November DDD

[ducati916]

Big Tech. earnings are not being welcomed. They are carrying the whole market lower.

Mr FFF's last post:

POOF! Goodbye iBankCoin​

Thu Oct 31, 2024 9:31am EST 34



Seventeen years ago a much younger Fly took to the internets with the intent to change the way people talked about finance. At the time, there was a wide chasm between boardroom jargon and the so called professionals, whether it was online or on CNBC. In the beginning, I was known for saying outlandish things, writing funny articles about my experiences in the market; but it wasn’t too far into the beginning of the site when the financial crisis hit and my bonafides were firmly established, having nailed that and many others since then.

The halcyon days of the blogosphere pre Twitter was something to behold and I did my part in creating a community of like minded lunatics. We traded and did it well and argued and got mad at one another; because that’s what men do when competing.

Once upon a time, the site hosted 200 bloggers, did a few public events, and regularly trolled CNBC with malicious intent. But those days are long over and I made a promise to you long ago that I’d never blog past the age of 47.5. Lo and behold, here I am at 48 with news that I am retiring from blogging as “The Fly”, in exchange for getting back into the field of professional money management.

You have to understand, I have been given a gift from God to see what others cannot and my skillset is wasted by simply talking to a gaggle of ne’erdowells. Whilst I do appreciate your evergreen support and company, The Fly was always destined for greatness and I must bid you adieu.
Many thanks to all of you who’ve read me since 2007 and before that on other sites. I have enjoyed blogging here and feel grateful for the opportunity to share my thoughts and concerns with you over so many blogs: 25,000+ but who’s counting?

Plans for the future entail running my own shop, not a hedge fund but investment advisory, and I intend to do so with the utmost skill and professionalism that you’ve come to expect over the years: winship. I will continue to write, but under client portal. Thanks to the financial tools I’ve created with Stocklabs, my skills have never been better and I do intend to continue to invest in its technology.

For financial advisory inquiries, email me at Flybroker@gmail.com.

For this important day, killing iBC on Halloween of 2024, I put together some merch for you to peruse and possible purchase, in memory of the site.
If you’ve enjoyed my writing over the years and never knew about or purchased my books, they are available on Amazon.

And now for a video goodbye from Le Fly, aka Senior Tropicana, aka HORATIO CLAWHAMMER.

Ciao and Fin.

For those that want to watch the video:



Economy:



Consumer spending up, will that continue if UE jumps higher?
Government spending up, courtesy of increased debt.
Trade deficits massive.

Debt/GDP still increasing. The power of compounding debt outruns all combined spending.

A healthy economy? LOL.



“Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny.”

- Lao Tzu



Of course it's froth. When in a bull market there is demand, Wall St. will create endless supply.



Didn't last long, but: "We are in a different market now — and this market now is not being driven by futures, it's being driven by metal," he explained. "As the (gold) price has gone up, it's been driven by ... buying of metal, which means that the fundamentals keep moving up."

Eric Balchunas tweeted about MSTU, which is an ETF that gives you twice the daily exposure of Microstrategy, which itself is a levered bet on Bitcoin. Bitcoin is up 65% year-to-date. MSTR is 307%. But why stop there? Why not have two times the daily exposure of the two times exposure?​

This ETF, which launched just six weeks ago, is already in the top 1% of volume, right there with GLD.​

Eric said, “It’s so funny they’ve long had 3x MSTR ETFs in Europe but no one cares, no assets, volume.”​

We spoke with Jason Zweig on TCAF last week about the gamblification of the markets that is apparently unique to Americans.​

As much as I enjoy gambling, I don’t love it in the market. But as I told Jason, it’s not 100% bad.​

If people can keep it to a small amount, that’s good. If people can learn that it’s a fruitless exercise, that’s good. If it teaches them that the market is a serious place and is, in fact, not a casino, that’s good. And if they can learn this lesson at an early stage before they accumulate real money, that’s great!​

​

Against the odds, but sucking wind today.

This market is an interesting mix of historical markets. The UST market harks back to the late 1940's/50's market with the enormous Debt/GDP level. The economy however post WWII was growing at an enormous clip. Today the war is not ending but escalating and the US is losing it on the hot side. Add in a new Cold War, which is also being lost, unlike Cold War I which was won and debt is unequivocally going to continue to rise.

The stock market has the euphoria and overvaluations of the late 1920's and 1990's. In the 1920's Investment Trusts were the ETF's of the day and were springing up willy-nilly. The 1990's had the earnings free dot.coms. Today we have leveraged ETF's on anything and everything, you just know that this will not end well.

The warning signs are everywhere.

Standing against the wind is the Fed. LOL.

Against that backdrop, Mr FFF has moved into (back into) professional money management. I'm trying to remember how he fared through the 2008 period. I'll probably have to refer to my notes made at the time.

