glum but XHB and TOL at highs. I couldn't short them.

Liked the mention of coffee in the oil report. Coffee is the workers "oil".

Always chuckle when I see lists that show how $1000 investment has grown >$100K. Seems so easy. Why didn't we do it?
How about a $1000 investment in BTC 20 yrs ago. What would that be worth now? Probably bought it through Mt Gox back then. Mt Gox was hacked and investment lost if you hadn't kept your BTC in an offline wallet.

 

[ducati916]

Lots of info in that post. Home sector may be looking glum but XHB and TOL at highs. I couldn't short them.

Liked the mention of coffee in the oil report. Coffee is the workers "oil".

Always chuckle when I see lists that show how $1000 investment has grown >$100K. Seems so easy. Why didn't we do it?
How about a $1000 investment in BTC 20 yrs ago. What would that be worth now? Probably bought it through Mt Gox back then. Mt Gox was hacked and investment lost if you hadn't kept your BTC in an offline wallet.

So for $1000 you could have bought 100,000 BTC. Which = 100,000 * 95,000 = $9,500,000,000 = $9.5 billion.

Re. housing: pretty much everything is in a melt-up higher.

This is one of those really uncomfortable markets where you know the fundamentals are absolutely shocking, yet, you simply cannot get short anything for fear of it doing an MSTR.

However, that being said, when it breaks, how many will be looking to buy the dip? Conditioning will die a hard death.

jog on
duc

 

[peter2]

pretty much everything is in a melt-up higher.

Yeah, how about PME spiking 10% higher today. I was going to post that the daily price chart was going parabolic, which we know is unsustainable. Now the weekly chart is parabolic!

The biggest problem for me is that although the index is going higher it's due to a small number of large caps only. There's not many trading opps outside those few that are pushing the index up. I'm holding GEAR, GGUS but unfortunately not enough.

The raging USD and China slow (no) growth are holding commodity prices down. This dampens demand for most of the ASX market. Damn bifurcation (using one of your words) , materials down, banks up.

 

[qldfrog]

Yeah, how about PME spiking 10% higher today. I was going to post that the daily price chart was going parabolic, which we know is unsustainable. Now the weekly chart is parabolic!

The biggest problem for me is that although the index is going higher it's due to a small number of large caps only. There's not many trading opps outside those few that are pushing the index up. I'm holding GEAR, GGUS but unfortunately not enough.

The raging USD and China slow (no) growth are holding commodity prices down. This dampens demand for most of the ASX market. Damn bifurcation (using one of your words) , materials down, banks up.

We are especially affected here as basically on the ASX, it is miners or 4 banks if we summarise...
So when mining goes down .....

 

[ducati916]

Full: https://www.theblock.co/post/327954...tegys-stock-premium-amid-bitcoin-buying-spree




US markets closed today for Thanksgiving.

jog on
duc

 

[ducati916]

Oil News:

Thanksgiving has disrupted a highly eventful week that saw OPEC+ ramp up its shuttle diplomacy as the oil group postponed its December 1 meeting. Despite that move, ICE Brent settlements moved in a very narrow bandwidth of less than $1 per barrel all week, between $72 and $73 per barrel. As the Russia-Ukraine war intensifies and Iran comes to the forefront of Trump’s policy moves, geopolitics could make a surprise comeback in December, complementing OPEC+’s decisions and pushing oil prices higher.
OPEC+ Postpones December Meeting. OPEC+ has delayed its upcoming policy meeting to December 5 as members are reportedly discussing postponing the anticipated output hike due to start in January 2025, simultaneously coordinating the future of compensation cuts with Iraq and Kazakhstan.

Iran Prepares for New Uranium Enrichment Boost. Iran has notified the International Atomic Energy Agency that it would seek to install more than 6,000 additional uranium-enriching centrifuges at its enrichment plants, according to an IAEA internal report, raising the risks of confrontation with Tehran.

Russia Bombards Ukraine’s Energy Infrastructure. Russia attacked Ukraine’s energy assets with 91 missiles and 97 drones this week in the second largest attack of the past month, with over 1 million people losing power in the immediate aftermath of the strikes and damages reported in 9 regions.

