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(Bull) Market June 2021 (1 Viewer)

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So why is June looking good?

Well first off our seasonality data which has been remarkably accurate all year so far.

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But more importantly:

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Look at the bottom in March 2020. 30 March. 1 April we made the move higher.

Why? The Fed. rode to the rescue.

Screen Shot 2021-05-29 at 4.58.21 PM.png


Look at the 2020 data. Now I couldn't circle or mark this (beyond my technical skills) but the peak of the Fed. intervention via RRPs was 30 March/1 April. Now look at the latest data. The max (so far)...28 May.

The market was seriously wobbling in mid to late April. It could have fallen apart in May. But it didn't. Buying support came in. The Fed. The stock market is a massive carry trade that cannot be allowed to unwind. Not anytime soon anyway.

Look at 2017. The last big RRP intervention.

Screen Shot 2021-05-29 at 5.14.39 PM.png


2016 was wobbly. Boom in comes the Fed. and the market just takes off to the upside.

2019 was the Taper Tantrum. Far from coming into the market, the Fed. was trying to takeaway support. Stocks started to crash. The Fed. caved. Stocks resumed their upward trajectory until the extrinsic shock.

The size of the current intervention tells us something of the risks in the market currently, hidden from view below the surface. While I have no evidence, I would suggest that the blow-up of debt lies somewhere in there. Somewhere in probably the financial system (banks, hedge funds) there is or has been an issue.


jog on
duc
 
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Inflation:

First off, inflation is an expansion of money and credit. Inflation is not a one-off change in the price level caused by a short-term distortion to protect profit margins but is a persistent acceleration in prices. It is a condition that lasts for years; it is not something that is temporary. There has never been a natural disaster or a policy response to a natural disaster that ushered in a permanent change in the inflation trend, all they do is create short-term disturbances, distortions, and deviations. The question therefore is/was COVID a natural disaster?

Inflation searches are on the up:

Screen Shot 2021-05-30 at 5.27.50 PM.png



What the pandemic has not changed are the secular disinflation fundamentals that have been around for decades. These are still in full force. The ageing of the population for one; the fastest growing segment of the population that is also grabbing the highest share is the 65-years-and-up cohort and this trend will continue for the next decade. While there are some folks who claim this is inflationary from the supply side, they ignore the much more powerful effect this has on aggregate demand because no other age category has seen such a sudden decline in annual expenditures than this segment of the population, whose share will continue to rise.

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The accelerating pace of technological change has not changed either and is actually picking up momentum during this pandemic as businesses figured out they can do more with less labor input. Here we had the worst economy since 1946 last year and yet business volume spending on automation, IT equipment and software, expanded more than 6%. The share of business spending on productivity enhancements in the past 15 months has risen to an all-time high. And so, look at what is happening fundamentally in the real economy and we saw this in spades in the first quarter, where productivity accelerated at a 4% year-over-year rate, or double the historical trend.

Screen Shot 2021-05-30 at 5.32.28 PM.png
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The accelerating pace of technological change has not changed either and is actually picking up momentum during this pandemic as businesses figured out they can do more with less labor input. Here we had the worst economy since 1946 last year and yet business volume spending on automation, IT equipment and software, expanded more than 6%. The share of business spending on productivity enhancements in the past 15 months has risen to an all-time high. And so, look at what is happening fundamentally in the real economy and we saw this in spades in the first quarter, where productivity accelerated at a 4% year-over-year rate, or double the historical trend. The earnings of the Big 4 highlights this surge in productivity and earnings due to technology (love it or hate it).

Some say that debt is affordable because interest rates are so low, but the causation runs the other way. Because the debt situation is so onerous, interest rates must stay extremely low to prevent the economic and financial system from collapsing, as we saw, for example, when bond yields got as high as 5%-plus in the summer of 2007 and to 3%-plus in late 2018. There is a reason why these levels of market interest rates were unsustainable, even in the context of what appeared to be an economy operating at or near full employment. This could be an argument for higher inflation IF the Fed. has to step in to suppress yields. If that were to happen Gold/Silver would be off to the races. It hasn't happened yet. It has happened in the past. Without a doubt, that debt must come down at some point.

