Sunday, July 9, 2017

Idle Meandering On A Sunday Night -- July 9, 2017; Inflation, Already Low, Is Falling Further -- A Mystery

Updates

July 15, 2017: in the original post I talk about the imagined experience of recharging an EV on a cross-country drive. Here's where we stand (see graphic below) and the tea leaves do not suggest things will improve any time soon with regard to batteries. When looking at the graphic below, think about all the service stations across the country; the number of pumpers at each station; the size of the "footprint" of the service station pump areas; and, the length of time one car takes to refuel. Now consider if a significant number of those cars were EVs, all requiring 20 minutes to charge just enough for 60 additional miles. Add this: with your conventional gasoline automobile you can stop at any branded gasoline station (Shell, Chevron, XOM, etc) but if you have a Tesla you have to use a Tesla charging station. No saying how the other EVs will "operate" their recharging system. Source for the graphic:


July 10, 2017: see comments which include these links:
https://blogs.wsj.com/chinarealtime/2017/02/24/china-dials-back-its-lending-to-wobbly-venezuela/
https://s3.postimg.org/b93czxxtf/Webp.net-compress-image_52.jpg 
https://www.youtube.com/watch?v=BAjN6bG7XzMhttps://s13.postimg.org/8zc2kcb87/Captura_de_pantalla_543.png  

Original Post

 Over the weekend I read an "op-ed" by Bernie Sanders. He was tired of Trump's tweets. LOL. Bernie was writing bout his summer vacation and how they were just getting ready to visit Utah. I thought the entire piece very boring, so I assume the same thing: talking about my week in Montana will be very boring to readers. If I do write about my trip it's for the archives, for future reference, and I would encourage readers to ignore it. It will be as boring as Bernie's travelogue -- maybe more so. LOL.

So, where are we on July 9, 2017? The 170th day into Mr Trump's presidency; about 240 days since his election.

US cities are calm, certainly compared to Hamburg. I guess Angela Merkel took a page from the Baltimore mayor's playbook: give them some room to destroy. 

Gasoline is cheap, although I was surprised to see it slightly higher here in north Texas than when I left, currently about $2.19/gallon.

We have "everyone" falling all over themselves writing about EVs. No one talks about the infrastructure. It will be interesting to see all those EVs on the road with drivers looking for charging stations. Seriously. Even when EVs become mainstream (air quotes would be good here), drivers are going to say, "Hey, does that look like a charging station?" "No, dear, that's  Netflix kiosk."

I think the big takeaway this week is the separate paths the US and China are taking vs the path that the EU is taking. 

A reader hit the proverbial nail on the head when he wrote this:
It seems very obvious that Germany and most of Europe would want the US to follow the same energy policy as they are promoting for themselves. They have to be very afraid of the huge, and I mean HUGE economic advantage the US will have with our inexpensive fossil fuel economy.
I explain it to people this way: imagine the largest economy in the world and then giving that largest economy the least expensive energy in the world.
That is our future If we don't allow the "left" to destroy it.
One can only hope that Trump is not a one-off. If after four years, "we" elect another Obama all was for nought.

The only way the EU can hobble the US, is to convince the US to go down the same "energy road" as the EU. China will not be so crazy. In fact, one can argue, the Chinese are being duplicitous -- if that's the right word: encouraging the EU to encourage the US to go "green," thereby hobbling the entire western world. Meanwhile, China will continue going its own way.

Futures mean squat, but right now it looks like another nice day for the market: all three indices (S&P; Nasdaq; and, Dow) are in the green (futures at 9:50 p.m. Central Time). The jobs report this past week was incredible; it's funny: I can read a dozen stories after the jobs report is released, and remain confused about what it might mean, and yet, Matt Drudge seems to figure it out immediately. If Hillary were president, the media would be crowing about the jobs report and the economy and the market. But she isn't. And they aren't (crowing about anything, except the president's tweets).

So, I'm in a great mood tonight, looking forward to seeing what the market does tomorrow.

My only bit of sadness: not being on Lake Flathead. Wow, that was incredible. I would write more but I don't want to come off as being as boring as Bernie.

**************************
The Magical Mystery Tour

From the WSJ over the weekend:
Leading central banks plan to withdraw some of the stimulus measures they have put in place since the financial crisis. But their timing seems a little puzzling: Inflation, which is already below their targets, is falling world-wide.
The decline in inflation is a mystery since the global economy appears to be growing at a faster pace than during recent years, while unemployment rates continue to edge lower.
According to central bankers, inflation is generated by the gap between the demand for goods and services and the economy’s ability to supply them. When that output gap is wide, inflation is lower, and when it is narrow, prices grow more quickly.
Low inflation is a symptom of a weak economy, something they want to avoid as much as high inflation, a sign of an overheated economy.
Try as they might, central banks have been unable to reach their inflation targets over recent years, despite their success boosting growth and lowering jobless numbers. That has raised questions about the reliability of the traditional link between the output gap and prices.
Is it different this time?