Argentina Expands into Brazil’s Gas Market. Brazilian firm Matrix Energia and French oil major TotalEnergies (NYSE:TTE) confirmed the first deal to supply shale gas from Argentina’s Vaca Muerta patch to Brazil via Bolivia’s gas grid as the latter’s gas exports to Argentina ceased in September.

Indonesia Courts Russia, US for Nuclear Plants. The new Indonesian government is in negotiations with the United States and Russia on acquiring nuclear technologies for power plants, seeking to start operating its first unit as early as 2036, despite a very pressing seismic risk across most of its islands.

Europe’s Key Driller Expands in West Africa. Italy’s oil major ENI (BIT:ENI) managed to lock in four new exploration contracts offshore Ivory Coast, boosting its presence in the country after its 2.5 BBbls Baleine and 1.5 BBbls Calao discoveries, with the new contracts giving it nine years to explore.

EU Tightens Tariff Pressure on China. Members of the European Union approved the imposition of anti-dumping duties on titanium dioxide from China, provisionally setting the tariffs between 14.4% and 39.7% as China’s share rose to almost 25% lately in the product mostly used in paints and printing.

Trump Mulling Sanctions on Iraq. US President-elect Donald Trump is reportedly considering placing secondary sanctions on Iraq, terminating Baghdad’s sanction waivers to import Iranian gas, sanctioning individuals across the country’s energy sector, and clamping down on fuel smuggling from the country.

Panama Canal Transit Recovers on Higher Water Levels. Since September, vessel transits through the Panama Canal rose to 730-740 per month, the highest traction in a year with LPG flows ramping up to previously unseen levels, although more available tonnage also resulted in lower VLGC freight rates.

Mexico Freezes New Oil Service Contracts. Mexico’s embattled state oil firm Pemex froze most of its new service contracts with drilling companies as the NOC’s top management mandated a $1 billion E&P budget cut, owing more than $5.2 billion overall, in a move that would lower the country’s production.

China Doubles Down on Coal Imports. China is set to import its highest-ever volume of thermal coal amidst rising electricity demand, bringing in 37.5 million tonnes this month according to Kpler data, as global coal prices have been trending lower than domestic production, around $140 per metric tonne.

Trafigura Adds Excitement to Zinc Markets. Global trading firm Trafigura has single-handedly launched a rally in zinc prices after it ordered thousands of tons of zinc out of LME warehouses, with total orders surging to a record 97,225 tonnes, sending prices of the base metal to $3,130 per metric tonne.

ADNOC Spins Off Low-Carbon Business Unit. ADNOC, the national oil company of the UAE, has launched XRG, its new unit focused on investing in natural gas, low-carbon energy and chemicals that is slated to operate independently starting from Q1 2025, with an enterprise value of more than 80 billion.




Nvidia's extraordinary growth amidst the AI-driven boom has turned it into the largest company in the world by market value. Its market cap first surpassed the combined total of Italy, Spain and Portugal in May 2023. By January 2024, the company had overtaken the total market sizes of Australia, Germany and the Nordics. By June 2024, it had surpassed even the United Kingdom for the first time, one of the world’s biggest developed markets. Nvidia's valuation growth underscores the growing dominance of mega-cap technology companies amid speculation and enthusiasm over the transformative potential of emerging technologies like AI.




Several insights emerge from this analysis: EUR/USD and aluminium may look like an attractive trade, as they are priced significantly below fair value. But their R2 values hover around 50, indicating price movements are likely influenced by factors such as momentum or market sentiment rather than macroeconomic drivers.

On the other hand, GBP/USD and Hang Seng Index both show R2 values around 70 and FVG exceeding 1.5 standard deviations, making them attractive candidates for further exploration, particularly after accounting for trading cost. Investors can use this table to identify and prioritize assets for potential trading strategies based on valuation gaps and the influence of macroeconomic conditions.



Both the Sharpe and Sortino ratios are widely used measures of risk-adjusted returns, with higher values indicating better performance relative to risk. However, the two ratios differ in how they treat volatility:

• The Sharpe ratio uses total volatility (both upside and downside) in its denominator, treating all fluctuations as negative for returns.
• The Sortino ratio, on the other hand, focuses only on downside risk, recognizing that upside swings are desirable to investors.

