May DDD 2025

[ducati916]

So remember back in 2020 when oil went to (-$30) barrel and the shale oil industry in the US collapsed? This is that.





JC;

• The Nasdaq closed April with a 0.9% gain.
• I still refuse to fight Papa Dow.
• Fresh monthly candlesticks make for a special day.

It was only a week ago that The Wall Street Journal was telling your parents that we were headed for the worst April since the Great Depression.

It didn't turn out that way.

In reality, the S&P 500 and the Dow Jones Industrial Average ended April on seven-day winning streaks.

The S&P 500 recovered from a decline of nearly 14% over the first five trading days of the month to close down just 0.8% for April.

The Nasdaq Composite was down more than 14% but actually closed with a gain of 0.9%.

Papa Dow bounced back from a 13% slide to start the month to finish with a loss of just 3.2%

And we just got a fresh set of monthly candlesticks.

These are major data points for our process. We only get to look at fresh monthly candlesticks 12 times a year.

This set shows multiple U.S. indexes turning former resistance at their prior-cycle highs into fresh support...

"The Great Depression," lol...

I Still Refuse To Fight Papa Dow​

Yesterday was April 30, the last day of the month, which means we get new monthly candlesticks.

Take a look at Papa Dow:



Notice how former "resistance" – where the chart stops going up due to more selling pressure than buying pressure – keeps turning into "support."

That's where the chart stops going down due to more buying pressure than selling pressure.

We call this behavior "polarity." And it's the building blocks for supply and demand dynamics. It starts here.

The bottom line is that if the Dow is above its prior-cycle highs, then this bull cycle is still intact.

And if this bull cycle is still intact, we want to spend our time looking for stocks to buy and putting money to work from the long side.

These are complete monthly data points, and now we can move forward.

There are a lot of shenanigans that take place among institutional fund managers – "window dressing," they call it – at the end of each month.

Month's end is when they've got to show what they own to their investors.

Sometimes they don't want to show what they own because they're embarrassed to share that they were in the wrong stock.

Hence the end-of-month shenanigans.

What we can do now with monthly closing prices is take a step back and really zoom out.

That's the beauty of these monthly candlesticks: the big-picture perspective. And we only get to do this 12 times a year.

We have no choice but to identify the primary trend. And this is how we start to do it.

This is a special day. I get very excited when we get all this new data.

It's like Christmas for me.

Get Yourself Out There​

We're so grateful for news people and their uncanny ability to mislead the households who are turning to them for help and for hope.

Thank you for crushing their dreams and providing profit opportunities for the rest of us.

I've been doing this for more than 20 years, and I didn't come up with this stuff by myself.

All the things you guys hear me talk about, I learned by going to dinners and happy hours and actually doing and living it.

I had a great day doing that in New York City on Tuesday.

It was another reminder to get outside, to go meet people, to speak to investors, and to talk to smart traders.

I had a lot of different meetings with traders of all ages and experiences.

Wound up at a speakeasy late at night, you know, talking with one of our coders who runs backtests for me.

This is my man in Nova Scotia. He lives in a fishing village, is what he calls it. And he just runs backtests for me.

I had some other friends who are traders in town sharing ideas.

This is not just something I do.

It's really a lifestyle, right? And it's great to have friends that I can share ideas with.

I just want to just remind everybody, you know, try, right?

I'm telling you, it's so worth it.

Stay sharp,

The S&P 500 has closed higher for eight straight days, gaining +8.7%. This was its first eight-day win streak since November, and another gain tomorrow would be the first nine-day win streak since 2004. The index closed above its 50-day moving average today for the first time since February. However, it remains -2.5% below its 200-day moving average. @SubuTrade notes that when eight-day win streaks have occurred belowthe 200-day moving average, returns over the next month have historically been weak, up just 50% of the time with an average loss of -3.1%. The Takeaway: The S&P 500 has rallied for eight straight days, and another gain tomorrow would mark its longest win streak in over two decades. However, the next month has historically been unimpressive when eight-day win streaks have occurred below the 200-day moving average.

Today's number is... -0.87%
Out of the seven global regions I track, only one showed a negative return in April, the United States, which was down -0.87%.
Here’s the chart:

Let's break down what the chart shows:

• The red bars show the April performance for each of the seven global regions
• The blue bars show the year-to-date performance for each of the seven global regions

The Takeaway: The United States has been the last place that you wanted to be invested in this year. And the data shows this.
The global shift in leadership is starting to take hold in 2025.
Money moves to where it's treated the best, and right now, that's not in the United States.
This is what we call global rotation.
Yet many people overlook the opportunities it presents due to their biases toward their home country or simply because they are unaware of it.
In April, only one of the seven regions I track showed a decline: the United States, which was down -0.87%.
And the United States is the only region with a negative year-to-date return, down over -5%.
In contrast, Europe Ex-UK has taken the leadership role in 2025, boasting an impressive year-to-date return of over 18% and of 4.6% in April.
This rotation doesn't mean the world is falling apart…. It signifies that money is just flowing elsewhere.
Do you think the United States will continue to underperform throughout the rest of 2025?
What are your thoughts?






jog on
duc

 

[divs4ever]

https://www.aussiestockforums.com/attachments/screenshot-2025-05-01-at-6-19-19-am-png.198763/

awesome , i have been trying and waiting for an entry into HZN ( i have an order in the market currently )

BTW i expect some pain on the way before this becomes a 'bottom drawer stock ' and can live next to BPT among the others

 

[ducati916]

Oil News:

Friday, May 2nd, 2025

China, preparing for a week-long lull in trading activity, has nevertheless given the oil markets a much-needed carrot after a month-long stick treatment, saying that Beijing is evaluating a Trump administration proposal to hold negotiations over tariffs. As US-Iran nuclear talks have seemingly hit a temporary impasse, ICE Brent is set to start May trading with a second consecutive weekly decline, trading slightly above $61 per barrel.

Saudi Arabia Wants Lower Oil Prices. Seemingly intent to regain lost market share and stymie non-OPEC+ production growth, Saudi Arabia has been signalling that it will continue unwinding its output cuts and that Riyadh is ready to handle a prolonged period of lower prices after 5 years of OPEC+ cuts.

Texas LNG Project Sapped by Deadly Incident. Port Arthur LNG, the 13 mtpa gas liquefaction project developed by Sempra (NYSE:SRE), saw all construction work suspended after three people were killed and two others injured in a scaffolding accident that took place at 2am, according to contractor Bechtel.

Pemex Sinks Even Lower. The world’s most indebted oil company, the Mexican state oil firm Pemex, posted another quarterly loss after its Q1 performance showed a $2.1 billion shortfall, attributing the disappointing results to falling production from mature wells and delays in new well completions.

US Ethane Might Be Out of the Woods. Chinese petrochemical producers have been allegedly informed that ethane will be exempted from Beijing’s 125% tariff on all US goods, providing some relief as the US accounts for 99% of global ethane trade and has sent some 5.3 million tonnes to China last year.

Scotland No Longer Has a Refinery. Scotland’s only refinery, the 150,000 b/d Grangemouth plant operated by a tandem of Petrochina and Ineos, ceased all crude oil processing this week, to be refurbished into an import terminal as plans for a biorefinery never really took off.

Ukraine Signs Long-Delayed US Minerals Pact. Kyiv signed the oft-mulled minerals deal with the Trump administration following two months of hesitation, giving the US preferential access to its energy resources, including rare earth metals but also iron, uranium and natural gas.

Spain Mulls Nationalization of Grid Operator. Alerted by the possibility of another nationwide blackout, Spain’s deputy Prime Minister has suggested that Madrid fully take over the Mediterranean country’s power grid operator REE, currently 20% owned by the state with the rest held in private hands.