Nonetheless it's a shame that his blog will no longer be a feature, always amusing, often insightful.

jog on
duc

 

[Sean K]

View attachment 187046View attachment 187047View attachment 187048

Big Tech. earnings are not being welcomed. They are carrying the whole market lower.

Mr FFF's last post:

POOF! Goodbye iBankCoin​

Thu Oct 31, 2024 9:31am EST 34

View attachment 187059

Seventeen years ago a much younger Fly took to the internets with the intent to change the way people talked about finance. At the time, there was a wide chasm between boardroom jargon and the so called professionals, whether it was online or on CNBC. In the beginning, I was known for saying outlandish things, writing funny articles about my experiences in the market; but it wasn’t too far into the beginning of the site when the financial crisis hit and my bonafides were firmly established, having nailed that and many others since then.

The halcyon days of the blogosphere pre Twitter was something to behold and I did my part in creating a community of like minded lunatics. We traded and did it well and argued and got mad at one another; because that’s what men do when competing.

Once upon a time, the site hosted 200 bloggers, did a few public events, and regularly trolled CNBC with malicious intent. But those days are long over and I made a promise to you long ago that I’d never blog past the age of 47.5. Lo and behold, here I am at 48 with news that I am retiring from blogging as “The Fly”, in exchange for getting back into the field of professional money management.

You have to understand, I have been given a gift from God to see what others cannot and my skillset is wasted by simply talking to a gaggle of ne’erdowells. Whilst I do appreciate your evergreen support and company, The Fly was always destined for greatness and I must bid you adieu.
Many thanks to all of you who’ve read me since 2007 and before that on other sites. I have enjoyed blogging here and feel grateful for the opportunity to share my thoughts and concerns with you over so many blogs: 25,000+ but who’s counting?

Plans for the future entail running my own shop, not a hedge fund but investment advisory, and I intend to do so with the utmost skill and professionalism that you’ve come to expect over the years: winship. I will continue to write, but under client portal. Thanks to the financial tools I’ve created with Stocklabs, my skills have never been better and I do intend to continue to invest in its technology.

For financial advisory inquiries, email me at Flybroker@gmail.com.

For this important day, killing iBC on Halloween of 2024, I put together some merch for you to peruse and possible purchase, in memory of the site.
If you’ve enjoyed my writing over the years and never knew about or purchased my books, they are available on Amazon.

And now for a video goodbye from Le Fly, aka Senior Tropicana, aka HORATIO CLAWHAMMER.

Ciao and Fin.

For those that want to watch the video:



Economy:

View attachment 187053View attachment 187052View attachment 187051View attachment 187050View attachment 187049

Consumer spending up, will that continue if UE jumps higher?
Government spending up, courtesy of increased debt.
Trade deficits massive.

Debt/GDP still increasing. The power of compounding debt outruns all combined spending.

A healthy economy? LOL.



“Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny.”

- Lao Tzu

View attachment 187054

Of course it's froth. When in a bull market there is demand, Wall St. will create endless supply.

View attachment 187055

Didn't last long, but: "We are in a different market now — and this market now is not being driven by futures, it's being driven by metal," he explained. "As the (gold) price has gone up, it's been driven by ... buying of metal, which means that the fundamentals keep moving up."

View attachment 187057

​

Eric Balchunas tweeted about MSTU, which is an ETF that gives you twice the daily exposure of Microstrategy, which itself is a levered bet on Bitcoin. Bitcoin is up 65% year-to-date. MSTR is 307%. But why stop there? Why not have two times the daily exposure of the two times exposure?​

This ETF, which launched just six weeks ago, is already in the top 1% of volume, right there with GLD.​

Eric said, “It’s so funny they’ve long had 3x MSTR ETFs in Europe but no one cares, no assets, volume.”​

We spoke with Jason Zweig on TCAF last week about the gamblification of the markets that is apparently unique to Americans.​

As much as I enjoy gambling, I don’t love it in the market. But as I told Jason, it’s not 100% bad.​

If people can keep it to a small amount, that’s good. If people can learn that it’s a fruitless exercise, that’s good. If it teaches them that the market is a serious place and is, in fact, not a casino, that’s good. And if they can learn this lesson at an early stage before they accumulate real money, that’s great!​

​

View attachment 187058

Against the odds, but sucking wind today.

This market is an interesting mix of historical markets. The UST market harks back to the late 1940's/50's market with the enormous Debt/GDP level. The economy however post WWII was growing at an enormous clip. Today the war is not ending but escalating and the US is losing it on the hot side. Add in a new Cold War, which is also being lost, unlike Cold War I which was won and debt is unequivocally going to continue to rise.