By comparing the two ratios in a scatter plot, we can observe that several developed markets fall above the green line, where the Sharpe ratio exceeds the Sortino ratio. This suggests that the Sharpe ratio may overstate the risk-adjusted performance by penalizing positive volatility alongside negative. The Sortino ratio offers a more nuanced view, particularly for investors more concerned with downside risks.



European gas markets are navigating heightened uncertainty amid ongoing geopolitical and weather-related challenges:

• Price dynamics: Dutch TTF gas prices surged nearly 20% in November, driven by colder temperatures and reduced wind energy output.
• Storage levels: Europe's gas reserves dipped below 90% for the first time in 2023, raising concerns about winter supply.
• Geopolitics: The Russia-Ukraine conflict continues to strain energy supplies, compounded by Gazprom's recent suspension of gas deliveries to Austria.

Looking ahead, projections from Goldman Sachs suggest TTF prices could spike to €77/MWh in extreme scenarios, with storage levels potentially dropping to 40% by the end of March 2025 compared to 53% in March 2024. Based on the five-year seasonal pattern, this chart projects storage levels to fall to 44% by the end of March 2025.



The concept of a Strategic Bitcoin Reserve, proposed by Trump during his 2024 presidential campaign, has stirred significant debate. Proponents suggest that such a reserve could serve as a hedge against inflation, diversify national reserves and position the US as a leader in the evolving digital economy. Critics, however, point to Bitcoin’s high volatility, the risk of public fund losses and the uncertainty surrounding the long-term viability of cryptocurrencies as reserve assets.

In this simulation:

• 2017-2020: Had the reserve been established during Trump’s first term, its value would have reached approximately US$38 billion by 2021, despite Bitcoin's significant price volatility.
• 2021-2023: A sharp decline in Bitcoin prices during 2022 led to a temporary dip in the reserve’s value.
• 2024: Renewed investor interest in the crypto market spurred a strong recovery, doubling the reserve’s hypothetical value since its completion in 2021.

This simulation underscores Bitcoin’s potential for significant returns, but highlights the inherent risks and volatility of incorporating cryptocurrencies into strategic reserves. It also reflects broader market trends and the potential implications of large-scale national adoption of digital assets.

BTC drawdowns:





More evidence that we are caught in a euphoric melt-up.

The week that was:





So we have skyrocketing confidence in the market as indicated by the above chart.

What could possibly go wrong? What is believed to be true, but is actually false?


A Strange Defeat, by Aurelien – 11/20/24 A Strange Defeat. - by Aurelien


I’ve written a number of times now about the unreality with which the West habitually approaches the continuing crisis in and around Ukraine, and the almost clinical dissociation from the real world that it displays in its words and its actions. Yet as the situation deteriorates and Russian forces move forward everywhere, there is no real sign that the West is becoming more reality-based in its understanding, and every probability that it will learn nothing, and continue to live in its constructed alternative reality until it is dragged out forcibly.


True, some daring leading-edge thinkers in the West are starting to wonder about the need for negotiations, even if they are on the West’s terms. They have begun to accept that perhaps some of Ukraine’s 1991 territory will have to be considered lost, if only in the short term. Perhaps, they muse, there will be a Korean-style DMZ in place, guaranteed by neutral troops, until such time as Ukraine can be rebuilt to take the offensive again. And then they look at the map of Russian advances, and they look at the size and power of the two armies, and they look at the size and readiness of NATO forces and they fall into despair.


But actually, no: scrub that last sentence. They don’t look, and if they did, they wouldn’t really be able to understand what they were seeing anyway. The “debate” (if you can call it that) in the West largely excludes real life factors. It takes place at a high normative level, where certain facts and truths are simply assumed.

The result is a decision-taking and influencing class that has no real idea about strategy and conflict at all, and just repeats words and phrases it has heard somewhere, as magical incantations. One minute “F16s” (whatever they are precisely) will save the day, the next, “deep strikes” are going to bring Putin down.