Refiners Warn of California Gasoline Shortages. PBF Energy chief executive Matthew Lucey warned that the closure of P66’s Los Angeles refinery and Valero’s Benicia plant would create a gasoline short in California that could be as big as 250,000 b/d, causing the state to lose 17% of its current capacity.

China Courts Europe as Its Next UCO Market. As Trump’s 145% tariff on China has killed any market economics in supply used cooking oil to the US, Chinese producers of the increasingly popular biofuel now target Europe to maintain steady export flows, after a meagre 0.6 million tonnes exported in 2024.

Chevron-Exxon Arbitration Set to Begin Soon. The Paris-based International Chamber of Commerce has scheduled the first hearing of ExxonMobil’s (NYSE:XOM)arbitration dispute against US peer Chevron (NYSE:CVX), claiming it has right of first refusal over Hess’ Guyanese assets, part of the latter’s buyout.

Malaysia Turns Against Petronas. Malaysia’s Sarawak state warned the country’s national oil firm Petronas that its Miri crude oil terminal operates without a regulatory license and questioned its distribution rights, endangering Petronas’ revenues as the state is home to 60% of the country’s reserves.

Asia Starts to Pull LNG Cargoes Away from Europe. According to media reports, four LNG carriers that were en route to Europe changed course to Asia over the past week as the decline in European gas prices and the return of Asia’s gas premium led sellers of US LNG to look eastward again.

Shell Plays Down Talk of BP Takeover. Wael Sawan, chief executive of UK-based energy major Shell (LON:SHEL) said that he would rather ramp up the company’s share buyback than launch a takeover bid over peer major BP (NYSE:BP), coming on the back of Q1 net profit falling 28% year-over-year to $5.6 billion.



Traders often say OPEC’s job is to support prices. But this week, Brent crude dropped 8% — and Saudi Arabia barely blinked.

The headlines say it’s about OPEC discipline. But the numbers — and the timing — suggest something bigger is unfolding.

And now, oil is trading at four-year lows just as the group’s meeting shifts to May 3, conveniently when markets are closed.

In this week’s Global Energy Alert, our analysts break down:

• What Riyadh’s production strategy signals about its real priorities
• How Saudi Arabia could be prepping for Iran’s return — and hedging its bets on Russia
• The hidden stakes in U.S.–Saudi defense and nuclear talks tied to oil

OPEC’s next move could reset the market — and if you're not watching closely, you'll miss the setup.



AI replacing jobs: https://www.theatlantic.com/economy...opy-link&utm_medium=social&utm_campaign=share

Manufacturing in US Full: https://www.molsonhart.com/blog/america-underestimates-the-difficulty-of-bringing-manufacturing-back







Read the Manufacturing link first, then:





New bull market or bear market rally?


jog on
duc

 

[Garpal Gumnut]

@ducati916

What does the DDD stand for in your monthly missives. I have asked in the past but you may not have seen it.

Failing that does anyone on ASF know what the DDD in @ducati916 's missives means.

gg

 

[ducati916]

Mr GG,

Duc's Daily Dozen


jog on
duc

 

[divs4ever]

but i prefer to sell into rallies/up-trends

when i have successfully picked tops ( fairly rare but have done so a few times ) i often end up with a part-filled transaction with brokerage taking the sizzle out of the trade

so a rise in May is not a bad thing for me , as i select prices and look to reduce in all of May not just the first week ( or before )

now if the market starts sliding in May .. i will be looking for stuff to buy

however so far this May BEAR looks to be my most likely buying ( looking for a dip in coming months )

 

[ducati916]

• The Nasdaq Composite has rallied +18% from its April 8th low on a closing basis.
• When the Nasdaq has surged more than +14% off a 52-week low, Jason points out that the following week's performance has historically been telling.
• When the index has fallen less than 3% within the following week, the average 12-month forward return has been nearly +40%. Conversely, if it experiences a -3% drop, the average return has been roughly -13%.

The Takeaway: The Nasdaq has surged +18% from its recent low. After similar thrusts, a pullback within a week has historically been a red flag. As Walter Deemer famously said, "When the train leaves the station, it doesn't back up to let latecomers on. If it does, there's something wrong with the train."




First real test will likely be next week.







Climbing a wall of worry or actually something to worry about?


US shale oil needs prices above $65. Even better above $70. At sub $60 shale oils will be shut in. If shale production is reduced permanently, then oil will have to move much higher eventually, $100+.


So the GOR (gold: oil ratio) is important:




Because this is China's strategy to displace UST as the reserve asset and allow China to use Yuan (and anyone else) to buy energy and or any other commodities, displacing the USD.

Currently Yuan swap lines are being used more than ever before. Why?

As long as Russia is selling oil and commodities in CNY then whenever we need gold, we can simply agree to a higher gold/oil ratio (GOR) and then short oil in the west, take the USDs, use them to buy gold from the west at the lower GOR, sell the gold for more oil in Russia at the higher GOR, sell a portion of the oil to cover our oil short in the west and then keep the balance, essentially getting oil for free.

This can continue until either the POG rises significantly or the West runs out of gold.

Either way, as long as Russia sells oil in CNY your gold will continue to rise in both CNY terms and in oil terms.

In this way China never runs out of gold while maintaining the Shanghai Gold Exchange which allows anyone to exchanage excess Yuan held via trade into the neutral reserve asset, gold.

So (obviously) one issue is: what are the production costs in Russia for oil?




It will be interesting. The Arabs seem intent on crashing the price lower (again) to crush shale possibly forever.

Meanwhile there is another energy crisis building:



AI etc is untenable in the US currently with its crumbling electrical grid.

How long does it take to build out new infrastructure capable of supplying what is needed?
How much does it cost?

A question for @Smurf1976

The consequences are that the US falls very far behind China in the AI race/dominance. Important? Probably.

Of course then you have the question of how do you generate that power, which takes us back to oil/gas/nuclear.


As to the question of cost:

The US economy has been 'finacialized' over the past 50yrs by design. This is a major problem.



So basically you play the stock market.

Why take risks building businesses when you can invest in homes or stock indices and make a much higher risk-adjusted return?

Similarly, why would a corporate exec (whose net worth is heavily tied up in his or her own stock) take risks on investing in capex or new facilities, when they can just buy back stock and make a much higher risk-adjusted return for the company, while also enriching themselves?

So if the private sector in unwilling to take the risk to build out the infrastructure, who is?

Oh yes, the public sector, who currently sit with $200 Trillion + in liabilities and can barely pay the interest on the public portion of that debt, $36 Trillion and counting, which is running in excess of $1.2 Trillion p/a.

This is the dichotomy: the stock market is moving higher, lots of commentators extolling price action etc as evidence that the bull is back. Meanwhile the fundamentals are collapsing. I agree the fundamentals are a horrible timing tool, but by the same token 'price action' is often fantasy.

Returning to the QQQ chart- just beware that PP. If we go through, then back to test the highs. Could get choppy however or outright fail at that PP.

So I put some trades on last week around XLU, XLE, and XLP.


jog on
duc

 

[divs4ever]

and China is very busy expanding electricity at a massive rate , conventional nuclear power plants , thorium plants , research into sodium ion batteries ( implying increased solar deployment )

China and AI , China has a major advantage over the G7 , a huge local population ( to harvest data and learning parameters from )

now in time i expect India to close the gap ( between China and India )

 

[ducati916]

This didn't take long:




Full:https://www.zerohedge.com/commoditi...k-says-us-oil-output-has-peaked-slashes-capex


jog on
duc

 

[divs4ever]

This didn't take long:

View attachment 198946


Full:https://www.zerohedge.com/commoditi...k-says-us-oil-output-has-peaked-slashes-capex


jog on
duc

looks like i will miss my two preferred oil targets ( one a new position , one an accumulate ) again

i was hoping the Saudi news would create a bigger dip , before shale started begging for mercy ( and probable subsidy/tax cuts )

 

[Captain_Chaza]

Phew! As you all know, I have not Hoisted an OILL in 20 years
I just don't trust OPEC and its + ( Russia)
Call me Superstitious if you wish

Of course there will be a Bottom one day in OIL but "I Don't Give a Damn!"