The writer and the analysts are blowing off the effect "cheap energy" might have on inflation:
Much of that decline was due to easing energy prices. But even excluding that volatile item, and similarly choppy food prices, “core” inflation is slowing in many places.
That isn’t a recent phenomenon. Core inflation in developed economies hasn’t changed much in the years since the financial crisis, never reaching the 2.5% rate it stood at in September 2008, when Lehman Brothers collapsed, or going below the 1.1% rate it hit in December 2010.
Central bankers are struggling to explain why inflation isn’t responding the way the textbooks say it should to an improving global economy and falling jobless rates. According to the OECD, the unemployment rate in developed economies fell to 5.9% in May from 6.3% a year earlier.
One wonders if analysts have discounted cheap energy too much?

I will wager that in the next six months we will start seeing articles on the effect low energy prices are having on the global economy and the low inflation rate.

**********************
The Apple Page

With iPhone 8 release looming, Apple may become the world's first trillion-dollar company. Link here.
****************************
Best Birthday Gift Ever

Link here.


No matter how bad your aim is, at three feet and less, you cannot miss. I'm wondering if this works on "cockroaches." Probably not.

Legal in California? Yes. But Amazon won't ship any bug assault gun to California. Can't make this stuff up.

6 comments:

  1. Bruce Oksol said: "...the Chinese are being duplicitous -- if that's the right word: encouraging the EU to encourage the US to go "green," thereby hobbling the entire western world. Meanwhile, China will continue going its own way."

    Yes, indeed.

    China suffers from the same predicament that the EU suffers from: an extreme poverty of conventional oil and gas resources. In addition, its attempts to jump start its shale industry have not been overly successful.

    According to an ancient (ancient at least in the fast-moving world of shale technology) study conducted by the EIA in 2011, China has some of the largest unproved technically recoverable shale resources in the world.
    https://www.eia.gov/analysis/studies/worldshalegas/

    But since neither China's wind and solar "transformation" nor its own shale revolution have worked out, so it's looking for fossil fuels anywhere in the world it can secure them.

    This from the Wall Street Journal:

    "'China is primarily concerned that the Venezuelan opposition, were it to assume control of the government, would be unfriendly to China,' said Margaret Myers, co-author of the report and a director with the Washington-based Inter-American Dialogue….

    'The Chinese government and also the policy banks have lots of concerns, but China also sees longer-term opportunity in Venezuela because it has lots of oil and minerals,' said Renmin University of China professor Cui Shoujun….

    Venezuela is part of China’s stronger economic and strategic focus on Latin America. In November, Beijing released a strategic blueprint for the region, its first in eight years.

    Last year’s $21.2 billion—mostly for infrastructure and raw-material projects—was more than either the Inter-American Development Bank or the World Bank lent to Latin America and the Caribbean, the report said.

    China’s decision to concentrate its financial firepower on Brazil, Ecuador and Venezuela reflects in part these countries’ rich natural resources….

    https://blogs.wsj.com/chinarealtime/2017/02/24/china-dials-back-its-lending-to-wobbly-venezuela/

    China talks a good wind and solar game, but it's putting its money where the oil and gas are:

    https://s3.postimg.org/b93czxxtf/Webp.net-compress-image_52.jpg

    ReplyDelete
    Replies
    1. The WSJ link is particularly noteworthy; thank you.

      Delete
  2. Bruce Oksol says: "One wonders if analysts have discounted cheap energy too much?"

    Here's a link to a very insighful video presentation by the heterodox Australian economist, Steve Keen.

    --The role of Energy In Production--
    https://www.youtube.com/watch?v=BAjN6bG7XzM

    And here's a screenshot of the key insight: none of the dominant economic theories -- Marxist, Neoclassical, Post-Keynesian and Kummel-Ayres-Voudouris --
    takes energy inputs into account.

    https://s13.postimg.org/8zc2kcb87/Captura_de_pantalla_543.png

    ReplyDelete
    Replies
    1. All links have been placed up in the main body of the blog.

      Delete
  3. Feel free to expound on the beauty of the Flathead Lake area! The Mission Valley is amazing, The Lake has some of the best fishing in the Rockies! And is one of the clearest lakes in N. America.

    Nothing boring about it! (Now Bernie...thats another story)

    ReplyDelete
    Replies
    1. Thank you. I will probably talk about Flathead Lake on and off over the next few days.

      Delete