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Higher debt growth past a certain limit is deflationary and exerts downward pressure on interest rates. In the past three decades, we have seen a 90% inverse correlation between the all-economy debt-to-GDP ratio and the 10-year Treasury note yield. There is a 75% inverse correlation between the debt ratio and core inflation — the debt morass and adding to it ends up being a future drag on real GDP growth and hence the downward pull on inflation and interest rates.

Now with the re-opening and fiscal juice boosting demand ahead of supply, we have a temporary inflationary situation on our hands that will get resolved in the second half of the year. It may take some time, as Jay Powell told us at the last FOMC meeting. Or it may spiral out of control. Time will tell.

It is 100% true that this time around, the pandemic has triggered supply chain disruptions and the lingering effects of COVID-19 have restricted the supply of some key materials and this is also the case on the labor front — though there is more than ample supply of idle workers waiting in the wings whether in manufacturing, construction, resources or consumer cyclical services.

And then there is this other little matter, which has accentuated the shortages of materials, which is the unprecedented consumer spending on durable goods during this crisis — soaring 44% in the year to March and well over 20% above the pre-COVID-19 peak. And keep in mind that this segment of personal consumption expenditure is more than double the areas of services that are primed for a post-COVID-19 recovery. That so-called “pent-down” demand, since nobody is building another deck in the backyard or fitting a second table in the dining room, may well provide a huge offset to the service sector rebound. What we then end up with is the government deficit bumping against massive surplus savings in the household sector, which then splashes a lot of cold water on the hawkish inflation and bearish interest views that have dominated the market narrative for much of this year.


Screen Shot 2021-05-30 at 5.43.58 PM.png
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So while the deficit boom has resulted in the federal government having “dis-saved” by $3 trillion over the past year, household savings have ballooned $4 trillion and the net savings in the corporate sector have expanded $100 billion (internally generated cash flows minus capital spending). In other words, we are still stuck in a savings glut.

What we have in fiscal stimulus resembles far more the debt/GDP ratios of the war years than of a recessionary bust. These were government (Federal) run deficits. The 1970's was a Commercial banking expansion of the money supply as can be seen from the chart below. This was a period where home ownership and huge mortgages (to offset the inflation of the time from the war time government deficits) expanded the money supply even further, but without concomitant increases in productivity. In fact productivity fell, but wages through COLA agreements were rising. So you had a situation of low(ish) interest rates and a tremendous double whammy of a credit expansion. From the loan to deposit ratio (above) we can see that currently this is not the case. The economy is in a saving mode.

Now that can change. If enough people start to 'believe' that inflation is a thing and permanent, that can lead to taking loans that will be inflated away over time. It will have to be the banking system that facilitates this, although, with digital currencies just around the corner, it could become Central Banks that undertake this.


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This episode was essentially a 'war' on the virus.

To get a true inflationary shock, a number of things will need to continue their trends; (a) DXY needs to be heading towards the 70's, (b) commodity prices broadly need to keep rising and at least double from here, (c) 10yr yields will need to be artificially kept low should they start to rise and finally (d) all other economies need to stop expanding their credit and debt levels while the US continues, which will accelerate and drive the fall of DXY.

The last component would be the breakdown (total) and reversal of globalisation that has occurred over the last 20yrs +. While relations with China are tepid to cold, this hasn't occurred yet either, which is not to say that they can't. A Cold War definitely seems to be brewing in the background.

We will have better optics as to what is really happening towards the end of this year and the start of 2022. The data will have had time to settle and indicate where the economy is actually moving to.