Salute and Gods' Speed

 

[ducati916]

Oil News


Oil majors have been surprisingly inert in reacting to oil prices declining by more than $10 per barrel since early April, preferring to wait out the resolution of the U.S.-China trade war before cutting expenditures.

- Posting a net profit of $7.7 billion, down 7% from a year ago, oil major ExxonMobil (NYSE:XOM) maintained its capital expenditure guidance at $27-29 billion, with peers Chevron, Shell and TotalEnergies keeping their targets as well.

- Embattled oil firm BP (NYSE:BP) was the only major to cut its capex guidance by $0.5 billion to $14.5 billion, with CEO Murray Auchincloss flagging further downgrades down the line if prices don’t recover.

- BP will be unable to maintain its current dividend strategy if oil prices remain below $71 per barrel, whilst Shell leads the pack of oil majors with a dividend breakeven of $48 per barrel, easily accommodating a couple more months of expedited OPEC+ unwinding.

Market Movers

- French oil major TotalEnergies (NYSE:TTE) has applied for an environmental permit in Chile to launch a 16 billion green hydrogen and ammonia project, with construction expected to begin in 2026.

- Argentina’s Energy Ministry confirmed its plans to privatize national gas company Enarsa, a company founded in 2003 to import Bolivian gas that since transformed into the country’s leading gas and power trader.

- Norway’s state oil firm Equinor (NYSE:EQNR) sold its remaining 60% operated interest in Brazil’s offshore Peregrino field to regional producer PRIO for a consideration of 3.35 billion.

Tuesday, May 06, 2025

Oil prices have largely shrugged off the bombshell that OPEC+ dropped on markets when it announced plans to speed up the unwinding of its production cuts. Early on Tuesday, both WTI and Brent were up by around 4%. That said, the current ICE Brent price of $61-62 per barrel is still susceptible to sudden dips below $60 per barrel, should rumors of potential US-China trade talks turn out to be more of the market’s wishful thinking than reality.

OPEC+ Doubles Down on Flooding Policy. In yet another instance of Saturday diplomacy, OPEC+ members have agreed to raise collective output by 411,000 b/d in June, mirroring the fast-tracked unwinding started back a month ago, as Saudi Arabia seeks to regain market share lost to non-OPEC countries.

Shell Keeps Its Eyes on the Prize. London-based energy major Shell (LON:SHEL) is still considering a potential takeover bid for its embattled peer BP (NYSE:BP), holdingtalks with industry advisers on the feasibility of a giant deal that would create a giant worth more than $265 billion.

Saudi Arabia Cautiously Hikes Asian Prices. Saudi Aramco (TADAWUL:2222) hiked its Asia-bound formula prices for June-loading cargoes by a uniform $0.20 per barrel, sticking to a somewhat dovish pricing policy after the Dubai spot premium widened to 1.66/bbl in April, up $0.28/bbl from March.

Giant Merger Roils Canada’s Retail Landscape. US fuel distributor Sunoco (NYSE:SUN) agreed to buy Calgary-based Canadian retailer Parkland (TSEKI) in a deal valued at $9.1 billion, creating the largest fuel distributor across the Americas, however minority stakeholder Simpson Oil might seek to derail it.

Democrats Sue Trump Over Wind U-Turn. A coalition of Democratic states led by New York filed a lawsuit against the Trump administration, arguing that the US President’s pause on all federal wind energy approvals is unlawful as Trump failed to provide any detailed justification for the decision.

Trinidad Wants Guyana’s Gas. Running short of its own domestic production, Trinidad and Tobago is seeking a term supply agreement with Guyana to tap into their upcoming offshore gas projects developed by ExxonMobil (NYSE:XOM) as Venezuelan supply options were derailed by US sanctions.

Woodside Looking for New LNG Partners. Australia's leading gas producer Woodside Energy (ASX:WDS) said it would seek to sell a further 20%-30% stake in its $17.5 billion Louisiana LNG project, having taken a FID last week and garnering $5.7 billion of financing from U.S. investment firm Stonepeak.

Asia Turns Its Back on King Coal. Asian thermal coal prices have plunged to a four-year low, with Indonesian lower calorific value coal trading below $50 per metric tonne whilst Australia’s Newcastle coal benchmark fell below the $100/mt threshold for the first time since June 2021 on weak Chinese buying.

Easing Trade Tensions Lift Copper. As markets are weighing the probability of US-China trade talks over the upcoming weeks, copper prices edged higher this week with the 3-month LME contract jumping to $9,470 per metric tonne, further buoyed by low Chinese stocks and a weaker dollar.

LNG Canada to Start Loading in June. Canada’s first export LNG project under development, the 14 mtpa Canada LNG, has completed the cooldown of its liquefied natural gas terminal in Kitimat, BC after it received a cargo earlier in April, and is on track to load its first ever LNG cargo in June.

Drillers Warn of Shale Peak Coming Soon. US shale firm Diamondback Energy (NASDAQ:FANG) warned that with WTI trending below $60 per barrel, US shale would start declining later in 2025, with the U.S. frac crew count already down 20% compared to January and rig count expected to fall another 10%.

Europe Eyes 2027 End to Russian Gas Imports. The European Commission will propose legal measures to end the EU’s imports of Russian gas and LNG by next month, seeking to ban any new commercial deals with Russian entities by the end of this year and winding down all imports by December 2027.

Iran Keeps on Exporting Oil Despite US Pressure. Iran exported 1.6 million b/d of oil in April, virtually unchanged compared to March levels, as Donald Trump’s ‘maximum pressure’ policy is yet to yield any tangible results in Tehran’s energy flows.








USD to move lower?




Gold close to ATH, moving higher?

Of course. If the US is now engaged in a gold based QE, then gold is going far higher.

Given that GDP has collapsed, which means the Debt/GDP ratio is rising and the yields are again rising, USD weakening:



The US is a hot mess.

We have already seen that the Bond market has essentially zero liquidity and will collapse in a heartbeat.

The US also needs to replenish the SPR after Biden et al depleted it. With POO at a pretty good price and US Shale needing higher prices, why not refill the SPR. Seems a sensible proposition.

With unemployment data as it is...no rate cuts from the Fed. How long before the Bond market spits the dummy again?


jog on
duc

 

[ducati916]

You can't make an omelette without breaking some eggs. And you can't make a new global trading order without breaking a few things in financial markets.

The big picture: A stunning surge in the value of the Taiwanese dollar and other Asian currencies over the last week is a vivid example of how the Trump administration's break from a decades-old system of global commerce will cause collateral damage along the way.

• The world is highly exposed to the U.S. dollar, so a shifting perception of the U.S. role in the world economy could have rapid and unpredictable effects across global markets.
• The flip side of persistent U.S. trade deficits is that many other countries accumulate massive stockpiles of Treasury bonds and other U.S. assets. To the extent that Trump is serious about trying to reduce the trade deficit, it implies major disruption to asset markets as well.
• Exactly how, when, and where that plays out is anybody's guess. We're not aware of anyone who predicted a currency market flare-up driven by Taiwanese life insurance this time last week!

Catch up quick: The Taiwanese dollar surged 10% relative to the U.S. dollar between last Thursday and Monday. It has partially receded since, but that's still a much bigger and faster move than is usually seen in currency markets.