So for example, it is impossible for a society brought up on just-in-time delivery and impulse purchases on Amazon to understand the importance of logistics and the nature of the attrition war the Russians are fighting. If you look at a map and try to understand it (I know!) you can see the Ukrainian forces are fighting at the end of very long supply lines, especially for western equipment and ammunition, whereas the Russians are only a few hundred kilometres, at most, from their borders.


The fuel consumption of heavy armoured vehicles is measured in gallons per mile, and even if they can be delivered to the area of operations by train or transporter (which has its own problems) they consume frightening amounts of fuel, all of which has to be brought, dangerously and expensively, into the operational area.


They also break down, require new tracks and new engines and an endless supply of ammunition, all of which has to be brought forward. So Leopard tanks are not just teleported into the battle area, and when they are damaged they have to be sent back to Poland for repairs. And just about every aspect of military operations requires electrical power: yes, even drone operations.


The Russians of course know this, and have been targeting power generation and distribution systems, bridges and railway junctions, ammunition and logistic storage sites and troop concentrations and training areas. But they are not capturing large amounts of territory with daring armoured thrusts, so the Ukrainians must be winning, mustn’t they?

Yet tanks without fuel or ammunition, or whose engines have broken down, are useless, and once Ukrainian forces are operationally isolated from their supply lines it’s only a question of time before they lose their combat capability and have to surrender or make a run for it. This is what appears to be happening now around Kursk.


And if you are fighting an attrition war, and your stocks and replenishment capabilities are greater than your enemy’s, you want your enemy to use up those stocks as quickly as possible. So why not send, for example, large numbers of cheap drones that can be replaced, to soak up large numbers of defensive missiles that can’t? But this is too much for most alleged western experts to wrap their neurons around.


…


I think that what we are seeing, as well as culpable deliberate ignorance, is the beginning of a gnawing realisation that NATO is not strong but weak, that NATO equipment is mediocre, that talk of “escalation” is meaningless in the absence of something to escalate with, and that if the Russians felt so inclined they could do a lot of damage to the West. But even there, western pundits are stuck in narratives of armoured warfare and territorial conquest.


The Russians don’t need to do that, of course. With their missile technology, which the West has consistently ignored and downplayed, they can make a mess of any city in the western world, and no western state is in a position to respond. Of course the Russians, who understand these things, realise that they don’t need to actually use these missiles: the psychological leverage they have from just possessing them will do quite nicely.


…


The French historian and Resistance martyr Marc Bloch, who fought in the Battle of France in 1940, wrote a book about it, only published posthumously, after the war, called L’Étrange défaite, or The Strange Defeat, in which he tried to explain what had happened. His central conclusion was that the failure was intellectual, organisational and political: the Germans employed a more modern style of war that the French were not expecting and could not cope with.


Time has nuanced that conclusion: the German tactics were certainly innovative, involving fast-moving, deep penetration armoured units and close cooperation with aircraft, but they were also extremely risky and required a lot of luck to pull off successfully. But Bloch was right that the Germans had developed a style of warfare, dictated by the need to avoid long wars, to which there was no counter at the time, and which posed unexpected and, for a period insoluble, problems for the defender.


There’s something about the dazed incomprehension of the French political and military class and the people themselves, in the summer of 1940 that seems very relevant today. The defeat of the West—not yet even recognised as such—is at once intellectual, organisational and political. The ruling classes of the West seem to have no idea at all what has happened to them and why, nor what is likely to follow.

Which actually, extrapolated, means that the US is in danger of losing the (currently) trade war with China as the Chinese are streets ahead strategically.

We have market valuations very, very high and getting higher. This simply means that markets are priced pretty much for perfection. No flies in the ointment.

The other hidden issue, manipulated by manipulated data, unemployment. If this canard blows up and there is a de facto recession with deficits blowing up to $6T and above, what happens to markets?

FOMO rules the market currently. The last time I saw this was 1999. Trying to grab every last penny is dangerous unless you are in the market everyday and ready/willing to flippe-floppe very quickly...assuming of course that you actually correctly catch the top and do not succumb to BTD. Of course we have been conditioned to BTD, 2020 was the classic case-in-point.

jog on
duc