The stock market has the euphoria and overvaluations of the late 1920's and 1990's. In the 1920's Investment Trusts were the ETF's of the day and were springing up willy-nilly. The 1990's had the earnings free dot.coms. Today we have leveraged ETF's on anything and everything, you just know that this will not end well.

The warning signs are everywhere.

Standing against the wind is the Fed. LOL.

Against that backdrop, Mr FFF has moved into (back into) professional money management. I'm trying to remember how he fared through the 2008 period. I'll probably have to refer to my notes made at the time.

Nonetheless it's a shame that his blog will no longer be a feature, always amusing, often insightful.

jog on
duc

Yes, will miss Mr FFF.

 

[qldfrog]

Same here, was always looking at his irreverence and so modest approach, quite a lot of truth and learnings there too
I wish him well

 

[ducati916]

Amazon is up over $130 Billion in value overnight. For perspective, that's the entire market-cap of Charles Schwab. That's more than the entire value of Nike. And many others. Amazon represents 22% of the entire Consumer Discretionary Index. It's 5% of the Nasdaq. $AMZN is the newest member of the Dow Jones Industrial Average. And it's on pace to go out at the highest weekly close in the company's history. Get all the details and everything you need to know here.

​

You might be thinking, why does JC care so much about this one company? It's because if this stock can't get going, then BULL MARKET CANCELLED. That's why. Is that reason enough for you? This stock means so much to the market right now that we teamed up with Retail Legend Jeff Macke to get all the details on everything going on at the world's largest retailer.

Oil News:

Friday, November 1st, 2024

No sooner had OPEC+ depressed market sentiment by admitting a potential rollover of its cuts into 2025, Iran reemerged as the main talking point of the markets. Having downplayed the Israeli retaliatory strike, the oil markets are now anticipating an Iranian attack on Israel, using a large number of drones from Iraqi territory. A semblance of geopolitical risk premium has lifted ICE Brent futures back to $74-75 per barrel, ahead of a particularly jittery week when the United States votes for its president.

OPEC Mulls Delaying 2025 Output Hike. OPEC+ could postpone its planned increase of oil production, bringing back the 2.2 million b/d output under eight countries’ voluntary cuts, citing concerns about soft oil demand, particularly on the heels of China’s slowing down, as well as rising non-OPEC supply.

UK Ratchets Up Taxes on Oil Producers. The UK government will increase its windfall tax on oil and gas production in the North Sea from 35% to 38% and extend the levy by one year to March 2030, despite a widespread exodus of oil majors after both ExxonMobil and Chevron sold all their assets this year.

Woodside Finds Partner for Tellurian Takeover. Japan’s leading gas firm Tokyo Gas (TYO:9531) is in talks with Woodside Energy (NYSE:WDS) over taking a stake in US LNG developer Tellurian after the latter closed its $1.2 billion takeover this month, marking yet another Japanese investment into US gas.

Trafigura Takes $1.1 Billion Hit from Mongolia Fraud. The world’s leading trading firm Trafigura will post a $1.1 billion loss after an internal audit revealed widespread fraud in its Mongolian petroleum oil product supply business over the past five years, including data and document manipulation.

Shell Starts Arbitration Against Calcasieu Pass. UK-based energy major Shell (LON:SHEL) has started arbitration proceedings over the two-year delay in term deliveries from Venture Global’s Calcasieu Pass facility, allegedly losing billions as the US developer still claims the plant is not fully commissioned.

US Slaps New Sanctions on Arctic LNG 2. The US Treasury announced new sanctions imposed on Novatek’s Arctic LNG 2 liquefaction terminal, Russia’s latest LNG project in the Arctic, targeting construction service provider Smart Solutions and four LNG tankers run by newly created UAE firms.

Europe Picks an EV Fight with China. After long deliberations, the European Union has decided to ramp up tariffs on Chinese-build electric vehicles to as much as 45.3%, saying that China’s EV production benefits from preferential financing and land grants, risking future retaliation from Beijing.

Saudi Arabia Eyes Vietnam Refining Options. The Vietnamese government stated that Saudi Arabia’s state oil firm Saudi Aramco (TADAWUL:2222) wants to invest in the Asian country’s refining sector, signing a memorandum of understanding for potential cooperation in storage, supply, and trading.

European Majors Flock into US Gas. Norway’s state oil firm Equinor (NYSE:EQNR) boosted its portfolio of non-operated US shale assets after it bought EQT’s (NYSE:EQT) gas interests in the northern Marcellus basin for $1.25 billion, taking its stake to 40.7% as most of the assets are still operated by Expand Energy.

China’s Top Driller Locks in Key Iraqi Deal. China’s top upstream firm CNOOC (HKG:0883) signed an exploration and production contract with Iraq to develop the onshore Block 7, with the state-owned firm holding 100% interest over a massive territory covering more than 6,000 km2 in Diwaniyah province.