• It reflected the nation's life insurance and pension funds rushing en masse to shift away from U.S.-issued debt and to hedge their exposure to the dollar.
• Taiwan's huge stockpile of U.S. assets reflects its longtime trade surplus. As it sells semiconductors and other goods to American firms, it must somehow recycle the dollars it earns.
• The shift came against the backdrop of a steadily weakening dollar over the last month, which made the firms eager to protect against the risk of losses from their dollar-denominated assets falling further. But everyone rushing to the door at the same time made the situation worse.

Between the lines: It's not uncommon for moderate economic and policy shifts to be magnified by crowded trades and financial market positions unwinding. The global financial system routinely turns small sparks into big conflagrations.

• It is worth remembering that, amid volatile trade policy and loose talk about purported "Mar-a-Lago Accords" or other efforts to reset global currency and debt arrangements.

Flashback: Following Trump's April 2 tariff announcement, Treasury bonds fell sharply, a move that analysts partly attributed to the unwinding of the "basis trade" — in which hedge funds profit from the gap between Treasury securities and futures contracts tied to those bonds.

• In the fall of 2022, the U.K. government released a deficit-busting fiscal plan that caused the value of its bonds to fall, exacerbated by pension funds facing a cascade of margin calls and forced selling.
• A 1998 default on Russian bonds was the key catalyst for the collapse of the massive hedge fund Long Term Capital Management and East Asian currency crises.

The bottom line: These first gyrations in currency and asset markets triggered by U.S. policy swings aren't enough to have much impact on the economy. But they're probably not the last.




Full:https://www.cnbc.com/2025/05/06/pau...if-trump-cuts-china-tariffs-to-50percent.html

​

From JC;

• The "degens" are extremely frustrated.
• This "Squeeze" is an all-timer.
• Facts change, human behavior does not.

I was on a late night Twitter Spaces I pop into sometimes on Friday nights when I'm going through my weekly charts.

Helps me tap into the madness of the crowds.

Last Friday, they were all in disarray.

They were talking about how markets are different now, that politics have changed how markets work.

"It's different this time."

Nope.

"It's the same old situation," to quote Motley Crue...

It's always different.

It's not just "this time."

Price First, Crowd Second​

I find myself in this Spaces a couple of times a month, usually on Friday nights after the family has gone to bed and I'm reviewing the weekly data.

I've shared with them, honestly, that I look to them for idea flow. Many times I fade them, sometimes I'll agree.

But recently, I told them I thought the risk was to the upside in stocks – particularly China, small caps, and other speculative growth areas.

They did not agree. They were of the "dead cat bounce" mentality.

I'm not one of those anonymous lurkers online. So if I'm there you know I'm there.

Twitter gives you the option to enter these spaces anonymously. But, since I'm there and have a relatively larger following, they usually invite me up.

And I'll share a few thoughts with the whole crew.

I appreciate their hard work, their consistency, their passion for markets, and their search for potential catalysts.

Many times I'll disagree with a take I see. And, sometimes, I'll act on it and take the other side.

But that's OK. That's what makes markets, and I appreciate their perspectives.

I also agree with some takes.

And, many times, I learn something.

This Spaces crew tends to include politics in their discussions.

And they are not particularly keen on President Donald Trump.

I've been at this every day for almost 22 years. The facts are different every time.

But human behavior stays the same.

The Trump administration is a huge question mark.

The president and his tariff policy have created historic levels of uncertainty among consumers and investors.

We know. We have the data.

And this isn't the first time we've seen a "Trump Squeeze," where the uncertainty he and his buddies create sparks a massive unwind to the upside.

Remember Trump Squeeze 1.0?

So many people thought Trump was going to crash the market, the last time he won the U.S. Presidential Election.

But 2017 ended up being on of the greatest and least volatile years in the history of the American stock market:



We saw the fear spike in November 2016.

And we're seeing it again now.

People are scared. That's good because we know how to use it to inform our trading.

We know when sentiment levels are this extreme, they don't stay that way for long.

Consumers and investors change their minds... and optimism builds... as the prices of stocks rise.

Sentiment follows price.

Price moves first.

Then the crowd follows.

I'll Go Anywhere for a Good Trade Idea​

I was laying on the couch Friday night after peacing out from this Spaces shaking my head

These guys are angry AF. It makes sense based on what we're seeing in the positioning data.

Over the past six months their heads have exploded whenever I've mentioned buying China.

I've been joining these Twitter Spaces for years now, and before that it was an app called "Clubhouse." But, today, it all happens on Twitter.

I just tune in to see what the "degens" are doing – they refer to themselves as "degens," short for "degenerates."

They tend to call me out when I'm in and ask my thoughts on the market.

They almost always think I'm the crazy one...

Stay sharp,




So it's the 'smart money' v the 'dumb money'.

The dumb money is however largely constituted of the passive flows. The passive flows have been and would still seem to be the dominant capital flow within equities.

This is unlikely to change much unless the US enters a recession that has a rise (significant) in unemployment. Those passive flows in get reduced and the passive flows out begin.

Bonds:





For the second straight QRA, Bessent did not term out UST issuance. He cannot term out US debt without causing a US debt crisis. This is exactly what Yellen also learned.

The Fed has not sold any 10y+ USTs on net since 2010 despite the US having recently gone through the longest yield curve inversion on record. The only plausible explanation is LT UST markets are not nearly as liquid and deep as advertised.

From Barron's

Any signal of higher-than-expected issuance now or in the future would have also jolted the bond market at a tricky time; bonds just suffered one of their worst selloffs in April after President Donald Trump unveiled tariffs.

…while also warning that the Treasury getting “too aggressive” with UST buybacks “could undermine institutional credibility”

Any substantial ramp-up of buyback activity could suggest the Treasury is intervening with the market functioning.

“An activist approach by the Treasury in managing yields could undermine institutional credibility,” wrote J.P. Morgan’s Managing Director Joyce Chang when summarizing thoughts by speakers at a recent J.P. Morgan investor seminar on the sidelines of the IMF/World Bank meeting.



Very close to that 5%.

The 5% mark is where bond market liquidity dries up and liquidity has to be provided by the Fed, Treasury or someone.


This is the working room that the US has in its war with China. This is why China can out last the US. The gap from 4.7% to 5% takes hours, possibly even minutes.

Stocks collapse in a bond market liquidity crisis.

Ultimately the real value of bonds must be crushed. Inflation via YCC or some-such.

Then stocks will be in that high, secular inflation that predominated 1949-1969.



Stocks in aggregate will perform well in nominal terms. Some even in real terms.


jog on
duc

 

[Smurf1976]

AI etc is untenable in the US currently with its crumbling electrical grid.

How long does it take to build out new infrastructure capable of supplying what is needed?
How much does it cost?

A question for @Smurf1976

There's also a difference in how quickly the US builds versus China.

China's track record is they can build nuclear from scratch in 5 - 7 years and they can build coal from scratch in ~3 years if they're in a hurry to do so.

For the US nuclear there's not a lot of recent experience but it took about 10.5 years of actual construction to add two complete new nuclear generating units (reactor, turbine, alternator, all ancillaries - the lot) to the already operational Vogtle power station site. Bearing in mind that's for the construction, before that are all the regulatory approval processes, financing and so on so realistically 15 years minimum.

Coal in the US has similar issues with the time to obtain permits, finance etc being significant. For the actual construction though 4 - 7 years depending on whether it's an existing site or new, whether a new mine is being developed to feed it, whether it needs other major works eg water supply dam, rail line, etc. That's assuming it could actually obtain permits and financing, something that does seem questionable.

