Sold them now. (well half)If I sold some more Banks yesterday it'd suit me as well.
On the fence for this one.
Oil News:
The marked shift in oil sentiment recently has been to a great deal prompted by a widespread concern of Chinese demand peaking this or next year as LNG displaces diesel in long-haul trucking, EV sales overtaking conventional cars since July and rail expansion eating into jet fuel recovery.
- Chinese refinery runs have been declining for five straight months, with the National Bureau of Statistics reporting throughput rates at 13.91 million b/d in August amidst a widespread decline in Shandong teapot runs, as low as 55% last month.
- Meanwhile, Asian refiners’ margins slumped to the lowest seasonal levels since 2020 as high inventories of diesel and gasoline become an increasingly worrying factor as peak summer demand tapers off.
- China’s clampdown on tax evasion is aggravating the pressure on refiners after a Shandong court ruled two refiners run by state-owned firm Sinochem, the Huaxing and Zhenghe plants totalling 220,000 b/d in capacity, fully bankrupt.
Market Movers
- US upstream firm APA (NASDAQ:APA) said it would sell non-core assets in the Permian basin to an undisclosed buyer for some $950 million, reducing its debt after the $6.7 billion acquisition of Callon Petroleum.
- Japan’s largest trading company Mitsubishi (TYO:8058) signed a framework agreement with ExxonMobil to join the Baytown blue ammonia and hydrogen project, right after ADNOC signed on, too.
- China’s national oil company PetroChina (SHA:601857) has signed two petroleum sharing contracts with Suriname’s state oil firm Staatsolie for two shallow-water blocks, saying they’ve missed the Guyana bonanza and do not want to miss Suriname.
Tuesday, September 17, 2024
After several tumultuous weeks, the downhill slide seems to have ended for crude oil futures, with ICE Brent trading relatively rangebound at $72.50 per barrel. Supply disruptions in Libya and the US Gulf of Mexico prevented concerns over China's economy from triggering an even bigger slide and the US Federal Reserve’s much-anticipated interest rate cut could lift the market mood slightly higher.
Bearish Bets Hit All-Time Lows. Short positions held by hedge funds and other money managers in the ICE Brent futures contract surpassed long ones for the first time on record, with a net short of 12,680 contracts reflecting widespread concerns over Chinese demand and the US economy.
Petrobras’s New Strategy Refocuses on Oil & Gas. The new top financial officer of Brazil’s state oil firm Petrobras (NYSEBR) Fernando Melgarejo said the company’s new 2025-2029 strategic plan would have a more upstream-focused vision to prevent a decline in oil and gas reserves around 2030.
US Gulf Recovers from Hurricane Francine Impact. Oil and gas producers are resuming production in the US Gulf of Mexico with only 12% of output (and 24 platforms) shut in as of Monday, some 213,000 b/d, as peak closures reached 732,000 b/d last week or 42% of total offshore output.
Brazil Nears in on Dam Disaster Settlement. Brazil’s government confirmed that it is in talks with mining giants Vale (NYSE:VALE) and BHP (NYSE:BHP) over a potential $18 billion payout for the deadly 2015 Brumadinho dam collapse, ending one of the most protracted mining litigations.
Colombia Implodes After Court Blocks Offshore Drilling. A Colombian court ordered the halt of drilling operations at the Uchuva-2 offshore well in the gas-rich and untapped offshore zone of the country, saying the operator Ecopetrol (NYSE:EC) failed to consult a local Indigenous community.
Egypt Awards 20-Cargo LNG Tender for Winter. As Egypt seeks to cover its power needs amidst drastically declining domestic gas production, the country’s state energy firm EGPC has bought 20 LNG cargoes for the winter, the first such tender since 2018 when Zohr started to ramp up output.
US Oil Majors Fight Back Against Consumer Lawsuits. US oil majors including ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) defeated an appeal by consumers that accused them of colluding with former US President Donald Trump and OPEC+, citing a lack of proof of antitrust violations.
Saudi NOC Builds Up LNG Portfolio. Saudi Arabia’s national oil firm Saudi Aramco (TADAWUL:2222) will lift its stake in LNG investment firm MidOcean Energy to 49%, co-owned with EIG, and also fund its acquisition of a new 15% stake in Peru LNG from Hunt Oil Company to bring its stake to 35%.
Can Gold Production Peak Soon? According to S&P Global, the relative scarcity of new gold discoveries since 2020 could lead to a gold production peak in 2026 at 110 million ounces, driven by Australia and Canada mostly, subsequently falling to 103 million ounces in 2028.