A New Argentinian Upstream Star Is Born. Argentina’s privately owned upstream firm Pluspetrol is gradually becoming the second largest player in the country, now agreeing to buy ExxonMobil’s (NYSE:XOM) assets in the country’s Vaca Muerta shale play for a consideration of $1.7 billion.

Saudi Arabia Eyes Africa for Mining Expansion. According to media reports, Saudi Arabia is closing in on a deal to take a stake in First Quantum Minerals’ Zambian copper and nickel assets for $1.5-2.0 billion, with the country’s mining company Maaden expecting to seal the contract by the end of this year.

Mexico Signals Readiness for Private Investment in Oil. Victor Rodriguez, the new chief executive of Mexico’s state oil firm Pemex, said that the country would welcome private investment in exploration and production of crude and natural gas under President Sheinbaum, a policy change compared to AMLO years.

So the US elections are close.

Differences in policies: Keep/lose tax hikes. Could be a big deal.

Next year the debt ceiling returns. This does have some odd implications other than the usual circus around whether it gets increased or not. More on this over the w/e.

jog on
duc

 

[ducati916]

AMZN

The selling pressure around the $200 level in July coincided with some major insider activity. In March, it was reported that Amazon founder Jeff Bezos planned to sell up to 25 million shares of AMZN by the end of 2025. When AMZN kept unsuccessfully trying to break through $200 in July, we quickly found out why. Insider transaction filings showed that Bezos seemingly had a limit order to sell millions of shares above $200. As you can see below, from July 2nd through July 11th, Bezos sold millions of shares a day at an average price just above $200. On July 11th, the last day of reported selling from Bezos, the stock no longer had enough buyers to keep up with Bezos' sell orders and eventually traded lower. Since then, there have been no more reported Bezos sales, and the stock price didn't get near $200 again...until today.

As mentioned earlier, AMZN shares reacted positively to earnings after the close last night and traded up 6%+ in reaction to the news. That took shares up near $200 at the open this morning for the first time since July 11th -- when Bezos last reported a sale.

Based on AMZN's intraday action today, it looks like Bezos still has a live $200 limit sell order because the stock stalled out at $200 once again and couldn't break through.

Back in July, Bezos managed to unload more than 8 million of the 25 million shares he reportedly plans on selling. The stock has traded over 80 million shares today, but only around 5 million shares have traded at $200 or higher, so we'll see how many more shares he managed to unload when his next insider sales report gets filed.

For now, it looks like $200 is going to remain stiff resistance until the Bezos shares clear.





In 1977, President Jimmy Carter addressed the nation in a speech warning America about the potential dangers of energy dependence. Demand for oil was soaring and America “[couldn’t] substantially increase our domestic production” — forcing the country to rely on imports of oil. Now, 47 years on, Carter has had two things to celebrate in the last month: his 100th birthday and record US oil production.

Indeed, American crude-oil production rose 1.5% in August to hit a record 13.4 million barrels a day, as the top producing states of Texas and New Mexico saw output hit fresh record highs of 5.82 million and 2.09 million, respectively.

Well that was productive​

Despite the number of oil rigs dropping to less than a third of the level 10 years ago and the workforce shrinking in the same period, too, oil has become one of the most productive industries in the US over the past decade. That production boom is expected to run into next year as well, with some predicting that we’ll be making an extra 600,000 barrels each day in 2025.

Indeed, the US has been consistently producing more crude oil than any nation in history for the last six years, according to figures from the Energy Information Administration, after overtaking Russia as the world’s top producer in 2018 and becoming a net exporter of oil in 2019.

US crude-oil prices saw the biggest daily drop in over a year earlier this week, and analysis from the World Bank suggests that costs will continue to fall next year as global supply looks set to outstrip demand.

Note: even though the weekly data from the US EIA is much more timely — in this case, available as recently as October 25 — it’s considerably less reliable. The monthly report is based on a much more comprehensive survey, and the trends between weekly and monthly production estimates can vary significantly, even over extended periods of time. For its part, the EIA says the monthly figures “can serve as a definitive historical benchmark” while the weekly data is more of a “near-term estimate of recent history.”




The price will be critical. Shale needs $70/barrel.

Possible trade:



The surge in AI is driving the nuclear revival and uranium demand going forward.


jog on
duc

 

[ducati916]

For next week:



jog on
duc

 

[ducati916]

Economy:



Strong economy. LOL.



Mr Saylor, aka Hunt Bros. and MSTR buying it all.

Deficits and debt exploding in 'a strong economy'.

Oil News:

The stormy political landscape in the US stands in stark contrast with Europe where several windless days have led to a rebound in natural gas prices, sending TTF futures back to €41 per MWh ($14 per mmBtu).