Even if we are in a 1970's style inflation, it will take higher rates than we have currently to crash the market. There will be plenty of time and warning to exit the market if rates continue to rise without any sign of Fed. intervention.


jog on
duc
 
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Such a detailled and extensive analysis.thanks.
May i come back to 2 of your points:
One a potential black swan which could occur any time even in June
Anyone with half a brain knows that Covid leaked from the wuhan lab
While it has been hidden, then moved to the conspiracy area ,or Trump lunacy then FB banned etc, now it seems even the US intelligence does not want to be muzzled.
I actually understand the williness of the western governments to hide this, i like truth,above all, but that truth will cause heavy casualties
Should a credible enough source CIA, f.e. show or accept proofs of that origin, this could very quickly heats up and we should see talk of reparations which i doubt China will accept,
this could cause pretty choppy time for the market, going to full economic/software war.
I know a black swan can not come from known issues but i keep this on the back of my mind.
As dangerous as junk bonds imho.

A second point you touch about is the increasing 65y+ population, there is indeed a consumption effect as you pointed, but maybe even more important for us, this cohort will very quickly move from net buyers of shares and investment tools to net sellers.
We will not see that next month but sooner or later this could reverse the perma bull into a perma bear, don't you think?
 
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Such a detailled and extensive analysis.thanks.
May i come back to 2 of your points:
One a potential black swan which could occur any time even in June
Anyone with half a brain knows that Covid leaked from the wuhan lab
While it has been hidden, then moved to the conspiracy area ,or Trump lunacy then FB banned etc, now it seems even the US intelligence does not want to be muzzled.
I actually understand the williness of the western governments to hide this, i like truth,above all, but that truth will cause heavy casualties
Should a credible enough source CIA, f.e. show or accept proofs of that origin, this could very quickly heats up and we should see talk of reparations which i doubt China will accept,
this could cause pretty choppy time for the market, going to full economic/software war.
I know a black swan can not come from known issues but i keep this on the back of my mind.
As dangerous as junk bonds imho.

A second point you touch about is the increasing 65y+ population, there is indeed a consumption effect as you pointed, but maybe even more important for us, this cohort will very quickly move from net buyers of shares and investment tools to net sellers.
We will not see that next month but sooner or later this could reverse the perma bull into a perma bear, don't you think?


Re. the weaponisation of viral agents: unfortunately everyone is playing this game. China either by accident or design let the genie out of the bottle. I'm not sure how this plays out.

Re. selling down: I'm of that age cohort (almost). Many are still working and plan to continue to work either through choice or necessity. It might become a thing. If it does, I think it's still some time off. I don't think the transition to the younger investors will not create a major issue though.

jog on
duc
 
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One a potential black swan which could occur any time even in June
Anyone with half a brain knows that Covid leaked from the wuhan lab
While it has been hidden, then moved to the conspiracy area ,or Trump lunacy then FB banned etc, now it seems even the US intelligence does not want to be muzzled.
I'll keep out of the "where did COVID originate from" debate and simply note that nationalist sentiment was rising even before the pandemic.

Any blow up relating to COVID is thus akin to pouring petrol on the fire but the fire itself had already been lit some years ago in my view. :2twocents
 
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I'll keep out of the "where did COVID originate from" debate and simply note that nationalist sentiment was rising even before the pandemic.

Any blow up relating to COVID is thus akin to pouring petrol on the fire but the fire itself had already been lit some years ago in my view. :2twocents
Sure, but here we are talking about billion dollars liabilities and million of deaths.
Covid or anything else of that magnitude would be a major detonator.Whether purposely or not, (see my opinion month ago and clearly outside this thread), the governments via measures and scares have really primed the opinion, and having a clear culprit makes it sure that the situation becomes explosive.
Just another factor which is difficult for gov to control, and us to assess but can lead to extreme world/market conditions.
 
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Some interesting developments in both the Gold & Crypto markets.

1. The Basel regulations that pertain to the derivative gold market (paper gold) take effect in Europe at the end of this quarter. The London gold market will likely with a high probability follow Europe in Jan. 2022. Essentially the UNALLOCATED gold futures market will cease to exist as the Banks withdraw and close down their trading desks.