Gas turbines I'll make the comment very cautiously since at present there's a "waiting list" for orders that is very rapidly escalating. That one's a rapidly moving target, just a few months ago an order placed with GE, Siemens or Mitsubishi would've seen an almost immediate start on manufacture. That's very rapidly changed due to a surge in orders however and it's somewhat hard to put a precise figure on it due to that rapid shift. At the moment credible sources are to the effect that no major manufacturer has any capacity to take on more orders for work in the next 4 years but it may be longer than that depending on what model and so on.

On the upside someone's ordered and will be receiving a lot of gas turbines over the next few years. On the downside anyone who hasn't already ordered is in for a lengthy wait.

That said, that's referring to major manufacturers in the West. China hasn't really been involved there on the supply side, but they do have some small domestically produced gas turbines now reportedly in production and have test fired a large one.

Then there's site installation on top of that although that's relatively quick for gas, and certainly the site could be fully prepared awaiting its delivery.

Also with gas (or coal or nuclear) there's the question of fuel supply. Just building the equipment, the power station, is only half the story. It needs fuel to run otherwise it's nothing more than a rather expensive monument. Bearing in mind it's not just fuel itself, but it's fuel on site so where necessary that means rail or pipelines being built too.

Solar and wind can be built rapidly so long as local labour isn't a constraint. It's just an assembly task really, and the nature of it is that having a a lot of people on site all at once isn't all that hard. Assuming you've got enough people plus the ability to supply and fabricate basic materials - steel, concrete, aluminium, etc.

Hydro in the US would run into massive delays with permits and so on. In China it's just the construction time and that's hugely variable depending on the project. A simple project ~4 years, though some would come in well under that, but a highly complex one involving massive scale civil construction can end up at 15 years easily if it requires building more than just the dam and power station itself (eg have to build roads, bridges etc as part of it for practical reasons). It's extremely project specific due to the nature of it.

All up, my thinking is we'll see data centres locating where energy is available as a key decision. If someone wants to build a data centre in whatever location and can't obtain power to run it, meanwhile there's a utility somewhere else waving its arms saying "pick me" then the obvious solution is relocate the data centre. Perhaps not ideal in some ways, but if it means building it versus not building it then that becomes rational.

 

[qldfrog]

There's also a difference in how quickly the US builds versus China.

China's track record is they can build nuclear from scratch in 5 - 7 years and they can build coal from scratch in ~3 years if they're in a hurry to do so.

For the US nuclear there's not a lot of recent experience but it took about 10.5 years of actual construction to add two complete new nuclear generating units (reactor, turbine, alternator, all ancillaries - the lot) to the already operational Vogtle power station site. Bearing in mind that's for the construction, before that are all the regulatory approval processes, financing and so on so realistically 15 years minimum.

Coal in the US has similar issues with the time to obtain permits, finance etc being significant. For the actual construction though 4 - 7 years depending on whether it's an existing site or new, whether a new mine is being developed to feed it, whether it needs other major works eg water supply dam, rail line, etc. That's assuming it could actually obtain permits and financing, something that does seem questionable.

Gas turbines I'll make the comment very cautiously since at present there's a "waiting list" for orders that is very rapidly escalating. That one's a rapidly moving target, just a few months ago an order placed with GE, Siemens or Mitsubishi would've seen an almost immediate start on manufacture. That's very rapidly changed due to a surge in orders however and it's somewhat hard to put a precise figure on it due to that rapid shift. At the moment credible sources are to the effect that no major manufacturer has any capacity to take on more orders for work in the next 4 years but it may be longer than that depending on what model and so on.

On the upside someone's ordered and will be receiving a lot of gas turbines over the next few years. On the downside anyone who hasn't already ordered is in for a lengthy wait.

That said, that's referring to major manufacturers in the West. China hasn't really been involved there on the supply side, but they do have some small domestically produced gas turbines now reportedly in production and have test fired a large one.

Then there's site installation on top of that although that's relatively quick for gas, and certainly the site could be fully prepared awaiting its delivery.

Also with gas (or coal or nuclear) there's the question of fuel supply. Just building the equipment, the power station, is only half the story. It needs fuel to run otherwise it's nothing more than a rather expensive monument. Bearing in mind it's not just fuel itself, but it's fuel on site so where necessary that means rail or pipelines being built too.

Solar and wind can be built rapidly so long as local labour isn't a constraint. It's just an assembly task really, and the nature of it is that having a a lot of people on site all at once isn't all that hard. Assuming you've got enough people plus the ability to supply and fabricate basic materials - steel, concrete, aluminium, etc.

Hydro in the US would run into massive delays with permits and so on. In China it's just the construction time and that's hugely variable depending on the project. A simple project ~4 years, though some would come in well under that, but a highly complex one involving massive scale civil construction can end up at 15 years easily if it requires building more than just the dam and power station itself (eg have to build roads, bridges etc as part of it for practical reasons). It's extremely project specific due to the nature of it.

All up, my thinking is we'll see data centres locating where energy is available as a key decision. If someone wants to build a data centre in whatever location and can't obtain power to run it, meanwhile there's a utility somewhere else waving its arms saying "pick me" then the obvious solution is relocate the data centre. Perhaps not ideal in some ways, but if it means building it versus not building it then that becomes rational.

"Solar and wind can be built rapidly so long as local labour isn't a constraint. "
And as long as we buy from China or India
Otherwise, back to previous supply delays let alone cost.
And only if we agree to stop using Gemini on calm still nights
AI centers energy needs are similar to BTC farms and might end up at the feet of barrages in Alaska or aside volcanoes in iceland.
But they will need permanent feed whereas crypto farming can be slowed down

 

[ducati916]

LOL.




jog on
duc

 

[ducati916]

The United States is ripping up longstanding trade arrangements, developing more hostile relationships with allies, and undermining independent institutions, all while rapidly running up more debt.

The big picture: That's a recipe for the role of the U.S. dollar as global reserve currency — unquestioned since the end of World War II and at a high-water mark just a decade ago — to fade.

• So argues Rogoff, the Harvard economist and former chief economist at the International Monetary Fund, in a conversation with Axios and in his new book "Our Dollar, Your Problem."
• President Trump's policies have accelerated that process, Rogoff argues, but it was already set in motion.

State of play: When a company in Indonesia does business with one in South Korea, it probably transacts in dollars. When a country in the Middle East runs up huge surpluses from selling oil, it probably parks the money in dollar-denominated investments.

• And when a bank in Europe does business with a country that is on the outs with the U.S. government, it can face massive fines and risk losing access to the global dollar payments system.
• Alternatives to the dollar — the euro, the Chinese renminbi — have to this point not been true rivals, as neither offers the kind of deep and open debt markets and institutional frameworks that make them particularly attractive outside their home countries.

Zoom out: There have always been aspects of this system that other countries don't like very much — hence the title of Rogoff's book.

• The U.S. sets fiscal and monetary policies based on its own interest, so countries tethered to the dollar are along for the ride, losing some control over their domestic economies.
• And the U.S. has used economic sanctions in recent years for an increasingly wide array of goals — in the view of rivals and even allies, acting as a geopolitical bully.
• That was already setting the stage for other countries to try to bolster their capacity to use other currencies for global commerce. The sense that the U.S. is an unreliable partner is turbocharging that process.

What they're saying: "What's happening under Trump is an acceleration of where we were going," Rogoff tells Axios. "He's a catalyst and an accelerant. But I do think if [former Vice President Kamala] Harris had won, the risk would have been pretty big over a longer arc of time, say, five to seven years, than Trump has managed."

• "This isn't something that just turns overnight, but the rest of the world was already seeking more freedom from the dollar, and this lit a fire under it."
• "In order for the euro to become more important outside Europe, they need to expand their financial system, the banking networks, in a way that accommodates that, and ditto the Chinese. The Chinese are working very hard at that."

The U.S. response to Russia's 2022 invasion of Ukraine lit a fire under the Chinese, Rogoff adds. "They saw what we did with sanctions and that we froze central bank assets."