UAE Eyes Expansion into India’s SPR Reserves. Following a visit of UAE top officials to India, the country’s oil company ADNOC is eyeing opportunities to expand its crude storage volumes in India’s underground SPR caverns as Delhi seeks to triple its reserves from the current 5.86 million barrels.
Germany’s Wind Power Auction Beats Expectations. Germany’s Federal Network Agency stated it had awarded contracts for almost 3 GW of onshore wind energy in its latest annual auction, the highest volume ever, with the average awarded price reaching 7.33 €cent/KWh, a couple of cents below the maximum allowed limit.
Russia Lands Landmark Bolivia Lithium Deal. One of the most coveted lithium reserves globally, Bolivia’s Salar de Uyuni will see increasing Russian involvement after the country’s lithium firm YLB signed a $976 million deal to build its first direct lithium extraction plant, with a capacity of 14ktpa.
South Sudan Resumes Flows Through War-Torn Sudan. The presidential office of South Sudan announced that the country and its northern neighbor Sudan have made headway in restarting the halted pipeline that brings its crude to the export markets, repairing damaged areas as government forces continue to clash with RSF forces.
So tomorrow the Fed cuts the FFR. The discussion is whether it is 25bps or 50bps.
What are the probabilities of 0bps? Zero. But what if there is no cut? Because the probability is never zero. It might only be 1% but there still remains some small risk that the Fed do nothing.
What would happen?
Whatever the Fed does or does not do, markets can only do 1 of 3 things: go up, go down, go nowhere. Are you ready for any eventuality?
View attachment 184376View attachment 184375View attachment 184374View attachment 184373
Even if I knew the number and told you what it was today, it would still make no difference because the issue isn't what the number is, the issue is where does the market go.
No-one has a clue. There are lots of theories.
As I'm typing:
View attachment 184378
View attachment 184379
Mixed bag and unchanged from yesterday. Lots of chop.
We also have Triple Witching this Friday:
View attachment 184384
Media will be clueless:
View attachment 184383View attachment 184382View attachment 184381View attachment 184380
Manage the risk according to your plan. Mr FFF seems to have gone to cash.
Markets until tomorrow will remain rangebound, choppy and a nothingburger.
View attachment 184377
Oil will trade back towards the top of its range, which is about the $90 mark. It to will remain rangebound in that $70 to $90 range. Not too hot, not too cold. Buy low sell high.
jog on
duc
Yea missed out on OIL top ups..... Still have lowball bids in.Oil News:
.......
Manage the risk according to your plan. Mr FFF seems to have gone to cash.
Markets until tomorrow will remain rangebound, choppy and a nothingburger.
Oil will trade back towards the top of its range, which is about the $90 mark. It to will remain rangebound in that $70 to $90 range. Not too hot, not too cold. Buy low sell high.
jog on
duc
They’ll say the market was already priced in with this cut?So market down after half point fall?
What was the market expecting?
| What we don't want to do is fight the tape. That's what's important here. And not just today. Always. Sometimes you'll hear people say, "Don't fight the Fed". But that's not just an incomplete statement. It's also misleading. The late great Marty Zweig, said it best. "Rule #1: Don't fight the tape." As you go down his list you'll eventually come to: "Rule #6: Don't fight the Fed (Not as valid as Rule #1)" Marty even felt the need to add a Barry Bonds asterisk onto Rule #6, reminding everyone how much less important it is compared to Rule #1. Days like today where the Fed cuts the Fed Funds Rate by half a point, it's a great reminder that it's the TAPE that we don't want to fight. NOT the Fed. The Fed just does whatever the bond market tells it to do. U.S. 2-year yields have already been collapsing. Now Fed Funds are following... |
| I just got done with a few days at the FutureProof Conference in Huntington Beach, CA. I spoke to a lot of people. If you ask me what I think? It seems to me that stocks are in a bull market, but sentiment isn't currently a headwind. We're still seeing a lot of people fighting these trends. They're fighting the tape, and in many cases, they're doing so by focusing too much on the fed. The irony in it all. I just landed in Chicago where I will be for the next few days with everyone on our team. These private meetings will also include local Chicago traders and a few others who flew in. |
Source: Eric WallersteinThe S&P 493 have yet to see the margin expansion from AI and other productivity-enhancing tech. They will. We expect S&P 500 forward profit margins to widen to 14% next year
One of the striking features of the past five years has been the domination of the financial scene by purely psychological elements. In previous bull markets the rise in stock prices remained in fairly close relationship with the improvement in business during the greater part of the cycle; it was only in its invariably short-lived culminating phase that quotations were forced to disproportionate heights by the unbridled optimism of the speculative contingent.