2. A large % of the physical gold is now held in Asia. China has been buying physical gold for quite some time. They will undoubtably support the BIS position.

3. Which leaves the US.

4. Goldman Sachs issued a position paper:

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Which rather infers that GS will leave the gold market (and associated commodity markets as per Basel regulations) and move into the crypto markets.

A good thing?

If you have ever traded gold you'll quickly realise, no, this is a terrible thing. The gold market has been manipulated for decades, suppressing the POG etc. If GS and the other Bullion Banks are out of gold and into Crypto, great for gold, sucks for crypto.

Goldman in 2020 released a very negative report on Crypto. In 2021 their position has moved 180 degrees. Now crypto, BTC, is an ASSET class.

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All interesting and useful (positive) information. Almost makes you feel safe.

GS is the bloodsucking octopus. Their trading desk trades against (sometimes with) customer order flow. If GS are promoting BTC and simultaneously setting up a trading desk, watch out!

Chart on all coins:

Screen Shot 2021-05-31 at 7.41.22 AM.png


WTF is 'Polygon' (another coin obviously)?


Interesting times ahead.


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duc
 
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@ducati916 is it possible to reload this screen capture again as I'm unable to read the notations. (Maybe a thumbnail as well)

Duc Capture.JPG


Skate.
 
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So the point of all the BTC analysis etc. is to actually trade a position. However the only way that I am going to trade BTC is on my own terms. Getting sucked into the crazy world of BTC is just not going to happen. When you trade vol. you need to be able to harness and control that vol. otherwise it eats your position alive.

Below is BTC to RIOT. RIOT obviously to date trades on moves in BTC. RIOT is my proxy. I will use Options.

Screen Shot 2021-05-31 at 3.24.48 PM.png


As can be seen, this mirrors to an extent BTC's vol.

Screen Shot 2021-05-31 at 3.58.50 PM.png


Which is exactly what I want, but it allows me to control it on my own terms and trade size (not quite M. Burry size) which makes the effort worthwhile.

Unless BTC rallies, RIOT will likely gap down come US markets re-opening on Tuesday:

Screen Shot 2021-05-31 at 4.10.14 PM.png



jog on
duc
 
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The arguments are fundamentally flawed.


Watch for yourself.


jog on
duc

My takeaway from the YouTube video
Michael Saylor says "I think" at the beginning of his answers. I'm unsure if he "thinks a lot" or he just doesn't know.

So the point of all the BTC analysis etc. is to actually trade a position. However the only way that I am going to trade BTC is on my own terms.

When I read those two paragraphs above
I nearly fell off my chair.

Getting sucked into the crazy world of BTC is just not going to happen.

phew2.jpg


I could be wrong
From memory, I'm sure @Value Collector called Bitcoin "fairy dust" & I'm sure you wouldn't trade "fairy dust" or would you?

Skate.
 

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My takeaway from the YouTube video
Michael Saylor says "I think" at the beginning of his answers. I'm unsure if he "thinks a lot" or he just doesn't know.

The people that think the most, are the normally the ones that are least likely to say "I know", look at scientists for example, the concepts that are supported by the most evidence, are called "Theories", its not that science is unsure or doesn't know anything, its just in science over confidence is looked at as a weakness not a strength.

I often purposely say "I think" rather than "I know", especially when in reality we are dealing with things that might be unknowable.

A member of this forum once said to me that the fact I said "I think" so much rather than "I know" showed that I my positions were weak, I actually believe its the opposite, over confidence is a weakness, where as cautiously accepting that you don't know everything, and that you are willing to be proven wrong is in fact a strength.
 
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So in the above video Mr Saylor makes the following claims for BTC:

(i) Will become the dominant settlement protocol worldwide, essentially based on 'trust' which is a function of the technology;
(ii) Suggests that Bond Funds, Insurance Companies etc. replace Bonds with BTC;
(iii) Return to the Gold Standard using BTC.