• "They have open doors, not just from Russia and North Korea, but large parts of Africa, Asia and Latin America. They don't trust the Chinese, but they don't trust the Americans anymore, either."

Several officials in Trump's orbit argue that the U.S.'s reserve currencystatus — the "exorbitant privilege," as it has been called — comes with a heavy burden and that it is high time for the rest of the world to pay for that. Top White House economist Steve Miran said recently that "our financial dominance comes at a cost." "While it is true that demand for dollars has kept our borrowing rates low, it has also kept currency markets distorted," Miran said. "This process has placed undue burdens on our firms and workers, making their products and labor uncompetitive on the global stage." Yes, but: Rogoff argues that the costs of dollar dominance are more subtle than that, and that the benefits the United States receives are considerable. "If you have a mortgage, you have something to lose, because the exorbitant privilege brings down all interest rates in the United States. Auto loans, student loans, it's a very direct effect," he says. "More subtle but important is when the next crisis hits, if we've lost our exorbitant privilege, we will not be able to borrow as much to fight it. The rest of the world looks in awe at how much the United States is able to borrow" in episodes like the COVID-19 pandemic and the 2008 financial crisis. "There's a national security element. A huge percentage of the global financial network essentially goes through U.S. regulators. The fact that we get all this information makes the U.S. able to ward off terrorist threats, allocate our intelligence services, and use sanctions in place of military interventions." The bottom line: Predictions that the rest of the world might one day shun the dollar have come and gone for years. It just might be real this time — and would come with a cost.

Oil News:


Friday, May 9th, 2025

ICE Brent futures have recovered to $64 per barrel as oil markets keep their hopes high for the upcoming first round of US-China trade talks this weekend. Should US Treasury Secretary Scott Bessent reach some sort of breakthrough with his Chinese counterpart He Lifeng, May could recoup most of April’s losses.

US Slaps Sanctions on Third Chinese Refiner. The US Department of the Treasury imposedsanctions on the Hebei Xinhai Chemical Group refinery and three companies operating the Dongying port in Shandong province, arguing they had facilitated the delivery of Iranian crude oil over the past years.

IEA Warns of Global Methane Risks. Releasing its Global Methane Tracker 2025 report, the International Energy Agency warned that the energy sector emitted 145 million tonnes of methane last year, adding that at least 35 million tonnes could be cut at no net cost, if oil companies took heed.

Russia Wants China Investing into Its Upstream. As Chinese President Xi Jinping visited Moscow this week, the Kremlin pitched the idea of Chinese companies investing into its mulled 13 mtpa Baltic LNG project in Ust Luga, concurrently seeking to expedite talks on the stalled Power of Siberia-2 pipeline.

Mexico’s Offshore Platforms Leak Again. Mexico’s state oil company Pemex reported two separate leaks in a pipeline connecting the offshore Akal-C platform with the Dos Bocas maritime terminal in the southern state of Tabasco, with oil slicks reported along a 5-mile stretch of the shoreline.

Glencore Expands into Singapore’s Chemicals. Aster Chemicals, the JV of global trading major Glencore (LON:GLEN) and Indonesian petrochemical company Chandra Asri, agreed to buy Chevron’s polyethylene-producing plant in Singapore, less than a month after it bought Shell’s Bukom refinery.

Norway Mandates Resumption of Frontier Exploration. Norway’s parliament ordered its government to launch a new oil exploration licensing round that would include frontier parts such as the eastern part of the Barents Sea in the Arctic, as gas production is expected to fall sharply after 2030.

US Jet Demand Roars Back to Strength. Returning to pre-COVID levels for the first time in 5 years, the EIA reported that US jet fuel demand surpassed 2 million b/d in the week ended May 2, for the first time since December 2019 after a robust 474,000 b/d week-on-week increase.

Venezuela Restarts Key Refinery. In defiance of tightening US sanctions, Venezuela’s state oil firm PDVSA restarted the 310,000 b/d capacity Cardon refinery after a year-long halt that was triggered by a power failure and subsequent lack of equipment, seeking to ramp up gasoline production in the country.

Europe Soften Car Emission Mandates. The European Commission has yielded to intense lobbying from Europe’s car manufacturers and extended the timeline to meet new CO2 emission targets by 2027 rather than just this year, defined as 93.6 CO2/km for passenger cars and 153.9 CO2/km for vans.

Iran Rekindles Hopes of Caspian Drilling. Having failed to find any commercial volumes of oil in the offshore zone of the Caspian Sea so far, Iran’s Oil Ministry is now looking to renew exploratory drilling in its shallow water part, drilling the Rudsar wildcat after a 28-year drilling hiatus.

Texas Drilling Activity Plunges on Trump Impact. According to energy consultancy Enverus, oil and gas permit applications in Texas fell to their lowest since February 2021 this past April, dipping 30% month-over-month to 570 applications after Q1 2025 hovered around 800 applications per month.

Brazil Gets Its Exploration Mojo Back. Brazil’s state oil firm Petrobras (NYSEBR) announced the discovery of a high-quality oil reservoir in the Aram block of the offshore Santos Basin, with its wildcat drilled to a water depth of 1,952 metres and potentially expanding the scope of its pre-salt ambition.

Soybeans Carry the Weight of Trade Wars. China’s soybean imports collapsed to their lowest since at least 2015 when Beijing’s statistical agency started to track them, amidst halted US imports and loading delays in Brazil, with inflows totalling only 6.1 million metric tonnes, a 30% drop from March levels.







So I posted this previously.

In light of @Smurf1976 excellent post re. power generation, the above is what has and could continue to drive the US economy. Since the US government has actively allowed the US economy to evolve the way it has, the US stock market effectively backs the UST market, via the marginal consumer spending and therefore tax receipt links. (Net Capital Gains + Taxable IRA Distributions alone ~200% of the growth in annual consumer spending, which is 2/3 of US GDP…and that doesn’t include executive stock compensation.)

US consumer spending cannot grow unless stocks rise. Which means US GDP and US tax receipts cannot rise unless stocks rise. Which is a problem with US True Interest Expense (Entitlements + Interest) are already 108% of all-time high Federal receipts trailing 12-months through February. So if stocks fall too far, for too long, the US government will quickly face default on Entitlements or Interest. Which means that they will again need to print the money. Which is inflationary.

In short: you want to reshore manufacturing, you must have the ability to generate the power required. That is not a quick fix. Never mind actually finding a skilled workforce which is now a generation removed.

The whole point of tariffs is/was to force or encourage allies to build manufacturing plant etc in the US. This is to rectify 20yrs of bad US policy and off-shoring.

As it cannot work, and from above container ships are way down, the US will enter another covid like shortage of goods. Again there will be this split between the real economy and the financialised economy, the UST market and stock market.

So on one hand, stocks have to keep rising, about 10% per year to keep a lid on interest expense and entitlements. You cannot have a recession as that would drive far higher deficits.

You have forced foreign demand for stocks to end and are actively imposing light forms of capital controls on those. This is in part why US stocks outperformed all other global stocks. No more.

As for the Bond market, anything over a duration of a Bill (3mths) cannot be sold. This means a constant need to re-finance. That is equivalent to a Banana Republic. The US Treasury market blows up every time China sneezes, because of the decisions to financialise the US economy. Buffett holds 5% of the US Bills issued.

The technicians tell me it's a bull market.

The recent volatility is not confirmatory of a bull market. This is bear market volatility. Until the debt issue is resolved, this is a bear market. The debt is resolved when the 30yr and 10yr are pegged via YCC at 2% and inflation is allowed to run hot as the Fed monetises and buys the endless debt of the US govt., as it finances the huge cost of reshoring. This will take at least a decade. It is pretty clear private enterprise is not going to lead the charge.