- In Germany alone, gas-fired generation accounted for more than 60% of the country’s energy mix due to low wind, sending spot electricity prices to their highest since early January, just below €100 per MWh.

- Europe’s gas markets are also following the path of Tropical Storm Rafael after it formed in the Caribbean recently, as its Louisiana-bound trajectory could prompt closures of offshore platforms and liquefaction terminals.

- Tropical Storm Rafael is expected to make landfall in Cuba this Wednesday already as a Category I hurricane, entering the waters of the US Gulf of Mexico around November 7.

Market Movers

- The world’s largest oil producer Saudi Aramco (TADAWUL:2222) has maintained its $31.1 billion quarterly dividend despite posting a 15.4% year-over-year decline in Q3 earnings, booking a net income of $27.6 billion.

- Norway’s state oil firm Equinor (NYSE:EQNR) has been unsuccessful with its exploration drive in Canada’s offshore waters, with the Cappahayden South well failing to find commercial volumes of oil and gas.

- Mining giant AngloAmerican (LON:AAL) has agreed to sell its 33.3% minority stake in the Jellinbah metcoal joint venture to Australian power generation firm Zashvin for $1.1 billion, as part of divestment spree.

Tuesday, November 05, 2024

The US presidential election is looming large over the oil markets as Donald Trump and Kamala Harris continue to poll neck and neck ahead of what promises to be a long and tight election night. The decision of the ‘great eight’ of OPEC+ helped push Brent slightly higher, now trading above $75 per barrel, but the market remains focused primarily on the U.S. election.

OPEC+ Postpones Supply Return to December. Eight OPEC+ members that were set to start raising oil production in December have decided to delay the restart by one month, raising the probability that the oil group would not unwind its 2.2 million b/d output cuts in 2025.

Pipelines Become a Worry for US Producers Again. The spread between WTI prices in West Texas and Houston has been widening in the last two months on dwindling pipeline space, with crude evacuation capacity to Corpus Christi already 97% full and Houston filling up quickly.

US Refiner Confirms Closure of Key Plant. US chemicals giant LyondellBasell Industries (NYSE:LYB) detailed its anticipated plan to permanently shut its 263,776 b/d Houston refinery in Q1 2025, running it at 90% capacity this quarter and then shutting one CDU each month in January-February.

Saudi Economy Returns to Growth. Despite oil production staying put at 9 million b/d, Saudi Arabia’s economy accelerated an annual 2.8% in the third quarter of 2024 after four straight quarterly contractions, with 2025 annual growth expected to strengthen to 4.6%.

Price of Iranian Oil Surges on Export Risks. Discounts on Iranian barrels sold to Chinese customers are at their tightest since the Trump-era reinstatement of sanctions on Tehran, as geopolitical tensions and fears of supply disruptions pushed the differential of Iranian Light to -$4 per barrel to Brent.

Environmentalists Set to Block Key US Lithium Mine. Environmental groups have filed a lawsuit challenging the US Interior Department’s approval of Ioneer’s (ASX:INR) Rhyolite Ridge lithium mine in Nevada, the first lithium-mining site in the US, saying it posed an existential risk to a rare breed of buckwheat.

UK Power Prices Soar on Import Needs. Electricity prices in the United Kingdom jumped to £115 per MWh this week, their highest in almost a year, as low wind power generation across the country prompted the country’s generators to import more, mostly from nuclear-rich France and hydro-rich Norway.

UAE is Expanding into the Mediterranean. After forming a JV that eyes Egypt’s offshore waters, the UAE’s state oil company ADNOC has reportedly expressed interest in taking a stake in Cyprus’ deepwater gas fields, however preferring to invest in de-risked assets rather than exploration.

Venezuelan Oil Exports Near One-Million Threshold. Oil exports from Venezuela rose to their highest since early 2020, posting an average of 947,000 b/d for crude and fuel oil in October, up 21% month-over-month, as crude shipments of Chevron (NYSE:CVX) soared to a new record high of 280,000 b/d.

China Traders Exploit Benchmark Gaps. A whopping 5 million barrels of Middle Eastern crude was delivered to the Shanghai International Exchange this month, an unusual volume for an otherwise mute trade, with Vitol supplying the most after domestic yuan-pegged futures for crude soared above Brent.

Oil Hedging Becomes the New Trading Frontier. A total of 68.44 million barrels of oil in Brent futures and options were traded in October, according to data from the Intercontinental Exchange, marking the highest monthly volume ever, as producers and traders hedged against war risks.

Canada Set to Tighten 2030 Emission Targets. The draft regulations issued by the Canadian government this week stipulate a cap on greenhouse gas emissions from the oil and gas sector at 35% below 2019 levels by the end of this decade, potentially prompting output cuts further down the road.