Essentially these 3 drivers will drive 100's of thousands of Corporations and 5Billion people to adopt BTC, keeping its price rising for 100's of years.

(i) Sure it could become a settlement system. To do so however because it is limited to 350,000 transactions/day, the value of each coin would need to become very high, possibly $1B/coin or more. Mr Saylor has BTC compounded gain at 160%/annum. To get to that $1B/coin it will have to maintain that growth rate for the next 11yrs from a current price of $30K/coin. Not impossible. Probable?

(ii) If Bond Funds et al were to adopt BTC and it did continue its 160% compounded annual growth rate, then certain issues could well disappear. The problem is matching your assets (BTC) to your liabilities as they fall due. To bad if at an inopportune moment, it gets chopped in half. In other words, volatility is an issue, unless it never falls in price.

(iii) The last claim is a return to the Gold Standard, using BTC. Governments will NEVER willingly return to a gold standard as that removes the most important pillar of their power. If the US blows up DXY then all currencies linked to DXY also blow up. At this point, the only way government could foist another government currency on us (hopefully we are smart enough) is to back that currency with gold or BTC. As governments don't hold any BTC and with no asset to purchase it with, it would be gold, which they do hold.


By far the most egregious error that Mr Saylor is prone to is that he doesn't seem to understand that 'money' or a currency is not wealth. Wealth is the productive capability of an individual, community, country. Money is simply a tool to facilitate transactions in exchange where no common agreement exists of that production. Money is not a store of value, its value fluctuates, but not to the extent that Mr Saylor anticipates (ie 160%/annum). You can't have it both ways: money fluctuates in a fairly predictable range, unless inflationary forces take hold, which is the problem with fiat, not really with gold as the cost to mine more inhibits its production to a level that has essentially no effect.

The next major error is that IF BTC goes to derivatives (paper BTC) your speculative growth rate of 160%/annum goes down the pan. This is exactly the issue with gold/silver. Paper gold can be manipulated. Its price can be suppressed and has been for decades. The irony is or is it more than coincidence, paper gold is set to disappear and paper BTC is to be introduced. There will be no need to make BTC 'illegal' its price will be squashed.

As for this shite:

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Honestly, only half-wits need apply.

These guys:

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Are quintessential TRADERS. Druckenmiller came up under Soros. He will sell in a heartbeat. Same with Tudor Jones. I doubt Dalio will hold to zero. All these chaps will play while it shows them a profit.

Mr flippe-floppe-flye:

Screen Shot 2021-06-01 at 7.29.33 AM.png


Remember the story of the shoe-shine boy to Rockerfeller:

Screen Shot 2021-06-01 at 6.28.38 AM.png


jog on
duc
 
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So the markets re-open meh.

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Pretty self-explanatory.

Some long term market history:

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Real returns.

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Rents:

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Mr flippe-floppe-flye:

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Some more on cryptos:

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That is the game. Old as the hills. A new generation of wannabes are set to be fleeced.

Today's market is I think reflecting these 2 charts:

The first is the PUT/CALL ratio. Calls got ahead of themselves and I guess the MM are having a bit of a shakeout.

Screen Shot 2021-06-02 at 5.07.56 AM.png


The VIX is an interesting one:

Screen Shot 2021-06-02 at 5.08.24 AM.png


As part of my analysis (not shown) I include a time element. Due to the change of the month, this time element has changed. The VIX today however is correlating to May. This, if I am correct and not smoking something funny, should correct tomorrow with a fall in the VIX. Essentially today we are bouncing off of a May support level. We'll see.

Just on the Reverse Repo. data, this looks very similar to Operation Twist that we have seen before. This is where short end Treasuries are being fed into (see that pun) the market to the banks (spike) and the cash is used to buy long end curve Treasuries, thereby keeping yield down. The short end Treasuries are then repurchased at maturity. New short end curve Treasuries are then issued or not as the case may be.