Meanwhile gold tells you the state of affairs.

So the bull market in gold has +/- 10yrs to run.


jog on
duc

 

[ducati916]

Full:https://www.bloomberg.com/graphics/2025-ai-impacts-data-centers-water-data/


The Midwest is emerging as one of the nation's fastest-growing data center hubs, with development stretching from Kansas and Iowa to the Great Lakes states of Ohio, Michigan, Indiana and Wisconsin.
Why it matters: Data centers power the AI boom — but their soaring energy and water demands often go unreported and the benefits for local communities are unclear because data centers create few permanent jobs.

• Data centers, which are essentially warehouses for computers and servers, used 4.4% of U.S. electricity in 2023 and could consume up to 12% by 2028, according to the Department of Energy.
• Construction of the centers is at an all-time high, increasing 69% year-over-year from 2023 to 2024, per commercial real estate firm CBRE.

State of play: Columbus, Ohio and Chicago are the region's primary data center markets, but companies are increasingly eyeing places such as Minneapolis and parts of Indiana, where land is cheaper and energy is more available.

• The Midwest's tax incentives are particularly appealing for companies, Jon Davis, a policy strategist for The Council of State Governments, tells Axios.
• Plus: Cooler Midwest temperatures and proximity to the Great Lakes reduce the need for energy-intensive cooling — an advantage over warmer southern states.

Zoom in: The largest project is the Amazon data center campus coming to New Carlisle, but Microsoft, Google and Meta have also announced hyperscale data centers in Indiana.

• Citizens Action Coalition has tracked nearly 30 data centers that have been proposed across the state so far.
• Even though Indiana's data center boom is in the nascent stages, it's having an impact on energy usage. Indiana Michigan Power has estimated that the handful of data centers coming to Northern Indiana will use more electricity by 2030 than all Hoosier households.

Friction point: The expansion often happens behind closed doors.

• Local governments frequently sign nondisclosure agreements with tech firms, limiting public knowledge of energy and water usage, says Helena Volzer of the nonprofit Alliance for the Great Lakes.

The other side: Our world is growing increasingly digital, and the data needs to go somewhere.

• "It's businesses of all shapes and sizes as well. They're increasingly relying on digital infrastructure," Dan Diorio, senior director of state policy for the Data Center Coalition, tells Axios.
• As companies build to meet that surging demand, energy is a "significant cost driver" and it's in their best interests to be efficient, he says.

Data centers house server farms that store our information, along with electrical equipment that gets hot, requiring 24/7 air cooling that annually uses millions of gallons of water as a refrigerant.
Yes, but: Their true water consumption is unknown, since most of them rely on municipal utilities, Volzer says.

• The Great Lakes Compact is an agreement among Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania and Wisconsin about managing the Great Lakes water basin.
• Cities report to the compact how much water they're using, but that isn't broken down into details such as how much is from data centers.

Plus: Data centers also use a large amount of electricity, which requires generating water. However, water consumption is attributed to power plants rather than data centers, further obscuring their transparency.
By the numbers: Hyperscale data centers, which can take up over 10,000 square feet of floor space and house over 5,000 servers, can use between 1 million and 5 million gallons of water per day when evaporative cooling — the most common method — is used, according to the Alliance for the Great Lakes.

• For reference, a hyperscale data center that uses 365 million gallons in a year is equivalent to what roughly 12,000 Americans use in a year, according to the Alliance.

Threat level: To meet the demand on existing electricity power grids, some strained markets may have to add capacity on- or off-site.

• The Citizens Action Coalition warns that this could reverse progress Indiana has made on environmental goals.
• Indiana lobbyists have pointed to data centers as a reason to keep fossil fuel power plants open. State lawmakers passed a major energy bill last month that will make it hard for utilities to close coal-fired plants, in part, as a way to deal with large-scale energy users like data centers.

Hofstadter's Law: It always takes longer than you expect, even when you take into account Hofstadter's Law. — Douglas Hofstadter




Nice start to the week for the bulls.


So apart from the obvious, a more relevant reason to be bullish:



Look at bought back $74.8B and repurchased $169B



Draw a line on the chart below of LT UST futures prices from April 2024, the month just before the beginning of UST buybacks.

UST buybacks seem to have put a line under LT UST futures prices, in what could be called “Yield Curve Control-like price action”, which begs the question: Are UST buybacks just a soft form of Yield Curve Control (YCC)?

Which is of course incredibly inflationary.

UST are a bust. Nominally stocks can do fine. Some will even do well on a real return basis.



Joining the Yellen PUT we now have the Bessent PUT.

Bessent will not (cannot) allow the UST market to blow-up. Which means that stocks can drift higher.

At the moment all of the interventions into the various markets are very sub rosa. They, the Trump team, cannot afford to trigger a recession. Trying to bluff China has obviously not worked and Trump has backed down as that ran a very high risk of triggering the recession.


jog on
duc

 

[ducati916]

Energy news:

A string of deals targeting large-cap electricity generation companies across the US has put this year’s to date power sector M&A tally to $51 billion, on track for a new all-time high.

- Up until now, the highest number of US generation mergers and acquisitions took place immediately after COVID-19 hit, when a total of $55.7 billion was spent on corporate takeovers.

- AI’s increasing need for power generation is amplifying the market’s reaction to these deals - NRG Energy’s stock surged a whopping 26% on Monday after it announced its acquisition of LS Power.

- Buying operational generation capacity is significantly cheaper than building new gas-powered plants - the cost of new gas capacity has tripled from $800 per kW to $2400 per kW in less than two years.

Market Movers

- Permian-focused US upstream firm APA (NASDAQ:APA) agreed to divest $608 million worth of assets in the New Mexico portion of the Permian Basin to Permian Resources, located across 13,320 net acres.

- US energy firm NRG Energy (NYSE:NRG) agreed to purchase power generation assets from investment firm LS Power in a deal valued at $12 billion, greatly expanding its natural gas-powered generation.

- US oil major ExxonMobil (NYSE:XOM) is set to invest $1.5 billion into the Usan oil field in deepwater Nigeria, producing since 2012 and seeing output decline to 33,000 b/d of oil this year, down from 45,000 b/d two years ago.

- US asset management giant Blackstone (NYSE:BX) is reportedly in talks to buy New Mexico and Texas-focused utility firm TXNM Energy in a deal that could be valued north of $11 billion, including debt.

Tuesday, May 13, 2025

Even if for the next 90 days, fears of a global economic collapse have eased following US-China talks and subsequent reductions in import tariffs. With OPEC+ still keen to flood the market with oil, the pricing upside was somewhat limited. ICE Brent settled around $66 per barrel with no immediate prospect for a breakout towards $70 per barrel.

US, China Put Trade War on a Pause. The United States and China agreed to cut reciprocal tariffs by 115% on most goods, marking a 90-day trade war pause, with US goods now only triggering a 10% tariff in China, whilst Chinese goods would come with a 30% levy for American importers.

Saudi State Coffers Suffer Amidst Low Prices. Saudi national oil company Saudi Aramco (TADAWUL:2222) reported a 4.6% quarterly drop in its Q1 profits to $26.01 billion, citing lower sales and higher operating costs, but it kept its giant $85.4 billion dividend for this year intact.

US SPRs to Fill Up Again. The US Congress’ Energy and Commerce Committee suggested including $1.5 billion in the 2026 fiscal year budget to replenish and maintain the Strategic Petroleum Reserve, equivalent to 22 million barrels of government purchases and 220 million maintenance costs.

Norway’s Troubled Oilfield Down Again. Following a four-month delay in commissioning, Equinor’s (NYSE:EQNR) 220,000 b/d capacity Johan Castberg oil field in the Arctic Barents Sea halted operations due to an oil leak from a heat exchanger, set to resume pumping by the end of this week.