Guyana and Suriname Weigh Gas Ambitions. Guyana and Suriname could supply 12 million metric tonnes of LNG at a competitive price by the next decade if both South American countries decide to monetize their natural gas resources, with their non-associated reserves estimated at 13 TCf.

No wind:



At the mercy of the Weather Gods.



Bond market vol. rising:



jog on
duc

 

[ducati916]

Some election data:

While it may be tempting to pile into the three sectors performing the best today because of Trump's victory, the three sectors that performed the best on the day after Election Day 2016 ended up being some of the worst-performing sectors during Trump's first four-year stint in office. As mentioned above Financials, Energy, and Industrials were the three best-performing sectors on the day after the election in 2016, and they're also the three best-performing sectors today. As shown below, though, Energy (XLE) would go on to fall 49% from the day after the 2016 election through the day before the 2020 election, while Financials (XLF) was the second worst sector ETF during that time frame and Industrials (XLI) was on the lower end of the performance pack. On the flip side, it ended up being Technology (XLK) and Consumer Discretionary (XLY) that performed the best between the 2016 and 2020 elections even though they weren't big standouts on the day after the 2016 election. jog on duc

 

[ducati916]

Oil News:

Friday, November 8th, 2024

The US presidential election has dominated global newsfeeds this week, triggering widespread speculation on how a new Trump administration would implement its election promises in the first weeks and months of its tenure. Meanwhile, Hurricane Rafael, potentially the last hurricane of this Atlantic season, has temporarily shut down some 400,000 b/d of production but its weakening outlook will most probably spare the 4 million b/d of oil output that is still in its way. Oil prices remain rangebound, with ICE Brent trading around the $75 per barrel mark in recent sessions.

Hurricane Rafael Forces Gulf Platform Evacuations. Ahead of Hurricane Rafael passing through the US Gulf of Mexico, offshore operators evacuated 17 producing platforms as the 17th named storm of this hurricane season threatens some 4 million b/d of production capacity, even if gradually weakening.

Iraq Proposes New Kurdistan Deal. Iraq’s federal government reached out to the semi-autonomous Kurdish authorities with the proposal of doubling the amount it pays for the KRG’s oil production to $16 per barrel, however further talks are expected as this is still $10 per barrel less than what Erbil wants.

Iran Fears Worsening Gasoline Shortages. Iran’s new government has warned of an impending gasoline shortage despite an existing gas rationing system, as demand for the fuel reached 750,000 b/d lately and the domestic refining system can only churn out 670,000 b/d, requiring additional refining capacity.

Africa Mulls Refinery Expansions. Buoyed by the relative success of Nigeria’s Dangote refinery, Gabon announced its plans to build a 60,000 b/d refinery in Port Gentil, with the capacity of the plant exceeding the African country’s 46,000 b/d domestic demand and eyeing regional exports as well.

Germany Explores U-Turn on Nuclear Policy. In an almost complete reversal of Angela Merkel’s energy policy, Germany’s conservative parties CDU and CSU have called the country’s 2023 nuclear shutdown ‘ideologically wrong’ and advocate for a feasibility study into the reactivation of idled nuclear plants.

Europe Cools on Past Petrochemical Ambition. Polish state-controlled oil refiner Orlen (WSEKN) said it would not continue with its $13 billion Olefins petrochemical project in its current form, one of the largest in Europe, adding it would optimize, suspend or terminate the investment due to low profitability.

BP Divests Dutch Retail Network. The UK’s oil major BP (NYSE:BP) is preparing to sell all 310 of its petrol stations in the Netherlands, citing high maintenance costs of the system and limited growth potential, expecting to finalize the divestment towards the end of 2025 whilst keeping its Rotterdam refinery.

New EU Commission Eyes 2027 End to Russian Gas. The new Energy Commissioner of the European Union will seek to end Russian gas imports into the bloc ahead of the assumed 2027 target, albeit a non-binding one, as Europe is still getting 18% of its needs from Russia via the Ukraine transit route.

India Calls for More Term LNG Deals. India’s state-run gas firm Gail will add 5-6 mtpa of long-term LNG supply contracts to its portfolio by the end of this decade, taking its total import needs to 20-21 mtpa, as the Modi government set a mandate to increase the share of gas in generation from 6% to 15% by 2030.

Alaska’s Exploration Activity Dies Down. The Biden administration plans to offer the minimal possible acreage in a Congress-mandated oil and gas lease sale, offering only 400,000 acres, after delaying the auction for several years, with Alaska’s drillers now hoping for a Trump-era leasing revival.

Miners Want Trump to Speed Up Mining Permits. Mining giant Rio Tinto (NYSE:RIO) called on US president-elect Donald Trump to speed up the permitting process for new copper projects, referring to its Resolution copper mine which could supply a quarter of the US’ copper needs but remains stalled.