But in the 1921-1933 cycle this ‘culminating phase’ lasted for years instead of months, and it drew its support not from a group of speculators but from the entire financial community. The ‘new era’ doctrine – that ‘good’ stocks were sound investments regardless of how high the price paid for them – was at bottom only a means of rationalizing under the title of ‘investment’ the well-nigh universal capitulation to the gambling fever.
Why did the investing public turn its attention from dividends, from asset values, and from average earnings to transfer it almost exclusively to the earnings trend, i.e. to the changes in earnings expected in the future? The answer was, first, that the records of the past were proving an undependable guide to investment; and, second, that the rewards offered by the future had become irresistibly alluring.
Along with this idea as to what constituted the basis for common-stock selection emerged a companion theory that common stocks represented the most profitable and therefore the most desirable media for long-term investment. This gospel was based on a certain amount of research, showing that diversified lists of common stocks had regularly increased in value over stated intervals of time for many years past.
These statements sound innocent and plausible. Yet they concealed two theoretical weaknesses that could and did result in untold mischief. The first of these defects was that they abolished the fundamental distinctions between investment and speculation. The second was that they ignored the price of a stock in determining whether or not it was a desirable purchase.
The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis… An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy ‘good’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.
That enormous profits should have turned into still more colossal losses, that new theories should have been developed and later discredited, that unlimited optimism should have been succeeded by the deepest despair are all in strict accord with age-old tradition.”
– Benjamin Graham & David L. Dodd, Security Analysis, 1934
| They can't even sell the Chinese stocks! Chinese stocks! The worst stocks on the planet. Yes those. They're even buying those. That's what happens in bull markets. The CSI 300 is up over 4% overnight. This is the Chinese equivalent to the S&P500, which is now bouncing off support from Q1 and potentially putting in a historic double bottom: |
| Think about what this could mean to global markets, if even the worst stocks can't go down. I mean, just look at the returns in China compared to the United States over the past 4 years, taking it back to before the prior cycle's peak. Using this timeframe, you can really see the lack of recovery in China. |
| And I'm not just cherry picking the CSI 300 here. It's just that this index is a good representation of the Chinese Market. But if you want to compare that to the more popular China ETFs, you'll see the same thing, or worse. |
| While the CSI300 and China Large-cap 25 Index $FXI are only down 26% for this period, the China Technology ETF $CQQQ is down double that. So is Chinese Internet ETF $KWEB. I look at a lot of charts folks. The Chinese ones are the worst ones. And there aren't any sellers left. That's the point here. They're even buying the worst ones, which is just further evidence of risk appetite for equities, not risk aversion. So first, from a more global macro perspective, this is a tailwind for market bulls and shareholders of stocks. The fact that they can't even sell China, is NOT a good case for the bears. Second of all, how do we profit from this? In other words, first weigh the evidence, determine the environment that we're in, AND THEN find the best way to express that thesis in the market. This is the top/down approach that we always talk about. Now break it down to the individual stocks that make up these indexes and look at names like Tencent $TCEHY or Alibaba $BABA or $JD. Oil News: Crude oil inventories in Cushing, Oklahoma, the delivery point for the NYMEX WTI future contract, have been unprecedentedly low recently, sitting near the lowest in a decade for this time of the year. - The launch of the Trans Mountain Expansion pipeline with a nameplate capacity of 590,000 b/d of which roughly two-thirds are currently utilized, limited the inflows of Canadian oil to Cushing and hindered any reasonable stock build over the summer. - Cushing’s current stockpiles of 22.7 million barrels as of September 13 represent less than a third of the storage hub’s operational capacity of 78 million barrels, stoking concerns that tank bottoms could prompt a sudden supply squeeze to refiners. - With Enbridge now operating the US-bound Mainline system without congestion, the scarcity of barrels in Cushing has widened the spread between the NYMEX futures contract and WTI Houston quotes, with the September average so far standing at $1.5 per barrel. Market Movers - Brazil’s state oil company Petrobras (NYSE - Nigeria’s national oil company NNPC is reportedly in talks with investors to revive the dormant Brass LNG project, with a planned capacity of 10 