Oman Wants to Launch a New Gas Bonanza. The government of Oman is seeking to sell a part of its natural gas assets to garner at least $8 billion, offering minority stakes in fields contained in Block 6, the country’s most oil-prolific acreage and some 10.7 TCf of untapped non-associated gas reserves.

French Oil Major to Make Indonesia U-Turn. France’s energy major TotalEnergies (NYSE:TTE) is reportedly negotiating a farm-in to Petronas’ Bobara offshore project in Indonesia, potentially marking its return to the Southeast Asian country seven years after it sold all its assets there.

Resolution Copper Delayed Again. Less than a month after President Trump restarted the land transfer process to launch Rio Tinto’s (NYSE:RIO) giant Resolution Copper mine, the largest deposit of copper ore in the US, a district judge temporarily blocked the move, saying it would irreparably damage the Apache people.

Venezuelan Oil Is Now Disguised as Brazilian. According to Chinese sources, independent refiners across China are now buying Venezuelan crude oil disguised as mixed bitumen from Brazil (which Brazil doesn’t export), with customs-reported data already indicating a total worth of $1.2 billion.

China Opens Taps on Rare Earth Exports. Beijing has issued export permits to at least four rare earth magnet producers, the first such allowance since China’s authorities restricted exports last month, with reports suggesting suppliers of German carmaker Volkswagen (ETR:VOW) received a licence, too.

Better Saudi Prices Keep Asian Demand Robust. After Chinese refiners nominated a one-year high of 48 million barrels of Saudi term supplies in May, next month is set to see the same level of crude exports with private refiners Hengli and Rongsheng maximizing their purchases as long as prices remain low.

Namibia’s Oil Craze Still Years Away. Namibia’s petroleum commissioner, Maggy Shino, said that French major TotalEnergies plans to take an FID on the 150,000 b/d Venus project, potentially the first oil field in the country’s portfolio, only by late 2026, delayed by more than two years.

Supply Discipline Rekindles Bullish Solar Spirit. Solar stocks have jumped by more than 10% on Tuesday amidst widespread speculation that China’s top solar wafer producers Daqo New Energy and Tongwei would jointly curb production, concurrently targeting a new price range that would suit most suppliers.

Vietnam Wants to Double Down on Nuclear. The government of Vietnam wants to add a combined capacity of 6.4 GW between 2030 and 2035, using President To Lam’s visit to Russia to preliminarily agree with Moscow on the construction of a nuclear power plant, simultaneously reaching out to South Korea and France.

Markets

• The S&P 500 ($SPX) closed at its highest level since February as the V-bound continued today. It’s sitting only 4.2% below record highs after bouncing more than +18% from last month’s low (on a closing basis).
  
• Many dismissed the recent Zweig Breadth Thrust, but $SPX has gained nearly +10% since it triggered three weeks ago. Willie highlights another rare signal that fired yesterday: the deGraaf Breadth Thrust.
  
• Popularized by Jeff deGraaf, this breadth thrust triggers when the percentage of 20-day highs in the S&P 500 spikes above 55%. While the signals in 2002 and 2011 were notable failures, $SPX has been higher a year later 97% of the time across 30 signals since 1979.
  

The Takeaway: Breadth thrusts are piling up, with the percentage of 20-day highs recently spiking above 55%. These thrusts reinforce the bull case and suggest we’re in the early innings of a multi-month rally.



Context:





Basically their pricing power has been crimped.



Energy will be a thing.


jog on
duc

 

[ducati916]

Healthcare:


Trump’s executive order aimed at compelling drug makers to reduce prices was no surprise — it was a matter of when, not if. Last year, US medication spending surged to $487 billion, intensifying long-lasting concerns over soaring health care costs. With Big Pharma struggling to shake its reputation for exploitative pricing, Trump’s order seemed inevitable.

Despite surging costs, and the tailwinds from Covid-19 vaccines and then obesity drugs, health care stocks’ performance has been lackluster. The ratio of the S&P 500 health care stocks to the overall index highlights a gradual descent since late 2022. The artificial intelligence rally sucked up a lot of oxygen — but not even the breakthrough in GLP-1 blockbuster drugs for obesity has turned this around:


Trump’s “Most Favored Nation” hasn’t led to immediate price cuts, but the market’s worried reaction hints at problems ahead. The order pushes drugmakers to lower their prices to the much cheaper levels available in other countries or face a new system forcing that outcome.

The president is touting price reductions between 30% and 80%. How painful would this be for Big Pharma? It’s estimated that the proposal, seen as a way to help pay for tax cuts, could cost them as much as $1 trillion over a decade. UBS’s Trung Huynh argues it could pose an average 10% net income headwind across US pharma groups if the policy were applied to the top 50 drugs. And it could be worse:

In a gray sky scenario, if it is total exposure across all drugs for each company, assuming a 50% net price cut at 60% contribution margin, this would result in a -15% average net income cut.

Trump’s move adds pressure to an industry that was just starting to recover, buoyed by promising advances in weight-loss drugs. Preliminary results from Eli Lilly’s experimental pill were encouraging, compared to injectables. Rival Novo Nordisk A/S announced it was partnering with US biotech company Septerna Inc. to develop oral obesity pills in a deal potentially worth up to $2.2 billion. But the performance of the Tema GLP-1 Obesity & Cardiometabolic ETF, which tracks the weight-loss drug makers, suggests the doubts over pricing have drowned any excitement in the market:


Beyond political uncertainty, BofA analyst Allen Lutz note that health care and tech carry idiosyncratic risks. Historically, when one sector struggles, the other attracts investor inflows. This chart shows health care outperforming when the economic outlook worsens:


In that context, the abrupt shift to worrying about overheating rather than a recession is just what health care stocks didn’t need. As for the longer term pressures on margins, Lutz shows that higher wages in the sector have outpaced rising prices. Labor is typically the largest cost item for hospitals, home health and hospices, so this is a key swing factor for profitability:


Still, health care isn’t lacking in interest from investors, recording the second-largest cumulative inflows of any sector year-to-date after tech, according to the bank’s data:


It looks like investors are counting on artificial intelligence to shake up health care — think faster drug discovery, fewer failed clinical trials, sharper diagnostics, and even better patient care. For the time being, that explains the greater enthusiasm for direct AI plays. And as the World Health Organization predicts a global shortage of 10 million health workers by 2030, AI-powered nurses might just step in to fill the gap.

UnitedHealth Group ($UNH) has shed roughly -50% amid a 5-week losing streak, closing at a four-year low today. The stock has been a notable drag on the Dow and the Health Care sector. Two of its worst days since 2008 have occurred in the last month alone. It tumbled -22% after earnings a few weeks ago, and nearly -17%yesterday. It's tempting to buy a blue-chip name on sale like this, but catching a falling knife can be dangerous Scott points out that RSI printed its most oversold reading since 2008 today. A divergence would be bullish, but price and RSI are making multi-year lows simultaneously. In other words, momentum is confirmingthe recent weakness. The Takeaway: UnitedHealthcare ($UNH) has slid -50% amid a five-week losing streak. Price and momentum are both hitting multi-year lows, suggesting the proverbial 'falling knife' hasn't hit the floor yet.

Worth a punt?








Since the Fed began QT in June 2022, the Fed has actually net BOUGHT $300B of 10+ year USTs.

The US cannot engage China in Cold War 2. They will lose. The UST market is constantly in a state of blowing-up. The rhetoric out of Trump and Washington will abate. Trump will continue to cave.

We have already a soft version, a Treasury version of YCC. Eventually the Fed will have to come on board, particularly if the UST market becomes increasingly unstable.

Then we get a 1950-1970 type of market.


jog on
duc