Now if that is the case and logically it will be, how can a sovereign debt load of x130 GDP be allowed to rise? It will bankrupt the US. The game is kick-the-can and keep kicking it to allow the US time to inflate out of this mess.

So, Tech. Tech. hates high yields because Tech. is valued on growth, not current earnings. Growth can't live in a high yield world. But since we are going to be in negative real yields for a looooooong time, Tech. should recover and start to perform or possibly outperform once again.

Yields are obviously critical. On a straight analysis I have yields at 1.61%. They were at 1.58%. I would expect a 3 basis point move higher. Today we are seeing that move higher. If however the Fed. is getting involved in a de facto YCC, then I would expect to see those come off.

The difficulty is that there is so much noise in the market currently. The 'trend' is chop. Do we worry about basis point moves?

Screen Shot 2021-06-02 at 5.29.35 AM.png


June is starting like the most of May was: choppy, messy and meh. I think we rally, if not from here, certainly into the end of the week and the S&P500 along with NASDAQ move higher.




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duc
 
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Oil news:


- The average retail price for gasoline in the U.S. jumped above $3 per gallon last week, the highest price since 2014.

- Memorial Day travel is expected to be 50% higher than the same weekend in 2020.

- California saw the highest prices at over $4 per gallon, while Texas saw the lowest at $2.72.

Market Movers

- Pembina Pipeline (TSE: PPL) will acquire Inter Pipeline (TSE: IPL) in an $8.3 billion all-stock deal, creating one of the largest pipeline companies in Canada.

- Kinder Morgan (NYSE:KMI) agrees to acquire the Stagecoach Gas Services natural gas pipeline and storage joint venture from Consolidated Edison (NYSE:ED) and Crestwood Equity Partners (NYSE:CEQP) for $1.225B.

- BP (NYSE: BP) and Eni (NYSE:E) are in early-stage talks for the Italian energy firm to take over BP's assets in Algeria, Reuters reports.

Tuesday, June 1, 2021

Oil prices rose by 1 percent early on Monday, driven by expectations that recovering demand with summer travel and reopening economies will easily accommodate the gradual increase in OPEC+ production.

But oil prices rose even more sharply on Tuesday, with Brent topping $71 per barrel, the highest level in more than two and a half years. “The demand growth is pretty OK, the OPEC+ discipline is very good, inventories are going down,” Fereidun Fesharaki, chairman of consultants FGE, said in a Bloomberg television interview. “If there is no Iranian shadow on the market, prices could hit $75-$80 by the middle of the third quarter.”

OPEC+ reaffirms trajectory. OPEC+ officials met for a virtual meeting on Tuesday and reaffirmed its current plans to gradually increase production in July. The Joint Technical Committee (JTC) of the OPEC+ group maintained at a meeting on Monday its outlook for global oil demand growth at around 6 million barrels per day (bpd) this year.

Bullish sentiment gathers again. Even with Brent at the $70 marker, some analysts see more room to run. “We see demand outstripping supply in the order of 650,000 barrels per day and 950,000 bpd in Q3 and Q4 respectively,” ANZ analysts said.

Supply shortage? “The market is now facing the exact opposite dilemma of April 2020,” said Louise Dickson, an analyst at consultancy Rystad Energy. “Producers now have just as delicate of a task to bring back enough supply to match the swiftly rising oil demand. If markets over-tighten, a flare-up in prices could jeopardize the global economic recovery.”

Iran aims to ramp up supply. The U.S. and Iran are nearing a deal to restore the terms of the 2015 nuclear agreement, and Tehran is already eyeing an increase in oil production. “The next Iranian government should make it a top priority to raise oil production to 6.5 million barrels a day,” Iranian oil minister Bijan Namdar Zanganeh told reporters. The higher output will “improve the country’s security and political might.” Separately, an Iranian official said they hoped for a deal by August, dampening prospects that a deal would be reached this week.