mtpa, and potentially also find partners for the mothballed Olokola LNG. - US oil major Chevron (NYSE:CVX) stated it is not looking to invest in new US liquefaction capacity and ruled out taking a stake in Driftwood LNG, saying it can monetize its gas without additional LNG plants. Tuesday, September 24, 2024 The prospect of another hurricane in the US Gulf of Mexico, triggering platform evacuations and shut-ins again, as well as China’s much-anticipated stimulus measures have breathed life into oil prices and ICE Brent swung over the $75 per barrel for the first time in more than three weeks. With Israel-Lebanon potentially adding some geopolitical risk, too, the upside might be far from over. China Unveils Huge Stimulus Package. China’s Central Bank presented the largest stimulus package since the pandemic to bolster economic growth in the country, lowering borrowing costs and cutting mortgage interest rates, sending Chinese stocks and bonds to their highest in more than two years. Oil Producers Evacuate Gulf Platforms Again. US offshore oil producers started to evacuate non-essential staff from Gulf of Mexico production platforms amidst increasing risks of Hurricane Helena hitting the area, with Shell (LON:SHEL) announcing it would shut its Stones and Appomattox facilities. OPEC Continues to Woo Brazil. Presenting OPEC’s latest annual World Oil Outlook in Brazil, the organization’s Secretary General Haitham al Ghais said he is looking forward to working with Brazil over the coming years, seeking to make the South American nation a full OPEC+ member. FTC Set to Approve Chevron-Hess Merger. The US Federal Trade Commission is expected to approve Chevron’s (NYSE:CVX) $53 billion purchase of Hess Corporation as soon as this week, leaving the ExxonMobil-Chevron arbitration over Guyanese assets the last hurdle to be cleared. Microsoft Eyes Restart of Three Mile Island. US power operator Constellation Energy (NASDAQ:CEG) saw its stock soar by 30% after it inked a deal with Microsoft (NASDAQ:MSFT) to resurrect a unit of the Three Mile Island nuclear plant in Pennsylvania to feed an AI-driven demand surge in the region. Russia Sees Lower Oil Revenue Ahead. According to Russia’s draft three-year budget until 2027, the Kremlin anticipates a decline in oil and gas revenue by 14% over the next three years, down from $118 billion expected in 2025, due to a more lenient taxation regime on Gazprom and lower oil prices. California Sues ExxonMobil Over Plastic Pollution. California’s Attorney General and several environmental groups have sued US oil major ExxonMobil (NYSE:XOM) over allegedly engaging in a decades-long campaign that helped fuel plastic pollution, filing a case in a San Francisco state court. Europe’s Hydrogen Project Pipeline Gets Thinner. UK-based energy major Shell (LON:SHEL) scrapped its plans to build a low-carbon hydrogen plant in Norway less than a week after Equinor relinquished its idea of a 10 GW blue hydrogen plant in the country, citing an overall lack of demand. Canada Unlikely to Recover TMX Investments. IISD, a Canadian environmental think tank found that Canada’s federal government is unlikely to recover its $25 billion investments in the TMX pipeline, saying it constitutes a $6.4 billion fossil fuel subsidy and should be offset by additional levies. Iron Ore Weakens Further on Soft Chinese Data. Having hit a one-year low earlier this week on higher-than-usual Chinese steel production and exports, iron ore futures have spiked on news of China’s economic stimulus, with Singapore futures trading above $92 per metric tonne. US Natgas Prices Soar on Hurricane Risks. Henry Hub natural gas futures jumped some 7% this week to a 3-month high on early indications that US oil and gas producers would be forced to shut production in the offshore Gulf, with the October-delivery front-month contract surpassing $2.6 per mmBtu. Glencore Is About to Lose Its Rosneft Stake. Global commodity trader Glencore (LON:GLEN) is set to lose its 0.57% stake in Russia’s largest oil producer Rosneft after the Moscow Arbitration Court rejected its appeal to postpone the payback of the $130 million it owes to state-owned Sberbank. Offshore Canada Yet to Become New Drilling Frontier. Despite hopes that the high-impact Persephone well could hold as much as 1 billion barrels of oil in Canada’s offshore, the Exxon-spudded wildcat turned out to be dry, just as Equinor’s Sitka prospect yielded no commercial reserves. Mr FFF So I did a little selling today. I lightened up on GDX and XLI. I didn't get a fill on GDXJ, but I did get a fill on UNG. I'll post that trade later. China and FXI surged once China announced stimulus. So I lightened up a little on FXI. Stocks are running because inflation is a given. The Fed have given up on inflation and are trying to avoid a recession and an increase in UE. They are late again. Inflation will morph into stagflation as UE ramps up. Of course you have to be long stocks. You just have to keep a close eye on the UST market and problems there, made more difficult because they are actively trying to hide the problems. jog on duc |
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