Tanzania Lures Investors with Huge Licensing Round. The African nation of Tanzania plans to offer 24 oil and gas exploration blocks in its 5th licensing round, to be launched next year, believing that it could entice oil majors to drill its offshore waters despite the relatively unfavorable Petroleum Act of 2015.

Trump’s Re-election Could Revive Keystone XL. President Trump’s return to power has brought the topic of reviving the stalled 830,000 b/d Keystone XL pipeline, intended to carry Canadian oil from Alberta, with operator TC Energy dropping its $15 billion claim against the US government.



This week:



So post election, post Fed, big bull week.

Some stuff earlier in the week:



Mine: CENX

Last week was incredibly busy at work which cut into my ability to post.

Obviously a big 'news' week with Trump getting re-elected. After the euphoria dies down or the wakes go home, the reality will be that there is nothing really that can be done to solve the crisis, unless of course the US are going to enter into true austerity and slash spending.

No.

It will be inflation. Lots of it.



As debt will need to rise.

There will be issues around this as the 'Debt Ceiling' makes a return in the new year and
the U.S. Treasury won’t be able to issue net new debt until Congress raises or suspends the ceiling again. They still have spending obligations, however, and are running structural deficits due to the policies that Congress has put into effect for decades.

And so as a result, the Treasury will begin to draw down their cash levels, since they’ll be paying out more in expenses each month than they receive in tax revenue and can’t issue net new bonds to fill that gap. The Treasury stores its cash balance at the Federal Reserve in what is known as the Treasury General Account. This cash is an asset for the Treasury and a liability for the Fed.

Lately, the Treasury’s policy has been to hold about $700 billion to $850 billion worth of cash in its TGA. And they have certain legal constraints on them to prevent them from gaming the system too much to get around debt ceiling suspensions. And right now, they’re at their target level:



If the Treasury runs out of cash without a new debt ceiling authorization, then it will have to default on something. Social security checks, Medicare payments, Defense payments, or temporary default on Treasuries can be in the cards since those make up the bulk of spending, and so Congress historically acts to prevent that level from being reached during the 11th hour.

But here’s the unintuitive thing. During the multi-month period where the Treasury is drawing down its cash levels to keep paying its bills, that can actually be stimulating for financial markets. It’s a net-plus for liquidity in the financial system while it’s happening as long as it doesn’t hit zero. It’s like a game of inverse BlackJack.

We can think of the TGA balance as cash sitting in an unused void. It represents money that has been pulled in from taxes and bond issuance, but not yet spent. And so when it is drained down, this cash is coming back out of that void and back into the financial system. During a drawdown, the Treasury is spending more money into the system than they are removing from it with taxes and bond issuance, and this money winds up back in aggregate bank reserves. A drawdown of the TGA is actually quite similar to the Fed doing quantitative easing, in that sense.

Obviously this has already been successfully implemented by Yellen so not a 'new' strategy. But clearly it has its limits.

Now liquidity has poured in from somewhere the $MOVE is down sharply.
USD is still elevated, but has stopped rising.
10yr UST down sharply (from the added liquidity)

This has, for the moment, averted any issues in the stock market. Let's see if they can hold everything down. I'm suspecting Yellen.

jog on
duc

 

[ducati916]

jog on
duc

 

[ducati916]

I'll have a lot more to say re. BTC in light of one of Trump's comments at the BTC conference a few months ago. Now that he has been elected, this could actually play out.

I have two new trades for Monday. The big move this week has provided loads of great opportunities.

jog on
duc

 

[ducati916]

jog on
duc

 

[divs4ever]

jog on
duc

ROFL

i suppose it depends on what 'victory ' looks like to the Fed

 

[ducati916]

ROFL

i suppose it depends on what 'victory ' looks like to the Fed

The important comment, which interests me as Trump has alluded to it, was the comment re. BTC.

This is what I will expand on tomorrow.

jog on
duc

 

[ducati916]

Just a few charts to warm up:



So let's get into the BTC thing:



And the evidence:



Stablecoins have (apparently) the spare Balance Sheet capacity (bootstrap operation) to buy short dated Treasury Paper. The higher BTC goes, the more UST paper they can buy.

Now a conversation from the BTC conference:


Peter McCormack: ... tell you an interesting Trump story from last night, and I won't dox the other person because it's unfair on them, but we were at a party last night and we were chatting to somebody and their father is a very, very famous person. I'll tell you offline… Trump's orange-pilled this person. So people are saying, "Oh, Trump's just here [at the BTC Conference] for our votes." No. So this is somebody, they've been trying to orange-pill [convince to buy BTC] for years, right?