OPEC+ enjoys new era with oil majors constrained. Western oil companies are under escalating pressure to constrain their production as the energy transition gathers pace. But with supply kept in check, OPEC+ could see new tailwinds with space to bring production back online even as oil prices remain at relatively high levels. “We see a shift from stigmatization toward criminalization of investing in higher oil production,” said Bob McNally, president of consultant Rapidan Energy Group and a former White House official.

Equinor and Exxon go forward with $8 billion Brazil project. Equinor (NYSE: EQNR) and ExxonMobil (NYSE: XOM) said on Tuesday that they would proceed with an $8 billion oil field in Brazil, which is slated to come online in 2024 and have a production capacity of 220,000 bpd.

Shale merger wave on the way. The U.S. shale sector could be in for another consolidation wave. This time, unlike last time, drillers seem to be willing to stick with the new agenda of capital discipline.

Intel Warns: Chip Shortage Threatens EV Boom. The current global chip shortage could take until 2023 to be overcome, semiconductor maker Intel said on Monday in another warning that the microchip supply crunch could delay the electric vehicle (EV) revolution.

Gas bans in homes rattle industry. A growing trend of banning new natural gas hookups in homes and businesses is ratting the gas industry. Some utilities are fighting aggressively to head off bans, others are taking a second look at growth scenarios. “We welcome the opportunity to avoid investments in new gas assets that might later prove to be underutilized as decarbonization efforts progress here in California,” a spokesperson with PG&E told the WSJ.

Asia refinery margins crash to $0. Asian refiners are struggling with a major slump in profit margins because of the resurgence in Covid-19 infections in the region, Bloomberg has reported, citing the latest trends in complex refining margins in Singapore.

Business school grads shun fossil fuels. New business school graduates choosing a career in the oil and gas industry have declined by 16% since 2019, and by 40% since 2006.

Yamal LNG’s fourth train reaches capacity. Yamal LNG’s fourth train reached full production capacity. Sales will go on the spot market.

BP invests $220 million in U.S. solar. BP (NYSE: BP) announced a $220 million investment in renewables in the U.S. with the purchase of 9 GW of solar projects from developer 7X Energy. The purchase is the oil major’s first big solar investment since 2017.

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Re. 'Transitory Inflation':

Some interesting DXY data. For PPI inflation to take hold, we definitely need to see DXY decline and decline into a 70 handle. On the way down through the 80 handle, transitory will probably bite the dust. For that to happen, yields need to fall or at least stop going up. Hence the Operation Twist reintroduction.

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Semiconductor shortages are on their way to being history.

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The sale of second hand cars, which was massive in the data, was largely driven (another pun) by shortages in new cars. This is set to change.

Pretty self-explanatory.

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Unemployment has stayed high due to some States' very low minimum wages. This meant that people 'earned' more on government handouts than by working. As the handouts wind-down, this is set to change.

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Banks are not currently expanding credit (as they did in the 1970's). Hence, currently we have asset price inflation, not CPI inflation. The commodities drive PPI inflation.



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So we really need to track 3 forms of inflation: (i) asset price (tick), (b) PPI prices (commodities & DXY) (tick) and (iii) CPI (tick currently). Only the CPI inflation will be transitory. The other 2 will continue and gradually leak into CPI numbers, even as manipulated as they are.


jog on
duc
 
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A strange trading day. As I write this post:

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On the surface, all seems well enough. Under the surface, something just smells wrong:

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May amount to nothing. However I have trimmed the directional element of the trading book (see trades) closing all. So essentially I am sitting 100% hedged.

Mr flippe-floppe-flye:

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The sectors:

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jog on
duc
 
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My unknowledgeable routine in the morning:
quick look:
Market flat, USD up, gold and silver up, oil up, and BTC up 5% :)
Mr LeDuc will like this ;-)
A bit of fear back in market and switch to relatively safe assets?
Usually leading to a slight down ASX day
Will check VIX in a couple of hours but would expect slightly higher or flat
Then i read the in-depth analysis from @ducati916 .

Am I the alone in this kind of wakeup market check process?
 

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