Preston Pysh: What?!
Peter McCormack: Yeah. We were chatting to him last night and he said, "Yeah, my dad's in [BTC] now." I was like, "What?" He's like, "Yeah."
Danny Knowles: Trump called him up.
Peter McCormack: Trump called up. We were like, "What?" Yeah. Trump called him up.
Preston Pysh: Get the heck out of here…
Peter McCormack: Yeah. He's like, "Trump called him up and Trump said, 'Yeah, Bitcoin, it's the new oil.'" And they're in.
The reference to oil is historically material:



So my old man worked for BP. He was responsible for the design and building of the Alaska pipeline in the 1970's. Why was a British company drilling for oil in Alaska?

By devaluing the USD v. oil significantly (oil up 400% in six months), the US was able to “deprive OPEC from their strategic power”…because the much higher price of oil in 1974 led to the dramatic expansion of oil production in friendly nations – Alaska, Gulf of Mexico, UK North Sea – thereby “depriving OPEC from their strategic power” (reducing US and western dependence on OPEC oil.)

So this time, there is a war with the East and the East is weaponising gold. This is a major issue for the US.

Essentially backstopping US deficits with BTC instead of with oil as in 1973-74 and “depriving the BRICS of their strategic power” vis a vis gold. Trump’s BTC is the new oil comment might literally be the ultimate Trump card.

Now in the gold thread, Europe is rebuilding their gold base. It would seem that it is only the US that is pursuing this (potential) BTC strategy.

The CIA wrote the White Paper on Bitcoin in 1996:

How To Make A Mint: The Cryptography of Anonymous Electronic Cash

The US military power is eroded to such an extent that the US can no longer force allies or adversaries to adhere to a USD/UST standard. That will also apply to BTC, which would in any case need to be far more widely dispersed to actually be of any use globally.

What does seem to be clear is that BTC is a geopolitical tool or is fast becoming one.

To accurately assess the risk/reward is difficult.

jog on
duc

 

[ducati916]

Speculation running wild:



We are now entering the 1999 rush higher. Things will get crazy.

All against a backdrop of really, really bad economic fundamentals.

This reminds me of Isaac Asimov's classic Foundation trilogy. President Trump pushing back against the tide of economic historical forces. Your choices: take the pain or inflate. Trump will inflate, whereupon inflation will consume the US.

The question is will BTC prove to be anti-fragile? Or is it part of the speculative problem?

The 'bet' is that the Tether balance sheet can absorb Treasury issuance to the tune of TRILLIONS going forward.

No other sovereigns are buying UST.
The banks unless they are granted another bailout cannot buy UST

Hedge Funds are buying UST on leverage. LOL.

Now we have Tether, a most nefarious entity, being the great bail out hope for the US Govt. LOL.



jog on
duc

 

[finicky]

The question is will BTC prove to be anti-fragile? Or is it part of the speculative problem?

How could something that only exists on computers be "fragile".
Get real. Crypto is so necessary, so utterly indispensable and floats on an unlimited rising tide of investor demand. It's the new digital age ushering out relic money.

 

[qldfrog]

How could something that only exists on computers be "fragile".
Get real. Crypto is so necessary, so utterly indispensable and floats on an unlimited rising tide of investor demand. It's the new digital age ushering out relic money.

But btc is as valuable as a usd or aud on a bank account plucked out of the air on a fed/rba computer balance sheet, i would say more valuable ...
Btc is a consequences of fiat currencies

 

[ducati916]

How could something that only exists on computers be "fragile".
Get real. Crypto is so necessary, so utterly indispensable and floats on an unlimited rising tide of investor demand. It's the new digital age ushering out relic money.

LOL.

The perceived 'value' is fragile. The whole point of BTC is to transform a speculative nothing into money or a money substitute. If that purpose succeeds then there will be value there. If it fails, it's essentially worthless.



As stated, bubble psychology is highly seductive.

I purchased a position in MSTR on 2 Oct 2024 at $161.99. Today it closed:



That is over 100% in just over 1 month. That is rampant speculation.

It is speculation because MSTR essentially has no underlying business now other than a proxy holding of BTC. Mr Saylor lives or dies as goes BTC.

What it boils down to is:

Can President Trump convert BTC into a US Treasury reserve asset thereby conferring BTC value?

If he can, it will need to be done by next year. Once the mid-terms roll around, politically he will likely be hamstrung again for the second half of his term. All his radical ideas need to get done fast.

Now that does not even consider what the rest of the world, moving to gold, actually think/do re. BTC.

That the US is even actually considering this should actually be a red flag as to just how desperate and bad things actually are.

jog on
duc

 

[finicky]

The whole point of BTC is to transform a speculative nothing into money or a money substitute.

oh right, thanks for illuminating.